Welcome to your Regenerative Medicine Deal Review for the month of June. It was an epic month in partnerships that saw multiple collaborations closely tying industry leaders together. Almost all public cell-based immunotherapy companies have formed partnerships with Big Pharma or biotech in the last 24 months, amongst a flurry of collaborative activity that is driving incredible growth in the industry. The outlier was industry pioneer Juno, which, until recently, was a lone wolf. Juno finally chose its suitor in June, partnering with oncology leader Celgene. The latter also announced a partnership with bluebird bio, which in turn formed its own collaborations with Kite Pharma and Five Prime Therapeutics.
Juno Therapeutics (JUNO) has outpaced most of its pier group in identifying disruptive technologies to augment its CAR pipeline. 2015 has been a very active year for the company, which spent a good deal of cash on acquisitions and deals. So far already, Juno has acquired Stage Cell Therapeutics GmbH for $65M, to access its T cell isolation/activation technologies, and completed a $63M licensing deal with Fate Therapeutics (FATE) to gain access to small molecules that can be used to modulate T cell activity. Juno added to its tool kit this past month with the $26M acquisition of X-BODY, a Massachusetts-based company with an antibody-engineering platform that can be used to generate antibodies against novel targets.
In its boldest move yet, the company has formed a 10-year partnership with Celgene (CELG) that will not only provide a plethora of new expertise and tools to work with in pursuit of next generation CAR products, but give Juno a billion dollars to add to its war chest. The collaboration will initially focus on the CD19 and CD22 programs. Celgene’s investment, which comes in the form of $150M in cash and $850M in JUNO equity, will earn the company commercialization rights to CAR products developed through the partnership with the exception of the United States and select jurisdictions in Europe. In addition, it will retain the right to select two additional programs (excluding CD19 and CD22) that will be subject to global profit sharing.
Kite Pharma (KITE), Juno’s most formidable competitor in the liquid cancers (leukemias), has also shown an ability to identify enabling technologies and tools to complement its pipeline. The company acquired T Cell Factory GmbH last year, for $25M, to bring TCR discovery capabilities in-house. This past month, the company formed a new collaboration with Adimab, a leader in antibody engineering. As part of the collaboration, Kite will have the right to research antibodies identified through Adimab’s proprietary discovery platform and in-license those it feels have the greatest potential for the generation of novel CAR products. Adimab will receive an upfront payment, milestones, and royalties on sales; terms were not disclosed.
KITE formed a powerhouse of its own, partnering with bluebird bio (BLUE) and bringing together its pipeline of HPV TCR products with bluebird’s gene editing and lentiviral platforms. The collaboration will see the pair co-develop and co-commercialize second generation TCR products targeting HPV type 16 E6 (HPV-16 E6). The novel TCR products will leverage gene editing to incorporate genes that enhance T cell function and lentiviruses to improve the efficiency by which HPV-16 E6 is delivered into patients’ cells ex vivo. KITE will lead the program in the United States while BLUE will retain an option to lead the program in the European Union; costs and profits will be split equally.
BLUE also partnered with Celgene to develop T cell-based immunotherapies targeted to B cell-maturation antigen (BCMA). Under the terms of the deal, BLUE will receive $25M from Celgene to fund development of the lead anti-BCMA candidate and continue pre-clinical development of other BCMA targeted CAR products. Celgene will retain an option to commercialize, on a worldwide-basis, all anti-BCMA products developed in the program. In addition to the upfront payment, BLUE will also receive milestones and royalties on sales; terms were not disclosed.
Finally, BLUE partnered with privately-held Five Prime Therapeutics to develop novel CAR products using a number of proprietary antibodies to an undisclosed cancer target. Five Prime will receive an upfront payment of $1.5M, milestone payments of $130M, and a tiered royalty for each product developed through the collaboration.
While Celgene has been known to be an aggressive dealmaker and front-load its deals if it really loves a new technology, its investment in Juno was the butt of criticism amongst biotech analysts and industry journalists who expressed scepticism with the deal structure. Celgene bought equity in Juno at $93 per share, more than twice the share price the day the deal was announced, a premium to market that is almost unheard of. It also paid Juno 100% up-front, choosing not to mitigate any development risk through back-ended milestone payments. In the title of a column he wrote on the deal, Adam Feurstein refers to Celgene as being either “desperate” or “insane” for paying such a staggering premium for its 10% investment in Juno.
Indeed, Juno is not infallible. It is competing against some very well endowed companies, including Kite Pharma, bluebird bio, Cellectis and, perhaps the most dangerous of all, Novartis, which has a propensity to spend large when it believes in a technology. In addition, while Juno’s clinical results have been outstanding, they are heavily biased to the liquid cancers, specifically B cell-related lymphomas and leukemias, which are small markets. In order to maintain its growth Juno will need to tap into the solid tumour market as well, which is a different beast all together from a CAR perspective. The toxicity observed with first generation CAR products (two patients died in one of Juno’s Phase 1/2 studies) is also a concern. A paradigm shift from patient-specific to bulk manufactured therapies could also be very disruptive to Juno’s business model; the use of gene editing technologies to make “universal” cells is becoming a reality.