Celgene Acquires Juno Therapeutics at $9 Billion – $87 a Share. Why Array is Trading Around $15 in Premarket Today.

Celgene (CELG) and Juno (JUNO) announced the signing of a definitive merger agreement upon which, Celgene has agreed to acquire Juno. Celgene will pay $87 per share in cash, or a total of approximately $9 billion, net of cash and marketable securities acquired and Juno shares already owned by Celgene (approximately 9.7% of outstanding shares). The transaction was approved by the boards of directors of both companies.

Juno is recognized with its chimeric antigen receptor T (CAR T) and T Cell Receptor (TCR) therapeutics.  Its pipeline has multiple genetically engineered T Cell therapeutics having multiple targets and cancer indications. Adding to Celgene’s lymphoma program, JCAR017 (lisocabtagene maraleucel; liso-cel) represents a potentially best-in-class CD19-directed CAR T currently in a pivotal program for relapsed and/or refractory diffuse large B-cell lymphoma (DLBCL). Regulatory approval for JCAR017 in the U.S. is expected in 2019 with potential global peak sales of approximately $3 billion.

The Acquisition

Celgene will acquire all the outstanding shares of common stock of Juno through a tender offer for $87 per share in cash, or an aggregate of approximately $9 billion, net of cash and marketable securities acquired and Juno shares already owned by Celgene. The transaction has been approved by the boards of directors of both companies and is subject to customary closing conditions, including the tender of a number of shares of Juno common stock, that when taken together with the shares of Juno common stock already directly and indirectly owned by Celgene, represent at least a majority of outstanding shares of Juno common stock, and expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is anticipated to close in Q1:18.

Celgene expects to fund the transaction through a combination of existing cash and new debt. The resulting capital structure will be consistent with Celgene’s historical financial strategy and strong investment grade profile providing the financial flexibility to pursue Celgene’s strategic priorities and take actions to drive post 2020 growth.

The acquisition is expected to be dilutive to adjusted EPS (earnings per share) in 2018 by approximately $0.50 and is expected to be incrementally additive to net product sales in 2020.

There is no change to the previously disclosed 2020 financial targets of total net product sales of $19 billion to $20 billion and adjusted EPS greater than $12.50.

J.P. Morgan Securities LLC is acting as financial advisor to Celgene on the transaction. Morgan Stanley & Co. LLC is acting as financial advisor to Juno. Legal counsel for Celgene is Proskauer Rose LLP and Hogan Lovells, and Juno’s legal counsel is Skadden, Arps, Slate, Meagher and Flom, LLP.

Prohost Observations

There is no doubt that Celgene’s acquisition of Juno will strengthen Celgene’s global leadership in hematology and helps its future growth going far into the future.

Prohost picked Kite and Juno, believing that their CAR T genetically engineered therapeutic creation will be a game changer in the treatment of cancer – hematological cancers at the beginning, then solid tumors later on. Both firms have now been acquired at Billions of dollars. Kite was acquired by Gilead Sciences (GILD) which is also a Prohost Pick and Juno is been now acquired by Celgene, which is also one of the Prohost picks.

We believe that both Gilead and Celgene will benefit a lot from their acquisition to these scientifically solid biopharmaceutical firms.  In collaboration with Juno’s team, Celgene plans to expand its existing center of excellence for immuno-oncology translational medicine by leveraging Juno’s research and development facility in Seattle, WA as well as Juno’s manufacturing facility in Bothell, WA.

Upon completion of the acquisition of Juno, Celgene will be positioned to become a preeminent cellular immunotherapy company. The strategic advantages of this acquisition we read include:

– Leverage a novel scientific platform and scalable manufacturing capabilities to position Celgene at the forefront of future advances in the science of cellular immunotherapy

– Accelerate Juno’s pipeline development to capture the full potential of cellular immunotherapy

Juno’s JCAR017, a pivotal stage asset, with an emerging favorable profile in DLBCL, is expected to add approximately $3 billion in peak sales and significantly strengthen Celgene’s lymphoma portfolio. JCARH125 will enhance Celgene’s campaign against BCMA (B-cell maturation antigen), a key target in multiple myeloma

Prohost and the CAR T Firms

Prohost added Juno to its Portfolio on 03/11/2015 at $$51.36, the stock is trading in premarket today at $86.26 UP $18.45. Prohost Target for 2018 was $100. Prohost still has three other CAR T developing firms in its portfolio.  

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In Other NEWS

ARRAY 

Array (ARRY) is Trading now at 14.83 +1.69. Results from BEACON Phase 3 Trial with a combination of encorafenib, binimetinib and cetuximab demonstrate an 8 Month Median Progression-Free Survival in BRAF-Mutant Colorectal Cancer.

Read more in The Upcoming Week in Review. The Week in Review will have very important private lessons about the way development-stage biotech firms should be assessed.      

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