Juno Therapeutics Inc (NASDAQ:JUNO) stock is up about 50% after the Wall Street Journal reported on Tuesday that biotech giant Celgene Corporation (NASDAQ:CELG) is in talks to buy the company.

This deal makes sense for multiple reasons. It will likely happen. And soon. But after this big jump, Juno stock is priced accordingly.

Consequently, I don’t think there is any reason to jump into the rally.

Here’s a deeper look.

Celgene Will Likely Buy Juno

Juno Therapeutics is a pioneer in the booming cell therapy industry, where biotech companies are developing modified human immune cells to combat cancer cells.

Granted, Juno hit a big road bump earlier this year when patient deaths forced the company to shelf what could’ve been the first cell therapy treatment on the market. The company, however, has since rebounded by producing promising efficacy data for its newer therapies.

In all likelihood, Juno will release a wildly successful cell therapy product within the next 12 to 24 months. A pipeline of successful cell therapy product launches will likely follow suit.

Celgene lacks significant exposure to this rapid-growth industry. But its competitor Gilead Sciences, Inc. (NASDAQ:GILD) does have significant exposure. They just shelled out nearly $12 billion to buy Kite Pharma Inc (NASDAQ:KITE), a cell therapy company similar to Juno.

Therefore, it’s likely that Celgene will likewise gain significant exposure to this space through acquisition. This gives the acquisition rumors surrounding Juno stock some legitimacy.

…But The Price Tag Won’t Be $12 Billion

The price tag for a buyout won’t be much higher than where Juno stock is currently trading. Gilead acquired Kite Pharma for $11.9 billion, or $180 per share. That takeover price represented a 50% premium to Kite’s 30-day volume weighted average stock price.

Why would Celgene pay a bigger premium for Juno than the premium Gilead paid for Kite? They won’t.

Juno is a slightly more speculative play than Kite, with benefits that aren’t as big and won’t kick in as soon. According to consensus analyst estimates, Gilead’s cell therapy treatments will start yielding material revenue this year, and will hit $1.7 billion by 2022. Juno’s cell therapy treatments won’t yield any revenue this year, and just $1.2 billion by 2022.

Smaller scope with benefits that are farther down the road means that Celgene will pay (at most) a 50% premium for Juno. Juno’s 200 and 50-day exponential moving averages are around $48. Juno stock currently trades at about $69, or about a 40% premium to those moving averages. A 50% premium implies a takeover price of around $72 per share.

At that price a takeover is pretty likely. I peg it in the 70% to 80% range.

But there is also a 20% to 30% chance that no deal materializes.

After all, the wording across the press is that the two companies are “in talks”, which doesn’t imply this deal is set in stone. In such a scenario, Juno stock would fall back to where it has been trading recently, or around $48.

Lets do some math. There is a 75% chance Juno stock heads to $72, and a 25% chance it heads to $48. That implies a fair value of about $66.

Bottom Line on Juno Stock

There is a high probability that Juno stock gets taken out by Celgene at a price north of $70 per share.

But that is already price into Juno stock after this big rally.

As such, I don’t see any reason to jump into Juno stock here and now. If it keeps dropping to materially below $66, that would be a “buy the dip” opportunity. Until then, the stock seems fully priced with overly optimistic acquisition hopes.

As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.