Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Juno Therapeutics' Cash Position and Potential Cash Cow JCAR017 Are Still What's Important

It's been a pretty good year for Juno Therapeutics (NASDAQ: JUNO) so far. The clinical-stage biotech's share price is up more than 50% year-to-date. Its financial position in the first quarter looked great thanks to its collaboration with Celgene (NASDAQ: CELG). And at the American Society of Clinical Oncology (ASCO) meeting in June, it reported positive data from an early stage study of lead candidate JCAR017 in treating aggressive B-cell non-Hodgkin lymphoma.

Juno provided an update on its second-quarter performance after the market closed on Thursday. Did things still look rosy? Here are the highlights. 

Image source: Getty Images.

Juno Therapeutics results: The raw numbers

Metric 

Q2 2017 

Q2 2016 

Year-Over-Year Change

Revenue

 $21.3 million  $27.6 million

(22.8%)

Net earnings

 ($100.7 million)  ($64.8 million)

N/A

Adjusted EPS

 ($0.74)  ($0.64)

N/A

Data Source: Juno Therapeutics.

What happened with Juno Therapeutics this quarter?

At this stage, Juno's low revenue and net loss don't really mean a whole lot on their own. With no products on the market yet, the company operates off of collaboration and licensing revenue, plus cash raised through stock offerings and borrowing. Having said that, Juno's revenue did fall in Q2 from the prior-year period, primarily because it got boost in Q2 2016 from a sub-license agreement with Novartis.

Juno's loss also widened in the second quarter. This stemmed largely from higher research and development expenses. Juno spent $101.1 million in the second quarter of 2017 on R&D compared to $72.3 million in the prior-year period. This is actually good news, because it reflects the biotech's ramping up of manufacturing its experimental drugs and continued clinical development. 

There are two financial metrics that are most important for Juno. One is its cash burn. As you might expect, with higher spending and lower revenue, Juno burned through more cash last quarter than it did in the same period of 2016: Juno reported cash burn of $59.8 million, compared to cash burn of only $5.2 million in the prior-year period. That comparison is skewed, however, because Juno received $50 million from Celgene in Q2 2016 related to the licensing of Juno's CD19 program.

The other key financial metric for Juno is its current cash position. On that front, the company continues to be in great shape. At the end of the quarter, Juno had cash, cash equivalents, and marketable securities totaling $801.8 million.

Looking beyond the numbers, there were several key developments for Juno in the quarter. Its presentation of JCAR017 data at ASCO mentioned earlier was one of them, and that was followed by a similar presentation at the International Conference of Malignant Lymphoma meeting. Juno also added to its leadership team with the hiring of Sunil Agarwal as president of research and development, and appointed two new board members -- Jay Flatley, executive chairman of Illumina, and Rupert Vessey, president of research and early development at Celgene.  

What management had to say

President and CEO Hans Bishop said:

It has been a historic last several months for the CAR T field, highlighting the potential of these therapies for patients. Juno is well-positioned to make a major impact, particularly with the potential best-in-class profile emerging for JCAR017. We look forward to starting the pivotal cohort for JCAR017 this quarter as well as expanding the use of this drug into broader populations over the coming year.

Looking forward

Juno still thinks that its 2017 cash burn will be between $270 million and $300 million. Of that amount, $245 million to $275 million is estimated to fund operating activities, while $22 million to $27 million is expected to go toward capital expenditures. With its large cash stockpile, Juno shouldn't need to raise more cash anytime soon. 

The main thing to watch in the months ahead will be the study of JCAR017 in treating aggressive B-cell non-Hodgkin lymphoma. Juno's partner Celgene continues to project possible approval of the experimental drug by 2019. Celgene also is counting on JCAR017 to reach blockbuster status -- a key reason underlying Juno's current valuation of more than $3 billion, despite its minimal revenue.

 

10 stocks we like better than Juno Therapeutics
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Juno Therapeutics wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

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