2018’s M&A Frenzy Has Begun: Juno Therapeutics Inc (JUNO), Celgene Corporation (CELG)


Celgene Corporation (NASDAQ:CELG) announced this morning that it is acquiring Juno Therapeutics Inc (NASDAQ:JUNO) for $9 billion or $87/share (net of the ~10% it already owns).

The company will fund the acquisition with cash and additional debt. CELG expects the deal to close in 1Q18 and to have a dilutive effect this year, and to become incrementally accretive in 2020. The assumption is based on the expected approval of JCAR017 in DLBCL in 2019, and potential peak sales of $3 billion in hematological malignancies, with potential upside from solid tumor indications.

Cantor analyst Mara Goldstein commented, “Revenue diversification is of paramount importance for CELG shares and our concern lies with the top and bottom line benefits from the JUNO deal, which may not accrue quickly enough given the competitive CAR-T landscape and the early stage of the remainder of the pipeline.”

As such, Goldstein reiterates s Neutral rating on CELG with a price target of $112.

Mizuho analyst Salim Syed added, “While CELG noted during the call that there can be no cross-pollination on the manufacturing front for the two companies, we believe its important to understand what sort of knowledge-based synergies can exist now at CELG between the CELG employees working on what was the Juno collaboration and the CELG employees working on BLUE collaboration. We also believe it’s important to understand if there is any way BLUE can exit the collaboration at its will.”

Syed maintains a Buy rating on Celgene shares with a price target of $128.

Juno Therapeutics has also been the subject of a number of recent research reports. In a report released today, Guggenheim analyst Anthony Butler downgraded JUNO to Hold. Separately, on January 18, Maxim’s Jason McCarthy assigned a Buy rating to the stock and has a price target of $98.

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