Wrong Track

Juno Needs to Back a Different CAR-T Horse

There's no sense throwing more good money after its current lead drug.
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As other companies race toward approval for CAR-Ts -- medicines that modify human immune cells to hunt cancers -- Seattle-based Juno Therapeutics Inc. is stuck in neutral.  

The company's lead drug candidate, JCAR015, has caused five patient deaths from brain swelling this year. Its clinical trial is currently on hold as the company tries to figure out what's wrong. Juno says it still believes the drug can help patients. But the company and its investors would be best served if it moved on to focus on its other drugs. 


After a truly disastrous year with multiple patient deaths, Juno is trading down near its IPO price


It's easy to understand the company's reluctance to give up. Earlier this year, the drug was in the thick of the race with Kite Pharma Inc. and Novartis AG to be first to market in this drug class. Despite the risks, Juno's drug offers a potential cure for patients with few other options. 

Juno emphasized the drug's efficacy, and the danger of other treatments, on Monday night at the American Society of Hematology meeting. Currently available options for patients who get worse after initial treatment also have a pretty high chance of killing patients. But the fact remains that Juno's drug has caused substantially more deaths than its competitors. Any path forward is likely to be long and not worth the trouble.

Analysts have almost completely written off JCAR015's chances; consensus estimates for 2020 sales dropped from more than $270 million last year to $24 million after the second set of patient deaths, reported last month. 

Hero to Near Zero

Analyst expectations for JCAR015 have plunged after serious toxicity issues emerged

Source: Bloomberg

The shift in consensus reflects that the drug could be scrapped and will almost certainly be late to market.

The first three patient deaths, in July, caused the company to admit it would likely no longer be able to get the drug approved in 2017 -- even though the FDA allowed the trial to start up again within days of halting it, after the company blamed the deaths on a chemotherapy regimen used to prep patients. 

Two more deaths in November, under a new chemo regimen, made it clear there are probably deeper issues. The FDA will be less lenient this time, and more skeptical about Juno's fixes. Juno may still need to run a new trial from scratch, making a multiple-year delay seem more likely. 

During that period, Kite will likely launch a CAR-T with a better safety profile to treat a different blood cancer, while making progress in treating Acute Lymphoblastic Leukemia (ALL), which JCAR015 targets. Novartis is likely to launch its drug for younger patients with ALL. More distant competitors such as Bluebird, Cellectis, and Bellicum will be working hard to catch up. 

This whole drug class is likely to have a tough commercial time. Doctors may be reluctant to embrace cell therapy because of potential safety risks and cost; these drugs are pricey to produce and will cost a mint, given the tiny initial patient populations they target. JCAR015's late arrival and checkered past mean it's more likely to flop if it makes it to market.  

Juno has another product, JCAR017, that looks to have fewer toxicity issues. It has a better chance to get to market and keep the company relevant. Juno had more than $1 billion in cash and marketable securities as of the end of the third quarter -- more than all but one other company in the Nasdaq Biotech Index with a market cap under $10 billion.

Cash to Burn But Not to Waste

Juno has a large cash pile for a small biotech, but shouldn't waste it on its flawed lead drug

Source: Bloomberg

But that's no license to keep going with a clearly flawed and possibly unviable product alongside its other programs.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Max Nisen in New York at mnisen@bloomberg.net

    To contact the editor responsible for this story:
    Mark Gongloff at mgongloff1@bloomberg.net

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