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Is Celgene (CELG) Looking to Take Over Juno Therapeutics?

Zacks Equity Research

Per reports, biotech bigwig Celgene Corporation CELG is looking to acquire smaller biotech Juno Therapeutics JUNO.

Rationale of the Deal

Celgene is on the look-out of new deals and acquisitions given a lacklustre 2017.  Celgene suffered a series of setbacks over the last few months. The company suffered a setback when a late stage study on its lead cancer drug Revlimid in combination with Rituxan failed.

Earlier in Jan 2018, Celgene announced it will acquire Impact Biomedicines for an upfront amount of $1.1 billion. The acquisition will add a late stage candidate, fedratinib, a highly selective JAK2 kinase inhibitor, to Celgene’s pipeline.  The candidate is being developed for the treatment of myelofibrosis and polycythemia vera. Fedratinib demonstrated statistically significant improvements in the primary and secondary endpoints of splenic response and total symptom score, respectively in a randomized, placebo-controlled, phase III pivotal trial (JAKARTA-1) for treatment-naïve MF.

We note that the slowdown in mature products compelled prominent biotechs to acquire smaller ones with promising pipelines. Gilead Sciences, Inc. GILD acquired Kite Pharma and subsequently obtained FDA approval of Yescarta (axicabtagene ciloleucel), the latter’s chimeric CAR-T therapy candidate.

Why is Celgene Mulling Over the Acquisition?

Celgene already has a collaboration and investment agreement with Juno for the development and commercialization of immunotherapies for cancer and autoimmune diseases. The agreement became effective in July 2015. Per the terms of the agreement, Celgene has the option to be the commercialization partner for Juno’s oncology and cell therapy auto-immune product candidates, including Juno’s CD19 and CD22 directed CAR T-cell product candidates.

Per the deal, Juno will have the option to enter into co-development and co-commercialization arrangements on certain Celgene-originated development candidates that target T-cells.

In April 2016, Celgene exercised option to develop and commercialize Juno’s CD19 program outside North America and China. The company also entered into a pre-negotiated license agreement with Juno with respect to such program by making a $50.0-million license payment.

 

 

Celgene’s stock has loss 22.3% of its value in the last six months compared with the industry’s decline of 2.4% while Juno’s stock surged significantly following the news.

CAR-T Therapy Holds Promise

The CAR-T therapy space was in the spotlight in 2017 as the FDA approved the first CAR-T therapy, Kymriah for the treatment of patients upto 25 years of age with B-cell precursor acute lymphoblastic leukemia that is refractory or in second or later relapse stage.

Given the immense potential of the therapy, Celgene too wants to go the Gilead way. Meanwhile, Celgene also has a partnership with bluebird bio, Inc. BLUE for CAR-T therapy candidates.  Last month, the company also announced results from the ongoing CRB-401 phase I clinical study on investigational anti-B-cell maturation antigen CAR-T cell therapy, bb2121. The data showed ORR of 94% in patients in active dose cohorts (doses above 50 x 106 CAR + T-cells) and CR rate of 56% observed in patients in active dose cohorts.

Zacks Rank

Celgene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..

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