Juno Therapeutics Surges on Report of Celgene Deal Talks

(Bloomberg) -- Juno Therapeutics Inc. surged after the Wall Street Journal reported that Celgene Corp. was in talks to buy the Seattle-based drugmaker.

Shares of Juno, a leader in the effort to use the immune system to treat cancer, rose more than 50 percent to $68.80 a share at 6:43 a.m. in premarket trading Wednesday in New York. The company had a market value of roughly $5.2 billion as of the close of regular trading on Tuesday.

If a deal is reached, it would continue a recent string of acquisitions by Celgene, which is under pressure to find ways to offset generic competition for top-selling cancer treatment Revlimid. Late last year, the biotechnology giant pared back its closely watched outlook for 2020 profits, sparking a steep selloff in its shares.

Celgene, based in Summit, New Jersey, agreed last week to buy closely held Impact Biomedicines for $1.1 billion upfront, gaining an experimental blood-cancer treatment. The value of that deal could climb to as much as $7 billion over time if the drug reaches certain milestones.

Juno spokesman Chris Williams said the company doesn’t comment on market rumors or speculation. Celgene didn’t immediately respond to a request for comment.

Existing Pact

Juno and Celgene already have a partnership. Celgene agreed to pay Juno about $1 billion in 2015 as a part of a 10-year deal to study cures for cancer and autoimmune diseases.

Celgene has “been talking about its needs to do deals, its needs to grow its revenue,” said Bloomberg Intelligence analyst Asthika Goonewardene in a telephone interview.

A takeover of Juno, if it comes at as hefty a premium as the stock-market activity in the wake of the Journal report suggests, would rank among Celgene’s largest-ever deals. In 2015, Celgene acquired Receptos Inc. for $7.2 billion, gaining an experimental treatment called ozanimod being tested in Crohn’s disease, ulcerative colitis and multiple sclerosis.

Michael Yee, an analyst at Jefferies, said in a note to clients that he viewed the potential deal “as an incremental positive” for Celgene “since it would consolidate long-term revenues and technological expertise.”

Celgene shares were down about 0.8 percent in premarket trading. As of the close of trading on Tuesday, the stock was roughly 28 percent below its peak in October of last year.

Deal Wave

Analysts and investors have speculated that changes to the tax code will entice U.S.-based companies to bring back cash from abroad and spur merger and acquisition activity in 2018. Last year was the slowest since 2013 in terms of biopharmaceutical merger volume.

Shares of Bluebird Bio Inc., another firm researching so-called CAR-T treatments that use the immune system to fight cancer, rose more than 7 percent late Tuesday, on speculation that the Cambridge, Massachusetts-based firm could also be a potential takeover target. The stock was little-changed early Wednesday.

Celgene and Bluebird Bio also have a partnership agreement to develop therapies that target proteins linked to blood cancers like multiple myeloma.

Bluebird Bio spokeswoman Elizabeth Pingpank said the company doesn’t comment on merger rumors.

--With assistance from Michelle Fay Cortez and Ivan Levingston

To contact the reporter on this story: Rebecca Spalding in New York at rspalding@bloomberg.net.

To contact the editors responsible for this story: Cecile Daurat at cdaurat@bloomberg.net, Timothy Annett, John Lauerman

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