SUMMIT, NJ (TheStreet) -- Celgene (CELG - Get Report) was known as the savviest collaborative deal maker in biotech. That honorific has to be called into question after Celgene announced a plan Monday to buy a $1 billion, stake in Juno Therapeutics (JUNO) and its CAR-T cancer immunotherapy platform at more than twice Juno's current market value.
Under terms of the 10-year collaboration, Celgene is buying 9.1 million shares of Juno at $93 per share -- a 102% premium to Juno's closing price of $46.30. Juno will also receive a $150 million upfront licensing fee from Celgene.
For its investment, Celgene secures an option to be the ex-U.S. commercialization partner for Juno's platform of CAR-T cancer immunotherapies targeting certain blood cancers, plus other potential co-development and marketing rights.
The partnership is a tremendous show of support for Juno as it battles Novartis (NVS - Get Report), Kite Pharma (KITE), Bluebird Bio (BLUE - Get Report) and other companies developing therapies which use re-engineered T cells to identify and kill cancer cells.
But investors will undoubtedly raise questions about the high price paid by Celgene to get into bed with Juno, especially since CAR-T therapies are still years from the market in certain blood cancers and may never be an effective treatment for solid tumors. Celgene's investment feels desperate unless a competitive bidding process forced the company to open the wallet super wide.
"Bottom line is we like that Celgene is making a big commitment to CAR-T as we think this will be an important hematological platform in the future -- but certainly would agree with the likely pending consensus view that the price tag is also big," writes RBC Capital analyst Michael Yee in a note issued after the deal was announced.
Celgene shares closed Monday at $114.91 and were unchanged in after-hours trading. Juno shares are up 40% to $64.34 in after-hours trading.