Shares of Juno Therapeutics, Inc. [NASDAQ:JUNO] jumped 36.07% to an intra-day high of $63.00 per share on Tuesday, after Celgene [NASDAQ:CELG] announced that they will pay Juno about $1 billion, $150 million in upfront payment and $850 million in purchases of Juno’s common shares, in exchange for a 10-year global collaboration for the development and commercialization of immunotherapies focusing on Juno’s Chimeric Antigen Receptor Technology (CAR T) and T Cell Receptor (TCR) technologies.

Juno Therapeutics develops CAR T and TCR, in which T cells are genetically modified or reprogrammed to recognize and kill cancer cells. Juno's CAR T cell technology inserts a gene for a particular CAR into the T cell, enabling it to recognize cancer cells based on the expression of a specific protein located on the cell surface. Juno's TCR technology provides the T cells with a specific T cell receptor to recognize protein fragments derived from either the surface or inside the cell. According to Juno, when either type of modified T cell engages the target protein on the cancer cell, it initiates a cell-killing response against the cancer cell. 

The Celgene and Juno collaboration will be focusing on Juno's CD19 and CD22 directed CAR-T product candidates and B-Cell Maturation Antigen (BCMA), also known as tumor necrosis factor receptor superfamily member 17 (TNFRSF17). Juno has four CD19-targeting CAR T-cell therapies in trials. CD19 (Cluster of Differentiation 19) is a B-lymphocyte antigen which is found on the surface of B-cells, a type of white blood cell. 

In December 2014, Juno entered into an agreement with privately owned Opus Bio to obtain a license for the company’s CAR-T cell product candidate targeting CD22, a protein expressed on most B cell leukemias and lymphomas. It appears that Celgene may be more interested in the BCMA, as earlier this month, Celgene and Bluebird Bio [NASDAQ:BLUE] announced a new collaboration agreement focusing on the development of lead product candidate bb2121, targeting the BCMA. Bluebird Bio will be receiving a $25 million milestone payment from the exchange.

The immunotherapy market is expected to top $31 billion by 2020, according to Goldman Sachs. In the CAR T and TCR cell spaces, Juno will be competing with Novartis [NYSE:NVS], Kite Pharma [NASDAQ:KITE] with its lead product candidate CD19 CAR in Phase II/III for the treatment of patients with B cell lymphomas or leukemias, Bellicum Pharmaceuticals [NASDAQ:BLCM], and Bluebird Bio. CAR-T's promising preclinical results in blood cancers has been fairly well established over the past two years, but not in solid tumors.

Juno does not have any FDA approved products in its pipeline and therefore does not have any revenue. In the first-quarter of 2015, Juno Therapeutics reported a cash burn of $26.4 million and a net loss of $24.2 million, or $0.30 per share. The results exceeded the consensus estimates for a loss of $0.31 per share. Looking forward, Juno gave a full-year 2015 cash burn guidance of between $125 million and $150 million.

Juno’s investigational CAR T cell product candidates are in Phase I or Phase I/II, including JCAR014, laboratory treated T cells for treating patients with relapsed or refractory chronic lymphocytic leukemia, non-Hodgkin's lymphoma, or acute lymphoblastic leukemia, and JCAR015, for patients with precursor B cell acute lymphoblastic leukemia (B-ALL) treated with autologous T Cells genetically targeted to the B cell specific antigen CD19. Clinical results from both products were presented at the 2015 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago.

In April, Juno and AstraZeneca [NYSE:AZN] announced a collaboration between the two companies, focusing on patients with non-Hodgkin's lymphoma using Juno's CAR T cell technology and the MEDI4736 antibody developed by MedImmune, a subsidiary of AstraZeneca. On June 2, Juno Therapeutics shares spiked 15.3%, to an intra-day high of $61.50 per share, following reports on the Bloomberg terminal that AstraZeneca would consider purchasing a CAR T therapy company like Juno. 

From our technical viewpoint, JUNO has been trading in a wedge since the beginning of April. The stock failed to make a breakout earlier this month, but managed to hit an all-time high at $69.28 as the AstraZeneca’s buyout rumor faded away. 

On Wednesday, June 17, the first day of the expiration of the lock-up period restrictions, 6.1 million shares of JUNO were traded, or about 4 times the average daily trading volume. The stock closed on that day at $51.21 per share, just above 100-day SMA and has been falling since then. 

According the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) filing with the U.S. Securities and Exchange Commission (SEC), Juno Therapeutics has a total of 77,939,023 shares outstanding and issued 11,022,917 shares, at $24.00 apiece, in its IPO on December 19, 2014. It is anyone’s guess on how many JUNO shares major shareholders and company insiders will sell. Although the announcement of the collaboration with Celgene sent the JUNO stock skyrocketing, the selling could continue until Juno’s second-quarter 2015 earnings report.

Disclosure: No position in JUNO. Long position in CELG. No positions in any other companies mentioned. No Recommendations.