On January 22, 2018 Celgene Corporation (NASDAQ: CELG) and Juno Therapeutics, Inc. (NASDAQ: JUNO) reported the signing of a definitive merger agreement in which Celgene has agreed to acquire Juno (Press release, Juno, JAN 22, 2018, View Source [SID1234523416]). Under the terms of the merger agreement, 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.
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Juno is a pioneer in the development of CAR (chimeric antigen receptor) T and TCR (T cell receptor) therapeutics with a broad, novel portfolio evaluating 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 of Juno builds on our shared vision to discover and develop transformative medicines for patients with incurable blood cancers," said Mark J. Alles, Celgene’s Chief Executive Officer. "Juno’s advanced cellular immunotherapy portfolio and research capabilities strengthen Celgene’s global leadership in hematology and adds new drivers for growth beyond 2020."
"The people at Juno channel their passion for science and patients towards a common goal of finding cures by creating cell therapies that help people live longer, better lives," said Hans Bishop, Juno’s President and Chief Executive Officer. "Continuing this work will take scientific prowess, manufacturing excellence and global reach. This union will provide all three."
The acquisition will also add a novel scientific platform and scalable manufacturing capabilities which will complement Celgene’s leadership in hematology and oncology. In collaboration with Juno’s team in Seattle, 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.
Strategic Rationale for Acquiring Juno
Upon completion of the acquisition of Juno, Celgene will be positioned to become a preeminent cellular immunotherapy company. The strategic advantages of this acquisition will include the opportunity to:
• 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
• 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
• Additional cellular therapy assets in proof-of-concept trials for hematologic malignancies and solid tumors will add to Celgene’s existing pipeline
• Accelerate revenue diversification with meaningful growth drivers beyond 2020
• Capture 100% of the global economics on all Juno’s cellular immunotherapy assets
Terms of the Agreement
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.