Juno Therapeutics Inc (NASDAQ:JUNO), which is a biotech operator that is focused on cancer treatments, has seen its stock languish during September. Yet this has come after a blistering performance. From early June, JUNO stock has logged a return of over 80%.
So yes, it’s natural for there to be some profit taking. And besides, there are still quite a few risks with JUNO stock. During the past year, the company has had issues with a major clinical trial, which involved two deaths.
JUNO is also facing tremendous competition. Just some of the rivals include Kite Pharma Inc (NASDAQ:KITE), Bellicum Pharmaceuticals Inc (NASDAQ:BLCM), Cellectis SA (ADR) (NASDAQ:CLLS), bluebird bio Inc (NASDAQ:BLUE), ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) and Novartis AG (ADR) (NYSE:NVS).
What’s more, there are also political concerns. Given that a cancer treatment for a patient can cost hundreds of thousands a year, there is likely to be pressure on pricing.
All this sounds kind of daunting, right? True. Yet I still think the future still looks promising for JUNO. And to see way, let’s take a look at 3 factors:
#1 Bullish Reason For JUNO Stock – The Power of CAR-T Treatments
At the heart of JUNO is its CAR-T innovations, which involve leveraging a patient’s immune system to fight various forms of cancer. This approach has many advantages as disease is often different from person to person. Although, there are still quite a few risks since CAR-T treatments are still in the early phases.
Despite all this, it is encouraging that JUNO has the backing of one of the top biotech operators in the world: Celgene Corporation (NASDAQ:CELG). Back in 2015, it made a $1 billion investment in the company.
Something else to keep in mind: Juno has a robust pipeline. Note that the company has nine drugs in different trials (they range from Phase 1 to Phase 2).
Right now, the lead candidate is JCAR-017, which is focused on leukemia and lymphomas. As seen during the summer, the drug has shown strong results, with the response rate at 59% for B-cell non- Hodgkin lymphoma.
#2 Bullish Reason For JUNO Stock – Consolidation Play
Back in late August, the CAR-T industry got a big lift. Gilead Sciences Inc. (NASDAQ:GILD) agreed to shell out $11.9 billion for KITE. It was a clear-cut sign that CAR-T was for real.
Since then, many analysts on Wall Street have been trying to find the next M&A target. And yes, one of the names that keeps popping up is JUNO.
Granted, it can be dicey to make a wager on an potential M&A transaction. But then again, JUNO would still likely get the attention of a mega pharma company that is looking for growth. Again, the company has a healthy pipeline. And more importantly, it would be tough to create new treatments from scratch. This would not only be costly but also require dealing with the many issues of IP (Intellectual Property) rights.
Finally, there is a race in the CAR-T industry to get to market quickly. In other words, there is probably lots of motivation for JUNO to seek out a buyout partner in order to gain access to substantial financial resources and global distribution.
#3 Bullish Reason For JUNO Stock – Financials
Even if JUNO does not opt to do an M&A deal, the company still has a solid financial position. According to the latest financial report, the cash position was about $800 million.
And then last week the company pulled off a follow-on offering of $277 million. In fact, CELG agreed to purchase 600,000 shares at $41 each.
For the full-year, the burn rate is expected to range from $270 million to $300. So all in all, JUNO has a lot of financial resources to get its drugs to market.
Tom Taulli runs the InvestorPlace blog IPO Playbook and is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
