Why Celgene Is Betting Big on 2020 With Juno Acquisition

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Juno Therapeutics Inc. (NASDAQ: JUNO) saw its shares take off early on Monday after it was announced that Celgene Corp. (NASDAQ: CELG) would be acquiring the cancer-focused firm. While this had been rumored recently, we finally have a price tag on the deal, and Juno investors appear to be happy with it.

Also today, it was announced that Sanofi was acquiring Bioverativ.

Under this terms of the deal, Celgene will pay $87 per share in cash, or roughly $9 billion in total. Keep in mind that Celgene already owns about 9.7% of Juno stock.

This transaction represents premiums of 65% and 132% compared with Juno’s 50-day and 200-day moving averages of $52.83 and $37.46, respectively.

The transaction was approved by the boards of directors of both companies and is expected to close in the first quarter of this year.

The acquisition is expected to be dilutive to adjusted earnings per share (EPS) 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.

Celgene noted the strategic advantages of this acquisition:

  • 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
  • Accelerate revenue diversification with meaningful growth drivers beyond 2020
  • Capture 100% of the global economics on all Juno’s cellular immunotherapy assets

Mark J. Alles, Celgene’s CEO, commented:

The acquisition of Juno builds on our shared vision to discover and develop transformative medicines for patients with incurable blood cancers. Juno’s advanced cellular immunotherapy portfolio and research capabilities strengthen Celgene’s global leadership in hematology and adds new drivers for growth beyond 2020.

Shares of Juno traded Monday morning up about 27%% at $86.09, with a consensus analyst price target of $61.79 and a new 52-week trading range of $19.08 to $86.28.

Celgene shares traded about 1% lower at $101.56. The consensus price target is $124.29, and the 52-week range is $94.55 to $147.17.