Juno Just Raised A Ton of Cash. Here Comes the Spending Part.
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immunotherapy technology, including T-cells with on/off switches and that secrete proteins to help stimulate the immune system. (Others are working on such improvements, too; Houston-based Bellicum Therapeutics (NASDAQ: BLCM), for example, which went public 24 hours before Juno, is also developing cells with an on/off switch.)
There’s the need to build a commercial structure: If and when products get to market, Juno will also sell them. It is aiming to be what was once the grand dream of any biotech: a FIPCO. (That’s “fully integrated pharmaceutical company,” for you youngsters out there.)
Sales and marketing will also cost money, although in its S-1, Juno says it will start modestly, “promoting”—that is, sending sales teams—to the 41 hospitals and clinics that the National Cancer Institute has designated as “comprehensive cancer centers.”
(Juno CEO Hans Bishop had an up-close view of a cutting-edge commercial cell therapy organization gone awry. He was chief operating officer for Dendreon (NASDAQ: DNDN), which built a commercial and manufacturing organization for its approved prostate cancer immunotherapy, Provenge, but collapsed into bankruptcy last month because of weak sales and huge debts.)
If Juno’s immunotherapy programs gain traction against the thornier problem of treating solid tumors (lung, breast, pancreatic, and stomach cancer are all examples, and they make up the vast majority of cancer cases), Juno says it will expand the size of its commercial organization. In 2015, the firm should also provide details of its European expansion.
And there are payments to others: With the heady stock debut, Juno is already on the clock to make what it calls “success payments.”
They’re a very unusual mechanism. As the stock price increases from $20 to $160 a share, the payments to Fred Hutch, will increase, up to a total of $375 million. For MSK, payments start when the stock price hits $40 and goes to $120, and top out at $150 million. The payments can be made with equity instead of cash. (In addition, Fred Hutch owns 13 million Juno shares, and MSK owns 2 million.)
The third academic partner of Juno is Seattle’s Children’s Research Institute; it has a more standard licensing agreement with Juno based on product milestones and royalties, but there is no mention of stock-based “success payments.”
When asked earlier this month about Seattle Children’s, Bishop said, “Some institutions don’t want stock, but for the ones who did, it’s a fair way of aligning their participation with some of our stock success.”
When asked if Seattle Children’s didn’t want stock, Bishop would only say, “Some institutions did, and some didn’t.”
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