Ending the $2.6 billion agreement from 2016 with Celgene Corp. lifted the fortunes of Jounce Therapeutics Inc. (NASDAQ:JNCE) Wednesday as the stock rose 10.5%.
Three years ago, Jounce and Celgene's massive deal was seen as a win for both. Jounce was to receive a $225 million up-front payment and a $36 million equity investment as part of a five-candidate immuno-oncology collaboration. The deal included Jounce's lead candidate, JTX-2011, an inducible T-cell co-stimulator, and as many as four early stage immunotherapies targeting B cells, T regulatory cells and tumor-associated macrophages. (See BioWorld, July 20, 2016.)
Terminating the agreement changed the financials at Jounce. By fully owning 100% of its programs, it now expects to record about $50 million in cash revenue in 2019 and approximately $98 million in noncash revenue in 2019 representing the remaining recognition of the up-front payment received in July 2016. Based on its operating and development plans, Jounce continues to expect gross cash burn on operating expenses and capital expenditures for full-year 2019 to be approximately $80 million to $95 million.
It was the Bristol-Myers Squibb Co. (BMS) acquisition of Celgene that changed the calculation at each company.
"We had set out our plans and what targets to go after; then we had to relook at that and talked to Celgene because we saw that BMS had overlapping programs," Hugh Cole, chief business officer and head of corporate development, told BioWorld.
Those overlaps are Jounce's lead product candidate and inducible T-cell co-stimulator (ICOS) antibody, vopratelimab (formerly JTX-2011), as well as JTX-4014, a PD-1 and -2 inhibitor. With the deal terminated, Jounce retains full worldwide rights to its pipeline, with a single exception, and vopratelimab and JTX-4014 will continue on their clinical paths.
Vopratelimab is a clinical-stage monoclonal antibody that binds to and activates ICOS, a protein on the surface of certain T cells found in many solid tumors. In the phase I/II trial, vopratelimab was found to be safe and well-tolerated, both alone and in combination with Opdivo (nivolumab, BMS), an anti-PD-1 antibody. Findings from the adaptive-design, open-label trial called Iconic showed limited activity for the drug, both as a monotherapy and when used in combination with Opdivo (nivolumab, BMS) in gastric and triple-negative breast (TNBC) cancer, where the phase II cohorts had completed enrollment. The trial also enrolled individuals with head and neck squamous cell and non-small-cell lung cancer. In the abstract, Jounce reported that, with vopratelimab as a monotherapy, one of seven patients with gastric cancer had a partial response (PR). In the combo arm, two patients with gastric cancer had PRs, with two ongoing with stable disease, while one of 15 with TNBC had a PR. (See BioWorld, Aug. 23, 2018.)
JTX-4014 is a human IgG4 monoclonal antibody designed to block binding to PD-L1 and PD-L2. Jounce is developing JTX-4014 for potential use in combination with its pipeline of future product candidates. JTX-4014 is nearing the end of its phase I clinical trial.
"Terminating the rest of the collaboration to retain global rights to other programs gives us great flexibility," Cole said. "It also gives us the flexibility to seek other partners down the road."
One of those partners just happens to be Celgene as Jounce has now licensed worldwide rights to JTX-8064, an antibody targeting the LILRB2 receptor on macrophages. Jounce receives a $50 million nonrefundable license fee and could receive from Celgene up to $480 million in development, regulatory and commercial milestone payments, as well as royalties on potential worldwide sales. Celgene is responsible for all development and commercialization of JTX-8064.
Despite Wednesday's stock bump, Jounce stock is still down 38.5% in the past 12 months. Celgene's stock (NASDAQ:CELG) barely saw a ripple as it closed up 12 cents at $89.94 on Wednesday. For the past 12 months, the stock has traded essentially flat.
Celgene is about to enter what BMS' chairman and CEO, Giovanni Caforio, said will become the world's No. 1 oncology franchise, with major oncology franchises in both solid tumors and hematologic malignancies led by BMS blockbusters Opdivo and Yervoy (ipilimumab) and Celgene's Revlimid (lenalidomide) and Pomalyst (pomalidomide). The combined portfolio would create a top five immunology and inflammation franchise, led by Orencia (abatacept, BMS) and Otezla (apremilast, Celgene), according to Caforio, who also committed to "maintain our position as the No. 1 cardiovascular franchise, led by Eliquis" (apixaban). (See BioWorld, Jan. 4, 2019.)