Analysts weighed in how the FDA clinical hold Juno Therapeutics Inc (NASDAQ:JUNO) received affects its business as well as companies with similar drugs such as Kite Pharma Inc (NASDAQ:KITE), Celgene Corporation (NASDAQ:CELG) and bluebird bio Inc (NASDAQ: BLUE). Let’s take a closer look:
Juno Therapeutics Inc
Analyst Jonathan Eckard from Barclays discussed future ramifications of the FDA’s most recent hold to Juno’s lead pivotal trial, ROCKET, which tests a drug for leukemia. This hold came after two patients died due to swelling of the brain last week.
Eckard is worried that the FDA’s concerns may carry over to other Juno CAR T programs, adding risk to the company’s trials. The analyst’s initial reaction was that these deaths were specific to the ROCKET trail and the impact could be contained. He feels that this impact will be known within the next week or two and that investors should be on the lookout for negative headlines.
The deaths only occurred after the patients were given fludarabine, a drug used in most of Juno’s other programs. The common usage of fludarabine in Juno’s other programs is a big reason that the analyst is wary of its other programs. The analyst will only feel comfortable in about 4-5 weeks when “the FDA will have to respond to their proposed changes to ROCKET by then.” He feels that Juno’s new protocol is cleared, in addition to there being no bad headlines, Juno will have overcome most of the risk surrounding this hold.
The heightened risk surrounding Juno led the analyst to reiterate his Equal Weight holding, with a lowered price target of $35, marking a 26% increase from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jonathan Eckard has a yearly average return of -5% and a 27% success rate. Eckard is ranked #3416 out of 4035 analysts.
Out of the 7 analysts who have rated the company in the past 3 months, 71% gave a Buy rating and 29% gave a Hold rating. The average 12-month price target for the stock is $57.17, marking a 105.57% upside from current levels.
Kite Pharma Inc
Analyst Biren Amin from Jefferies discusses how the hold placed on Juno’s ROCKET trail will affect Kite Pharma’s similar ZUMA ALL trails. The drug that Juno believes caused the death to its patients is also used in Kite’s ZUMA trials, but at a much lower dose.
The analyst does not expect a major read-through to Kite Pharma from Juno’s hold because it has a “condition regimen that is a lower intensity from Juno’s.” Additionally, Kite requires its patients to remain in the hospital for a week following the cell infusion. This is done to treat patients if adverse events occur. Amin believes that Juno’s setback may cause its lead to shrink and put both companies on similar timelines.
The analyst exudes confidence about Kite’s trials due to its stricter criteria for “CNS involvement in ZUMA -3 and -4 with patients excluded with CNS-3 or CNS-2.” This is compared to Juno who just exclude CNS3 patients.
Kite also announced last week that its phase II portion of Zuma-1 in DLBCL is fully enrolled with 72 points. It is now all but guaranteed that the drug won’t experience a clinical hold from the FDA.
Following the news of Kite’s Zuma-1 and Juno’s clinical hold Amin reiterated his Buy rating with a price target of $72, marking an increase of 48% from current levels.
According to TipRanks.com, analyst Biren Amin has a yearly average return of 5% and a 48% success rate. Amin has a 36% average return when recommending KITE, and is ranked #665 out of 4035 analysts.
Out of the 9 analysts who have rated the company in the past 3 months, 89% gave a Buy rating and 11% gave a Hold rating. The average 12-month price target for the stock is $72.86, marking a 50.12% upside from current levels.
Analyst Alethia Young of Credit Suisse states that Juno’s clinical hold for its ROCKET trials has no affect on her valuation for Celgene. She also writes that it doesn’t affect her thesis that Celgene has a “best-in-class pipeline.”
The analyst explains that she doesn’t factor Juno’s programs into her valuation of near-term Celgene pipeline. Young is also bullish on Celgene long term because of its diversified partnerships. Giving it “exposure to a range of novel immuno-oncology technologies.”
The analyst has a 2020 Non-Hodgkin’s Lymphoma expansion sales of $2B. This is an important value driver due to Celgene having 5 Phase III readouts over the next 1-2 years.
Young’s confidence in Celenge in the short and long term caused her to reiterated her Outperform rating with a price target of $140, marking a 33% increase from current levels. The analyst has a success rate of 47% with an average loss of 7.2% per recommendation.
According to TipRanks, out of the 17 analysts who have rated the company in the past 3 months, 82% gave a Buy rating and 18% gave a Hold rating. The average 12-month price target for the stock is $142.58, marking a 35.75% upside from current levels.
bluebird bio Inc
Analyst Gena Wang from Jefferies spoke about bluebird following Juno’s ROCKET program receiving a clinical hold. Juno experienced 3 deaths, 2 more recently, in its acute lymphoblastic leukemia (ALL) studies. The deaths occurred after the patients received Cy/Flu regimen. The timeline for the re-starting of the ROCKET study is currently unclear and Juno’s new protocol has to be reviewed by the FDA before beginning.
Wang sees this clinical hold having a “marginal read-through to BLUE’s bb2121 CAR-T program in multiple myeloma”. This is due to differences in construct, vector, target/disease and dosing in bluebird’s drug compared to Juno’s.
The analyst’s belief that Juno’s safety concerns won’t affect bluebird led her to reiterate her Buy rating with a price target of $80, marking a 64% increase from current levels.
According to TipRanks.com, analyst Gena Wang has a yearly average return of -17.9% and a 22% success rate. Wang has a 22% average loss when recommending BLUE, and is ranked #3857 out of 4035 analysts.
Out of the 7 analysts who have rated the company in the past 3 months, 86% gave a Buy rating and 14% gave a Hold rating. The average 12-month price target for the stock is $104.60, marking a 114.56% upside from current levels.