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

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

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

On Tuesday, the company said it will partner with 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, otherwise known as immunotherapy.

Here’s what the deal entails:

  • Jounce is getting $225 million upfront.
  • Celgene is making a $36 million equity investment.
  • Jounce could get up to $2.3 billion as its drugs hit certain development milestones.

Jounce, which opened its doors to 2013, is gearing up for its first round of human trials for a drug called JTX-2011 later this year. JTX-2011 that works by accelerating the immune system so it goes after cancer cells. Beyond that, Jounce is 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 considers “I-O 2.0.”

That’s because some of the immuno-oncology (I-O) drugs that are available right now don’t work for everyone. Take Keytruda, the drug that’s credited with helping get President Jimmy Carter cancer-free after he was diagnosed with melanoma that had spread to his liver and brain. Only about 30% of metastatic-melanoma patients using Keytruda alone respond completely. For the rest, there still aren’t many answers about why patients aren’t responding. Murray said Jounce hopes to change that by looking at tumours and analysing patients that will be on trial so they have a clear picture of what works/what doesn’t for individual patients.

A crowded field

Cancer immunotherapy is an area that’s gotten a lot of attention across the board. For example, Vice President Joe Biden and the Obama administration have asked for a $1 billion initiative for a “cancer moonshot” which will in part focus on immunotherapy. Former New York mayor Michael Bloomberg and others pledged $125 million to create a new immuno-oncology focused cancer institute at Johns Hopkins, and Napster billionaire invested $250 million to create the Parker Institute for Cancer Immunotherapy.

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

It’s a competitive space, but Jounce CEO Murray said its focus on patients who aren’t responding to other treatments is 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.

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