Last week, Celgene Corp. (NASDAQ:CELG) shocked biotech investors when it agreed to pay $1 billion for $850 million worth of Juno Therapeutics' (NASDAQ:JUNO) stock and a handful of licensing rights, leaving Celgene with a 10% stake in the smaller company.
Juno Therapeutics is at the forefront of developing chimeric antigen receptor, or CAR, T-cell therapies, and the deal secures Celgene's access to next-generation therapies. However, Juno Therapeutics isn't the only company exploring the potential to reengineer T cells to help patients' immune systems better find and destroy cancer cells; Kite Pharma (NASDAQ:KITE) and Ziopharm Oncology (NASDAQ:ZIOP) are also exploring the possibility.
Locking up a leader
CAR-T approaches involve genetically engineering T cells outside of the body to produce CARs on the cells' surface that allow the T cells to recognize a specific protein, or antigen, on cancer cells. Once enough CAR-producing T cells are created, they are reintroduced into the patient's body, where they further multiply and attack their targets.
Juno Therapeutics' most advanced therapy is JCAR015, a CAR-T approach for use in adults with acute lymphoblastic leukemia. In a small, early-stage trial, 89% of 27 evaluable patients treated with JCAR015 experienced complete remission.
Those results were likely a major reason why Celgene inked its recently-announced deal, which includes that big equity investment, as well as an up-front cash payment to lock up options to foreign rights to Juno Therapeutics' CAR-T program.
Attempting to outpace it
The influx of cash gives Juno Therapeutics plenty of financial leg room to advance its pipeline, but Kite Pharma might still beat it to the punch.
Kite Pharma is developing KTE-C19 as a therapy for the treatment of aggressive non-Hodgkin lymphoma that expresses the CD19 antigen, the same protein that JCAR015 targets.
Last August, Kite Pharma reported that eight of 13 patients with B-cell cancer receiving KTE-C19 experienced complete remission and that another four patients underwent partial remission.
That's a solid showing for this early-stage program, and while Juno Therapeutics' new cash gives it flexibility, Kite Pharma's coffers aren't too shabby either. Exiting the first quarter, Kite Pharma's balance sheet boasted $428.5 million in cash and no debt.
Not to be left out, Ziopharm Oncology is teaming up with the cancer experts at the MD Anderson Cancer Center and Germany-based Merck Serono to develop its own CAR-T therapies.
Ziopharm Oncology's approach differs from Juno Therapeutics and Kite Pharma based on its focus on reengineering T cells that are more effective and pose lower risk to healthy cells. To do that, Ziopharm is employing Intrexon Corp.'s RheoSwitch technology, which can switch on and off T-cell activity.
The most advanced drug in Ziopharm Oncology's pipeline is Ad-RTS-IL-12, which is being studied in phase 2 trials for use in breast cancer patients. Other drugs in development include CAR-T therapies for B-cell malignancies, such as those being targeted by Juno Therapeutics and Kite Pharma. Overall, Ziopharm is guiding to have five CAR therapies in human trials by year-end.
Should you buy these stocks?
Because 93% of oncology drugs entering phase 1 trials have historically failed, all three of these CAR-T biotech stocks come with more than their fair share of risk.
There's no guarantee any of them will duplicate their early-stage clinical successes in larger, later-stage trials necessary for approval. Even if they do, we're still years from having a product from one of these companies on the market. For example, Celgene believes the first therapy from its Juno Therapeutics collaboration will come no earlier than 2020.
Although all three of these companies are risky, Juno Therapeutics might be the best bet. Its collaboration with Celgene means it has the best balance sheet of the trio and a well-heeled and massively successful potential marketing partner.
Regardless, the fact that CAR-T immunotherapies could revolutionize patient treatment by improving outcomes and limiting toxicity tied to chemotherapy makes all three companies worth watching.
Todd Campbell owns shares of Celgene. Todd owns the equity research firm E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool recommends Celgene and Juno Therapeutics. 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.