Juno Therapeutics (JUNO) soared ahead of the high-profile American Society of Hematology conference earlier this month, but it's been tough going for investors ever since. The sell-off in its shares is likely being caused by concern over how the company will position its non-Hodgkin lymphoma therapy, JCAR-017, in an increasingly crowded market. Additionally, worry over supply constraints and obstacles to reimbursement are likely at fault, too.

No. 1: Is safety enough?

JCAR-017 is a chimeric antigen receptor T-cell therapy (CAR-T) that reengineers a patient's immune system so that it can better find and fight cancer. The therapy involves removing a patient's T-cells, sending them to a facility where they're altered, and infusing them back into the patient. It's a complex and effective approach, but JCAR-017 is far from the only gene therapy that works this way.

A woman standing in front of a chalkboard covered in question marks.


If JCAR-017 eventually reaches the market, it will have to elbow market share away from Gilead Sciences' (GILD 0.12%) Yescarta and Novartis' (NVS 2.27%) Kymriah, two CAR-Ts that work similarly. Yescarta is already approved for use in non-Hodgkin lymphoma patients and Kymriah is expected to win approval in that patient population soon. 

Because Yescarta and Kymriah have the same mechanism of action and they've got a head start on JCAR-017, investors are right to wonder how JCAR-017 will differentiate itself. Heading into this month, some had hoped that better efficacy and safety would establish it as the best-in-class option. However, data reported this month has some questioning that theory.

In trials, the complete response rate was 50% with JCAR-017, but some investors were hoping for a higher figure. Yescarta and Kymriah both deliver response rates near 40%. 

Investors were also hoping that outpatient dosing of JCAR-017 might provide it with an edge with doctors and patients, but Novartis reported data this month that suggests Kymriah can also be given outpatient. 

JCAR-017's safety data was undeniably strong, with it seemingly causing fewer cases of severe cases of cytokine release syndrome and neurotoxity than its competitors. However, without a bigger advantage in efficacy and dosing, it's not clear if the safety data alone will establish it as the standard-of-care CAR-T. If it doesn't, then JCAR017's success or failure will depend on efficacy, pricing, and doctors' real-world experience with Yescarta and Kymriah. If JCAR-017's efficacy and pricing are similar and doctors see positive real-world results with Yescarta and Kymriah, then it could be tougher for JCAR-017 to win sales than previously hoped.

No. 2: Can Juno meet potential demand?

Gene therapy relies on viral vectors that are used to insert functional genes into human cells. However, there are only a few companies that make these inactivated viral vectors and that could make it tough for companies like Juno Therapeutics to secure the quantities of them necessary to meet future demand.

Securing enough viral vectors could be costly, too. Viral vector manufacturers have considerable pricing power and that's forcing drugmakers to pay up to guarantee supply. These costs could make JCAR-017 less profitable than it would be otherwise.

No. 3: Who pays?

Securing reimbursement from private insurers and Medicare is one of the biggest challenges facing gene therapy drugmakers. Kymriah and Yescarta cost $373,000 and $475,000, respectively, and so far, those prices are proving to be a barrier to their use.

According to Bloomberg, only five patients have been administered Yescarta since it launched about two months ago. In part, its limited use stems from the fact that its total cost of treatment, including services, can clock in between a half-million dollars and $1 million. Since Medicare doesn't have a distinct reimbursement code for Yescarta yet and commercial insurers are only approving it on a case-by-case basis, hospitals are nervous about ordering it without knowing for certain that they'll get paid.

The payment logjam should improve as providers gain more experience invoicing payers, but until then, CAR-T reimbursement is undeniably a risk that investors have to consider.