Wall Street Reacts To Celgene's Reported Interest In Juno

Shares of Juno Therapeutics Inc JUNO soared higher by 50 percent Wednesday after reports surfaced that the company is being targeted by Celgene Corporation CELG for an acquisition. Here's what some of Wall Street's top analysts are saying.

Morgan Stanley: Deal Could Solve Celgene's Problems

A potential acquisition of Juno by Celgene could solve some of its logistical issues with CAR-T and combine its interests in two cancer programs, myeloma and lymphoma, Morgan Stanley's Matthew Harrison said in a note. 

There are four other factors to be considered, Harrison said; 

Celgene has already said it could increase its leverage as high as 4.75x so it can add $27 billion worth of additional debt for a potential acquisition. 

Celgene already owns around 10 percent of Juno's stock and owns the rights to commercialize Juno's CD19 programs outside of North America and China. 

Acquiring Juno would give Celgene access to its BCMA CAR-T program, which would limit the manufacturing infrastructure needed to support its own CAR-T business.

Juno's initial solid tumor data in 2018 could be "promising," which may explain the potential timing of the deal.

See Also: Morgan Stanley: Epizyme Has 'Blockbuster' Cancer Drug In The Making

Wells Fargo: Accretive In 2021

Celgene's potential acquisition of Juno would be dilutive to its stock at first, Wells Fargo's Jim Birchenough said in a note. Assuming an 80-percent likelihood of success for Juno's therapies, a deal would be dilutive to Celgene's stock in 2018 by 42 cents per share, the analyst said. The following year, the deal would be dilutive by 39 cents and by 22 cents in 2020. But by 2021, the deal would be accretive by 2 cents per share; 35 cents per share in 2022; and accretive by 72 cents per share in 2023. By 2025, the deal be accretive by $1.55, according to Wells Fargo. 

Citi: $110 Price Tag

An M&A valuation of Juno yields a discounted cash flow valuation of $110 per share, Citi's Robyn Karnauskas said in a research report. But there are a few other factors that would need to be considered in the final buyout price, the analyst said:

Juno doesn't have data which shows its safety is differentiated yet.

Celgene already owns around 25 percent of Juno's revenues.

Celgene already had an agreement to develop BCMA CAR-T target multiple myeloma with bluebird bio Inc BLUE

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