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Jounce Therapeutics Strikes Deal To Create Next Generation Cancer Drugs

Jounce Therapeutics, a 3-year-old startup, has struck a deal worth as much as $2.5 billion with Celgene Corp to jointly develop cancer drugs.

The Cambridge-based startup is aimed at furthering technologies in "immuno-oncology" – drugs that tackle the immune system to better attack cancer cells.

According to the announcement of the deal:

  • Jounce will get $225 million upfront.
  • Celgene, based in Summit, NJ will be making an equity investment worth $36 million.
  • Jounce would retain a 60% US profit share of its lead drug JTX-2011, with Celgene getting 40%.
  • Celgene will have exclusive rights to market the drugs outside the U.S., however, Jounce will collect royalties from foreign sales.
  • Up to $2.3 billion could be earned by Jounce as its drugs hit certain development milestones.

The immunotherapy race thus far has been led by industry leaders Bristol-Myers Squibb Co and Merck Inc, who have greatly advanced the knowledge and production of immunology therapy. These treatments have resulted in unparalleled survival rates for some of the most fatal diseases, including advanced lung cancer and advanced melanoma.

The technology used by Jounce focuses on targeting biological markers on tumors to better match therapies given to patients. According to practicing physicians, about 20% of patients with advanced cancer do respond positively to these new drugs, and a portion of those patients can have lasting respite.

Jounce Chief Executive Richard Murray, who was involved in development of Merck's blockbuster immunotherapy Keytruda, told reporters:

"The approach is not to repurpose immunology drugs into oncology but rather to understand human tumors and the immune system cells within these tumors.”

In recent years there has been a growth of early-stage biotechs seeking cash and development expertise, giving them an opportunity to align with bigger drug makers who are also looking for promising new treatments. This deal with Jounce represents one of the largest deals unveiled in recent months, and allows partners to share the soaring costs and risks of developing drug.

“We had a number of business discussions, and in the end we felt that Celgene was the right strategic partner,” Murray said in an interview. “This agreement really validates our approach, and substantial capital and resources will now be available to us.”

Jounce currently employs about 60 employees at its office and lab complex near Harvard Square. The company expects to hire about 20 more employees by the end of the year, according to Murray.