Exhibit 99.1

JUNO THERAPEUTICS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Financial Statements
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Comprehensive Loss	F-5
Consolidated Statements of Cash Flows	F-6
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	F-7
Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Juno Therapeutics, Inc.

We have audited the accompanying consolidated balance sheets of Juno Therapeutics, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Juno Therapeutics, Inc. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Juno Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Seattle Washington

March 1, 2017

F-2

Juno Therapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

	December 31,
	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	187,891		$	252,398
Marketable securities	544,684			691,013
Accounts receivable	13,286			315
Prepaid expenses and other current assets	26,471			8,113
Total current assets	772,332			951,839
Property and equipment, net	81,734			42,086
Long-term marketable securities	189,706			272,888
Goodwill	221,306			122,092
Intangible assets	77,986			50,177
Other assets	6,400			6,046
Total assets	$	1,349,464		$	1,445,128
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,415		$	4,248
Accrued liabilities and other current liabilities	36,822			33,376
Success payment liabilities	22,786			64,829
Contingent consideration	7,605			1,905
Deferred revenue	43,264			15,370
Total current liabilities	114,892			119,728
Build-to-suit lease obligation, less current portion	—			9,294
Contingent consideration, less current portion	13,291			35,361
Deferred revenue, less current portion	120,054			129,831
Deferred tax liabilities	5,152			8,946
Other long-term liabilities	18,374			435
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized; 0 shares issued and outstanding	—			—
Common stock, $0.0001 par value, 495,000 shares authorized at December 31, 2016 and 2015; 103,403 and 97,247 shares issued and outstanding at December 31, 2016 and 2015, respectively	11			10
Additional paid-in-capital	1,911,769			1,733,263
Accumulated other comprehensive loss	(2,842		)	(6,083		)
Accumulated deficit	(831,237		)	(585,657		)
Total stockholders’ equity	1,077,701			1,141,533
Total liabilities and stockholders’ equity	$	1,349,464		$	1,445,128

See accompanying notes.

F-3

Juno Therapeutics, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

	Year Ended December 31,
	2016			2015			2014
Revenue	$	79,356		$	18,215		$	—
Operating expenses:
Research and development	264,285			205,160			204,511
General and administrative	70,675			57,155			28,247
Total operating expenses	334,960			262,315			232,758
Loss from operations	(255,604		)	(244,100		)	(232,758		)
Other-than-temporary impairment loss	(5,490		)	—			—
Interest income, net	5,869			1,730			69
Other income (expenses), net	(1,012		)	234			(10,718		)
Loss before income taxes	(256,237		)	(242,136		)	(243,407		)
Benefit for income taxes	10,657			2,760			—
Net loss	$	(245,580	)	$	(239,376	)	$	(243,407	)
Net loss attributable to common stockholders:
Net loss	$	(245,580	)	$	(239,376	)	$	(243,407	)
Deemed dividend upon issuance of convertible preferred stock, non-cash	—			—			(67,464		)
Net loss attributable to common stockholders	$	(245,580	)	$	(239,376	)	$	(310,871	)
Net loss per share attributable to common stockholders, basic and diluted	$	(2.42	)	$	(2.72	)	$	(36.82	)
Weighted average common shares outstanding, basic and diluted	101,476			88,145			8,443

See accompanying notes.

F-4

Juno Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss

(In thousands)

	Year Ended December 31,
	2016			2015			2014
Net loss	$	(245,580	)	$	(239,376	)	$	(243,407	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(1,186		)	(605		)	—
Net unrealized loss on marketable securities	(1,063		)	(5,388		)	(90		)
Reclassification adjustment for loss included in net loss	5,490			—			—
Total other comprehensive income (loss)	3,241			(5,993		)	(90		)
Comprehensive loss	$	(242,339	)	$	(245,369	)	$	(243,497	)

See accompanying notes.

F-5

Juno Therapeutics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2016			2015			2014
OPERATING ACTIVITIES
Net loss	$	(245,580	)	$	(239,376	)	$	(243,407	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	14,186			6,041			395
Non-cash stock-based compensation	57,172			31,941			6,504
Non-cash expense in connection with equity issuance	23,227			—			64,086
Loss from remeasurement of fair value of convertible preferred stock options	—			—			10,718
Deferred income taxes	(10,617		)	(2,760		)	—
Change in fair value of success payment liabilities	(32,474		)	51,557			84,920
Change in fair value of contingent consideration	(9,724		)	78			—
Other-than-temporary impairment on marketable securities	5,490			—			—
Other	1,089			(227		)	—
Changes in operating assets and liabilities:
Accounts receivable	(12,968		)	33			—
Prepaid expenses and other assets	(17,587		)	(6,888		)	(7,380		)
Accounts payable, accrued liabilities and other liabilities	19,855			22,144			1,619
Deferred revenue	18,122			144,782			—
Net cash (used in) provided by operating activities	(189,809		)	7,325			(82,545		)
INVESTING ACTIVITIES
Purchases of marketable securities and other investments	(750,344		)	(1,315,597		)	(121,827		)
Sales and maturities of marketable securities	969,720			459,381			—
Acquisitions, net of cash acquired	(74,575		)	(77,666		)	—
Purchase of property and equipment	(56,246		)	(28,184		)	(2,958		)
Net cash provided by (used in) investing activities	88,555			(962,066		)	(124,785		)
FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of (payments) of issuance costs	—			(1,683		)	281,383
Proceeds from issuance of convertible preferred stock	—			—			245,949
Proceeds from issuance of common stock to strategic partner	47,000			849,804			—
Proceeds from exercise of stock options, net of tax withholdings	4,786			3,366			—
Repurchases of common stock	(10,073		)	—			—
Payments of build-to-suit lease obligation	(369		)	(249		)	—
Payments of contingent consideration related to acquisition	(4,562		)	—			—
Net cash provided by financing activities	36,782			851,238			527,332
Effect of exchange rate changes on cash and cash equivalents	(35		)	(67		)	—
Net (decrease) increase in cash and cash equivalents	(64,507		)	(103,570		)	320,002
Cash and cash equivalents at beginning of period	252,398			355,968			35,966
Cash and cash equivalents at end of period	$	187,891		$	252,398		$	355,968
SUPPLEMENTAL CASH FLOW INFORMATION
Amounts capitalized under build-to-suit leases	$	—		$	9,910		$	—
Issuance of common stock for acquisitions	$	46,914		$	41,611		$	—
Issuance of common stock for success payments	$	9,481		$	71,648		$	—
Fair value of convertible preferred stock option at issuance	$	—		$	—		$	(6,889	)

See accompanying notes.

F-6

Juno Therapeutics, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands)

	Convertible Preferred Stock					Common Stock				Additional			Accumulated Other						Stockholders’
	Shares		Amount			Shares		Amount		Paid-in Capital			Comprehensive Loss			Accumulated Deficit			Equity (Deficit)
Balance as of December 31, 2013	19,181		$	72,583		6,379		$	1	$	8,137		$	—		$	(51,820	)	$	(43,682	)
Issuance of Series A-2 convertible preferred stock, net of $212 in issuance costs	23,484		93,936			—		—		(212		)	—			—			(212		)
Issuance of Series A convertible preferred stock	5,000		20,000			—		—		—			—			—			—
Issuance of Series B convertible preferred stock, net of $1,487 in issuance costs	12,244		133,712			—		—		(1,487		)	—			—			(1,487		)
Fair value of Series A-2 convertible preferred stock options at issuance	—		—			—		—		6,889			—			—			6,889
Deemed dividends on issuance of Series A-2 convertible preferred stock, non-cash	—		45,651			—		—		—			—			(45,651		)	(45,651		)
Deemed dividends on issuance of Series A convertible preferred stock, non-cash	—		21,813			—		—		(16,410		)	—			(5,403		)	(21,813		)
Conversion of preferred stock into common stock	(59,909	)	(387,695		)	59,909		6		387,689			—			—			387,695
Issuance of stock in initial public offering, net of $24,533 in offering costs	—		—			12,677		1		279,699			—			—			279,700
Issuance of common stock to strategic partner, non-cash	—		—			1,603		—		64,086			—			—			64,086
Stock-based compensation expense	—		—			1,506				6,504			—			—			6,504
Other comprehensive loss, net	—		—			—		—		—			(90		)	—			(90		)
Net loss	—		—			—		—		—			—			(243,407		)	(243,407		)
Balance as of December 31, 2014	—		—			82,074		8		734,895			(90		)	(346,281		)	388,532
Issuance of common stock for acquisition, non-cash	—		—			853		—		41,611			—			—			41,611
Issuance of common stock to strategic partner	—		—			9,137		1		849,803			—			—			849,804
Issuance of common stock for success payments	—		—			1,601		—		71,648			—			—			71,648
Issuance of common stock in connection with the Company’s equity award programs	—		—			3,582		1		3,365			—			—			3,366
Stock-based compensation expense	—		—			—		—		31,941			—			—			31,941
Other comprehensive loss, net	—		—			—		—		—			(5,993		)	—			(5,993		)
Net loss	—		—			—		—		—			—			(239,376		)	(239,376		)
Balance as of December 31, 2015	—		—			97,247		10		1,733,263			(6,083		)	(585,657		)	1,141,533
Issuance of common stock for acquisition, non-cash	—		—			1,181		—		46,914			—			—			46,914
Issuance of common stock to strategic partner	—		—			1,741		—		70,227			—			—			70,227
Issuance of common stock for success payments	—		—			240		—		9,481			—			—			9,481
Repurchase of common stock	—					(240	)	—		(10,073		)	—			—			(10,073		)
Issuance of common stock in connection with the Company’s equity award programs, net of tax withholdings	—		—			3,234		1		4,785			—			—			4,786
Stock-based compensation expense	—		—			—		—		57,172			—			—			57,172
Other comprehensive income, net	—		—			—		—		—			3,241			—			3,241
Net loss	—		—			—		—		—			—			(245,580		)	(245,580		)
Balance as of December 31, 2016	—		$	—		103,403		$	11	$	1,911,769		$	(2,842	)	$	(831,237	)	$	1,077,701

See accompanying notes.

F-7

Juno Therapeutics, Inc.

Notes to Consolidated Financial Statements

1. Organization

Juno Therapeutics, Inc. (the “Company”) was incorporated in Delaware on August 5, 2013 as FC Therapeutics, Inc., and changed its name to Juno Therapeutics, Inc. on October 23, 2013. The Company is building a fully-integrated biopharmaceutical company focused on developing innovative cellular immunotherapies for the treatment of cancer. Founded on the vision that the use of human cells as therapeutic entities will drive one of the next important phases in medicine, the Company is developing cell-based cancer immunotherapies based on its chimeric antigen receptor (“CAR”) and high-affinity T cell receptor (“TCR”) technologies to genetically engineer T cells to recognize and kill cancer cells.

In July 2016, the Company acquired RedoxTherapies, Inc. (“RedoxTherapies”), a privately-held company. See Note 3, Acquisitions. The acquisition provides the Company with an exclusive license to vipadenant, a small molecule A2a receptor antagonist that has the potential to disrupt important immunosuppressive pathways in the tumor microenvironment in certain cancers.

In January 2016, the Company acquired AbVitro, Inc. (“AbVitro”), a company with a leading next-generation single cell sequencing platform. See Note 3, Acquisition. The AbVitro acquisition is intended to augment the Company’s capabilities to create engineered T cells against a broad array of cancer targets. The Company will initially use this technology in its translation research assays, to find and generate fully-human TCRs and antibodies, and to find novel targets.

The Company is subject to a number of risks similar to other biopharmaceutical companies in the early stage, including, but not limited to, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, protection of proprietary technology, and the need to obtain adequate additional funding. If the Company, or any commercialization partner for the Company’s product candidates, does not successfully commercialize any of the Company’s product candidates, the Company will not be able to generate product revenue or achieve profitability. As of December 31, 2016, the Company had an accumulated deficit of $831.2 million.

2. Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Juno Therapeutics, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances are eliminated in consolidation.

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from such estimates.

F-8

The Company utilizes significant estimates and assumptions in determining the estimated success payment and contingent consideration liabilities and associated expense or gain at each balance sheet date. A small change in the Company’s stock price may have a relatively large change in the estimated fair value of the success payment liability and associated expense or gain. Changes in the probabilities and estimated timing of milestones used in the calculation of the contingent consideration liability may have a relatively large impact on the resulting liability and associated expense or gain.

Prior to becoming a public company, the Company utilized significant estimates and assumptions in determining the fair value of its common stock for financial reporting purposes. The Company recorded expense for restricted stock grants at prices not less than the fair market value of its common stock as determined by the board of directors, taking into consideration input from management and independent third-party valuation analysis, and in accordance with the AICPA Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation. The estimated fair value of the Company’s common stock was based on a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector and the prices at which the Company sold shares of convertible preferred stock, and the superior rights and preferences of securities senior to the Company’s common stock at the time.

Certain prior period amounts have been reclassified to conform to the current period presentation. For the years ended December 31, 2015 and 2014, $6.0 million and $8.7 million, respectively, was reclassified from litigation to general and administrative on the consolidated statements of operations. This reclassification does not have a material impact on the Company’s consolidated financial statements.

Initial Public Offering

On December 23, 2014, the Company closed its initial public offering (“IPO”) and issued and sold 12,676,354 shares of common stock (inclusive of 1,653,437 shares of common stock sold by the Company pursuant to the full exercise of the underwriters’ option to purchase additional shares) at a price to the public of $24.00 per share. The shares began trading on The NASDAQ Global Select Market on December 19, 2014. The aggregate net proceeds received by the Company from the offering, net of underwriting discounts and commissions and offering expenses, were $279.7 million. Upon the closing of the IPO, all then-outstanding shares of Company convertible preferred stock converted into 59,909,397 shares of common stock. The related carrying value of $387.7 million was reclassified to common stock and additional paid-in capital. Additionally, the Company amended and restated its certificate of incorporation effective December 23, 2014 to, among other things, change the authorized number of shares of common stock to 495,000,000 shares and the authorized number of shares of preferred stock to 5,000,000 shares.

