Yes, Juno Therapeutics (JUNO) Just Became a Great CAR-T Trade
Juno Therapeutics Inc (NASDAQ:JUNO) is poised to benefit from a rising acquisition trend.
Three weeks ago when Gilead Sciences, Inc. (NASDAQ:GILD) announced it would be acquiring smaller rival biopharma name Kite Pharma Inc (NASDAQ:KITE), traders clearly took notice. If Gilead wanted Kite for its CAR-T cancer therapy and Novartis AG (ADR) (NYSE:NVS) recently won the first-ever FDA approval for its CAR-T based oncology drug, there had to be something to it. The race was (proverbially) on. The scenario thrust a handful of younger, smaller biotech names into the spotlight at potential acquisition targets. One of the standout propositions within the CAR-T realm, however, is Juno.
And, as is the case with all competition within the drug development realm, however, it’s usually cheaper and easier for a major pharma name to buy their way into an arena rather than earn their way into an arena by developing their own drug from the ground up.
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Juno Stands Out
To be clear, there are other CAR-T drug developers worth a look. ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) and bluebird bio Inc (NASDAQ:BLUE) are a couple of the top-tier names that tend to come to mind. In an overarching way for investors though, Juno is a compelling play not just because it’s now a potential buyout candidate, but because its CAR-T platform is compelling even if the organization continues to fly solo.
But, first things first: the short version of a long story.
CAR-T therapies are, in simplest terms, a means of genetically re-engineering a person’s immune system in such a way that allows it to better fight certain kinds of cancers. CAR-T, short for chimeric antigen receptor T-cells, are simply a way of describing the modification of a patient’s disease-fighting T calls to recognize and attack cancerous cells they may not have been able to “see” and kill before. It’s an effective approach, though in that each therapy is custom-built for each patient by removing and the re-injecting T cells into their body, it’s not cheap. The recently-approved CAR-T therapy will cost an estimated $475,000 for a full treatment regimen.
As for Gilead’s interest in Kite Pharma, Kite’s axicabtagene ciloleucel (or axi-cel) is the company’s flagship drug in the pipeline, currently under an accelerated review by the FDA as a therapy for refractory aggressive non-Hodgkin’s lymphoma.
Enter Juno Therapeutics.
Juno’s pipeline is relatively deep, if not exactly mature. Of its eleven trials currently underway, all but two are in phase 1, and the other two are only in phase 2.
Still, even the right drug, no matter how far away the end zone may be, can be enough to power JUNO stock higher.
The lead drug in Juno’s pipeline is now JCAR-017, which is a CAR-T treatment that leverages the presence of a very particular protein found on nearly all b-cell forms of leukemia and lymphomas. Though only in phase one testing right now, it’s been impressive so far. The drug drove a complete response rate of 59% in early testing, and an objective response rate of 86% for b-cell lymphoma patients according to the most recent update of what it’s labeled the TRANSCEND study.
It should be noted that JCAR-017 wasn’t the company’s developmental trophy until just a few months ago. That honor belonged to JCAR-015 as a treatment for acute lymphoblastic leukemia until it was implicated in the death of a some patients in its trial, not-so-gently reminding current and would-be owners of JUNO stock that this is all still very much a speculative, uncertain effort.
Still, even with the failed trial, Juno has nine different drugs being tested in eleven different trials, all of which tap into the recently-validated science of CAR-T therapies. The race for them is only apt to heat up as time marches on, with some observers suggesting the CAR-T therapy market could be worth $8.5 billion by 2028.
Juno looks poised to play a prominent part of that sliver of the oncology drug market, one way or another.
Looking Ahead for JUNO Stock
It’s been said before but it merits repeating now: Owning a stock simply because one thinks it’s a buyout candidate is a lousy reason to own any stocks. There has to be more, for the simple reason that many buyout assumptions never pan out. Juno Therapeutics may well have to stand on its own for a while, if not forever; most potential suitors know all too well that a lot can happen between phase 1 testing and the end of phase 3 trials.
Still, what Juno lacks in developmental progress yet it makes up for with a deep bench — nine drugs spread across eleven different trials. If nothing else, a buyer could scoop up eleven compelling possibilities for not a whole lot more than the company’s current market cap of only $4.7 billion. That’s a pittance within the pharmaceutical world.
That’s the way Celgene Corporation (NASDAQ:CELG) feels about it anyway, which (very) interestingly shelled out $1 billion to up its stake in Juno Therapeutics to 10%, simultaneously securing co-development rights to new immuno-oncology drugs… CAR-T drugs specifically.
In other words, you could certainly do a lot worse than a speculative trade in JUNO stock.
As of this writing, James Brumley held a long position in Gilead. You can follow him on Twitter.
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