Celgene Stocks Up on More Juno Stock After Failed Flagship Drug Trial

Published: Mar 30, 2017

Celgene Stocks Up on More Juno Shares Even After Failed Flagship Drug Trial March 29, 2017
By Mark Terry, BioSpace.com Breaking News Staff

According to a Form 13 filing with the U.S. Securities and Exchange Commission (SEC), Celgene on March 24, 2017 acquired 75,568 shares of Juno Therapeutics for $22.3882 per share, at an aggregate purchase price of $1.69 million.

As of March 27, Celgene has now 10,350,833 shares of Juno common stock despite Juno’s recent struggles.

The Seattle-based company is focused on immuno-oncology, specifically CAR-T cancer treatments. In early March, Juno killed its JCAR015 program. This came four months after a clinical trial of JCAR015 was halted for the second time after patient deaths. In November 2016, the company stopped the trial after two deaths. In the summer of 2016, it had been halted after the deaths of three patients, but was cleared to continue by the U.S. Food and Drug Administration (FDA).

All five patients died from cerebral edemas. All patients in the trial had relapsed or refractory B cell acute lymphoblastic leukemia.

The deaths in July kicked off a class action lawsuit alleging that Juno violated federal securities law. Filed in July, the lawsuit alleges that the company’s chief executive officer, Hans Bishop, and Juno, concealed from investors the patient death in Phase II.

Although Juno had indicated there might still be hope for JCAR015, it would need to evaluate its safety and dose levels in a Phase I trial, which is unlikely. Meanwhile, the company will shift its resources to JCAR017, a CD19-directed CAR-T cell product candidate for the treatment of diffuse large B cell lymphoma.

JCAR017 was granted breakthrough therapy designation by the FDA for patients with relapsing and remitting aggressive large B-cell non-Hodgkin’s lymphoma, including DLBCL.

At the JP Morgan Healthcare Conference held on January 24, Juno indicated that JCAR017 was progressing and could be on the market as early as 2018. It also indicated that a combination trial with JCAR014 and durvalumab was expected to start soon.

On January 13, Todd Campbell writing for The Motley Fool, said, “While there’s no guarantee that JCAR017 will avoid a similar fate to JCAR015, brain swelling and safety risks are historically more common in the indication for which JCAR015 was being studied than it is for JCAAR017’s addressable market. Regardless, Kite Pharma and Novartis have the edge in this intriguing new class of drugs, and that could put Juno Therapeutics at enough of a disadvantage that investors ought to consider it a high-risk but high-reward investment.

Celgene apparent agrees. It inked a 10-year collaboration deal with Juno in June 2015, and the recent acquisition of company shares would not suggest Celgene was faltering in its support of the company.

Juno currently has a market cap of $2.2 billion based on 106.2 million shares outstanding and a price of $20.85 per share.

Juno are currently trading for $21.

On March 8, George Budwell, writing for The Motley Fool, said, “There are two good reasons for investors to remain patient with this volatile biotech stock, however. Specifically, Juno exited the most recent quarter with a substantial cash position of $922 million, and its new lead candidate, JCAR017, is about to enter a pivotal stage trial for relapsed or refractory diffuse large B cell lymphoma later this year. Cutting to the chase, this stock is trading right around 2.5 times its cash position right now, which is dirt cheap for a drugmaker that could possibly be only two years away from bringing a blockbuster cancer product to market.”

On the other hand, Kite and Novartis are probably going to beat Juno to market with a CAR-T product, and no one yet knows if JCAR017 is going to have the same problems JCAR015 had. Clearly Celgene has faith, but it’s less obvious if anyone but the high-risk investors agree.

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