Comprehensive Loss

Comprehensive loss is comprised of net loss and other comprehensive income or loss. Other comprehensive income or loss consists of unrealized gains and losses on marketable securities and foreign currency translation adjustments.

F-9

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at acquisition to be cash equivalents. Cash equivalents, which consist primarily of money market funds, are stated at fair value.

Marketable Securities

The Company generally invests its excess cash in investment grade short- to intermediate-term fixed income securities. Such investments are included in cash and cash equivalents, marketable securities, or long-term marketable securities on the consolidated balance sheets, classified as available-for-sale, and reported at fair value with unrealized gains and losses included in accumulated other comprehensive income or loss. Realized gains and losses on the sale of these securities are recognized in net income or loss. The cost of marketable securities sold is based on the specific identification method.

The Company periodically evaluates whether declines in fair values of its investments below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the investment until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any investment before recovery of its amortized cost basis. Factors considered include quoted market prices, recent financial results and operating trends, implied values from any recent transactions or offers of investee securities, credit quality of debt instrument issuers, other publicly available information that may affect the value of the investments, duration and severity of the decline in value, and our strategy and intentions for holding the investment.

Accounts Receivable

Accounts receivable primarily relates to cost reimbursements due from Celgene and other collaboration partners. Accounts receivable are generally due within 30 days. The Company consider accounts outstanding longer than the contractual terms past due. Given the nature and historical collectability of the Company’s accounts receivables, an allowance for doubtful accounts is not deemed necessary as of December 31, 2016 and 2015.

Property and Equipment, Net

Property and equipment primarily consists of land, building and building improvements, laboratory equipment, computer equipment and software, and leasehold improvements. Property and equipment is stated at cost, and depreciated using the straight-line method over the estimated useful lives of the respective assets.

F-10

Computer equipment and software	3 years
Laboratory equipment	5 years
Building	30 years
Building improvements	15 years
Land	Not depreciable
Leasehold improvements, Build-to-suit	Shorter of asset’s useful life or remaining term of lease

Build-to-Suit Lease Accounting

In 2015, the Company entered into a lease for a manufacturing facility in Bothell, Washington. The Company was responsible for the leasehold improvements required to remodel the facility and it bore the majority of the construction risk. Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 840-40, Leases—Sale-Leaseback Transactions (Subsection 05-5), required the Company to be considered the owner of the building solely for accounting purposes, even though it was not the legal owner. As a result, the Company capitalized $9.9 million as a build-to-suit property within property and equipment, net and recognized a corresponding build-to-suit lease obligation on its consolidated balance sheets equal to the fair value of the building at the inception of the lease.

Construction on the facility was completed in 2016, and the Company considered the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownership have transferred back to the landlord, as evidenced by a lack of continuing involvement in the leased property. The Company determined that the arrangement did not qualify for sale-leaseback accounting treatment and the building asset would remain on its consolidated balance sheets at its historical cost, and depreciated over its estimated useful life. The Company bifurcated the lease payments into a portion allocated to the building and a portion allocated to the parcel of land on which the building has been built. The portion of the lease payments allocated to the land was treated for accounting purposes as operating lease payments, and therefore was recorded as rent expense. The portion of the lease payments allocated to the building was further bifurcated into a portion allocated to interest expense and a portion allocated to reduce the build-to-suit lease obligation. The interest rate used for the build-to-suit lease obligation represented the Company’s estimated incremental borrowing rate, adjusted to reduce any built in loss.

In December 2016, the Company purchased the Bothell, Washington manufacturing facility for $18.2 million. At that point, the build-to-suit lease property and obligation were released, and the cost of the building and land were capitalized.

Impairment of Long-Lived Assets

The Company regularly reviews the carrying value and estimated lives of its long-lived assets, including property and equipment, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the asset to the Company’s business objectives. Should an impairment exist, the impairment loss would be measured based on the excess of the asset’s carrying amount over its fair value. The Company has not recognized any impairment losses on long-lived assets for the years ended December 31, 2016, 2015, and 2014.

F-11

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment annually during the fourth quarter and upon the occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment. The Company evaluates goodwill for impairment by assessing qualitative factors or performing a quantitative analysis to determine whether it is more-likely-than-not that the fair value of net assets is below the carrying amount.

Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost). The fair value of acquired in-process research and development (“IPR&D”) has been estimated using the replacement cost method. Under this method, the Company estimated the cost to recreate the technology and derived an estimated value to develop the technology. IPR&D assets are required to be classified as indefinite-lived assets and are not amortized until they become definite lived assets, upon the successful completion of the associated research and development effort. At that time, the Company will determine the useful life of the asset and begin amortization. If the associated research and development effort is abandoned, the related IPR&D assets will be written-off and an impairment charge recorded. Intangible assets are reviewed for impairment at least annually or if indicators of potential impairment exist.

Contingent Consideration from Business Combinations

At and subsequent to the acquisition date of a business combination, contingent consideration obligations are remeasured to fair value at each balance sheet date with changes in fair value recognized in research and development expense in the consolidated statements of operations. Changes in fair values reflect changes to the Company’s assumptions regarding probabilities of successful achievement of related milestones, the timing in which the milestones are expected to be achieved, and the discount rate used to estimate the fair value of the obligation, as well as the foreign currency impact of the contingent consideration for the Stage acquisition as potential future payments are denominated in Euro.

Leases

The Company has entered into various non-cancelable lease agreements for its office, laboratory, and manufacturing spaces. The Company recognizes rent expense under such arrangements on a straight-line basis over the effective term of each lease. Under the terms of certain of our lease agreements, we received, or will receive, tenant allowances and record these amounts as a liability, which is amortized as a reduction to rent expense over the term of the lease.

Fair Value of Financial Instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:

F-12

Level 1—Quoted prices in active markets for identical assets or liabilities

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability

The Company’s financial instruments, in addition to those presented in Note 7, Fair Value Measurements, include cash and cash equivalents, accounts payable, and accrued liabilities. The carrying amount of cash and cash equivalents, accounts payable and accrued liabilities approximate fair value because of the short-term nature of these instruments.

Convertible Preferred Stock Option

Pursuant to certain 2013 and 2014 convertible preferred stock purchase agreements, the Company had the right to sell, or “put,” additional shares of Series A and A-2 convertible preferred stock in subsequent closings as well as potential obligations to issue additional shares upon the occurrence of certain events. The Company assessed its rights and potential obligations to sell additional shares and determined them to be a single unit of accounting, with classification outside of equity in accordance with ASC 480, Distinguishing Liabilities from Equity.

The Company recorded these combined instruments as convertible preferred stock options as of the date of the initial closings of the Series A and A-2 convertible preferred stock financing. The options were revalued to fair value at each subsequent balance sheet date, with fair value changes recognized as increases or reductions to other income or expense, net in the consolidated statements of operations. The Company estimated the fair value of these instruments based on the Black-Scholes option pricing model. These options were exercised during 2014. For the year ended December 31, 2014, $10.7 million was recognized in other income or expense related to the changes in fair value of these options.

Deemed Dividends upon Issuance of Convertible Preferred Stock, Non-Cash

As of the dates of the second tranche closing and third tranche closing of the Series A-2 convertible preferred stock financing in June and July 2014, the estimated fair value of the Series A-2 convertible preferred stock was $5.96 and $7.88 per share, respectively, compared with the purchase price per share of $4.00. As of the date of the final closing of the Series A convertible preferred stock financing in July 2014, the estimated fair value of the Series A convertible preferred stock was $8.36 per share compared with the purchase price per share of $4.00. The differences between the estimated fair value as of the closing dates and the purchase prices were deemed to be equivalent to a preferred stock dividend. As a result, the Company recorded deemed dividends of $15.4 million, $30.3 million, and $21.8 million for the Series A-2 second tranche closing, Series A-2 third tranche closing, and Series A final closing, respectively, for the year ended December 31, 2014. The deemed dividends increased convertible preferred stock by $67.5 million, reduced additional paid-in capital by $16.4 million, and increased accumulated deficit by $51.1 million. The deemed dividends increased the net loss attributable to common stockholders by $67.5 million in the calculation of basic and diluted net loss per common share for the year ended December 31, 2014.

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Success Payments

The Company granted rights to share-based success payments to the Fred Hutchinson Cancer Research Center (“FHCRC”) and the Memorial Sloan Kettering Cancer Center (“MSK”) pursuant to the terms of its collaboration agreements with each of those entities. Pursuant to the terms of these arrangements, the Company may be required to make success payments based on increases in the per share fair market value of the Company’s common stock, payable in cash or publicly-traded equity at the Company’s discretion. See Note 5, Collaboration and License Agreements. The success payments are accounted for under ASC 505-50, Equity-Based Payments to Non-Employees. Once the service period is complete, the instruments will be accounted for under ASC 815, Derivatives and Hedging, and continue to be marked to market with all changes in value recognized in other income or expense.

Success payment liabilities are estimated at fair value at inception and at each subsequent balance sheet date and the expense is amortized using the accelerated attribution method over the remaining term (service period) of the related collaboration agreement or related possible payment due date (whichever is sooner). To determine the estimated fair value of the success payments the Company uses a Monte Carlo simulation methodology which models the future movement of stock prices based on several key variables. The following variables were incorporated in the estimated fair value of the success payment liability: estimated term of the success payments, fair value of common stock, expected volatility, risk-free interest rate, estimated number and timing of valuation measurement dates on the basis of which payments may be triggered, and certain estimated indirect costs creditable against the success payments are also included in the calculation. The computation of expected volatility was estimated using a combination of available information about the historical volatility of stocks of similar publicly-traded companies for a period matching the expected term assumption and its historical and projected volatility. In addition, prior to the Company becoming publicly traded there was one valuation measurement date on the basis of which payments may be triggered. There are several valuation measurement dates subsequent to the IPO on the basis of which payments may be triggered.

Concentrations of Credit Risk and Off-Balance Sheet Risk

The Company maintains its cash, cash equivalents, and marketable securities with high quality, accredited financial institutions. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to significant risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Claims and Contingencies

From time to time, the Company may become involved in litigation and proceedings relating to claims arising from the ordinary course of business. The Company accrues a liability if the likelihood of an adverse outcome is probable and the amount is estimable. If the likelihood of an adverse outcome is only reasonably possible (as opposed to probable), or if an estimate is not determinable, the Company provides disclosure of a material claim or contingency.

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Revenue

The Company recognizes revenue for each unit of accounting when all of the following criteria are met:

·persuasive evidence of an arrangement exists;

·delivery has occurred or services have been rendered;

·the seller’s price to the buyer is fixed or determinable; and

·collectability is reasonably assured.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s consolidated balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue in current liabilities. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, less current portion.

The Company analyzes agreements with more than one element, or deliverable, based on the guidance in ASC 605-25, Revenue Recognition-Multiple-Element Arrangements. The Company identifies the deliverables within the agreement and evaluates which deliverables represent separate units of accounting. Analyzing the agreement to identify deliverables requires the use of judgment. A deliverable is considered a separate unit of accounting when the deliverable has value to the collaborator or licensee on a standalone basis based on the consideration of the relevant facts and circumstances for each agreement.

In assessing whether an item has standalone value, the Company considers factors such as the research, manufacturing, and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, the Company considers whether the other deliverable(s) can be used for their intended purpose without the receipt of the remaining element(s), whether the value of the deliverable is dependent on the undelivered item(s) and whether there are other vendors that can provide the undelivered element(s).

Consideration received is allocated at the inception of the agreement to all identified units of accounting based on the relative selling prices. The relative selling price for each deliverable is estimated using objective evidence if it is available. If objective evidence is not available, the Company uses its best estimate of the selling price for the deliverable. Management may be required to exercise considerable judgment in estimating the selling prices of identified units of accounting under its agreements.

Options for future deliverables are considered substantive if, at the inception of the arrangement, the Company is at risk as to whether the collaboration partner will choose to exercise the option. Factors that the Company considers in evaluating whether an option is substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the option will be exercised. For arrangements under which an option is considered substantive, the Company does not consider the item underlying the option to be a deliverable at the inception of the arrangement and the associated option fees are not included in the initial consideration, assuming the option is not priced at a significant and incremental discount. Conversely, for arrangements under which an option is not considered substantive

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or if an option is priced at a significant and incremental discount, the Company would consider the item underlying the option to be a deliverable at the inception of the arrangement and a corresponding amount would be included in the initial consideration.

The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. The Company recognizes the revenue allocated to each unit of accounting over the period of performance. Revenue is recognized using either a proportional performance or straight-line method, depending on whether the Company can reasonably estimate the level of effort required to complete its performance obligations under an arrangement.

Research and Development Expense

The Company records expense for research and development costs to operations as incurred. For service contracts entered into that include a nonrefundable prepayment for service, the upfront payment is deferred and recognized in the statement of operations as the services are rendered. Research and development expenses consist of costs incurred by the Company for the discovery and development of the Company’s product candidates and include:

·clinical trial costs;

·costs to operate the Company-owned manufacturing facility;

·external research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, academic and non-profit institutions and consultants;

·costs incurred in connection with preclinical development activities;

·costs to acquire complimentary technology;

·personnel-related expenses, including non-cash stock-based compensation expense;

·changes in the estimated fair value of the liability attributable to the elapsed service period as of the balance sheet date associated with the Company’s success payments to FHCRC and MSK;

·changes in the estimated fair value of the contingent consideration liabilities;

·license and milestone fees; and

·other expenses, which include direct and allocated expenses for laboratory, facilities, and other costs.

General and Administrative Expense

General and administrative costs are expensed as incurred and include personnel-related expenses, including non-cash stock-based compensation expense, for our personnel in executive, legal, finance and accounting, human resources, commercial, and other administrative functions, legal costs, transaction costs related to acquisitions and collaboration and licensing agreements, as well as fees paid for

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accounting and tax services, consulting fees, including costs to support commercial readiness, and facilities costs not otherwise included in research and development expenses. Legal costs include general corporate legal fees, patent costs, litigation costs, and legal expense associated with inter partes review proceedings at the USPTO.

The costs related to acquiring patents and prosecuting and maintaining intellectual property rights are expensed as incurred to general and administrative expense due to the uncertainty surrounding the drug development process and the uncertainty of future benefits.

