Juno Therapeutics' Q4 Financial Results Overshadowed by Pipeline Setback

By Keith Speights Markets Fool.com

The last time Juno Therapeutics (NASDAQ: JUNO) reported quarterly results, it received a big boost from its partner Celgene (NASDAQ: CELG). However, Juno's stock hasn't performed so well since then.

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The clinical-stage biotech announced its fourth-quarter and full 2016 results after the market closed on Wednesday. Here are the highlights.

Image source: Getty Images.

Juno's results: The raw numbers

Metric

Q4 2016

Q4 2015

Year-Over-Year Change

Revenue

$21.2 million

$4.2 million

404.8%

Net loss from continuing operations

($52.8 million)

($85.2 million)

N/A

Adjusted net loss per share

($0.65)

($0.53)

N/A

Data Source: Juno Therapeutics.

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What happened with Juno this quarter?

Juno's Q4 financial results weren't nearly as important as the biotech's decision to scrap plans to move forward with pipeline candidate JCAR015. On Nov. 23, Juno placed a voluntary clinical hold on a phase 2 study evaluating the experimental CD19 drug after two patients experienced swelling in the brain that led to death. The company, in consultation with Celgene, ultimately decided its resources were better spent on other drug candidates.

As was the case in its third quarter, Juno'sQ4 revenue improved due to money received from its collaboration with Celgene. Juno's net loss was lower than in 2015's Q4 primarily due to gains from achange in value of the success payment and contingent consideration liabilities for its agreements withFred Hutchinson Cancer Research Center andMemorial Sloan Kettering Cancer Center.

However, the biotech's adjusted net loss worsened compared to the same period in 2015. This change was partially caused by Juno's acquisition of privately held Redox Therapies.

Juno also completed the acquisition of AbVitro in the quarter. Celgene plans to license a portion of the technology that Juno gained in that deal.

One positive from the fourth quarter was Juno's victory in a challenge by Kite Pharma to one of its key patents. TheU.S. Patent & Trademark Office upheld Juno's claims, and Juno is now suing Kite, alleging patent infringement involving Kite's lead drug candidate, KTE-C19.

Juno ended 2016 with a cash position of$922.3 million, including cash, cash equivalents, and marketable securities. The company reported cash burn of$232.2 million for the year, with$106.6 million of that total coming in the fourth quarter.

What management had to say

Juno Therapeutics CEOHans Bishop acknowledged the biotech's challenges in the fourth quarter.

2016 was a year of progress and learning for Juno and the cancer immunotherapy field. We continue to experience encouraging signs of clinical benefit in our trial addressingNHL, but we also recognize the unfortunate and unexpected toxicity we saw in our trial addressing ALL with JCAR015. We have decided not to move forward with the ROCKET trial or JCAR015 at this time, even though it generated important learnings for us and the immunotherapy field. We remain committed to developing better treatments for patients battling ALL and believe an approach using our defined cell technology is the best platform to pursue. We intend to begin a trial with a defined cell product candidate in adult ALL next year. We look forward to sharing detailed data supporting our learnings from the ROCKET trial at an upcoming scientific conference.

He added, "Looking forward into 2017, we continue to be optimistic about the progress we are making with JCAR017 and our pipeline more broadly. We expect 2017 will be a data-rich year of key insights, based on up to 20 ongoing trials by year end, and we plan to present data from these trials as appropriate throughout the year."

Looking forward

With Juno throwing in the towel on JCAR015, JCAR014 becomes the biotech's lead candidate. The CD19 therapy showed promise in results from a phase 1/2 clinical study targeting treatment ofchronic lymphocytic leukemia (CLL).Juno also has multiple pipeline candidates in early stage clinical studies, including another CD19 drug -- JCAR017.

Investors will want to closely watch Juno's results in the months ahead. There will no doubt be concerns that JCAR017 could encounter safety issuessimilar to those of JCAR015.

Running out of money shouldn't be a problem for Juno, though. It appears to be in good shape financially. Juno expects2017 cash burn, excluding cash inflows or outflows from upfront payments related to business development activities, will be between$270 million and $300 million. The biotech's current cash position should allow it to fund operations for at least another couple of years.

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Keith Speights owns shares of Celgene. The Motley Fool owns shares of and recommends Celgene. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.