What happened
Shares of Juno Therapeutics, Inc. (JUNO), a clinical-stage biotech that reprograms immune cells to battle cancer, gained 13.2% in January, according to data from S&P Global Market Intelligence. The industry-tracking iShares Nasdaq Biotechnology Index gained just 2.9% over the same period. The lack of significant news surrounding the biotech last month suggests that some bargain buying following a rough end to 2016 drove up the stock.
So what
Last summer, Juno Therapeutics stock was beaten up after the Food and Drug Administration halted a trial with its lead candidate, JCAR015, following unexpected patient deaths. The company shifted blame to a type of chemotherapy used to precondition patients before infusion with modified immune cells, but additional patient deaths in November led management to shut down the study again in November.
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One of Juno's rivals, Kite Pharma (NASDAQ: KITE), is advancing a candidate similar to JCAR015. This drug, KTE-C19, also known as Axi-Cel, is passing through clinical trials with far less side-effect drama. The biotech has already started a rolling submission that allows the FDA to begin this reviewing the candidate's application while it continues gathering clinical trial data.
The market's reaction to patient deaths in JCAR015's ill-fated study seems to have gone a step too far. The company's enterprise value of just $1.24 billion at the beginning of January seems to undervalue the assets in its pipeline. While it seems Juno won't be first to bring a chimeric antigen receptor modified T-cell (CAR-T) therapy to the U.S. oncology space, there's still plenty for the biotech to look forward to. Beyond the ill-fated former lead candidate, it has a handful of novel compounds in 11 active development programs.
Now what
Juno finished September with more than $1 billion in cash and equivalents. That should be enough to keep the doors open long enough to prepare its new lead candidate (JCAR017) for an FDA submission. The program is on pace to begin a trial designed to support an application this year. Success could lead to Juno's first filing and a possible approval in 2018.
Although JCAR017 could go on to generate sales north of $2 billion each year for Juno, there's a solid chance it will compete with KTE-C19 for adult non-Hodgkin lymphoma patients. In the quarters ahead, investors will want to keep their eyes open for data that signals its new lead candidate can unseat its potential rival.
