Jounce nabs first big deal in $2.6B I/O tie-up with Celgene

Third Rock-backed Jounce Therapeutics has done its first major deal with a biopharma. Its new immuno-oncology partnership with Celgene ($CELG) could be worth up to $2.6 billion, including an already secured upfront payment of $225 million and an equity investment of $36 million.

The deal is substantial considering that Jounce’s lead candidate that’s included in it, JTX-2011, is preclinical. It’s being developed to treat solid tumors both as a single agent and in combination; JTX-2011 is slated to enter the clinic this half.

“We are centered around the belief that immuno-oncology 2.0 will be a little bit more than the repurposing of immune mechanisms and testing them out in oncology,” Jounce CEO Richard Murray told FierceBiotech in an interview. “The goal is to understand across solid tumors the nature of the infiltrant--to identify different targets, discrete patient populations that you can define by biomarkers. We rely on human samples, which leads up to targets and immune cell populations.”

If the option to JTX-2011 is exercised, Jounce leads U.S. global development and U.S. commercialization for JTX-2011 and one additional program under the deal.

The partnership also includes up to four early-stage programs to be selected from a predefined pool of B cell, T regulatory cell and tumor-associated macrophage targets from the startup’s platform. An additional option is included to equally share a checkpoint immuno-oncology program.

JTX-2011 is a monoclonal antibody that specifically targets ICOS, the inducible T-cell costimulator, a protein on the surface of some T-cells that is thought to stimulate an immune response against cancer. Jounce’s Translational Science Platform is based on applying a bioinformatics approach to specific cell types in the tumor microenvironment.

Under an opt-in scenario, Jounce retains 60% of U.S. profit share for JTX-2011 with 40% going to Celgene. In the first additional program, Jounce keeps 25% with equal U.S. profit sharing for up to three additional programs. Development costs are shared at a similar rate. Celgene gets ex-U.S. commercialization rights for all the candidates under an opt-in, with the exception of the checkpoint program that will split global profits equally.

The company opted to pursue deal opportunities, more so than an IPO, given the choppiness of the market, Murray said. Jounce raised a $52 million Series B in April 2015, a round that included several crossover investors who typically have tighter timelines for returns.

Investors on that financing included Wellington Management, Redmile Group, Nextech Invest, Pharmstandard, Cormorant Asset Management, Omega Funds, Casdin Capital, Foresite Capital Management and an undisclosed investment fund.

A combination strategy is key going forward. In fact, the Phase I/II study that’s planned for the lead candidate includes an arm testing 2011 in combination with a PD-1 inhibitor, as well as one as a single agent.

“We see this as a cornerstone for 2011,” said Murray. “We know that other agents are capable of inducing ICOS. We think it primes the T cells to be ready for our therapeutic--that offers a logical means to prioritize combinations.” Murray was the SVP of biologics and vaccine research at Merck ($MRK) prior to joining Jounce.

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