Stock-Based Compensation

Under ASC 718, Compensation—Stock Compensation, the Company measures and recognizes expense for restricted stock awards, restricted stock unit (“RSU”) awards, and stock options granted to employees and directors based on the fair value of the awards on the date of grant. The fair value of stock options is estimated at the date of grant using the Black-Scholes option pricing model that requires management to apply judgment and make estimates, including:

·the expected term of the option, which is calculated using the simplified method, as permitted by the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 110, Share-Based Payment, as the Company has insufficient historical information regarding its stock options to provide a basis for an estimate;

·the expected volatility of the underlying common stock, which the Company estimates based on the historical volatility of a representative group of publicly traded biopharmaceutical companies with similar characteristics, and the Company’s own historical and implied future volatility;

·the risk-free interest rate, which is based on the yield curve of U.S. Treasury securities with periods commensurate with the expected term of the options being valued;

·the expected dividend yield, which the Company estimates to be zero based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends; and

·the fair value of the Company’s common stock on the date of grant.

Stock-based compensation expense for restricted stock, RSUs, and stock options is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. The Company is required to estimate a forfeiture rate to calculate the stock-based compensation expense for its awards. The Company estimates a forfeiture rate based on actual forfeitures, analysis of employee turnover, and expectations of future option exercise behavior.  Based on these factors, the Company’s estimated forfeiture rate has been immaterial since inception. The Company routinely evaluates the appropriateness of the forfeiture rate.

The Company also granted restricted stock awards that vest in conjunction with certain performance conditions to certain key employees, scientific founders, and directors. At each reporting date, the Company is required to evaluate whether achievement of the performance conditions is probable. Compensation expense is recorded over the appropriate service period based upon the Company’s assessment of accomplishing each performance provision. Compensation expense is measured using the

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fair value of the award at the grant date, net of forfeitures, and is adjusted annually to reflect actual forfeitures.

The Company also grants stock-based awards to certain service providers who are not employees, scientific founders, or directors. Stock-based awards issued to such persons, or to directors for non-board related services, are accounted for based on the fair value of such services received or of the equity instruments issued, whichever is more reliably measured. The fair value of such awards is subject to remeasurement at each reporting period until services required under the arrangement are completed, which is the vesting date.

Income Taxes

The Company determines its deferred tax assets and liabilities based on the differences between the financial reporting and tax basis of assets and liabilities. The deferred tax assets and liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be recovered. The Company applies judgment in the determination of the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes any material interest and penalties related to unrecognized tax benefits in income tax expense.

Foreign Currency Translation

Assets and liabilities denominated in foreign currencies were translated into U.S. dollars, the reporting currency, at the exchange rate prevailing at the balance sheet date. Revenue and expenses denominated in foreign currencies were translated into U.S. dollars at the monthly average exchange rate for the period and the translation adjustments are reported as an element of accumulated other comprehensive income or loss on the consolidated balance sheets.

Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and one reportable segment.

Recent Accounting Pronouncements

In 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (Topic 230), which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company early adopted this guidance for the year ended December 31, 2016.  The adoption of this standard did not have a material impact on its financial position, results of operation or related financial statement disclosures.

In 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), intended to simplify the accounting for share-based payment transactions, including the income tax consequences,

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classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company plans to adopt this standard on January 1, 2017 and expects the adoption of this new accounting guidance will not have a material impact on its consolidated financial statements.

In 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance requires lessees to recognize the assets and liabilities arising from leases on the balance sheet and additional qualitative and quantitative disclosures will be required. The amendment is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this standard on January 1, 2019 and is evaluating the impact of adopting the new accounting guidance on its consolidated financial statements.

In 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (Topic 606), amended by ASU No. 2015-14. This new standard will replace all current GAAP guidance on this topic and establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. This guidance can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In 2015, the FASB voted to defer the effective date to reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt this standard on January 1, 2018. As of December 31, 2016, the majority of the Company’s revenue is generated from licenses, milestones and from its collaboration arrangement with Celgene. The Company is currently evaluating the potential impact that Topic 606 may have on its consolidated financial statements.

3. Acquisitions

Acquisition of Technology from RedoxTherapies

In July 2016, the Company acquired RedoxTherapies, for a $10.0 million upfront cash payment. The Company also agreed to deliver additional consideration upon achievement of specified clinical, regulatory, and commercial milestones. The acquisition provides the Company with an exclusive license to vipadenant, a small molecule A2a receptor antagonist that has the potential to disrupt important immunosuppressive pathways in the tumor microenvironment in certain cancers. The Company concluded that the assets acquired did not meet the accounting definition of a business as inputs, but no processes or outputs, were acquired, and the licensed technology had not achieved technological feasibility. As such, the Company treated the acquisition as an asset purchase, recording the purchase price as $10.0 million in research and development expense in the accompanying consolidated statements of operations. Additionally, the Company made a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986 (“IRC”), which treats the transaction as an asset purchase for tax purposes.

In addition to cash paid, the acquisition agreement stipulates that the Company is required to make milestone payments to the founder of RedoxTherapies upon the achievement of specified clinical, regulatory, and commercial milestones. Triggering of these milestone payments was not considered probable as of the date of the acquisition, and no expense has been recorded for these milestones as of December 31, 2016. As a result of the acquisition, the Company obtained access to two license

F-19

agreements to which RedoxTherapies is party, which require the payment of royalties to the licensors based on annual net sales of licensed products or processes by RedoxTherapies and its sublicensees (which may include the Company), as well as certain payments upon the achievement of specified clinical and regulatory milestones. Triggering of these milestone payments was not considered probable as of the date of the acquisition, and no expense has been recorded for these milestones as of December 31, 2016.

Acquisition of AbVitro

In January 2016, the Company completed the acquisition of 100% of the outstanding equity in AbVitro. The Company paid $74.7 million in cash and issued an aggregate of 1,289,188 shares of the Company’s common stock valued at $46.9 million based on the closing stock price on January 8, 2016 of $36.39 per share. An additional $2.2 million was recorded as post-combination research and development expense in the year ended December 31, 2016 in connection with the accelerated vesting of employee stock options. Additionally, 24,446 RSUs were granted to former AbVitro employees, which shares are subject to monthly vesting over three years following the closing of the transaction, contingent on such employees continuing to provide services to the Company through such vesting dates. These are accounted for as post-acquisition compensation expenses. There are no milestone payment obligations under the terms of the AbVitro acquisition.

The elements of the purchase consideration are as follows (in thousands):

Cash paid	$	74,729
Common stock issued	46,914
Total consideration	$	121,643

The allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of the acquisition date. The components of the purchase price allocation are as follows (in thousands):

Net working capital	$	67
Deferred tax liabilities, net of tax attributes	(6,655		)
Acquired in-process research and development	29,017
Goodwill	99,214
Total consideration	$	121,643

IPR&D assets are required to be classified as indefinite-lived assets until they become definite lived assets upon the successful completion or the abandonment of the associated research and development effort. Accordingly, during the development period after the date of acquisition, we do not expect these assets to begin to be amortized until the first instance they are used for translational assays.

The factors contributing to the recognition of the amount of goodwill in the AbVitro acquisition include the ability to accelerate the generation of binders that recognize known targets and discover novel cancer antigen targets. The acquisition also provides the Company with the ability to utilize translational assays to provide a better understanding of the natural immune response to cancer as well as to interrogate and monitor the immune system of patients during treatment. None of the goodwill is expected to be deductible for income tax purposes.

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Acquisition of Stage Cell Therapeutics GmbH

In May 2015, the Company completed the acquisition of all the outstanding ownership interests in Stage Cell Therapeutics GmbH (“Stage”) not already held by it. Prior to the acquisition, the Company held a 4.76% equity interest in Stage. The Company paid €52.5 million, or $58.5 million, in cash and issued an aggregate of 486,279 shares of common stock, valued at $22.2 million based on the closing stock price on May 11, 2015 of $45.58 per share.

The Company also agreed to pay additional amounts of up to an aggregate of €135.0 million in cash based on the achievement of certain technical, clinical, regulatory, and commercial milestones related to novel reagents (€40.0 million), advanced automation technology (€65.0 million), and Stage’s existing clinical pipeline (€30.0 million). The fair value of this contingent consideration was estimated to be $28.2 million at the date of acquisition. Payments could vary based on milestones that are reached.

The elements of the purchase consideration are as follows (in thousands):

Cash paid (1)	$	58,496
Common stock issued	22,165
Fair value of contingent consideration (2)	28,244
Total consideration for 95.24% equity	108,905
Fair value of 4.76% initial investment in Stage (3)	3,682
Implied purchase price consideration for 100% equity	$	112,587

(1)The cash consideration represents the consideration paid in cash amounting to €52.5 million which is translated based on an exchange rate on May 11, 2015.

(2)The fair value of the contingent consideration was determined by calculating the probability-weighted milestone payments based on the assessment of the likelihood and estimated timing that certain milestones would be achieved. The fair value of the contingent consideration was estimated using a discount rate of 14.6%. The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due.

(3)The fair value of the initial investment is calculated as the implied per share fair value of the stock based upon the acquisition purchase price reduced by a lack of control discount associated with the 4.76% holding.

The allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of the date of acquisition. The components of the purchase price allocation are as follows (in thousands):

Net working capital	$	1,863
Property and equipment	651
Net assets acquired	2,514
Deferred tax liabilities	(10,801		)
Acquired in-process research and development	34,457
Goodwill	86,417
Total consideration	$	112,587

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IPR&D assets are required to be classified as indefinite-lived assets until they become definite lived assets upon the successful completion or the abandonment of the associated research and development effort. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until the acquired reagents or automation technology is accepted by the FDA as part of an IND, subject to management judgment.

The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Stage acquisition. The acquisition of Stage is intended to provide the Company access to transformative cell selection and activation capabilities, next generation manufacturing automation technologies, enhanced control of its supply chain, and lower expected long-term cost of goods. None of the goodwill is expected to be deductible for income tax purposes. The Company made a Section 338(g) election under the Internal Revenue Code with respect to this acquisition, resulting in the acquired entity being treated for U.S. tax purposes as a newly incorporated company. Under such election, the U.S. tax basis of the assets and liabilities of Stage were stepped up to fair value as of the closing date of the acquisition to reflect the consequences of the Section 338(g) election.

Acquisition of X-Body, Inc.

In June 2015, the Company completed the acquisition of 100% of the outstanding equity in X-Body, Inc. (“X-Body”). The Company paid $21.3 million in cash and issued an aggregate of 366,434 shares of common stock, valued at $19.4 million based on the closing stock price on June 1, 2015 of $53.07 per share. Further, an additional 72,831 shares of common stock were issued to two former X-Body stockholders in the transaction, which shares are subject to monthly vesting over the three years following the closing of the transaction. These will be accounted for as post-acquisition compensation expenses.

The Company also agreed to pay additional amounts in cash upon the realization of specified milestones substantially as follows, with respect to products generated using the X-Body technology: $5.0 million per target upon the achievement, during a specified period, of a certain regulatory milestone for products that utilize a certain type of binding mechanism; up to $30.0 million upon the achievement, during a specified period, of regulatory and clinical milestones for the first product using another type of binding mechanism (any product using such type of binding mechanism, a “Type X Product”); $5.0 million per product upon the achievement, during a specified period, of a certain regulatory milestone for a certain number of subsequent Type X Products; $50.0 million upon the achievement, during a specified period, of a clinical milestone related to the first product with certain specified binding properties (a “Type Y Product”); and $20.0 million upon the achievement, during a specified period, of a clinical milestone related to the first product with certain other specified binding properties. If a Type X Product or a Type Y Product is commercialized, Juno can choose either to make a commercialization milestone payment for such a product or to pay a low single-digit royalty on net sales of such a product. The fair value of this contingent consideration was estimated to be $8.9 million at the date of acquisition. Payments could vary based on milestones that are reached.

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The elements of the purchase consideration are as follows (in thousands):

Cash paid	$	21,331
Common stock issued	19,447
Fair value of contingent consideration (1)	8,944
Settlement of preexisting obligation (2)	1,123
Total consideration	$	50,845

(1)The fair value of the contingent consideration was determined by calculating the probability-weighted milestone based on the assessment of the likelihood and estimated timing that certain milestones would be achieved. The fair value of the contingent consideration was estimated using a discount rate of 15.2%. The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due.

(2)The settlement of preexisting obligation reflects the effective settlement of the Company’s preexisting prepaid contract research agreement with X-Body. No gain or loss was recognized by the Company on the effective settlement of this prepaid expense as of the acquisition date.

The allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of the acquisition date. The components of the purchase price allocation are as follows (in thousands):

Net liabilities assumed	$	(181	)
Deferred tax liabilities	(1,099		)
Acquired in-process research and development	16,450
Goodwill	35,675
Total consideration	$	50,845

IPR&D assets are required to be classified as indefinite-lived assets until they become definite lived assets upon the successful completion or the abandonment of the associated research and development effort. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until regulatory approval is obtained in a major market, typically either the United States or the EU, subject to management judgment.

The goodwill recognized as a result of the X-Body acquisition is primarily attributable to the fact that the acquisition furthers the Company’s strategy of investing in technologies that augment the Company’s capabilities to create best-in-class engineered T cells against a broad array of cancer targets. The acquisition brings in-house to the Company an innovative discovery platform that interrogates the human antibody repertoire, rapidly selecting fully human antibodies with desired characteristics, even against difficult targets. None of the goodwill is expected to be deductible for income tax purposes.

Post-Acquisition and Pro Forma Consolidated Financial Information

The business acquisitions did not have a material impact on the Company’s consolidated statements of operations, and therefore actual and pro forma disclosures have not been presented. The intangible assets acquired in the business acquisitions are in-process research and development assets, and as such, there would be no pro forma adjustment needed for the amortization of intangible assets.

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Transaction Costs

The Company incurred approximately $0.4 million and $4.5 million of direct transaction costs related to the business acquisitions for the years ended December 31, 2016 and 2015, respectively. These costs are included in general and administrative expenses in the consolidated statements of operations.

