As of the end of September, billionaire investor George Soros owned more than 660,000 shares of immunotherapy biotech stock Kite Pharmaceuticals (NASDAQ:KITE), shares that Soros could very well have bought during Kite's IPO in July ahead of a 200% jump.
Soros' bet on Kite suggests that he's a fan of immunotherapy plays, so it will be intriguing to learn whether or not he also takes a stake in Juno Therapeutics (NASDAQ:JUNO), an immunotherapy stock that IPO'd last Friday. Since Soros could be considering Juno, here's what you should know about the emerging biotech company.
First, a bit of background
Immunotherapy is a highly promising approach to cancer treatment that does away with chemotherapy's shock-and-awe approach of destroying both cancerous and healthy cells.
Instead, immunotherapy battles back against cancer by re-engineering the body's own immune system. Juno hopes to do this by altering the genetic code of the immune system's T-cells to allow them to more easily recognize and kill cancer cells.
Similar to Kite, Juno's research focuses primarily on B-cell lymphomas and leukemias and during very early stage research, Juno's approach has demonstrated an ability to shrink tumors.
For example, Juno's JCAR015 prompted remission in 91% of 22 patients with relapsed/refratory B cell acute lymphoblastic leukemia during phase 1 trials. Results from phase 1 trials should be viewed skeptically, but since just 10% or fewer of these patients have gone into complete remission without taking JCAR015, the findings appear very promising.
Getting money in the bank
Historically, just 7% of cancer drugs entering phase 1 trials ever end up winning the FDA green light and many of those drugs fail because they present considerable safety risks.
In Juno's regulatory filing for its IPO, the company said that 39% of the 23 adult patients in its JCAR015 trial experienced severe cytokine release syndrome, or sCRS. Two of those patients died from causes either directly or indirectly related to sCRS, prompting the FDA to place a clinical hold on the trial until changes were put in place. After those changes were made in April, the clinical trial resumed, but the fact that the hold happened serves as a good reminder to investors of the risk associated with these clinical stage drugs.
In order to fund research into its technology that will hopefully allow Juno to overcome these and other risks, the company is tapping equity markets to build up cash. Fortunately, demand for Juno's shares was high leading up to the IPO, which allowed Juno to increase the offer price on its shares to $24 from the previous price per share range of between $21-$23.
Thanks to more money in the bank, Juno expects to launch a phase 2 trials for JCAR015, as well as a phase 1 trial in relapsed/refractory B cell non-Hodgkin's lymphoma, and phase 1 trials for at least four additional product candidates targeting different cancer-associated proteins, in 2015.
Biotech stocks have been market darlings this past year and emerging biotech stocks like Kite Pharmaceuticals have been some of this year's biggest winners.
However, emerging, clinical-stage biotech stocks present significant risks. Any number of things can derail clinical trials and the enormous expense of those trials often means that investors are diluted later on by stock offerings necessary to keep cash stockpiles flush. As a result, these companies are best suited for risk-tolerant investors who can endure a complete loss. That being said, immunotherapy is incredibly intriguing and that suggests these companies should remain on investors radars, regardless of whether or not Soros takes a stake.
Todd Campbell has no position in any stocks mentioned. Todd owns shares in E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.