What happened

When Celgene announced it was acquiring Juno Therapeutics for $9 billion yesterday, it sent a wave through the market. Shares of many biopharma companies developing immunotherapies caught it, rode it, and then hopped off when the market closed yesterday. Fate Therapeutics (NASDAQ:FATE) didn't get the memo.

Shares of the small-cap biopharma rose 18% today -- following yesterday's 13.7% trek higher -- as investors kept the momentum going. While Fate Therapeutics is actually partnered with Juno Therapeutics on an early-stage program, the recent share appreciation seems to be a nod to the company's broad immunotherapy potential.

As of 11:35 a.m. EST, the stock had settled to a 14% gain.

A businessman drawing a green chart showing growth.

Image source: Getty Images.

So what

Juno Therapeutics is developing immunotherapies based on chimeric antigen receptor T-cell (CAR-T) and T-cell receptor (TCR) technologies. It's widely considered one of the top CAR-T companies and is expected to be next in line to receive market approval for such a drug, albeit behind two competitors. The acquisition by Celgene shows there's still plenty of serious interest in the field, which has demonstrated very promising results in treating pediatric cancers.

Fate Therapeutics can't really be compared to Juno Therapeutics, as it's still in the earliest stages of development, but the tiny peer has taken a shotgun approach to immunotherapy and cell therapy. It starts with induced pluripotent stem cells, which are then coaxed to transform into various immune cells, including natural killer cells (NKs), T-cells, and CD34+ cells. The idea is to create an off-the-shelf cellular immunotherapy production platform using stem cells. 

The company is also running its own clinical trials investigating several immunotherapy drug candidates. Therefore, given the increased excitement surrounding the field this week, it's easy to see why Wall Street is suddenly paying attention to Fate Therapeutics.

That said, it has much left to prove. Aside from a small partnership with Juno Therapeutics to create more effective T-cells, none of its clinical programs involve commercial partners. Mr. Market may be betting that will change, but the company has been around for years (and the stock has been publicly traded since 2013), so that may not be a reasonable expectation.

Now what

Immunotherapies, cell therapies, and gene therapies have tremendous potential to transform medicine, but each is in the early days of its technological arc. The hype surrounding novel, engineered biologics still seems to be outpacing reality. While there will be epic winners (and equally big losers), it's much too early to say where Fate Therapeutics is headed. Despite the euphoria at the moment, the company's future will be determined in the clinic -- and there's a long way to go.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.