Can Juno Therapeutics Inc (JUNO) Recover from the Current Bear Clutch?

By Carrie Williams

after-jcar015-hold-what-is-next-for-juno-therapeutics-inc-junoThe share price of biopharmaceutical company Juno Therapeutics Inc. (NASDAQ: JUNO) has plummeted down and hit its 52-week low yesterday, when the company placed a voluntary hold on its phase 2 trial for JCAR15 following the death of two patients enrolled in its cancer trial. JCAR015 is one of the most advanced chimeric antigen receptor (CAR) product candidates of JUNO used for treating adult patients with relapsed or refractory B-cell acute lymphoblastic leukemia (ALL). The shares fell by nearly 24.5% in a single day after the news and are currently trading at $22.56 after touching its lifetime low price of $19.41.

This is the second time that the same trial (ROCKET) is being placed on hold following patient’s death. In July, the ROCKET Phase I trial for testing lead product candidate JCAR015 in adult ALL patients was placed on clinical hold following the death of two patients from a cerebral edema. Believing that the issue was caused due to a protocol change that added fludarabine, Juno had removed fludarabine from the protocol, and the FDA permitted the company to restart the trial again.

The Phase 2 ROCKET study was intended to assess lead product candidate JCAR015 in adult patients with relapsed/refractory B-cell acute lymphoblastic leukemia. After enacting the fludarabine-less protocol, two patients suffered cerebral edemas earlier this week which turned out to be fatal. However, the mortality rates of adult R/R ALL patients treated using either JCAR014 or JCAR015, in Phase I and Phase II studies is less than 10% in over 100 patients treated as per JUNO management. This is actually a better cure rate than other treatments, including chemotherapy for late-stage ALL patients.

So, what does this mean for the share prices of JUNO in the near future? Just yesterday Cowen & Co. analyst Chris Shibutani said that he believes that despite the increased uncertainty for JCAR015, the opportunity for JUNO CD19-directed CART programs including JCAR014 and JCAR017 in DLBCL remains unaffected. JUNO management had also expressed confidence that the drug JCAR017 would be launched in NHL as early as 2018, in line with the original plan.

For now, there seem to be three possible outcomes for the future of ROCKET II trial, continuing the trial with no changes to the protocol, continuing trial with protocol amendments, or terminating the JCAR015 program. Among them, Shibutani believes that the possibility of terminating trials seems highly likely while continuing to pursue CAR-T development in adult R/ R ALL with a different CAR product.

The firm’s analyst also pointed out that in case the management decide to go with amending the ROCKET trial and continuing development with this product, there is a possibility that a fixed dosed regimen might be decided instead of the current body weight based (cell/kg) approach. This is because the patients who developed cerebral edema were described as a heavier set, implying greater cell dose administered. Nevertheless, a quick resolution is not expected for this clinical hold.

For now, the management expects to provide an update on their next steps during their analyst event at the American Society of Hematology (ASH) meeting on December 6. This decision, along with the upcoming data on JCAR017 in DLBCL/NHL will be pivotal in dictating the future share prices of JUNO. Until then, it looks as though the sellers might rule the roost for a while.

According to analysts’ recommendations from the past three months, the overall consensus rating on JUNO is a Moderate Buy. The analysts have an average price target of $45.60, based on data by TipRanks.com. This PT is an upside of 102.13% from the stock’s last close.