J.P. Morgan Clips Price Target on Juno Therapeutics Inc (JUNO) Following Termination of JCAR015 Program


Juno Therapeutics Inc (NASDAQ:JUNO) shares are dropping 7% following the biotech firm’s official termination of their JCAR015 program for the treatment of patients with acute lymphoblastic leukemia who had not received prior treatment.

J.P. Morgan analyst Cory Kasimov is not shocked by the negative news, as this follows last year’s string of deaths in the firm’s Phase 2 ROCKET trial. Therefore, the analyst reiterates a Neutral rating on JUNO while lowering the price target from $34 to $31, which represents a 32% increase from where the stock is currently trading.

“The company provided some high level color on their ongoing investigation into the root cause of these events and broadly implicated the preconditioning regimen, patient characteristics, and product attributes as contributing risk factors (in line with prior commentary). On the NHL front, the company is planning to initiate a pivotal arm for JCAR017 in the ongoing TRANSCEND trial in r/r DLBCL and reiterated timing for potential approval as early as 2018. For a number of reasons, including the need to finalize a dosing regimen, accrue/follow patients, and the time typically required for regulatory decisions, we view this timing as slightly aggressive and assume a 2019 market intro is more likely. Though JUNO maintains a diverse array of product candidates, the developmental challenges (recently made painfully obvious) for this promising but imperfectly understood technology keeps us on the sidelines for now. We hope for more clarity via the substantial newsflow expected in 2017,” contends Kasimov.

For the fourth quarter, the biotech firm posted non-GAAP EPS of ($0.65), compared to the analyst’s expectation of ($0.66) and consensus of ($0.63). Non-GAAP R&D of $73 million overshot the analyst’s forecast of $66 million. However, the analyst notes earnings are less significant in the context of Juno’s bigger picture. In reaction, the analyst has revised his model to estimate operating burn between $270 and $300 million and CapEx between $22 and $27 million, cutting JCAR015 entirely. Additionally, the analyst has boosted the probability assigned to JCAR017 in NHL.

Juno closed the fourth quarter with $922 million in cash, and a bonus of no debt, which the analyst expects to be overly ample to enable projects moving forward.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Cory Kasimov is ranked #4,314 out of 4,512 analysts. Kasimov has a 42% success rate and loses 5.1% in his annual returns. When suggesting JUNO, Kasimov forfeits 28.3% in average profits on the stock.

TipRanks analytics exhibit JUNO as a Buy. Out of 7 analysts polled by TipRanks in the last 3 months, 3 are bullish on Juno stock and 4 remain sidelined. With a return potential of 27%, the stock’s consensus target price stands at $32.25.

 

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