Juno stock jumps as reports suggest Celgene wants a buyout

After a $7 billion biobucks deal for Impact Biomedicines at the J.P. Morgan Healthcare Conference last week, Celgene is lining up another deal for CAR-T biotech Juno Therapeutics, according to several media reports.

The Wall Street Journal and later the Financial Times said the Big Biotech wants to buy Juno in order to gain access to its re-jigged pipeline of cutting-edge cell therapies, and replicate the kind of $12 billion deal Gilead paid for rival Kite Pharma and its recently approved CAR-T therapy.

No financial details have yet been revealed, and neither company are commenting on the rumors. Juno was worth just over $5 billion in market cap terms last night.

The pair have a long-standing partnership, with Celgene investing around $1 billion for Juno’s CAR-T development work in a 10-year pact in 2015, with rumors always nearby that Celgene may snap up the biotech if things went its way (as of September 2017, Celgene owned a 9.7% stake in Juno worth nearly $500 million).

But things have not gone smoothly, and Juno is now behind the leading pack of Kite/Gilead and Novartis in the CAR-T race (who now all have approvals). That's because, back in 2016, a series of deaths from its once-leading CAR-T forced it to scrap the program last year and look further back in its pipeline.

RELATED: FDA halts Juno CAR-T trial after three patient deaths

This drug, known as JCAR015, was culled when a number of patients died of cerebral edemas on either side of a FDA clinical in 2016; it had been in development for acute lymphoblastic leukemia (ALL). Juno said the safety failings likely stemmed from rapid early CAR-T cell expansion.

Its focus is now on JCAR017, a follow-up program that uses a defined CD4-CD8 composition that company executives think will improve safety and efficacy. This could see U.S. approval by year’s end, Juno has previously said.

As a defined cell composition candidate, JCAR017 goes through a manufacturing process that controls the number of CD4 and CD8 cells in the finished product. Juno thinks this approach will reduce the variability of the composition of JCAR017 in what Juno sees as vital areas, such as the number of viable CD8 cells and the capacity to release inflammatory cytokines.

Back in the summer, Juno posted updated data out of the ASCO cancer conference from its Transcend trial for JCAR017 in relapsed and refractory (r/r) aggressive B cell non-Hodgkin lymphoma (NHL).

This candidate targets CD19, a protein expressed on the surface of almost all B cell malignancies, and uses a defined composition of CD4 to CD8 T cells and a 4-1BB costimulatory domain, which the biotech said “differentiates it from other current CD19-directed CAR T product candidates.”

The phase 1 study has treated 71 patients with r/r aggressive B cell NHL, including those with diffuse large B cell lymphoma (DLBCL), follicular lymphoma grade 3B or mantle cell lymphoma (MCL).

This was a dose-finding study of JCAR017, following preconditioning agents fludarabine/cyclophosphamide lymphodepletion. In total, two analysis groups were presented for the DLBCL cohort: core and full.

The "core" analysis, of 44 patients, includes those that represent the population that will move forward into the biotech’s upcoming pivotal trial, which will begin in the second half of the year. This includes patients with DLBCL (de novo and transformed from follicular lymphoma).

The "full" analysis represents all r/r patients in the DLBCL cohort, 55 patients in all, including the 11 patients with poor performance status or niche subtypes of aggressive NHL.

When combining data across dose levels, the full data set showed the best ORR was 76% (41/54 patients) and CR 52%. And when using the core group, again combining data across dose levels, ORR hit 86% (38/44 patients) and the CR was 59%.

But there was one death, an elderly patient in their 80s, in what Juno described as a “Grade 5 adverse event of diffuse alveolar damage, which the investigator assessed as related to fludarabine, cyclophosphamide, and JCAR017 treatment, occurring on day 23.”

The 82-year-old patient was said to have refused mechanical ventilation for progressive respiratory failure, while neutropenic on growth factors and broad-spectrum antibiotics and antifungals. It also registered 18% (8/44 patients) having “severe neurotoxicity.”

But deal talk, coupled with a revival of its fortunes last year, saw Juno up more than 40% afterhours when the reports first surfaced last night. However, its rumored suitor was down 1%.  

Analysts at Jefferies said in a note to clients last night: “[A deal would] naturally be a smart move by Celgene as the buyout would enable it to integrate Juno’s entire cell therapy platform and bring it all in house. We are not surprised nor shocked to see this and view the potential acquisition as an incremental positive since it would consolidate long-term revenues and technological expertise, although we also acknowledge new revenues and external BD are favorable given that Celgene needs new revenue and already have rights to the majority of Juno’s pipeline.”

It sees the deal worth as much as $7 billion to $9.5 billion—lower than Kite’s $11.9 billion buyout from Gilead, but then Celgene already has certain rights and partial ownership tied up with Juno.  

This also comes a week after Celgene said it would be paying just over $1 billion up front, and around $7 billion in biobucks, for Impact Biomedicines, a tiny startup that got a $22 million series A just three months ago. That trial gave it access to its JAK2 inhibitor fedratinib, a Sanofi castoff.