At first glance, Inovio Pharmaceuticals (NASDAQ:INO) and Juno Therapeutics (NASDAQ:JUNO) might appear to have little in common. Inovio focuses on synthetic DNA immunotherapies, while Juno has hitched its wagon to chimeric antigen receptors (CAR) and T cell receptors (TCR). Also, Juno's market cap currently stands nearly eight times larger than Inovio's.
However, Inovio and Juno have some similarities, including some big-name partners and promising pipelines. Which of these two up-and-coming biotechs is the better buy for investors? Let's take a look at the positives and negatives of each stock.
Inovio's cervical dysplasia immunotherapy, VGX-3100, which demonstrated efficacy in a phase 2 trial, could be its first shot at commercial success. The company plans to begin a phase 3 clinical study for VGX-3100 later this year. Some estimate that the vaccine could reach peak annual sales of around $500 million if approved by the FDA.
The recent buzz for Inovio, though, has centered on its efforts to develop a Zika virus vaccine. The biotech announced good news in February from pre-clinical testing of its experimental vaccine. Inovio is one of a handful of leaders in the race to develop a reliable preventive treatment for Zika.
It also has teamed up with a couple of major drugmakers. AstraZeneca's MedImmune group acquired the rights to INO-3112, an experimental cervical cancer vaccine. Meanwhile, Roche and Inovio are partnering to develop a hepatitis B virus immunotherapy.
Juno doesn't have any products quite as far along in the development process as Inovio does. However, the company does have one phase 2 study underway for JCAR015, a potential treatment for relapsed/refractory acute lymphoblastic leukemia (ALL). Juno hopes the drug could win FDA approval as early as 2017.
There are a couple of other drugs in Juno's CD19 portfolio in addition to JCAR015 that it's also optimistic about. JCAR014 is in a phase 1/2 study targeting treatment of adult B cell malignancies, while JCAR017 is in a phase 1/2 study targeting treatment of pediatric ALL and another phase 1 study focused on adult non-Hodgkins lymphoma (NHL).
Juno also has a significant partner in Celgene (NASDAQ:CELG). The two biotechs forged a 10-year collaboration deal last year where Celgene gained access to several drugs in Juno's pipeline. Celgene forked over $1 billion, which included purchasing around 9.1 million shares of Juno stock. The deal underscored the significant potential of Juno's development program.
Both Inovio and Juno face the usual risk of failure in their treatments' clinical studies. It's important to note just how early stage these two biotechs are with their pipelines. Even with Inovio's VGX-3100 in phase 3 and Juno's JCAR015 in a potential registrational phase 2 study, there are no guarantees of success.
As development-stage biotechs, both stocks are also very vulnerable to general market conditions that could be negative for drugmakers. In particular, the political climate hasn't been favorable lately for biotechs and pharmaceutical companies.
And there's always competitive risks. Several larger rivals are working on Zika vaccines. One of them could end up beating out Inovio. Likewise, Juno isn't the only company working on CAR therapies. In particular, Kite Pharma stands out as a significant challenger.
Picking a winner
The similar positives and negatives for these two biotechs make the selection of a winner difficult. Juno's pipeline is impressive. Having Celgene as a partner is a huge plus (and there's always the possibility the big biotech could spend some of its substantial cash stockpile to buy Juno at some point in the future). However, I think the edge goes to Inovio.
Inovio's lead product is farther along in the clinical trial process. Sure, Juno will try to submit for approval of JCAR015 based on a phase 2 study -- but accelerated approval is usually a tougher hill to climb than winning approval based on late-stage results. I like Inovio's chances for approval with VGX-3100.
I also think Inovio has a pretty good shot at being first to gain approval for a Zika vaccine. If the worldwide impact of the virus becomes more severe, being first-to-market could bring big financial rewards for Inovio.