Analysts Weigh in on Celgene Corporation Following Broad Deal with Juno Therapeutics Inc


Wall Street analysts are weighing today on Celgene Corporation (NASDAQ:CELG) after the pharmaceutical giant announced a 10-year broad collaboration with Juno Therapeutics Inc (NASDAQ:JUNO) to advance T-cell targeted I/O therapy for which CELG will make a total of ~$1 billion initial payment to JUNO in exchange for options of co-development and co-commercialization of JUNO’s leading CAR and TCR assets for oncology and auto-immune diseases, mostly ex-U.S.

Piper Jaffray analyst Joshua Schimmer believes that the transaction essentially leaps CELG forward into a leading position in the I/O space as the company now possesses all the modalities (i.e. PD-L1, T cell therapy, anti-CD47, lenalidomide and others) required to address challenges in both hematological and solid tumors. The analyst also noted, “CELG doesn’t have to worry about bumping into KITE’s U.S. patent estate until one of the later globalright programs approaches commercialization. JUNO also gets co-commercialization rights on CELG programs which target T cells, although our interpretation is that CELG just potentially got almost half the value of the company for $1B of OUS cash plus development funding.”

Schimmer reiterated an Overweight rating on Celgene Corporation shares with a price target of $144, which represents a potential upside of 25% from where the stock is currently trading.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Joshua Schimmer has a total average return of 8.7% and a 53.2% success rate. Schimmer has an 17.2% average return when recommending CELG, and is ranked #496 out of 3684 analysts.

According to Canaccord Genuity analyst John Newman, Celgene has historically derived nearly 100% of its revenues from small molecules, but now invests $1B in Juno’s CART and TCR biologics capacity, opening the door for “protected” long-term biologics revenues. Newman wrote, “We believe long-term upside for CAR and TCR squarely rests on success in solid tumors, and suggest investors focus here going forward. Clearly, CELG dominates the Multiple Myeloma space and has deep expertise in B-cell malignancies where CD19 data have been generated, suggesting immediate JUNO-CELG R&D synergy. However, besides NHL, other CD19+ B-cell malignancies are small commercial markets compared to very large solid tumor indications.”A

Analyst John Newman has a total average return of 15.5% and a 56.1% success rate, according to TipRanks. Newman is ranked #179 out of 3684 analysts.

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