4. Goodwill and Intangible Assets

The following table summarizes the changes in the carrying amount of goodwill (in thousands):

Balance at December 31, 2014	$	—
Goodwill acquired	122,092
Balance at December 31, 2015	122,092
Goodwill acquired	99,214
Balance at December 31, 2016	$	221,306

There was no impairment of goodwill for the years ended December 31, 2016 and 2015.

The following table summarizes the gross carrying amount, accumulated amortization and the net carrying amount of intangible assets (in thousands):

	Gross Carrying  Amount			Accumulated  Amortization		Intangible  Assets, Net
Balance at December 31, 2014	$	—		$	—	$	—
Acquired in-process research and development	50,907			—		50,907
Effects of foreign currency translation	(730		)	—		(730		)
Balance at December 31, 2015	50,177			—		50,177
Acquired in-process research and development	29,017			—		29,017
Effects of foreign currency translation	(1,208		)	—		(1,208		)
Balance at December 31, 2016	$	77,986		$	—	$	77,986

There was no impairment of intangible assets for the years ended December 31, 2016 and 2015.

5. Collaboration and License Agreements

Celgene

Celgene Collaboration Agreement

In June 2015, the Company entered into a Master Research and Collaboration Agreement (“Celgene Collaboration Agreement”) with Celgene Corporation and one of its wholly owned subsidiaries (collectively, “Celgene”) pursuant to which the Company and Celgene agreed to collaborate on researching, developing, and commercializing novel cellular therapy product candidates and other immuno-oncology and immunology therapeutics, including, in particular, CAR and TCR product candidates. The Celgene Collaboration Agreement became effective in July 2015 and was amended and restated in August 2015.

Pursuant to the collaboration, prior to the exercise of an option for a program, each of the Company and Celgene will conduct independent programs to research, develop, and commercialize such product

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candidates (including, in the case of the Company, its CD19 and CD22 programs). Each party has certain options to obtain either an exclusive license to develop and commercialize specified product candidates arising from specified types of programs conducted by the other party within the scope of the collaboration, or the right to participate in the co-development and co-commercialization of specified product candidates arising from such programs, in each case in specified territories. Further, following the exercise of an option, Celgene has the right to exercise an option for a specified number of such programs, excluding the CD19 program and the CD22 program, to co-develop and co-commercialize products arising out of such programs in certain countries, and each of Celgene and Company has the right to elect to participate in certain commercialization activities for products in such programs in territories where it is not leading commercialization of such product. The parties may exercise their options with respect to specified product candidates arising under programs within the scope of the collaboration until the tenth anniversary of the effective date of the Celgene Collaboration Agreement (the “Research Collaboration Term”), subject to a tail period applicable to certain programs, for which options have not yet been exercised as of the expiration of the Research Collaboration Term. BCMA-directed product candidates are excluded from the collaboration.

For Company-originated programs (which includes the CD19 program and may include the CD22 program) under the collaboration for which Celgene exercises its option to obtain an exclusive license:

·The Company would be responsible for research and development in the United States, Canada, and Mexico, and, for cellular therapy product candidates, China, and would retain commercialization rights and would lead commercialization activities and book sales of products in those countries (the “Juno Territory”), subject to Celgene’s option, for a specified number of programs (excluding the CD19 program and the CD22 program), to elect to co-develop and co-commercialize product candidates arising from such programs, or for other programs, to elect to participate in certain commercialization activities in the Juno Territory, as further described below. Under all such license agreements, the Company has the right to participate in specified commercialization activities arising from such programs in certain major European markets;

·On a program-by-program basis, Celgene would receive an exclusive license, and pursuant to such license would be responsible for, development and commercialization outside of the Juno Territory (the “Celgene Territory”), including by leading commercialization activities and booking sales of products in the Celgene Territory. Celgene would be required to pay the Company a royalty on sales of products arising from such program in the Celgene Territory as further described below; and

·For Company-originated programs, excluding CD19 and CD22, Celgene would have the right to exercise an option for a specified number of such programs, to obtain the right to co-develop and co-commercialize products arising from such program worldwide, except for China. For each such program, following Celgene’s exercise of such option, the parties would enter into an agreed form of co-development and co-commercialization agreement, pursuant to which:

·Celgene would have the right to co-develop and co-commercialize product candidates arising from such programs, with the parties each entitled to bear and receive an equal

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share of the profits and losses arising from development and commercialization activities in such programs worldwide (other than China); and

·The Company would remain the lead party for development and commercialization activities for such product candidates in the Juno Territory, and Celgene would remain the lead party for development and commercialization activities for such product candidates in the Celgene Territory, subject to the Company’s right to participate in certain commercialization activities in certain major European countries, and Celgene’s right to elect to participate in a specified percentage of commercialization activities in the Juno Territory.

For other Company originated programs for which Celgene does not exercise such a co-development and co-commercialization right, Celgene would also have the right to elect to participate in up to a specified percentage of certain commercialization activities for product candidates in such program in the Juno Territory, and the Company would have the right to elect to participate in up to a specified percentage of certain commercialization activities for such product candidates in certain major European markets.

For Celgene-originated programs under the collaboration for which the Company exercises its option to obtain an exclusive license, the parties will enter into a co-development and co-commercialization agreement and:

·The parties will share global profits and losses from development and commercialization activities with 70% allocated to Celgene and 30% allocated to the Company; and

·Celgene will lead global development and commercialization activities, subject to the Company’s right to elect to participate in up to a specified percentage of certain commercialization activities in the Juno Territory under certain circumstances and in certain major European countries.

Furthermore, each of Celgene and the Company will have the exclusive right to exercise options to co-develop and co-commercialize product candidates arising out of programs for which the other party in-licenses or acquires rights that are within the scope of their collaboration, where such rights are available to be granted, with the parties each bearing an equal share of the profits and losses arising out of such programs following the exercise of such option. In general, for such programs where the rights are in-licensed or acquired by the Company and for which Celgene exercises its options, the Company will be the lead party for development and commercialization of product candidates arising from such programs in the Juno Territory, subject to Celgene’s right to elect to participate in certain commercialization activities for such product candidates in the Juno Territory, and Celgene will be the lead party for development and commercialization of product candidates arising in such programs in the Celgene Territory, subject to the Company’s right to elect to participate in certain commercialization activities for such product candidates in certain major European markets. Conversely, for such programs where the rights are in-licensed or acquired by Celgene and for which the Company exercises its options, Celgene will be the lead party for development and commercialization activities for product candidates arising from such programs on a worldwide basis, subject to the Company’s right to elect to participate in certain commercialization activities for such product candidates in the Juno Territory and in certain major European markets. The party exercising an option for these in-licensed or acquired programs is generally

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required to pay to the other party an upfront payment equal to one half of the costs incurred by other party in connection with the acquisition of rights to such programs.

Under the terms of the Celgene Collaboration Agreement, the Company received an upfront cash payment of $150.2 million. In addition to the upfront payment, Celgene is required to pay to the Company an additional fee if it exercises its option for each of the CD19 program and the CD22 program, totaling, if the options are exercised for both programs during the initial opt-in window, $100.0 million. As described below, in April 2016, Celgene exercised its option for the CD19 program and paid the Company $50.0 million as an option exercise fee. Upon a party’s exercise of the option for any other program (other than certain in-licensed or acquired programs where a party exercises its option at the time such program is acquired), the party exercising the option is required to pay to the other party a payment at the time of exercise of its option, calculated as a multiple of the costs incurred by the other party in relation to the development activities for such program prior to the exercise of the option, with such multiple based on the point in development of such product at which such party exercises such option. For programs for which the parties have entered into a license agreement, the Company will also receive royalties from Celgene, for product candidates arising from the CD19 and CD22 programs, at a percentage in the mid-teens of net sales of such product candidates in the Celgene Territory, and for product candidates arising from other Company programs that are subject to a license agreement, tiered royalties on net sales of such product candidates in the Celgene Territory, at percentages ranging from the high single digits to the mid-teens, calculated based on the stage of development at which Celgene exercises its option for such program.

Celgene CD19 License

In April 2016, Celgene exercised its opt-in right to develop and commercialize product candidates from the Company’s CD19 program in the Celgene Territory. As a result, the Company and Celgene entered into a license agreement (the “Celgene CD19 License”) pursuant to which Celgene received an exclusive, royalty-bearing license to develop and commercialize therapeutic CAR product candidates from the Company’s CD19 program in the Celgene Territory. The Company retains all rights to develop further and commercialize such product candidates in the Juno Territory. The Company and Celgene will generally share worldwide research and development costs, while the Company will be responsible for commercialization costs in the Juno Territory and Celgene will be responsible for commercialization costs in the Celgene Territory. The Company has the right to participate in specified commercialization activities for licensed products arising from the CD19 program in certain major European markets. Celgene has the right to participate in specified commercialization activities in North America for licensed products for certain indications under the CD19 program. The Company received a $50.0 million option exercise fee from Celgene upon the exercise of Celgene’s option for the CD19 program. The Company will also receive royalties from Celgene for CAR product candidates arising from the CD19 program at a percentage in the mid-teens of net sales of such product candidates in the Celgene Territory.

Celgene Share Purchase Agreement

In June 2015, the Company also entered into a Share Purchase Agreement (the “Celgene Share Purchase Agreement”) with Celgene. Pursuant to the Celgene Share Purchase Agreement, the Company sold 9,137,672 shares of the Company’s common stock to Celgene at an aggregate cash price of approximately

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$849.8 million, or $93.00 per share of common stock, on August 4, 2015. The Celgene Share Purchase Agreement also provides for additional sales of shares by the Company to Celgene as follows:

·First Period Top-Up Rights. Until June 29, 2020, Celgene has the annual right, following the filing of each Annual Report on Form 10-K filed by the Company, to purchase additional shares from the Company at a market average price, allowing it to “top up” to an ownership interest equal to 10% of the then-outstanding shares (after giving effect to such purchase), subject to adjustment downward in certain circumstances. If Celgene does not exercise its top-up right in full in any given year, then the percentage of ownership targeted for a top-up stock purchase for the next year will be reduced to Celgene’s percentage ownership at the time of such non-exercise or partial exercise (after giving effect to the issuance of shares in any partial exercise). In March 2016, Celgene exercised its annual top-up right to purchase 1,137,593 shares at a price of $41.32 per share, for an aggregate cash purchase price of $47.0 million. Given in March 2016, Celgene did not exercise the top-up right in full to reach 10% ownership that would have been permitted by the top-up right, the top-up right that will be triggered by the filing of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2016 will only permit Celgene to top-up its ownership stake of the Company’s common stock to 9.76%.

·First Acquisition Right. During the period beginning on June 29, 2019 and ending on June 28, 2020, subject to Celgene opting in to a certain number of Company programs under the Celgene Collaboration Agreement, Celgene will have the right (the “First Acquisition Right”) to purchase up to such number of shares that will allow Celgene to have ownership of 19.99% of the then-outstanding shares of the Company’s common stock (after giving effect to such purchase) at the closing price of the common stock on the principal trading market (currently The NASDAQ Global Select Market) on the date of exercise (the “FAR Base Price”), plus a premium on all shares in excess of the number of shares for which Celgene would then be able to purchase if it then had a top-up right as described in the preceding paragraph.

·Second Period Top-Up Rights. After the closing of the purchase of shares upon the exercise of the First Acquisition Right until the SAR Termination Date (as defined below), in the event that Celgene has been diluted after exercising the First Acquisition Right, the Company may elect annually, upon the filing of each Annual Report on Form 10-K filed by the Company, to offer Celgene the right to purchase additional shares from the Company at 105% of market average price, allowing Celgene to “top up” to an ownership interest (after giving effect to such purchase) equal to the percentage ownership of shares that Celgene obtained upon exercise of the First Acquisition Right, subject to adjustment downward in certain circumstances. If Celgene does not exercise its top-up right in full in any year in which it is offered such right by the Company, then the percentage of ownership targeted for a top-up stock purchase for the next year it is offered such top-up right will be reduced to Celgene’s percentage ownership at the time of such non-exercise or partial exercise (after giving effect to the issuance of shares in any partial exercise). The “SAR Termination Date” is the later of (a) June 29, 2025, and (b) the earlier of (x) the date that is 6 months following the date that the conditions to the exercise of the Second Acquisition Right (as defined herein) are satisfied and (y) December 29, 2025.

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·Second Acquisition Right. During the period beginning on June 29, 2024 and ending on the SAR Termination Date, subject to each of Celgene and the Company opting into a certain number of programs under the Celgene Collaboration Agreement, and provided that Celgene exercised the First Acquisition Right so as to obtain an aggregate percentage ownership of at least 17% of the Company, Celgene will have the right (the “Second Acquisition Right”) to purchase up to such number of shares that will allow Celgene to have ownership of 30% of the then-outstanding shares of the Company’s common stock (after giving effect to such purchase) at the closing price of the common stock on the principal trading market on the date of exercise (the “SAR Base Price”), plus a premium on all shares in excess of the number of shares for which Celgene would then be able to purchase if it then had a top-up right as described in the preceding paragraph.

·Final Top-Up Rights. Following the closing of the purchase of shares upon the exercise of the Second Acquisition Right and until the Celgene Collaboration Agreement expires or is terminated, Celgene would have the annual right, in the event that Celgene has been diluted after exercising the Second Acquisition Right, following the filing of each Annual Report on Form 10-K filed by the Company, to purchase additional shares from the Company at a price equal to 105% of market average price, allowing it to “top up” to the percentage ownership it had attained upon exercising the Second Acquisition Right, less 250 basis points, subject to adjustment downward in certain circumstances. If Celgene does not exercise its top-up right in full in any given year, then the percentage of ownership targeted for a top-up stock purchase for the next year will be reduced to Celgene’s percentage ownership at the time of such non-exercise or partial exercise (after giving effect to the issuance of shares in any partial exercise). These rights and the other described top-up rights, as well as the First Acquisition Right and Second Acquisition Right, may be limited or eliminated in certain circumstances when and if Celgene disposes of any of its shares.

