Social Media Rumors of Juno Acquisition Cause Stock Jitters

Social Media Rumors of Juno Acquisition Cause Stock Jitters January 25, 2017
By Mark Terry, Breaking News Staff

Juno Therapeutics ’ got jittery over the last few days, but there wasn’t any obvious news linked to it. CNA Finance did some digging, and found that it was social media rumors of a potential acquisition that likely caused the movement.

Juno, headquartered in Seattle, was at one time leading the way in the CAR-T immuno-oncology space. Chimeric antigen receptor (CAR) T-cells are engineered molecules that are grafted onto a monoclonal antibody to attack specific tumor cells. However, in July, the company announced that the U.S. Food and Drug Administration (FDA) was placing its Phase II trial of JCAR015 on a clinical hold after three patient deaths.

The deaths were eventually linked to reactions to the chemotherapeutic agent fludarabine, rather than JCAR015. The trial was modified as a result, which pushed the company’s accelerated FDA approval expected in 2017 to the first half of 2018. That in itself pushed other companies working in the space forward, notably Kite Pharma a bit of a head start.

But in November, the company placed a voluntary hold on the trial.

Otherwise, news from the company has been slim. It presented at the JP Morgan Healthcare Conference on January 24, indicating that its JCAR017 was progressing and might be on the market as early as 2018, and that a combination trial with JCAR014 and durvalumab was expected to start soon. It also had a strong balance sheet with more than $1 billion in cash and equivalents as of the third quarter of 2016.

Todd Campbell, writing for The Motley Fool on January 13, said, “At the JP Morgan Healthcare Conference this week, JCAR017 was the highlight of Juno Therapeutics’ presentation. 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 JCAR017’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.”

One of the major stabilizing factors for Juno is a 10-year collaboration deal it made with Celgene in June 2015. Juno received an upfront payment of $150 million. In addition, Celgene acquired 9,137,672 shares of Juno’s common stock at $93 per share. Any time during the 10-year period, Celgene can buy additional equity during specified windows and at specific market premiums.

CNA Finance wrote, “A rumor is circling Juno Therapeutics in the world of social media at the moment. That rumor is that the company will be taken over. However, as with most of these rumors, there is no buyer, no confirmation, and not one insinuation of validity. So, in this particular case, we’d say don’t get your hopes up. Nonetheless, it is indeed what’s causing the movement.”

Juno stock is currently trading for $19.78. It’s yearly high was on June 6, 2016, when it traded for $48.50, and the low was on December 13, 2016, when it traded for $17.86.

Zacks Investment Research downgraded the stock on January 23 from “hold” to “sell.”

In a research note, Zacks wrote, “Juno suffered a huge setback in July 2016 with the FDA placing a clinical hold on a Phase II study on JCAR015 in patients with relapsed or refractory B cell acute lymphoblastic leukemia. While the hold was lifted a week later and the study resumed under a reviewed protocol, the company voluntarily placed the study on hold in November 2016, and is presently working with the FDA and a Safety Monitoring Board to determine future steps. Moreover, Juno’s shares underperformed the Medical-Biomed/Genetics industry significantly in the past one year. Estimates have been going down lately ahead of the company’s Q4 earnings release.”

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