Juno Therapeutics Inc (NASDAQ:JUNO) ‘ Phase 2 ROCKET trial for JCAR015 has been placed on clinical hold following the deaths of three patients who were participating in the drug trial. The compound is being tested for treatment of adults suffering from relapsed/ refractory B-cell acute lymphoblastic leukemia (ALL).
Following the announcement, shares of Juno plunged more than 30% to as low as $27.63, and analysts from multiple firms downgraded or cut their price targets on them.
Juno Therapeutics downgraded by JPMorgan
In a report dated July 8, JPMorgan analyst Cory Kasimov and team downgraded Juno Therapeutics from Overweight to Neutral and slashed their price target from $64 to $39 per share. They note that the company is trying to get the trial restarted as quickly as possible, although they add that this will at least push back the clinical, regulatory and commercial timelines for the drug maker’s lead asset.
Juno management attributed the deaths to the addition of fludarabine to the pre-conditioning protocol for JCAR015. They are using the fact that there weren’t any deaths in the first group of patients treated only with cyclophosphamide to support their request to continue the trial without fludarabine.
The JPMorgan team added that the issue appears to be only related to JCAR015 combined with fludarabine as part of the pre-conditioning protocol and not with Juno’s other compounds JCAR014 and JCAR017. The trials on the other two compounds are continuing without changes. Kasimov and team are encouraged that the problem appears limited to JCAR015 and especially not JCAR017, which they view as having a much larger opportunity. However, they add that the problem demonstrates how early it is in the evolution of Juno Therapeutics’ technology and highlights how many important unanswered questions there are still.
“We’d be more comfortable if the mechanism behind the neurotoxicity was better understood,” they concluded. “Bottom line, we still have high hopes for JUNO’s CAR-T platform, but given the near/ medium term uncertainty, we see better opportunities elsewhere in our universe and are downgrading to Neutral.”
Goldman cuts price target for Juno Therapeutics
Goldman Sachs analyst Salveen Richter and team cut their price target for Juno Therapeutics to $36 per share. They still expect peak U.S. sales of JCAR015 to eventually reach $300 million, but they’ve lowered their probability of success from 85% to 60%.
In their report, they also highlighted a risk of read-through to Kite Pharma, which is developing a CAR T platform of its own, although they see some fundamental differences between the two companies. Kite shares declined more than 7% to as low as $48.39 during regular trading hours on Friday. They note that while there are some similarities between Kite’s KTE-C19, Kite’s compound has a different pre-conditioning regimen and different indications.
Raymond James analysts also slashed their price target for the drug maker, cutting it from $52 to $44 per share.
Still a path forward for Juno
Morgan Stanley analyst Matthew Harrison and team did not adjust their Equal-weight rating or $50 price target for Juno Therapeutics in their July 8 report. They’re waiting for more guidance from management during the second quarter earnings call before they update their model. However, they “sensitized” their model and explain that if they remove all sales from Juno Therapeutics’ adult ALL program from it, their price target could fall by about 16%. On the other hand, if their current projections for the program are met but six months later than previously expected, their price target would fall only by about 2%.