The First Period Top-Up Rights, Second Period Top-Up Rights and Third Period Top-Up Rights are collectively referred to herein as the “Top-Up Rights”. The First Acquisition Right and Second Acquisition Right are collectively referred to herein as the “Acquisition Rights.”

Each closing of the sale of shares to Celgene is subject to customary closing conditions, including termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Accounting Analysis

The Celgene Collaboration Agreement contains the following deliverables: (1) access to certain of the Company’s technology through a non-exclusive, worldwide, royalty-free right and license to conduct certain activities under the collaboration, and (2) participation on various collaboration committees. The Company considered the provisions of the multiple-element arrangement guidance in determining how to recognize the revenue associated with the two deliverables. The Company has accounted for access to certain of the Company’s technology and participation on various collaboration committees as a single unit of accounting because the two deliverables do not have standalone value and both obligations will be delivered throughout the estimated period of performance.

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The Company has identified the initial consideration for the Celgene Collaboration Agreement, which is the best estimated selling price, as the $150.2 million upfront payment. The Company determined that each of the identified deliverables have the same period of performance (the ten years research collaboration term) and have the same pattern of revenue recognition, ratably over the period of performance. As a result, the $150.2 million in arrangement consideration was recorded in deferred revenue and is being recognized over the ten year research collaboration term.

The Company also evaluated its own options pertaining to Celgene’s programs. If the Company exercises any of its options, it is required to make a payment equal to a percentage of the costs incurred by Celgene prior to the exercise of the option in connection with the research and development activities and regulatory activities for such development candidate. The percentage of costs to be paid varies based on the point in development of such product at the time the Company exercises its option. The Company will account for the payments as research and development expense upon the exercise of the related option. The Company determined that payments related to licenses that will be used in future research and development activities with no proven alternative future use at the time of acquisition by the Company should be expensed when incurred in accordance with the Company’s accounting policy.

In addition, Celgene purchased 9,137,672 shares of the Company’s common stock at a price of $93.00 per share, resulting in gross proceeds of $849.8 million. The Company determined that this initial purchase of common stock combined with the embedded future stock purchase rights had a fair value of $849.8 million and this amount was recorded in equity.

The Company evaluated and determined that the Top-Up Rights and Acquisition Rights granted to Celgene under the Celgene Share Purchase Agreement are not freestanding instruments as these rights are not legally detachable and separately exercisable from the Company’s common stock. In addition, the Company has further assessed whether the Top-Up Rights and Acquisition Rights should be accounted for as derivative instruments and determined that derivative accounting does not apply. The Company determined that the Top-Up Rights and Acquisition Rights are embedded and inseparable from the initial stock purchase and no subsequent remeasurement is necessary.

The Celgene CD19 License agreement contains the following deliverables: (1) an exclusive license with respect to intellectual property, (2) transfer of certain clinical and manufacturing knowledge and related support, and (3) participation on various collaboration committees during the technology transfer period. The Company has accounted for these deliverables as a single unit of accounting because they do not have standalone value and the obligations will be delivered throughout the estimated period of performance. The $50.0 million option exercise fee was recorded in deferred revenue and is being recognized ratably over the period in which the Company expects to fulfill these performance obligations, which was initially determined to be approximately two years.

To the extent the Company’s research and development costs for the CD19 program exceed Celgene’s research and development costs for the CD19 program for a given quarter, Celgene is required to provide partial reimbursement to the Company for such costs. The Company recognizes the reimbursement by Celgene as revenue in the period the services are performed. To the extent Celgene’s research and development costs for the CD19 program exceed the Company’s research and development costs for the CD19 program for a given quarter, the Company is required to provide Celgene partial reimbursement for

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such costs. The Company recognizes the reimbursement to Celgene as additional research and development expense in the period the services are provided.

For the year ended December 31, 2016, the Company recognized revenue of $64.6 million in connection with the Celgene Collaboration Agreement and the Celgene CD19 License. The Company recognized $5.1 million in revenue in connection with the Celgene Collaboration Agreement for the year ended December 31, 2015. As of December 31, 2016, there was $11.2 million due from Celgene included in accounts receivable on the consolidated balance sheets. As of December 31, 2015, there were no amounts due from Celgene.

Fred Hutchinson Cancer Research Center

In October 2013, the Company entered into a collaboration agreement with FHCRC, focused on research and development of cancer immunotherapy products. The agreement has a six year term and can be extended if mutually agreed upon. The research is conducted under project orders containing plans and budgets approved by the parties. In December 2015, the Company entered into an agreement with FHCRC to support the establishment of a clinical immunotherapy trial unit.

Excluding the expense or gain related to success payment obligations, the Company recognized $16.1 million, $10.3 million, and $6.9 million of research and development expenses in connection with its collaboration and funding agreements with FHCRC for the years ended December 31, 2016, 2015, and 2014, respectively.

In October 2013, the Company granted FHCRC rights to certain share-based success payments. Under the terms of this arrangement, the Company may be required to make success payments to FHCRC based on increases in the estimated fair value of the Company’s common stock. The potential payments are based on multiples of increasing value based on a comparison of the fair value of the common stock relative to its original $4.00 issuance price. The payments are based on whether the value of the Company’s common stock meets or exceeds certain specified threshold values per share, in each case subject to adjustment for any stock dividend, stock split, combination of shares, or other similar events. The aggregate success payments to FHCRC are not to exceed $375.0 million which would only occur at a stock valuation of $160.00 per share. In June 2014, the Company entered into an agreement with FHCRC in which it can offset certain indirect costs related to the collaboration projects conducted by FHCRC against any success payments. The term of the success payment agreement ranges from eight to eleven years depending upon when or if the company receives FDA approval of certain of its product candidates as specified in the agreement.

The following table summarizes all possible remaining FHCRC success payments, payable in cash or publicly-traded equity at the Company’s discretion:

Multiple of Initial Equity Value at issuance	15.0x		20.0x		25.0x		30.0x		35.0x		40.0x
Per share common stock price required for payment	$	60.00	$	80.00	$	100.00	$	120.00	$	140.00	$	160.00
Success payment(s) (in millions)	$	50	$	50	$	50	$	50	$	50	$	50

The success payments will be owed if the value of the Company’s common stock on the contractually specified valuation measurement dates during the term of the success payment agreement equals or

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exceeds the above outlined multiples. The valuation measurement dates are triggered by events which include an initial public offering of the Company’s stock, a merger, an asset sale, or the sale of the majority of the shares held by certain of the Company’s stockholders or the last day of the term of the success payment agreement. If a higher success payment tier is first met at the same time a lower tier is first met, both tiers will be owed. Any previous success payments made to FHCRC are credited against the success payment owed as of any valuation measurement date, so that FHCRC does not receive multiple success payments in connection with the same threshold. A payment may be triggered on the first anniversary of the closing of the IPO (or the date that is 90 days following such anniversary, at the Company’s option, if the Company is contemplating a capital market transaction during such 90 day period). The value of any such success payment will be determined by the average trading price of a share of the Company’s common stock over the consecutive 90-day period preceding such determination date.

In December 2015, success payments to FHCRC were triggered in the aggregate amount of $75.0 million, less indirect cost offsets of $3.3 million. The Company elected to make the payment in shares of its common stock, and thereby issued 1,601,085 shares of its common stock to FHCRC in December 2015.

The estimated fair value of the total success payment obligation to FHCRC, after giving effect to the success payments achieved in December 2015, was approximately $22.9 million and $67.3 million as of December 31, 2016 and 2015, respectively. With respect to the FHCRC success payment obligations, the Company recognized a gain of $20.5 million for the year ended December 31, 2016, and recognized expense of $44.3 million and $61.2 million for the years ended December 31, 2015 and 2014, respectively. The gain or expense recorded represents the change in the FHCRC success payment liability during such periods and twelve months of accrued expense. The FHCRC success payment liability on the consolidated balance sheets as of December 31, 2016 and 2015 was $13.3 million and $33.8 million, respectively.

The Company’s liability for share-based success payments under the FHCRC collaboration is carried at fair value and recognized as expense over the term of the six-year collaboration agreement. To determine the estimated fair value of the success payment liability the Company uses a Monte Carlo simulation methodology which models the future movement of stock prices based on several key variables. The following variables were incorporated in the calculation of the estimated fair value of the success payment liability as of the following balance sheet dates:

	December 31,
Assumptions	2016			2015
Fair value of common stock	$	18.85		$	43.97
Risk free interest rate	1.88% - 2.30		%	1.89% - 2.20		%
Expected volatility	75		%	70		%
Expected term (years)	4.79 - 7.79			5.79 - 8.79

The computation of expected volatility was estimated using a combination of available information about the historical volatility of stocks of similar publicly-traded companies for a period matching the expected term assumption and our historical and implied future volatility. The risk free interest rate and expected term assumptions depend on the estimated timing of FDA approval. In addition, the Company

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incorporated the estimated number and timing of valuation measurement dates in the calculation of the success payment liability.

In October 2013, the Company entered into a license agreement with FHCRC, pursuant to which the Company acquired an exclusive, worldwide, sublicensable license under certain patent rights, and a non-exclusive, worldwide, sublicensable license under certain technology, to research, develop, manufacture, improve, and commercialize products and processes covered by such patent rights or incorporating such technology for all therapeutic uses for the treatment of human cancer. The patents and patent applications covered by this agreement are directed, in part, to CAR constructs, including target specific constructs and customized spacer regions, TCR constructs, and their use for immunotherapy. The Company classifies on the consolidated statements of operations payments accrued or made under its licensing arrangements based on the underlying nature of the expense. Expenses related to the reimbursement of legal and patent costs are classified as general and administrative because the nature of the expense is not related to the research or development of the technologies the Company is licensing.

The Company also agreed to pay FHCRC annual maintenance fees, milestone payments, and royalties as a percentage of net sales of licensed products.

Milestone payments to FHCRC of up to an aggregate of $6.8 million per licensed product, including JCAR014 and JCAR017, are triggered upon the achievement of specified clinical and regulatory milestones and are not creditable against royalties. The Company may terminate the license agreement at any time with advance written notice.

Memorial Sloan Kettering Cancer Center

In November 2013, the Company entered into a sponsored research agreement with MSK, focused on research and development relating to chimeric antigen receptor T cell technology. The research is conducted under project orders containing plans and budgets approved by the parties. The Company also entered into a master clinical study agreement with MSK for clinical studies to be conducted at MSK on the Company’s behalf. Each such study will be conducted in accordance with a written plan and budget and protocol, or separate clinical trial agreement, approved by the parties. The Company is also party to separate clinical study agreements with MSK.

Excluding the expense or gain related to success payment obligations, the Company recognized $2.8 million, $4.7 million, and $2.5 million of research and development expenses in connection with its research and clinical agreements with MSK for the years ended December 31, 2016, 2015, and 2014, respectively.

The Company granted MSK rights to certain share-based success payments. Under the terms of this arrangement, the Company may be required to make success payments to MSK based on the increases in the estimated fair value of the Company’s common stock. The potential payments are based on multiples of increasing value based on a comparison of the fair value of the common stock relative to its original $4.00 issuance price. The payments are based on whether the value of the Company’s common stock meets or exceeds certain specified threshold values per share, in each case subject to adjustment for any stock dividend, stock split, combination of shares, or other similar events. The aggregate success

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payments to MSK are not to exceed $150.0 million, which would only occur at a stock valuation of $120.00 per share. In October 2015, the Company entered into an agreement with MSK in which certain indirect costs related to certain clinical studies and research projects conducted by MSK are creditable against any success payments. This agreement was amended by the Company in December 2015. The term of the success payment agreement ranges from eight to eleven years depending upon when or if the company receives FDA approval of certain of its product candidates as specified in the agreement.

The following table summarizes all possible remaining MSK success payments, payable in cash or publicly-traded equity at the Company’s discretion:

Multiple of Initial Equity Value at issuance	15.0x		30.0x
Per share common stock price required for payment	$	60.00	$	120.00
Success payment(s) (in millions)	$	70	$	70

The success payments will be owed, if the value of the Company’s common stock on contractually specified valuation measurement dates equals or exceeds the above outlined multiples. The valuation measurement dates are triggered by events which include an initial public offering of the Company’s stock, a merger, an asset sale, or the sale of the majority of the shares held by certain of the Company’s stockholders or the last day of the term of the success payment agreement. If a higher success payment tier is met at the same time a lower tier is met, both tiers will be owed. Any previous success payments made to MSK are credited against the success payment owed as of any valuation measurement date, so that MSK does not receive multiple success payments in connection with the same threshold. A payment may be triggered on the first anniversary of the closing of the IPO (or the date that is 90 days following such anniversary, at the Company’s option, if the Company is contemplating a capital market transaction during such 90 day period). The value of any such success payment will be determined by the average trading price of a share of the Company’s common stock over the consecutive 90-day period preceding such determination date.

In December 2015, a success payment to MSK was triggered in the amount of $10.0 million, less indirect cost offsets of $1.0 million. The Company elected to make the payment in shares of its common stock, and thereby issued 240,381 shares of its common stock to MSK in March 2016. In April 2016, the Company repurchased the shares issued to MSK at a price per share equal to $41.90.

The estimated fair value of the total success payment obligation to MSK, after giving effect to the success payment achieved in December 2015 and paid in March 2016, was approximately $14.1 million and $48.9 million as of December 31, 2016 and 2015, respectively. With respect to the MSK success payment obligations, the Company recognized a gain of $12.0 million for the year ended December 31, 2016, and recognized expense of $7.3 million and $23.7 million for the years ended December 31, 2015 and 2014, respectively. The gain or expense represents the change in the MSK success payment liability during such periods and twelve months of accrued expense. The MSK success payment liability on the consolidated balance sheets as of December 31, 2016 and 2015 was $9.5 million and $31.0 million, respectively.

