Celgene sees billion dollar potential at Juno

Juno Therapeutics has signed an agreement with Celgene which will see the biotech invest $1bn into the immunotherapy developer.

As part of a ten-year deal, Celgene will provide $150m upfront to Juno, and will pay $93 per share or $850m, a 100% premium on its stock price, in return for a 10 percent stake with the option to purchase a further 20% at a later time. Juno, which raised $265m in its December 2014 IPO, saw its stock price increase 40% on the news.

Juno launched in December 2013 as a joint venture between Seattle-based Fred Hutchinson Cancer Research Centre, the Seattle Children’s Research Institute and New York City-based Memorial Sloan-Kettering Cancer Centre. It quickly amassed $120m at launch before increasing its series A to $176m by the following April, for which the firm won GUV’s Deal of the Year 2014. It then went on to secure a further $134m in series B funding last autumn.

Investors in Juno’s series A and B rounds include Arch Venture Partners, a venture firm spun out from the University of Chicago’s old technology transfer programme, the Alaska Permanent Fund, an investment vehicle derived from the state’s oil profits, Amazon founder Jeff Bezos, and venture firm Venrock, established by the Rockefeller family.

The company’s main technology revolves around T-cells which have been genetically engineered to identify and target cancer, which has shown a great deal of success in trials held by Juno and others working in the immunotherapy field. However, the technology, of which Juno is a standard bearer along with firms like University of California Los Angeles’ Kita Pharma and Oxford University’s Adaptimmune, has its detractors. Fears that the technology isn’t as effective on solid tumours as it is on blood cancers and that the technology is too expensive for a wider roll out have slightly quelled investor confidence in immunotherapies after a white hot year for investment in the sector through 2014, with Juno’s share price dropping 11% since the turn of the year.

However, the investment by Celgene, which also caused Kite’s shares to jump 10%, shows a renewed enthusiasm in the technology.

Hans Bishop, chief executive of Juno, told news provider Financial Times: “Celgene is a world class oncology company that is investing a billion dollars in our company, and I do think that reinforces our belief in the potential of using Car-T in solid tumours. It’s clearly a very significant deal financially, but more important is the potential of the science and the potential together to be a broader leader in the immuno-oncology space.”