Tuesday's deal has Celgene paying $225 million to privately held Jounce Therapeutics to partner on the development of "next generation" cancer immunotherapies. Celgene is also taking a $36 million equity stake in Jounce.
None of Jounce's cancer compounds have been tested in humans yet, so this is an early-stage bet by Celgene that won't pay out for many years, if ever.
Jounce's lead drug, JTX-2011, is a monoclonal antibody that targets a protein known as ICOS found on the surface of certain T cells which seem innately adept at killing cancer cells. JTX-2011 tries to bring more ICOS activation to the T cells in order to enhance their cancer-fighting abilities.
"It's like stepping on the gas" of the T cells, says Jounce CEO Richard Murray, describing the way JTX-2011 is supposed to work.
By contrast, popular checkpoint inhibitors like Bristol-Myers Squibb's (BMY - Get Report) Opdivo and Merck's (MRK - Get Report) Keytruda work by releasing a brake on the immune system that stops T cells from recognizing and attacking tumor cells.
Jounce plans to move JTX-2011 into human studies before the end of the year.
For its investment in Jounce, Celgene gets an option to acquire rights to JTX-2011, plus four other cancer immunotherapy programs.
Murray joined Jounce as CEO two years ago from Merck, where he was involved in the development and approval of Keytruda. Going into Tuesday's Celgene deal, the company has raised about $100 million in two rounds of venture capital financing.
Jounce is "keeping its options open" on an initial public offering, Murray says.
Cashing a check for $225 million gives the company freedom to be patient.