Stock Update (NASDAQ:JUNO): Juno Therapeutics Inc Reports Fourth Quarter And 2015 Financial Results

Juno Therapeutics Inc (NASDAQ:JUNO), a biopharmaceutical company focused on re-engaging the body’s immune system to revolutionize the treatment of cancer, today reported business highlights and financial results for the fourth quarter and year ended December 31, 2015.

“2015 was a year of significant progress for our clinical pipeline with encouraging data from our most advanced pipeline candidates, particularly in B cell malignancies. We are preparing for our first potential launch in r/r adult ALL as early as 2017, which if successful, creates the opportunity to change the current standard of care,” saidHans Bishop, Juno’s President and Chief Executive Officer. “We also made significant advances in building our capabilities to support our goal of developing best-in-class CAR and TCR therapies. We look forward to a strong 2016 as we leverage these capabilities, our pipeline, and our people to create value for patients and shareholders.”

2015 and Recent Corporate Highlights

• CD19 Portfolio – Significant advances with Juno’s CD19-directed portfolio across B cell malignancies including relapsed/refractory (r/r) acute lymphoblastic leukemia (ALL), non-Hodgkin lymphoma (NHL), and chronic lymphocytic leukemia (CLL):
  • ALL – The Phase II ROCKET trial for JCAR015, a CD19-directed CAR T cell product candidate, continues to enroll adult r/r ALL patients in a potential U.S. registration trial that could lead to product approval as early as 2017. Data in 32 patients with pediatric r/r ALL with JCAR017 are encouraging, with a 91% complete remission (CR) rate, all of which are a complete molecular remission (CmR) as measured by flow cytometry, as presented at the 4^th International Conference on Immunotherapy in Pediatric Oncology inSeptember 2015. At the American Society of Hematology meeting in December 2015 (ASH 2015), investigators presented data for JCAR014 in adult r/r ALL showing that improved cell persistence, using the pre-conditioning regimen Juno plans to use going forward, led to deeper remissions and better duration of response, with 17/17 (100%) adult patients achieving a CR and a CmR.
  • NHL – Juno began enrollment of a multi-center Phase I trial for JCAR017 in r/r NHL and expects enrollment to continue through 2016. Investigators reported data at ASH 2015 from the ongoing Phase I trial for JCAR014 in r/r NHL, and using the dose and pre-conditioning regimen Juno plans to study further, 7/11 patients (64%) of patients achieved a complete response, including 6/8 (75%) of patients with the diffuse large B cell (DLBCL) sub-type of NHL. No patient with a complete response had progressed (range of 2–9 months) as of the data cut-off date. Enrollment in this study continues, and Juno expects to have greater numbers of patients and longer duration of follow-up in 2016.An IND for a combination trial of JCAR014 and MedImmune’s investigational programmed death ligand 1 (PD-L1) immune checkpoint inhibitor, durvalumab, cleared the U.S. Food and Drug Administration in late 2015, and Juno expects to enroll patients through 2016. Juno also expects to begin a Phase I trial for its CD19/4-1BB ligand armored CAR in 2016.
  • CLL – Investigators presented data at ASH 2015 of JCAR014 in r/r CLL in patients previously treated with ibrutinib. All 7 patients treated with JCAR014 using the pre-conditioning regimen Juno plans to use going forward had a response, with 4/7 (57%) having a complete response. No patient achieving a response had progressed (range 2-14 months) as of the data cut-off date. Enrollment in this study continues, and Juno expects to have greater numbers of patients and longer duration of follow-up in 2016.
  • The safety profile across the CD19 portfolio remains consistent with what has been previously reported, with cytokine release syndrome and neurotoxicity the most common severe drug-related side effects. JCAR015, JCAR017, and JCAR014 are investigational product candidates and their safety and efficacy have not been established.

JCAR018 – This CD22-directed, fully human CAR T cell product candidate provides an opportunity to treat or prevent CD19-negative relapses. JCAR018 recently reached its first clinical milestone in a Phase I trial being run at the National Cancer Institute (NCI) in pediatric and young adult r/r ALL patients, which triggered a payment to Opus Bio in the first quarter of 2016 of 408,068 shares of Juno stock. Investigators presented interim data from this ongoing study at ASH 2015, and Juno expects additional data to be presented from this trial later in 2016. In combination with CD19-directed CARs, CD22-directed CAR T treatment has the potential to meaningfully increase the percentage of ALL patients that experience long-term remissions.

