What happened

Juno Therapeutics (NASDAQ:JUNO), a clinical-stage biotech, saw its shares gain a whopping 87% in January, according to S&P Global Market Intelligence.

The stock took flight after the company reportedly agreed to a $9 billion all-cash buyout offer from its largest stakeholder and development partner Celgene Corp. (NASDAQ:CELG) last month.

A rocket taking off.

Image source: Getty Images.

So what

While Juno's shareholders likely cheered this news, Celgene's have been decidedly less enthusiastic, with the biotech's stock price falling by nearly 5% ever since the initial rumor of this deal was leaked in mid-January.

The culprit? The overarching problem is that this rather pricey deal won't have an immediate impact on Celgene's top line. Juno's lead CAR-T therapy candidate, JCAR017, isn't expected to hit the market as a treatment for advanced B-cell non-Hodgkin lymphoma until 2019, after all. 

Now what

The long-term value of this deal to Celgene's shareholders is also in serious doubt for one clear reason: JCAR017 requires individualized procedures that make it exceedingly difficult to manufacture on a commercial scale.

During clinical trials, for instance, the current cohort of Food and Drug Administration-approved CAR-T therapies were assessed on hundreds of patients -- not the thousands required to push their sales into the billions. Unfortunately, this scalability problem, which has plagued CAR-Ts from the onset, has yet to be adequately addressed.

The long and short of it is that the complex manufacturing process behind these first-generation CAR-Ts may limit their commercial potential in a significant way -- implying that Celgene might have just grossly overpaid for Juno.


George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool has a disclosure policy.