Is Juno Therapeutics Stock Now a Bargain Buy?

By George Budwell Markets Fool.com

What happened

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According to data fromS&P Global Market Intelligence, shares of the clinical-stage biotech Juno Therapeutics (NASDAQ: JUNO) gained nearly 12% over the month of February without a discernible catalyst. However, these double-digit gains have since evaporated just a few days into March after the company decided to scrap its lead clinical candidate, JCAR015, forsafety reasons.

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So what

Despite JCAR015's spotty safety record, which resulted in the FDA placing multiple clinical holds on the experimental CAR T therapy, the therapy's fairly strong performance as a potential treatment foracute lymphoblastic leukemia (ALL) suggested that it was a viable product candidate and could still possibly rack up sales of at least $300 million even with its outstanding safety issues.

So the company's decision to discontinue JCAR015's development wipes this potential near-term revenue source off the table, and pushes the onus for value creation squarely onto Juno's earlier stage candidates like JCAR017.

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Now what

There are two good reasons for investors to remain patient with this volatile biotech stock, however. Specifically, Juno exited the most recent quarter with a substantial cash position of $922 million, and its new lead candidate, JCAR017, is about to enter a pivotal stage trial for relapsed or refractory diffuse large B cell lymphomalater this year.

Cutting to the chase, this stock is trading right around 2.5 times its cash position right now, which is dirt cheap for a drugmaker that could possibly be only two years away from bringing a blockbuster cancer product to market.

A more pessimistic view, though, is that Juno is now well behind Kite Pharma and Novartis in the race to bring a CAR T product to market, and there's no guarantee JCAR017 won't run into safety problems of its own going forward. Put simply, this speculative biotech isn't for the faint of heart -- even though it does have several blockbuster candidates in the pipeline.

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George Budwell has no position in any stocks mentioned. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.