The Company’s liability for share-based success payments under the MSK collaboration is carried at fair value and recognized as expense over the term of the five year collaboration agreement. To determine the estimated fair value of the success payment liability, the Company uses a Monte Carlo simulation methodology which models the future movement of stock prices based on several key variables. The

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following variables were incorporated in the calculation of the estimated fair value of the success payment liability as of the following balance sheet dates:

	December 31,
Assumptions	2016			2015
Fair value of common stock	$	18.85		$	43.97
Risk free interest rate	1.90% – 2.31		%	1.91% – 2.20		%
Expected volatility	75		%	70		%
Expected term (years)	4.89 – 7.89			5.89 – 8.89

The computation of expected volatility was estimated using a combination of available information about the historical volatility of stocks of similar publicly-traded companies for a period matching the expected term assumption and the Company’s historical and implied volatility. The risk free interest rate and expected term assumptions depend on the estimated timing of FDA approval. In addition, the Company incorporated the estimated number and timing of valuation measurement dates in the calculation of the success payment liability.

In November 2013, the Company entered into a license agreement with MSK, pursuant to which the Company acquired a worldwide, sublicensable license to specified patent rights and intellectual property rights related to certain know-how to develop, make, and commercialize licensed products and to perform services for all therapeutic and diagnostic uses, which license is exclusive with respect to such patent rights and tangible materials within such know-how, and non-exclusive with respect to such know-how and related intellectual property rights. The patents and patent applications covered by this agreement are directed, in part, to CAR constructs, including bispecific and armored CARs, and their use for immunotherapy.

The Company agreed to pay MSK milestone payments and royalties as a percentage of net sales of licensed products and services by us or our affiliates and sublicensees.

Milestone payments to MSK of up to an aggregate of $6.8 million per licensed product, including JCAR015, are triggered upon the achievement of specified clinical and regulatory milestones and are not creditable against royalties. The Company may terminate the license agreement at any time with advance written notice, but if the Company has commenced the commercialization of licensed products, the Company can only terminate at will if it ceases all development and commercialization of licensed products.

St. Jude Children’s Research Hospital/Novartis

In December 2013, the Company entered into a license agreement with St. Jude (“St. Jude License Agreement”), pursuant to which the Company (1) obtained control over, and the obligation to pursue and defend, St. Jude’s causes of action in Trustees of the University of Pennsylvania v. St. Jude Children’s Research Hospital, Civil Action No. 2:13-cv-1502-SD (E.D. Penn.), which concerned both U.S. Patent No. 8,399,645 (the “‘645 Patent”) and a contractual dispute between St. Jude and the Trustees of the University of Pennsylvania (“Penn”) and (2) acquired an exclusive, worldwide, royalty-bearing license under certain patent rights owned by St. Jude, including the ‘645 Patent, to develop, make, and commercialize licensed products and services for all therapeutic, diagnostic, preventative, and palliative

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uses. The patents and patent applications covered by this agreement are directed, in part, to CAR constructs capable of signaling both a primary and a costimulatory pathway. Together with St. Jude, the Company was a party in, and was adverse to Penn and Novartis Pharmaceutical Corporation (“Novartis”) in, that litigation (the “Penn litigation”), which was settled by the parties in April 2015.

The Company agreed to pay to St. Jude milestone payments and royalties as a percentage of net sales of licensed products and services, and a percentage of St. Jude’s reasonable legal fees incurred in connection with the Penn litigation. Included in general and administrative expense for the years ended December 31, 2015 and 2014 was $5.5 million and $3.6 million, respectively, for legal reimbursements.

Milestone payments to St. Jude of up to an aggregate of $62.5 million are triggered upon the achievement of specified clinical, regulatory, and commercialization milestones for licensed products, including JCAR014 or JCAR017, and are not creditable against royalties. The Company can terminate the agreement for any reason upon advance written notice.

In April 2015, the Company and St. Jude agreed to settle the Penn litigation with Penn and Novartis. In connection with such settlement, in April 2015, the Company entered into a sublicense agreement (the “Penn/Novartis Sublicense Agreement”) with Penn and an affiliate of Novartis pursuant to which the Company granted to Novartis a non-exclusive, royalty-bearing sublicense under certain patent rights, including the ‘645 Patent, to develop, make, and commercialize licensed products and licensed services for all therapeutic, diagnostic, preventative, and palliative uses. This sublicense is not sublicensable without the Company’s prior written consent, although Novartis may authorize third parties to act on its behalf with respect to the manufacture, development, or commercialization of Novartis’ licensed products and licensed services. Under the Penn/Novartis Sublicense Agreement, Novartis paid the Company an initial license fee of $12.3 million, which was recorded as revenue for the year ended December 31, 2015. In addition, Novartis is also required to pay mid-single digit royalties on the U.S. net sales of products and services related to the disputed contract and patent claims (the “Royalty Payments”), a low double digit percentage of the royalties Novartis pays to Penn for global net sales of those products (the “Penn Royalty Payments”), and milestone payments upon the achievement of specified clinical, regulatory, and commercialization milestones for licensed products (the “Milestone Payments”). If the Company achieves any of the milestones with respect to its own products leveraging the same patents, prior to Novartis, the related Milestone Payment will be reduced by 50%. In addition, if the Company achieves any milestone after Novartis, the Company will reimburse Novartis 50% of any Milestone Payment previously paid by Novartis to the Company in respect of such milestone. These milestones largely overlap with the milestones for which the Company may owe a payment to St. Jude under the St. Jude License Agreement and the Milestone Payments would in effect serve to partially offset the Company’s obligations to St. Jude with respect to such milestones. Novartis may terminate the Penn/Novartis Sublicense Agreement at will upon advance written notice to the Company.

In 2016, two clinical milestones were met under both the Penn/Novartis Sublicense Agreement and the St. Jude License Agreement, pursuant to which the Company received payments of $14.3 million from Novartis, and the Company made corresponding payments to St. Jude of $12.5 million.

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Seattle Children’s Research Institute

In February 2014, the Company entered into a sponsored research agreement with Seattle Children’s Research Institute (“SCRI”). The research is conducted under project orders containing plans and budgets approved by the parties. The Company has also entered into clinical support and manufacturing services agreements with SCRI related to the Company’s JCAR017 trials. The Company recognized $4.4 million, $2.5 million, and $0.4 million of research and development expenses in connection with its sponsored research, clinical support and manufacturing services agreements with SCRI for the years ended December 31, 2016, 2015, and 2014, respectively.

In February 2014, the Company entered into a license agreement with SCRI that grants the Company an exclusive, worldwide, royalty-bearing sublicensable license to certain patent rights to develop, make and commercialize licensed products and to perform licensed services for all therapeutic, prophylactic, and diagnostic uses. Effective June 2015, the license agreement was amended to include additional patent rights.

The Company is required to pay to SCRI annual license maintenance fees, creditable against royalties and milestone payments.

The Company also agreed to pay SCRI milestone payments and royalties as a percentage of net sales of licensed products and licensed services. Milestone payments to SCRI related to licensed products, including JCAR014 and JCAR017, are triggered upon the achievement of specified clinical, regulatory, and commercialization milestones and are not creditable against future royalties. The Company may terminate the license agreement for any reason with advance written notice.

Opus Bio

In December 2014, the Company entered into a license agreement with Opus Bio, Inc. (“Opus Bio”) pursuant to which the Company was granted an exclusive, worldwide, sublicensable license under certain patent rights and data to research, develop, make, have made, use, have used, sell, have sold, offer to sell, import and otherwise exploit products that incorporate or use engineered T cells directed against CD22 and that are covered by such patent rights or use or incorporate such data. Certain of the licensed patent rights are in-licensed by Opus Bio from the National Institutes of Health (“NIH”). Under the agreement, the Company is required to use commercially reasonable efforts to research, develop, and commercialize licensed products. Such development must be in accordance with the timelines provided in the license agreement for achievement of certain clinical, regulatory, and commercial benchmarks, and with the development plans set forth in Opus Bio’s agreements with the NIH.

During the year ended December 31, 2014, the Company made an upfront payment to Opus Bio of $20.0 million, which was recorded as research and development expense. Additionally, the Company issued to Opus Bio 1,602,564 shares of its common stock, and recognized $64.1 million in research and development expense based on the fair value of the stock on the issuance date of December 24, 2014.

Upon achievement of certain clinical, regulatory, and commercial milestones set forth in the license agreement, the Company will be obligated to pay Opus Bio additional consideration. The consideration due upon achievement of the first three clinical milestones would consist of additional shares of our

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common stock in an amount equal to the dollar value specified for the applicable milestone, divided by the greater of $10.92 and the arithmetic average of the daily volume-weighted average price of our common stock on The NASDAQ Global Select Market over the 30 trading days preceding the achievement of the milestone, up to a maximum of 4,807,692 shares in the aggregate (this minimum per share value and maximum number of shares subject, in each case, to adjustment for any stock dividend, stock split, combination of shares, or other similar events). Two of these milestones were achieved in 2016, for which the Company issued a total of 603,364 shares of its common stock as payment and recorded research and development expense of $23.2 million based on the fair value of the common stock on the date the milestones were achieved. After giving effect to the achievement of these milestones, as of December 31, 2016, one milestone required to be paid in equity in the amount of $25.0 million remains to be achieved, along with up to $215.0 million in milestones payable in cash.

The license agreement further provides that the Company is required to pay to Opus Bio tiered royalties based on annual net sales of licensed products. The Company will also be required to make certain pass-through payments owed by Opus Bio to NIH under its NIH license agreements, including certain patent costs, development and commercial milestones of up to $2.8 million in the aggregate, royalties based on annual net sales of licensed products. The Company may terminate the agreement at will upon advance written notice.

Fate Therapeutics

In May 2015, the Company entered into a collaboration and license agreement with Fate Therapeutics, Inc. (“Fate Therapeutics”), to identify and utilize small molecules to modulate the Company’s genetically-engineered T cell product candidates to improve their therapeutic potential for cancer patients. The Company paid an upfront fee of $5.0 million in cash and purchased 1,000,000 shares in Fate Therapeutics common stock at a purchase price of $8.00 per share, representing an approximately 5% ownership interest in Fate Therapeutics. The upfront fee and the premium paid for the common stock of $0.8 million were recorded as research and development expense for the year ended December 31, 2015. The investment in Fate Therapeutics is classified as available-for-sale, and reported at fair value with unrealized gains and losses included in accumulated other comprehensive income or loss. Under the collaboration and license agreement, for each product developed by the Company that incorporates modulators identified through the collaboration, the Company will also be required to pay Fate Therapeutics target selection fees and milestone payments upon achievement of clinical, regulatory, and commercial milestones, as well as low single-digit royalties on net sales of licensed products. The Company can terminate the agreement at will upon advance written notice, but such termination may not be effective any earlier than May 2017.

The Company recognized $2.0 million and $1.3 million of research and development expenses in connection with its collaboration agreement with Fate Therapeutics for the years ended December 31, 2016 and 2015, respectively.

Editas Medicine

In May 2015, the Company entered into a collaboration and license agreement with Editas Medicine, Inc. (“Editas”), to pursue research programs utilizing Editas’ genome editing technologies with Juno’s CAR

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and TCR technologies. The Company paid an upfront fee of $25.0 million in cash, which was recorded as research and development expense for the year ended December 31, 2015. Editas is also eligible to receive future research, regulatory, and commercial sales milestones for each program. Following the approval of any products resulting from the alliance, Editas is also eligible to receive tiered royalties on net sales of licensed products. The Company can terminate the agreement at will upon advance written notice.

The Company recognized $3.9 million and $1.9 million of research and development expenses in connection with its collaboration agreement with Editas for the years ended December 31, 2016 and 2015, respectively.

6. Cash Equivalents and Marketable Securities

The following tables summarize the estimated fair value of cash equivalents and marketable securities and gross unrealized holding gains and losses (in thousands):

	December 31, 2016
	Amortized Cost		Gross  Unrealized  Holding Gains		Gross  Unrealized  Holding Losses			Estimated Fair  Value
Cash equivalents:
Money market funds	$	173,746	$	—	$	—		$	173,746
U.S. government and agency securities	4,712		—		—			4,712
Corporate debt securities	6,334		—		(6		)	6,328
Total cash equivalents	184,792		—		(6		)	184,786
Marketable securities:
Commercial paper	64,260		—		—			64,260
U.S. government and agency securities	320,224		51		(68		)	320,207
Corporate debt securities	160,379		18		(180		)	160,217
Total marketable securities	544,863		69		(248		)	544,684
Long-term marketable securities:
U.S. government and agency securities	132,622		4		(364		)	132,262
Corporate debt securities	55,920		1		(177		)	55,744
Equity securities	1,700		—		—			1,700
Total long-term marketable securities	$	190,242	$	5	$	(541	)	$	189,706

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	December 31, 2015
	Amortized Cost		Gross  Unrealized  Holding Gains		Gross  Unrealized  Holding Losses			Estimated Fair  Value
Cash equivalents:
Money market funds	$	177,164	$	—	$	—		$	177,164
Commercial paper	45,352		—		—			45,352
U.S. government and agency securities	2,000		—		—			2,000
Corporate debt securities	5,040		—		—			5,040
Total cash equivalents	229,556		—		—			229,556
Marketable securities:
Commercial paper	73,078		—		—			73,078
U.S. government and agency securities	470,519		2		(485		)	470,036
Corporate debt securities	148,143		1		(245		)	147,899
Total marketable securities	691,740		3		(730		)	691,013
Long-term marketable securities:
U.S. government and agency securities	204,551		1		(770		)	203,782
Corporate debt securities	65,898		33		(195		)	65,736
Equity securities	7,190		—		(3,820		)	3,370
Total long-term marketable securities	$	277,639	$	34	$	(4,785	)	$	272,888

The following tables summarize the gross unrealized holding losses and fair value for investments in an unrealized loss position, and the length of time that individual securities have been in a continuous loss position (in thousands):

	December 31, 2016
	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized  Losses			Fair Value		Unrealized  Losses			Fair Value		Unrealized  Losses
Marketable securities:
U.S. government and agency securities	$	143,480	$	(56	)	$	9,988	$	(12	)	$	153,468	$	(68	)
Corporate debt securities	128,013		(180		)	—		—			128,013		(180		)
Total marketable securities	271,493		(236		)	9,988		(12		)	281,481		(248		)
Long-term marketable securities:
U.S. government and agency securities	129,163		(364		)	—		—			129,163		(364		)
Corporate debt securities	53,643		(177		)	—		—			53,643		(177		)
Total long-term marketable securities	$	182,806	$	(541	)	$	—	$	—		$	182,806	$	(541	)

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	December 31, 2015
	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized  Losses			Fair Value		Unrealized  Losses		Fair Value		Unrealized  Losses
Marketable securities:
U.S. government and agency securities	$	457,641	$	(485	)	$	—	$	—	$	457,641	$	(485	)
Corporate debt securities	144,499		(245		)	—		—		144,499		(245		)
Total marketable securities	602,140		(730		)	—		—		602,140		(730		)
Long-term marketable securities:
U.S. government and agency securities	190,767		(770		)	—		—		190,767		(770		)
Corporate debt securities	50,591		(195		)	—		—		50,591		(195		)
Equity securities	3,370		(3,820		)	—		—		3,370		(3,820		)
Total long-term marketable securities	$	244,728	$	(4,785	)	$	—	$	—	$	244,728	$	(4,785	)

The Company evaluated its securities for other-than-temporary impairment and considers the decline in market value for the securities to be primarily attributable to current economic and market conditions. For the debt securities, it is not more-likely-than-not that the Company will be required to sell the securities, and the Company does not intend to do so prior to the recovery of the amortized cost basis.

