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A startup that wants to take cancer therapy to the next level just landed a $2.5 billion deal

t-cells immune system cancer immunotherapy
In this 2011 image, tiny beads (yellow) are used to force T-cells to divide before they are given to leukemia patients.
University of Pennsylvania via Microbe World / Flickr

The biotech company Celgene is making another major move into immuno-oncology.

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On Tuesday the company said it would partner with the startup Jounce Therapeutics in a deal worth as much as $2.5 billion. Together they will develop and commercialize Jounce's drug pipeline.

The startup is developing drugs that harness the immune system to better attack cancer cells, a treatment otherwise known as immunotherapy.

Here's what the deal entails:

  • Jounce is getting $225 million up front.
  • Celgene is making a $36 million equity investment.
  • Jounce could get up to $2.3 billion as its drugs hit certain development milestones.
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Jounce, which first opened its doors in 2013, is gearing up for its first round of human trials for a drug called JTX-2011 later this year. JTX-2011 is designed to accelerate the immune system so it goes after cancer cells. Jounce is also looking at other ways to approach the immune system that don't just draw on what we already know about immune responses, an approach Jounce CEO Richard Murray calls "I-O 2.0."

That's because some of the immuno-oncology, or I-O, drugs that are available right now don't work for everyone. Take Keytruda, the drug that is credited with helping get President Jimmy Carter cancer-free after he was found to have melanoma that had spread to his liver and brain. Only about 30% of metastatic-melanoma patients using Keytruda alone respond completely. There still aren't many answers about why the rest of patients aren't responding. Murray told Business Insider on Tuesday that Jounce hoped to change that by looking at tumors and analyzing patients who are participating in clinical trials so the company will have a clear picture of what works and what doesn't for individual patients.

A crowded field

Cancer immunotherapy has gotten a lot of attention lately. For example, Vice President Joe Biden and the Obama administration have asked for a $1 billion initiative for a "cancer moonshot," which will focus in part on immunotherapy. Former Mayor Michael Bloomberg of New York was part of a group pledging $125 million to create a new cancer institute at Johns Hopkins focused on immuno-oncology, and Napster billionaire Sean Parker invested $250 million to create the Parker Institute for Cancer Immunotherapy.

And deals for cancer immunotherapies have been among the biggest recent ones — last year, more than $10.9 billion was spent in immuno-oncology deals and partnerships.

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It's a competitive space, but Murray said Jounce's focus on patients who aren't responding to other treatments was what got Celgene interested.

"It resonated with Celgene moving more into to look for new mechanisms and identify the right patients and really push the boundaries where individual patients will respond to the new therapies," Murray said.

Pharmaceuticals Cancer
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