Despite a 6.1 million-share follow-on public stock offering, shares of Juno Therapeutics (NASDAQ: JUNO) are rallying 11.3% higher at 3 p.m. EDT.
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Juno Therapeutics shares have been rallying since competitor Gilead Sciences (NASDAQ: GILD) acquired Kite Pharma, and competitor Novartis (NYSE: NVS) secured approval for Kymriah, the first chimeric antigen receptor T-cell (CAR-T) therapy to win a regulatory green light from the U.S. Food and Drug Administration.
On Wednesday, Juno Therapeutics announced it's taking advantage of the run-up in its share price to raise more money to finance its own CAR-T research program; today, it announced the details.
The company will sell 6.1 million shares at $41 per share and underwriters can purchase an additional 915,000 shares to cover any overallotments. Concurrently, Juno Therapeutics is also selling 659,415 shares to Celgene Corp. (NASDAQ: CELG) at the same price. In total, management expects to raise $318.7 million before fees, if underwriters take full advantage of their overallotment option.
It's common for clinical-stage biotech stocks to raise money when shares rally, but it's unusual for share prices to increase on the news.
Celgene's ongoing interest in owning shares in Juno Therapeutics is likely behind investors' optimism. Over the past year, Juno Therapeutics has taken a back seat to Novartis and Kite Pharma in CAR-T, and that's led some to wonder how committed Celgene will remain to the company.
As a refresher, Celgene already owns about 10% of Juno Therapeutics, most of which was acquired when the two companies inked their collaboration deal in 2015.
Celgene's decision to acquire more shares in Juno Therapeutics, at a price that's a lot higher than it was a few months ago, suggests Celgene's not wavering in its belief that Juno Therapeutics' second-generation CAR-Ts will be differentiated enough to compete successfully someday against Gilead Sciences and Novartis.
It may be a while, however, before we know for sure if that's the case. Juno Therapeutics' most advanced drug is JCAR017, and that's likely a year or more away from being filed for approval by the FDA.
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Todd Campbell owns shares of Celgene and Gilead Sciences. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Celgene and Gilead Sciences. The Motley Fool has the following options: short October 2017 $86 calls on Gilead Sciences. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.