The Company has evaluated the near-term prospects of the Fate Therapeutics investment in relation to the severity and duration of the impairment. Based on that evaluation, in 2016 the Company determined that the equity security was other-than-temporarily impaired (“OTTI”), and a loss of $5.5 million was recognized at that time. The OTTI loss is included in net loss on the consolidated statements of operations for the year ended December 31, 2016.

All of our marketable securities have an effective maturity date of three years or less and are available for use and therefore classified as available-for-sale.

7. Fair Value Measurements

The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	173,746	$	—	$	—	$	173,746
Commercial paper	—		64,260		—		64,260
U.S. government and agency securities	—		457,181		—		457,181
Corporate debt securities	—		222,289		—		222,289
Equity securities	1,700		—		—		1,700
Total financial assets	$	175,446	$	743,730	$	—	$	919,176
Financial Liabilities:
Success payment liabilities	$	—	$	—	$	22,786	$	22,786
Contingent consideration	—		—		20,896		20,896
Total financial liabilities	$	—	$	—	$	43,682	$	43,682

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	December 31, 2015
	Level 1		Level 2		Level 3		Total
Financial Assets:
Money market funds	$	177,164	$	—	$	—	$	177,164
Commercial paper	—		118,430		—		118,430
U.S. government and agency securities	—		675,818		—		675,818
Corporate debt securities	—		218,675		—		218,675
Equity securities	3,370		—		—		3,370
Total financial assets	$	180,534	$	1,012,923	$	—	$	1,193,457
Financial Liabilities:
Success payment liabilities	$	—	$	—	$	64,829	$	64,829
Contingent consideration	—		—		37,266		37,266
Total financial liabilities	$	—	$	—	$	102,095	$	102,095

The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. The Level 2 marketable securities include U.S. government and agency securities, corporate debt securities, and commercial paper and are valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities (in thousands):

	Success Payment Liabilities			Contingent  Consideration			Total
Balance at December 31, 2014	$	84,920		$	—		$	84,920
Additions	—			37,188			37,188
Payments	(71,648		)	—			(71,648		)
Changes in fair value (1)	51,557			78			51,635
Balance at December 31, 2015	64,829			37,266			102,095
Payments	(9,569		)	(6,646		)	(16,215		)
Changes in fair value (1)	(32,474		)	(9,724		)	(42,198		)
Balance at December 31, 2016	$	22,786		$	20,896		$	43,682

(1) The amount of success payments and contingent consideration milestones achieved and changes in fair value for success payment liabilities and contingent consideration are recorded in research and development expense in the consolidated statements of operations.

As of December 31, 2016 and 2015, the estimated fair value of the success payment obligations, after giving effect to the success payments achieved by FHCRC and MSK, was approximately $37.0 million and $116.2 million, respectively. With respect to the success payment obligations, the Company recognized a gain of $32.5 million for the year ended December 31, 2016. For the years ended December 31, 2015 and 2014, with respect to the success payment obligation, the Company recognized expense of $51.6 million and $84.9 million, respectively.

The Company utilizes significant estimates and assumptions in determining the estimated success payment liability and associated expense at each balance sheet date. The assumptions used to calculate the

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fair value of the success payments are subject to a significant amount of judgment including the expected volatility, estimated term, and estimated number and timing of valuation measurement dates. A small change in the assumptions and other inputs, such as the fair value of the Company’s common stock, may have a relatively large change in the estimated valuation and associated liability and expense. For example, keeping all other variables constant, a hypothetical 10% increase in the stock price at December 31, 2016 from $18.85 per share to $20.74 per share would have decreased the gain recorded in 2016 associated with the success payment liability by $3.4 million. A hypothetical 10% decrease in the stock price from $18.85 per share to $16.97 per share would have increased the gain recorded in 2016 associated with the success payment liability by $2.9 million. Further, keeping all other variables constant, a hypothetical 35% increase in the stock price at December 31, 2016 from $18.85 per share to $25.45 per share would have decreased the gain recorded in 2016 associated with the success payment liability by $11.3 million. A hypothetical 35% decrease in the stock price from $18.85 per share to $12.25 per share would have increased the gain recorded in 2016 associated with the success payment liability by $10.2 million.

In connection with the acquisitions of Stage and X-Body, the Company also agreed to pay additional amounts based on the achievement of certain technical, clinical, regulatory, and commercialization milestones. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. The Company assesses these estimates on an on-going basis as additional data impacting the assumptions is obtained. Contingent consideration may change significantly as development progresses and additional data are obtained, impacting the Company’s assumptions regarding probabilities of successful achievement of related milestones used to estimate the fair value of the liability and the timing in which they are expected to be achieved. In evaluating the fair value information, judgment is required to interpret the market data used to develop the estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques could result in materially different fair value estimates.

The significant unobservable inputs used in the measurement of fair value of the Company’s contingent consideration are probabilities of successful achievement of the milestones, the period in which these milestones are expected to be achieved ranging from 2017 to 2043, and a discount rate of 16%. Significant increases or decreases in any of the probabilities of success and other inputs would result in a significantly higher or lower fair value measurement, respectively.

In 2016 a milestone requiring payment by the Company of €6.0 million to the former stockholders of Stage was achieved and paid. As of December 31, 2016, the estimated fair values of the contingent consideration associated with the Stage and X-Body acquisitions, after giving effect to the milestone achieved, were $16.6 million and $4.3 million, respectively. As of December 31, 2015, the estimated fair values of the contingent consideration associated with the Stage and X-Body acquisitions were $28.3 million and $9.0 million, respectively. The Company recognized a gain of $9.7 million and expense of $0.1 million related to the change in fair value of the contingent consideration, for the years ended December 31, 2016 and 2015, respectively. This gain or expense is recorded in research and development expense in the consolidated statements of operations.

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8. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	December 31,
	2016			2015
Building and building improvements	$	26,959		$	—
Laboratory and manufacturing equipment	24,746			9,706
Construction in progress	22,083			23,214
Land	6,250			—
Leasehold improvements	5,079			300
Computer equipment, software and other	3,199			773
Build-to-suit asset	—			9,910
Property and equipment, at cost	88,316			43,903
Less: Accumulated depreciation	(6,582		)	(1,817		)
Property and equipment, net	$	81,734		$	42,086

Depreciation expense related to property and equipment was $7.4 million, $1.6 million, and $0.2 million for the years ended December 31, 2016, 2015, and 2014, respectively.

9. Accrued Liabilities and Other Current Liabilities

Accrued liabilities and other current liabilities consisted of the following (in thousands):

	December 31,
	2016		2015
Accrued research and development expenses	$	9,220	$	7,132
Accrued bonus expense	8,844		7,054
Accrued clinical expenses	6,716		7,174
Accrued employee expenses	5,179		3,281
Accrued milestones	413		2,827
Other	6,450		5,908
Total accrued liabilities and other current liabilities	$	36,822	$	33,376

10. Stock-Based Compensation

Equity Incentive Plans

Until the IPO, the Company maintained and granted restricted stock awards and option awards under the 2013 Stock Incentive Plan (the “2013 Plan”) for employees, directors, consultants, and advisors to the Company. The 2013 Plan terminated as of the IPO as to future awards, but will continue to govern restricted stock awards and option awards previously granted thereunder.

In December 2014, the Company’s board of directors adopted the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan became effective the day prior to the effective date of the registration statement for the Company’s IPO, and enables the grant of incentive and non-qualified stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, and other stock-based awards to employees, directors, consultants, and advisors to the Company. Terms of the awards, including vesting

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requirements, are determined by the Company’s board of directors or by a committee appointed by our board of directors.

The 2014 Plan provides for an annual increase in the shares available for issuance thereunder, to be added on the first day of each fiscal year, beginning with the year ending December 31, 2015 and continuing until the expiration of the 2014 Plan, equal to the lesser of (i) four percent (4%) of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year or (ii) such number of shares determined by the board of director or an authorized committee of the board of directors; provided, however, that such determination under clause (ii) will be made no later than the last day of the immediately preceding fiscal year. As of December 31, 2016, the total number of shares available for issuance pursuant to future awards under the 2014 Plan was 7,271,205. As a result of the operation of this provision, on January 1, 2017, an additional 4,240,191 shares became available for issuance under the 2014 Plan.

Generally, awards granted by the Company under the 2013 Plan and 2014 Plan vest over four years.

Employee Stock Purchase Plan

In December 2014, the Company’s board of directors adopted the 2014 Employee Stock Purchase Plan (the “ESPP”). The ESPP is administered by the Company’s board of directors or by a committee appointed by the board of directors. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for consecutive six-month offering periods beginning on the first trading day on or after November 15 and May 15 of each year, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. The number of shares issued under the ESPP was 86,354 and 67,664 for the years ended December 31, 2016 and 2015. For the year ended December 31, 2014, no shares were issued under the ESPP.

The ESPP also provides for an annual share increase, to be added on the first day of each fiscal year, beginning with the year ending December 31, 2015 and continuing until the expiration of the ESPP, equal to the lesser of (i) one and a half percent (1.5%) of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year or (ii) such number of shares determined by the board of directors or authorized committee of the board of directors. As of December 31, 2016, the total number of shares available for future issuance pursuant to the ESPP was 4,238,385. As a result of the operation of this provision, on January 1, 2017, an additional 1,590,072 shares became available for issuance under the ESPP.

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Stock-Based Compensation

Stock-based compensation expense is recognized in the consolidated statements of operations as follows (in thousands):

	Year Ended December 31,
	2016		2015		2014
Research and development (1)	$	38,432	$	17,089	$	2,908
General and administrative	20,953		14,852		3,596
Total stock-based compensation expense (2)	$	59,385	$	31,941	$	6,504

(1)Included in research and development stock-based compensation expense for the year ended December 31, 2016 was $2.2 million related to the payout of employee stock options in connection with the AbVitro acquisition.

(2)Included in stock-based compensation expense for the years ended December 31, 2016, 2015, and 2014 is $7.3 million, $8.1 million, and $2.8 million, respectively, related to service providers other than our employees, scientific founders, and directors, including $3.9 million, $6.2 million, and $2.5 million, respectively, for a former co-founding director who became a consultant upon his departure from the board of directors.

Management estimates expected forfeitures and recognizes compensation costs only for those equity awards expected to vest. Total stock-based compensation cost related to unvested awards not yet recognized and the weighted average periods over which the awards are expected to be recognized as of December 31, 2016 for all employees are as follows:

	Stock Options		Restricted Stock and RSUs
Unrecognized stock-based compensation cost (in thousands)	$	113,526	$	19,974
Expected weighted average period compensation costs to be recognized (years)	2.69		2.10

Restricted Stock and RSUs

A summary of the Company’s restricted stock and RSU activity is as follows (in thousands, except per share data):

	Restricted Stock and RSUs		Weighted  Average Fair  Value at Date of  Grant per Share
Unvested shares as of December 31, 2014	8,353		$	1.46
Granted	396		49.51
Vested	(3,245	)	0.51
Forfeited	(27	)	0.60
Unvested shares as of December 31, 2015	5,477		3.72
Granted	382		29.96
Vested	(2,752	)	3.52
Forfeited	(52	)	10.04
Unvested shares as of December 31, 2016	3,055		$	7.10

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The following table summarizes additional information related to restricted stock and RSU activity (in thousands):

	Year Ended December 31,
	2016		2015		2014
Fair value of vested restricted stock and RSUs	$	90,464	$	158,541	$	21,365

Stock Options

A summary of the Company’s stock option activity is as follows (in thousands, except per share and contractual life data):

	Stock Options		Weighted Average Exercise Price per Share		Weighted  Average  Remaining  Contractual Life  (years)	Aggregate  Intrinsic Value
Outstanding as of December 31, 2014	2,720		$	7.23
Granted	2,915		49.08
Exercised	(269	)	7.39
Forfeited/Cancelled	(147	)	19.20
Outstanding as of December 31, 2015	5,219		30.25
Granted	4,091		29.09
Exercised	(412	)	7.11
Forfeited/Cancelled	(377	)	38.62
Outstanding as of December 31, 2016	8,521		$	30.28	8.63	$	22,162
Exercisable as of December 31, 2016	2,291		$	29.75	8.14	$	9,885

The fair value of each stock option granted has been determined using the Black-Scholes option pricing model. The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted to employees, directors, and consultants included the following:

	December 31,
Assumptions	2016		2015		2014
Risk free interest rate	1.13% — 2.45%		1.53% — 2.35%		1.59% – 2.17%
Expected volatility	70% —  75%		70% - 80%		75	%
Expected life (years)	5.27 - 9.97		6.02 - 10.00		6.25 - 10.00
Expected dividend yield	—	%	—	%	—	%

For employees, scientific founders, and directors, the expected life was calculated based on the simplified method as permitted by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. For other service providers, the expected life was calculated using the contractual term of the award. Management’s estimate of expected volatility was based on available information about the historical volatility of stocks of similar publicly-traded companies for a period matching the expected term assumption and its own historical and implied future volatility. The risk-free interest rate is based on a U.S. Treasury instrument whose term is consistent with the expected life of the stock options.