• Completed construction of the Juno manufacturing plant in Bothell, WA in 2015. Juno expects to begin supplying the vast majority of the clinical trial material for the ROCKET trial from this facility before the end of the first quarter of 2016 and bring production of other product candidates to this facility in 2016.
• Juno began trials for solid tumor product candidates against four different targets in 2015 and early 2016 – JCAR024 (ROR-1-directed CAR T), JCAR020 (MUC-16-directed armored CAR T engineered to secrete IL-12), JCAR023 (L1-CAM-directed CAR T), and JTCR016 (WT-1- directed TCR). These trials explore treatment across a variety of solid organ tumor settings with data expected over the next 6-18 months.
• Entered into a ten-year collaboration with Celgene to leverage T cell therapeutic strategies with an initial focus on CAR T and TCR therapies. Celgene gained the option to commercialize Juno programs outside North America and China and to co-promote certain programs globally. Juno has gained the option to co-develop, co-promote, and share profits with respect to select Celgene programs. In connection with the collaboration and stock purchase agreement, Juno received $1.0 billion.
• Completed three acquisitions, which substantially increased Juno’s capabilities, including:
  • AbVitro, a leading next-generation single cell sequencing platform company that will augment Juno’s capabilities to create best-in-class engineered T cells against a broad array of cancer targets, including significantly improving the speed of generating TCR binders, while also enabling comprehensive profiling of functional immune repertoires with cancer tissues. Juno and Celgene have agreed in principle to enter an agreement to license Celgene a subset of the acquired technology and grant Celgene options to certain related potential product rights emanating from the acquired technology.
  • X-Body, Inc., an innovative discovery platform that interrogates the human antibody repertoire, rapidly selecting fully-human antibodies and single-chain variable fragments (scFv’s) with desired characteristics, even against difficult targets. Fully-human scFv’s have a lower risk of generating an immune response in the patient, which may allow Juno’s CAR T cell therapies to persist longer and generate a greater clinical benefit.
  • Stage Cell Therapeutics GmbH, a leading research-based company with transformative, fully reversible cell selection and activation capabilities as well as next-generation automation technologies for manufacturing. These capabilities and technology have the potential to help Juno make better therapies for patients and make them more broadly accessible with improved manufacturing capabilities.
• Completed a number of licensing transactions to expand Juno’s research and development capabilities, including:
  • Fate Therapeutics: to identify and use small molecules with a goal of creating improved, next-generation CAR T and TCR products by modulating cell signaling pathways;
  • Editas: to use Editas’ genome editing technologies, including CRISPR/Cas9, in creating improved, next-generation CAR T and TCR products through gene editing; and
  • MedImmune: to support Juno’s trial combining JCAR014 and MedImmune’s anti-PD-L1 immune checkpoint inhibitor, durvalumab. This is the first trial to combine a CAR T cell therapy with a checkpoint inhibitor.
• Reached a favorable settlement that resolved litigation with the University of Pennsylvania and Novartis Pharmaceuticals Corporation regarding Juno’s exclusive patent license from St. Jude Children’s Research Hospital. Settlement terms included an initial $12.3 million payment to Juno as well as potential future milestone and royalty payments to Juno from Novartis’ CD19-directed CAR T cell products using a 4-1BB co-stimulatory domain.
• Built key capabilities and hired key talent, including the appointments of Robert Azelby as Executive Vice President, Chief Commercial Officer and Hyam I. Levitsky, M.D. as Executive Vice President, Research and Chief Scientific Officer. As part of Juno’s ongoing organizational growth, Mark Frohlich, M.D. will transition to the role of Executive Vice President of Portfolio Strategy and Robin Andrulevich has been promoted to Senior Vice President of People.

Fourth Quarter and 2015 Financial Results

• Cash Position: Cash, cash equivalents, and marketable securities as of December 31, 2015 were $1.22 billioncompared to $474 million as of December 31, 2014. In the third quarter of 2015, Juno sold 9,137,672 shares of its common stock and certain future stock purchase rights to Celgene for $93.00 per share resulting in proceeds of $850 million and received a cash payment of $150 million in connection with the collaboration agreement.
• Cash Burn: Excluding cash inflows and outflows from business development activities and litigation, cash burn for 2015 was $147.8 million, consistent with guidance of $125.0 million to $150.0 million. Cash burn for 2015 was comprised of net cash used in operations of $119.6 million associated with the growth of Juno’s operations, including advancing Juno’s programs and headcount growth, and $28.2 million related to the build out of Juno’s manufacturing facility and purchase of general lab equipment. Cash burn for the fourth quarter of 2015 was $51.4 million and included cash used in operations of $46.6 million related to the growth of Juno’s operations, including headcount growth, and $4.8 million in capital expenditures.
• Revenue: Revenue was $4.2 million for the fourth quarter of 2015 and $18.2 million for the year endedDecember 31, 2015. The fourth quarter included $3.8 million recognized in connection with the Celgenecollaboration agreement.
• R&D Expenses: Research and development expenses for the three and twelve months ended December 31, 2015, inclusive of non-cash expenses and computed in accordance with GAAP, were $75.6 million and $205.2 million, respectively, compared to $182.1 million and $204.5 million for the three and twelve months endedDecember 31, 2014, respectively.
  • Research and development expenses increased in 2015 compared to 2014 due to increased expenses associated with expanding Juno’s enrollment in clinical trials and overall investment in research and development capabilities, headcount growth, non-cash stock-based compensation expense, and advancing programs at Juno’s founding institutions.
  • Research and development expenses decreased in the fourth quarter of 2015 compared to the fourth quarter of 2014 due to lower expenses associated with the acquisition of technology.

