Juno Therapeutics shares took a big hit in 2016 when patients died in a clinical trial testing its groundbreaking CAR-T therapy, known as JCAR015. Investors weren't happy—and some of them sued, claiming the company and its executives had dragged their feet on breaking the bad news.
Two years and one company sale later, those investors agreed to settle their class-action claims for $24 million.
Under the deal, which awaits final court approval, Juno and former executives CEO Hans Bishop, CFO Steve Harr and CMO Mark Gilbert, will pay $24 million to put the lawsuit to bed. That's a small fraction of the losses shareholders suffered when Juno stock tanked on news of the patients' deaths—9.9% to 16.2%, the plaintiffs said, calculating those losses at $148 million to $247 million.
But “the expense and length of continued proceedings" would be risky, the investors said in a court filing, despite their belief that they have plenty of evidence support their claims.
The settlement comes eight months after Celgene shelled out a cool $9 billion to buy Juno, despite the trouble with JCAR015, which the company eventually sidelined.
After the patient deaths in July 2016, when the FDA halted testing, the agency soon allowed the clinical trial to resume under a revised protocol. But two more patients died later that year, and Juno pivoted to other products in its pipeline.
One of them—JCAR017—was the centerpiece of Celgene's buyout; the New Jersey company said in January that it figures it can generate $3 billion in peak sales. After the deal closed, Bishop stepped down, collected a $200 million-plus share of the proceeds and joined the Celgene's board of directors.
The Juno trial deaths represented a serious setback for the budding CAR-T field at the time. But since then, two drugs in the class have won approvals in U.S. and Europe, setting up a market duel as other companies advance their candidates and work to secure approvals. Novartis was the first to win U.S. approval with Kymriah in August. Gilead, which picked up Kite Pharma for $11.9 billion last year, followed with an FDA nod for Yescarta in October.
Both CAR-T drugs recently won approval in Europe, but only Novartis has managed to convince U.K. cost watchdogs its drug is worth the price. NICE, the U.K.’s cost gatekeeper, recently turned away Gilead’s Yescarta. A company spokesperson responded that Gilead is confident it will be able to strike a deal.