bluebird bio (NASDAQ: BLUE) is up 9.5% and Juno Therapeutics (NASDAQ: JUNO) is up 17% at 12:40 p.m. EDT Monday. Both appear to be riding the coattails of fellow immuno-oncology drug developer Kite Pharma (NASDAQ: KITE), which is being acquired by Gilead Sciences (NASDAQ: GILD) for $11.9 billion.
Kite, Juno, and Bluebird are all developing chimeric antigen receptor (CAR) and the related engineered T-cell receptor (TCR) technologies, which make genetic changes to patient's immune T cells, training them to attack cancer cells.
Kite is substantially further ahead of Bluebird and Juno. Kite's lead drug axicabtagene ciloleucel, which treats blood cancers such as diffuse large B-cell lymphoma, transformed follicular lymphoma, and primary mediastinal B-cell lymphoma, is under FDA review with a decision expected on or before Nov. 29. In March, Juno took a step back after announcing that it was discontinuing development of its lead CAR-T treatment, JCAR015, which was in phase 2 development. Bluebird's CAR-T program bb2121 is still in phase 1, although it's had pretty good data to date.
Of course, the market caps reflect the relative stages. Today's buyout announcement values Kite at $11.9 billion, while Juno's market cap is just $3.8 billion and Bluebird's is $4.9 billion. Bluebird's market capitalization reflects the fact that the company has an additional gene therapy program, to treat beta thalassemia and sickle cell disease.
Overall, it's pretty clear Juno and Bluebird have upside if they can get their drugs approved. But whether the two companies are worth more today than they were yesterday, because Kite is being acquired, is debatable. Juno has a large partnership with Celgene (NASDAQ: CELG), limiting the number of suitors that might be interested in buying the company. Bluebird also has a partnership Celgene, but only for bb2121, making the company potentially more attractive as a buyout candidate. However it's not optimal to count on that as part of an investment thesis.
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Brian Orelli has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bluebird Bio, Celgene, and Gilead Sciences. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.