Juno, CAR-T Peers Rise After Report Of Potential Celgene Deal

Shares of Juno Therapeutics (JUNO) are on the rise after the Wall Street Journal reported that the company is in talks to be acquired by Celgene (CELG). Several Wall Street analysts commented on the news, with Leerink's Michael Schmidt saying a deal could make potential strategic and operational sense and his peer at Citi arguing that Juno could be worth $110 per share in a takeover.

POTENTIAL ACQUISITION BY CELGENE: Following a report by The Wall Street Journal saying Celgene is in talks to possibly buy Juno Therapeutics, Wells Fargo analyst Jim Birchenough raised his price target for the latter to $63 from $54, while reiterating a Market Perform rating on the shares. With the prior acquisition of Kite Pharma by Gilead (GILD) for $12B, the analyst told investors he believes a similar interest in Juno cannot be ruled out. Meanwhile, Leerink's Schmidt argued in a research note of his own that a deal could make potential strategic and operational sense. Further, the analyst noted that he would be surprised if Juno would accept an offer lower than Kite's acquisition price of $11.9B, given the company's high-level conviction of having developed a best-in-class CAR-T platform and that Celgene previously acquired 10% of JUNO shares at $93 per share. He reiterated an Outperform rating on Juno's shares. Also commenting on the news, Jefferies analyst Michael Yee pointed out that if Celgene paid $65-$90 per share for Juno Therapeutics or a 50%-100% premium to the "unaffected" price before yesterday, it would equate to $7B-$9B in enterprise value to consolidate. The analyst told investors that he believes an $8B deal makes sense since Celgene owns 10% of Juno already. Assuming a $65-$90 per share deal price, the Street would view Juno as a positive "incremental" acquisition for Celgene, Yee contended, while reiterating a Buy rating and $125 price target on Celgene's shares.

COULD BE WORTH $110 PER SHARE: Meanwhile, Citi analyst Robyn Karnauskas told investors in a research note of her own that her analysis indicates Juno could be worth $110 per share in a takeover. However, the analyst pointed out that Juno does not have data showing their safety is differentiated yet. Kite Pharma had more data at the time of its acquisition, Karnauskas added, while also noting that Celgene already has an agreement to develop BCMA CAR-T targeting multiple myeloma with bluebird bio (BLUE).

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