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The following table summarizes additional information related to stock option activity:

	Year Ended December 31,
	2016		2015		2014
Aggregate intrinsic value of stock options exercised (in thousands)	$	12,177	$	10,925	—
Weighted average grant date fair value per share for options granted	$	18.30	$	32.51	$	4.86

11. Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) and the adjustments to other comprehensive income (loss) are as follows (in thousands):

	Foreign Currency  Translation  Adjustments			Net Unrealized  Gain (Loss) on  Marketable  Securities			Accumulated Other  Comprehensive  Income (Loss)
Balance at December 31, 2014	$	—		$	(90	)	$	(90	)
Other comprehensive loss	(605		)	(5,388		)	(5,993		)
Balance at December 31, 2015	(605		)	(5,478		)	(6,083		)
Other comprehensive income (loss)	(1,186		)	4,427			3,241
Balance at December 31, 2016	$	(1,791	)	$	(1,051	)	$	(2,842	)

The details of the components of other comprehensive income (loss) are as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014
Other comprehensive income (loss):
Foreign currency translation adjustments (1)	$	(1,186	)	$	(605	)	$	—
Net change in unrealized gain (loss) on marketable securities:
Unrealized gain (loss) on marketable securities (2)	(1,063		)	(5,388		)	(90		)
Reclassification adjustment for loss included in net loss (3)	5,490			—			—
Total other comprehensive income (loss)	$	3,241		$	(5,993	)	$	(90	)

(1)Foreign currency translation adjustments are not adjusted for income taxes as they relate to permanent investments in the Company’s international subsidiary.

(2)Unrealized gain (loss) on marketable securities is net of income taxes of $0.3 million for the year ended December 31, 2016. There was no income tax effect recorded on unrealized gain (loss) for the years ended December 31, 2015 and 2014.

(3)Amounts reclassified from accumulated other comprehensive income or loss are included in other-than-temporary impairment loss on the consolidated statements of operations. There was no income tax effect on this reclassification adjustment for the year ended December 31, 2016 as it does not create taxable income in future years.

12. Income Taxes

The Company recorded an income tax benefit of $10.7 million on a pre-tax loss of $256.2 million for the year ended December 31, 2016. Of the total income tax benefit, $6.7 million relates to the release of a portion of valuation allowance on the U.S. deferred tax assets as a result of the deferred tax liabilities

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established for intangible assets from the acquisition of AbVitro, net of tax attributes, and $3.6 million relates to the benefit associated with the net loss incurred by the Company’s German subsidiary for the year ended December 31, 2016.

In connection with the Celgene Collaboration Agreement and Celgene Share Purchase Agreement, the Company does not expect that the $849.8 million in consideration allocable to the sale of the Company’s shares and future rights to purchase shares of common stock of the Company under the Celgene Share Purchase Agreement will result in gain or loss in accordance with the IRC. The Company has determined that the $150.2 million consideration allocable to the upfront payment for the Celgene Collaboration Agreement is fully taxable, partially in 2015, with the remainder in 2016. In connection with the Celgene CD19 License, the Company has determined that the $50.0 million option exercise fee is fully taxable, partially in 2016, with the remainder in 2017.

Loss before income taxes is attributable to the following tax jurisdictions (in thousands):

	Year Ended December 31,
	2016		2015		2014
United States	$	245,156	$	236,028	$	243,407
Foreign	11,081		6,108		—
Loss before income taxes	$	256,237	$	242,136	$	243,407

The components of the benefit for income taxes are as follows (in thousands):

	Year Ended December 31,
	2016		2015		2014
Current:
United States	$	40	$	—	$	—
Total current	40		—		—
Deferred:
United States	$	6,985	$	1,100	$	—
Foreign	3,632		1,660		—
Total deferred	10,617		2,760		—
Benefit for income taxes	$	10,657	$	2,760	$	—

As of December 31, 2016 and 2015, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $249.4 million and $167.3 million, respectively, which are available to reduce future taxable income. Of these NOL carryforwards, a $7.0 million benefit will be recorded to equity when utilized. The Company also had U.S. federal and state tax credits of $34.2 million and $14.6 million as of December 31, 2016 and 2015, respectively, which may be used to offset future tax liabilities. The NOL and tax credit carryforwards will begin to expire in 2033. The NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The Company undertook a formal IRC Section 382 study in 2016. Based on this study, the Company concluded that it has experienced such “ownership changes” but its ability to use its U.S. NOLs and tax credit carryforwards is not subject to a material annual limitation. However, subsequent ownership changes may further affect the limitation in future years. The Company also has

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German NOL carryforwards of $13.4 million and $4.9 million as of December 31, 2016 and 2015, respectively, which have an indefinite carryforward period.

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:

	Year Ended December 31,
	2016		2015		2014
Federal statutory tax	35.0	%	35.0	%	34.0	%
Foreign tax rate differential	(0.1	)	(0.1	)	—
Valuation allowance	(35.1	)	(36.2	)	(32.4	)
Tax credits	5.5		3.8		0.7
Other	(1.1	)	(1.4	)	(2.3	)
Total	4.2	%	1.1	%	—	%

The principal components of the Company’s net deferred tax liabilities are as follows (in thousands):

	December 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	85,154		$	56,862
Tax credit carryforwards	34,243			14,561
Acquired technology	61,866			57,369
Success payments	34,804			47,745
Stock compensation	12,803			4,342
Deferred revenue	45,770			—
Other	7,649			5,019
Gross deferred tax assets	282,289			185,898
Valuation allowance	(271,635		)	(183,597		)
Deferred tax assets, net of valuation allowance	10,654			2,301
Deferred tax liabilities:
Acquired technology	(10,218		)	(10,540		)
Other	(5,588		)	(707		)
Deferred tax liabilities	(15,806		)	(11,247		)
Net deferred tax liabilities	$	(5,152	)	$	(8,946	)

The valuation allowance relates primarily to net U.S. deferred tax assets from operating losses, research and development tax credit carryforwards, amounts paid and accrued to enter into various agreements for which the tax treatment requires capitalization and amortization, success-based payments that are accrued but not yet paid for tax purposes, and deferred revenue associated with the Celgene Collaboration Agreement. The Company’s deferred tax liability relates primarily to technology acquired in the acquisition of Stage.

The Company maintains a full valuation allowance on its net U.S. deferred tax assets. The assessment regarding whether a valuation allowance is required considers both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative loss in recent years and its forecasted losses in the near-term as significant negative evidence. Based upon a review of the four sources of income identified within ASC

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740, Accounting for Income Taxes, the Company determined that the negative evidence outweighed the positive evidence and a full valuation allowance on its U.S. net deferred tax assets will be maintained. The Company will continue to assess the realizability of its deferred tax assets going forward and will adjust the valuation allowance as needed. Increases in the valuation allowance were $88.0 million and $89.2 million for the years ended December 31, 2016 and 2015, respectively. The Company has determined that it is more-likely-than-not that it will realize the benefit of the losses for its German subsidiary and has not recorded a valuation allowance against the German deferred tax assets.

The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more-likely-than-not to be sustained upon examination by the relevant income tax authorities. The Company is generally subject to examination by the U.S. federal and local income tax authorities for all tax years in which a loss carryforward is available and is subject to examination in Germany for four years. The Company’s German subsidiary is currently under examination by the German tax authorities for the years ended December 31, 2013 through December 31, 2015.

The Company applies judgment in the determination of the consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. As of December 31, 2016 and 2015, the Company’s uncertain tax positions were immaterial.

13. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders is calculated by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period, without consideration for common stock equivalents. The Company’s potentially dilutive shares, which include unvested restricted stock, unvested RSUs, options to purchase common stock, and potential shares issued for success payments, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The amounts in the table below were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated due to their anti-dilutive effect (in thousands):

	Year Ended December 31,
	2016	2015	2014
Unvested restricted stock and RSUs	3,055	5,477	8,353
Options to purchase common stock	8,521	5,219	2,720
Estimated number of shares issuable for success payments (1)	—	204	1,628
Total	11,576	10,900	12,701

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(1)Represents the number of shares that would have been issued if the success payment valuation date had been December 31 of each year presented. The number of shares issued, for purposes of this presentation, is calculated by dividing the success payment by the stock price per share on the valuation date.

As of December 31, 2016, the Company’s stock price was below the threshold that would require additional payments to FHCRC or MSK, therefore no shares are included.

In December 2015, success payments to FHCRC were triggered in the amount of $75.0 million, less indirect cost offsets of $3.3 million and a success payment to MSK was triggered in the amount of $10.0 million, less indirect cost offsets of $1.0 million. The Company elected to make the payments in shares of its common stock and thereby issued 1,601,085 shares to FHCRC in December 2015 and 240,381 shares to MSK in March 2016. For purposes of this presentation, the number of shares to be issued as of December 31, 2015 was calculated by dividing the success payment achieved by the price of the Company’s common stock on December 31, 2015.

As of December, 31, 2014, the Company’s common stock closing price per share was $52.22, which would have resulted in a success payment of $85.0 million ($75.0 million for FHCRC and $10.0 million for MSK).

14. Commitments and Contingencies

Leases

The Company has entered into various non-cancelable lease agreements for its office, laboratory, and manufacturing spaces with original lease periods expiring between 2017 and 2026.

In 2015, the Company entered into a lease for office and laboratory space in a building currently under construction located in Seattle, Washington. The lease is for approximately 241,300 square feet of space and the commencement date of the lease will be May 2017 with an initial term of 84 months. The Company intends for this space to serve as its corporate headquarters.

In addition to minimum rent, certain leases require payment of real estate taxes, insurance, common area maintenance charges and other executory costs. These executory costs are not included in the table below. The following table summarizes the Company’s future minimum lease commitments as of December 31, 2016 (in thousands):

Year ending December 31:
2017	$	3,627
2018	11,493
2019	13,417
2020	13,564
2021	13,877
Thereafter	36,858
Total minimum lease payments	$	92,836

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Rent expense for the years ended December 31, 2016, 2015, and 2014 was $5.6 million, $2.3 million, and $0.9 million, respectively.

Litigation

From time to time, the Company may become involved in litigation or proceedings relating to claims arising from the ordinary course of business.

Beginning on July 12, 2016, three putative securities class action complaints were filed against the Company and several of its officers. On October 7, 2016, these complaints were consolidated into a single action titled “In re Juno Therapeutics, Inc.” On October 19, 2016, the Court appointed a lead plaintiff. On December 12, 2016, the lead plaintiff filed an amended complaint.

The putative class in the amended complaint is composed of all purchasers of the Company’s securities between May 9, 2016 and November 22, 2016, inclusive. The amended complaint names as defendants the Company, its chief executive officer, its chief financial officer, and its chief medical officer and generally alleges material misrepresentations and omissions in public statements regarding patient deaths in the Company’s Phase II clinical trial of JCAR015 and the safety of JCAR015, violations by all named defendants of Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, as well as violations of Section 20(a) of the Exchange Act by the individual defendants. The amended complaint seeks compensatory damages of an undisclosed amount. On February 2, 2017, the Company and the individual defendants filed a motion to dismiss the complaint.

The Company has not recorded any liability as of December 31, 2016 since any potential loss is not probable or reasonably estimable given the preliminary nature of the proceedings.

15. Related-Party Transactions

The Company is party to the Celgene Collaboration Agreement, the Celgene Share Purchase Agreement, a voting agreement, and a registration rights agreement with Celgene, who is a holder of more than 5% of the Company’s common stock. See Note 5, Collaboration and License Agreements.

16. Employee Benefit Plan

In January 2014, the Company adopted a 401(k) retirement and savings plan (the “401(k) Plan”) covering all employees. The 401(k) Plan allows employees to make pre- and post-tax contributions up to the maximum allowable amount set by the IRS. Through December 31, 2016, the Company has not made any matching contributions to the 401(k) Plan on behalf of participants.

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17. Selected Quarterly Financial Data (Unaudited)

The following table contains quarterly financial information for the years ended December 31, 2016 and 2015 (in thousands, except per share data). The unaudited quarterly information has been prepared on a basis consistent with the audited consolidated financial statements and includes all adjustments that the Company considers necessary for a fair presentation of the information shown. The operating results for any fiscal quarter are not necessarily indicative of the operating results for a full fiscal year or for any future period and there can be no assurances that any trend reflected in such results will continue in the future.

Year Ended December 31, 2016	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Loss from operations (1)	$	(79,901	)	$	(61,524	)	$	(58,469	)	$	(55,710	)
Net loss	$	(71,138	)	$	(64,767	)	$	(56,897	)	$	(52,778	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.72	)	$	(0.64	)	$	(0.56	)	$	(0.51	)

Year Ended December 31, 2015	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Loss from operations (2)	$	(65,160	)	$	(67,965	)	$	(23,533	)	$	(87,442	)
Net loss	$	(64,965	)	$	(65,958	)	$	(23,240	)	$	(85,213	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.79	)	$	(0.79	)	$	(0.26	)	$	(0.89	)

(1)Included in loss from operations in the year ended December 31, 2016 are the following (in thousands):

Year Ended December 31, 2016	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Non-cash success payment expense (gain)	$	(6,583	)	$	3,465		$	(17,640	)	$	(11,716	)
Non-cash contingent consideration expense (gain)	$	(1,012	)	$	(4,499	)	$	336		$	(4,549	)
Non-cash expense related to milestones paid to Opus Bio	$	23,227		$	—		$	—		$	—
Upfront payments related to the acquisition of technology	$	—		$	—		$	15,000		$	—

(2)Included in loss from operations in the year ended December 31, 2015 are the following (in thousands):

Year Ended December 31, 2015	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
Non-cash success payment expense (gain)	$	38,910	$	3,961		$	(25,586	)	$	34,272
Non-cash contingent consideration expense (gain)	$	—	$	(80	)	$	1,283		$	(1,125	)
Upfront payments related to the acquisition of technology	$	—	$	30,810		$	—		$	—

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