  The expense related to the success payment liability for the three and twelve months ended December 31, 2015 was $34.3 million and $51.6 million, respectively, compared to $83.5 million and $84.9 million for the same periods in 2014. The decrease in the expense related to the success payment liability in 2015 compared to 2014 is primarily due to the decline in Juno’s stock price as of December 31, 2015 compared to December 31, 2014. In December 2015, success payment obligations to Fred Hutchinson Cancer Research Center(FHCRC) were triggered in the amount of $75.0 million, less indirect cost offsets of $3.3 million, and toMemorial Sloan Kettering Cancer Center (MSK) of $10.0 million, less indirect cost offsets that will be determined at the time of payment to MSK in March 2016. Juno elected to make the payment to FHCRC in shares of Juno common stock, and thereby issued 1,601,085 shares of Juno common stock to FHCRC inDecember 2015. The success payment obligation to MSK is required to be paid, in cash or shares of Juno common stock at Juno’s election, on March 18, 2016.

• Non-GAAP R&D Expenses: Non-GAAP research and development expenses for the three and twelve months ended December 31, 2015 were $41.1 million and $116.5 million, respectively. Non-GAAP research and development expenses include $3.6 million and $10.9 million of stock-based compensation expense for the three and twelve months ended December 31, 2015, respectively. Non-GAAP research and development expenses in 2015 exclude the following:
  • An expense of $34.3 million and $51.6 million for the three and twelve months ended December 31, 2015, respectively, associated with the change in estimated value and elapsed service period for Juno’s potential success payment liabilities to FHCRC and MSK, as well as the success payments achieved in 2015.
  • Upfront payments under the Editas and Fate Therapeutics license agreements of $30.8 million for the twelve months ended December 31, 2015.
  • Non-cash stock-based compensation expense of $1.4 million and $6.2 million for the three and twelve months ended December 31, 2015, respectively, related to a 2013 restricted stock award to a co-founding director that became a consultant upon his departure from Juno’s board of directors in 2014.
  • The change of $1.1 million in the fourth quarter of 2015 in the estimated fair value of the contingent consideration recorded in connection with the Stage and X-Body acquisitions.
• G&A Expenses: General and administrative expenses on a GAAP basis for the three and twelve months endedDecember 31, 2015 were $16.0 million and $51.1 million, respectively, compared with $6.1 million and $19.5 million for the three and twelve months ended December 31, 2014, respectively. The increase of $9.9 millionand $31.6 million for the three and twelve months ended December 31, 2015, respectively, was primarily due to increased personnel expenses, including non-cash stock-based compensation expense, costs associated with the Stage, X-Body, Celgene, Fate Therapeutics, Editas, and other business development transactions, an increase in patent and corporate legal fees, costs incurred to support expansion of the company, and costs associated with being a public company. General and administrative expenses include $5.4 million and $14.9 million of stock-based compensation expense for the three and twelve months ended December 31, 2015, respectively.
• GAAP Net Loss Attributable to Common Stockholders: Net loss attributable to common stockholders for the three and twelve months ended December 31, 2015 was $85.2 million, or $0.89 per share, and $239.4 million, or $2.72 per share, respectively. This compares to $191.9 million, or $13.68 per share, and $310.9 million, or$36.82 per share, respectively, for the same periods in 2014.
• Non-GAAP Net Loss Attributable to Common Stockholders: Non-GAAP net loss attributable to common stockholders for the three and twelve months ended December 31, 2015 was $50.7 million, or $0.53 per share, and $150.7 million, or $1.72 per share, respectively.

A reconciliation of GAAP net loss to non-GAAP net loss is presented below under “Non-GAAP Financial Measures.”

2016 Financial Guidance

Juno expects 2016 cash burn, excluding cash inflows or outflows from business development activities and including the assumption that Celgene exercises its CD19 opt-in rights, to be between $220 million and $250 million.

• Operating burn estimated to be between $170 million and $195 million.
• Capital expenditures estimated to be between $40 million and $55 million, the vast majority of which are related to one-time infrastructure build-outs. (Original Source)

Shares of Juno Therapeutics closed today at $35.17, down $1.50 or -4.09%. JUNO has a 1-year high of $69.28 and a 1-year low of $22.37. The stock’s 50-day moving average is $31.20 and its 200-day moving average is $42.12.

On the ratings front, Juno has been the subject of a number of recent research reports. In a report issued on February 25, Citigroup analyst Robyn Karnauskas initiated coverage with a Buy rating on JUNO and a price target of $45, which implies an upside of 23.8% from current levels. Separately, on February 17, Maxim Group’s Jason McCarthy reiterated a Buy rating on the stock and has a price target of $78.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Robyn Karnauskas and Jason McCarthy have a total average return of 5.2% and -16.5% respectively. Karnauskas has a success rate of 53.1% and is ranked #456 out of 3682 analysts, while McCarthy has a success rate of 26.9% and is ranked #3593.

Overall, 6 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $45.00 which is 23.8% above where the stock opened today.

Juno Therapeutics Inc is a biopharmaceutical company. The Company is engaged in revolutionizing medicine by re-engaging the body’s immune system to treat cancer.