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Why Juno Therapeutics Shares Are Flying High Today

By Todd Campbell – Mar 1, 2016 at 4:03PM

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An impressive pipeline of cancer drugs offers an opportunity to reshape cancer treatment.


What: After reporting fourth-quarter financial results and updating investors on its clinical-drug pipeline yesterday, shares in Juno Therapeutics (JUNO) were soaring 10% higher at 3:00 p.m. ET today.

So what: The clinical-stage drugmaker is knee-deep in developing next-generation cancer therapies that harness the immune system to find and destroy cancer cells.

In the fourth-quarter earnings release, management reaffirmed its goal of ushering JCAR015 for use in relapsed/refractory adult acute lymphoblastic leukemia patients to the FDA in 2017. In early-stage trials, 37 of 45 evaluable patients had a complete response to JCAR015. If Juno Therapeutics can notch similar results in its ongoing phase 2 trial, then management believes it could win accelerated FDA approval.

The company also updated investors on the progress of other drugs in its pipeline, including therapies under study for the treatment of diffuse large B-cell cancer, chronic lymphocytic leukemia, and solid organ tumor cancers. 

Juno Therapeutics also noted that its $1 billion collaboration with Celgene Corp. (CELG) is "off to a strong start." The two companies are working together on chimeric antigen receptor T- cell therapies (CAR-T) tied to a 10-year agreement inked last summer. As part of that agreement, Celgene acquired a more than 9.1 million share stake in Juno Therapeutics.

Now what: More than 90% of cancer drugs entering human trials fail to make it to market and that means that Juno Therapeutics faces stiff odds.

Nevertheless, Juno Therapeutics approach has demonstrated intriguing early-stage efficacy, and if safety risks, including cytokine responses, can be managed, then a potential commercialization of JCAR017 in 2017 could go a long way toward reducing the cash burn associated with its extensive R&D activity.

Last year, the company's development activities resulted in a cash burn of $148 million. This year, it expects that cash burn will increase to between $220 million and $250 million. That's a lot of money for a clinical-stage company to be spending, but it has $1.22 billion in cash on its books exiting December and that should give it plenty of flexibility to deliver on its near-term development and commercialization timeline. 

Todd Campbell owns shares of Celgene. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool recommends Juno Therapeutics. 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.

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