Juno Therapeutics Reports Second Quarter 2015 Financial Results

On August 12, 2015 Juno Therapeutics, Inc. (NASDAQ:JUNO), a biopharmaceutical company focused on re-engaging the body’s immune system to revolutionize the treatment of cancer, reported business highlights and financial results for the second quarter of 2015 (Press release, Juno, AUG 12, 2015, View Source;p=RssLanding&cat=news&id=2079196 [SID:1234507230]).

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"I am pleased by the progress we have made over the last quarter. Data we presented on JCAR014, JCAR015, and JCAR017 demonstrate the progress we are making in the clinic. The FDA clearance of the IND for JCAR015 was also an important milestone, and we are now well placed to start our first pivotal clinical trial," stated Hans Bishop, Juno’s CEO. "We also completed a number of strategic transactions that significantly improve our capabilities, access to transformative technologies, and balance sheet."
Concurrent with the Celgene partnership, the company announced that Thomas O. Daniel, M.D., President, Celgene Research and Early Development, has been appointed to the Juno Board of Directors. Dr. Daniel has extensive experience in oncology and immunology coupled with a proven track record of building and leading research and development teams.

"Tom has a tremendous track record of strategic leadership in building a world-class pipeline and successfully translating discovery research into new clinical candidates. We look forward to Tom’s contributions and insights as a member of the Juno Board," said Hans Bishop.

Second Quarter 2015 and Recent Corporate Highlights

Clinical Progress:

The U.S. Food and Drug Administration (FDA) cleared investigational new drug (IND) applications for JCAR015 and JCAR017 for the treatment of adult patients with relapsed/refractory (r/r) acute lymphoblastic leukemia (ALL), and r/r B cell non-Hodgkin lymphoma (NHL), respectively. The JCAR015 Phase 2 study will serve as Juno’s U.S. registration trial in adult r/r ALL, and the Phase 1 JCAR017 trial is the backbone component of Juno’s multi-pronged strategy in NHL. Juno expects both of these studies to begin this quarter.

Translational insights from ongoing trials across Juno’s CD19 portfolio were presented at various medical meetings and highlight several important areas of progress, including:

Early data of improved response rates in r/r NHL (6/7 or 86%) with greater cell expansion and persistence as presented in data for JCAR014 at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) meeting in May.

Emerging clinical data that corroborate pre-clinical evidence of the potential benefits of defined cell products in creating deeper remissions, with 91% complete molecular remission rates as measured by flow cytometry for both JCAR017 (20/22 evaluable patients) in r/r pediatric ALL and JCAR014 (21/23 evaluable patients) in r/r adult ALL, presented at ASCO (Free ASCO Whitepaper) and the American Association for Cancer Research (AACR) (Free AACR Whitepaper).

JCAR015 data continue to be encouraging, demonstrating complete remission (CR) in 87% of evaluable patients with ALL, and minimal residual disease (MRD) negative CR was reported in 81% of patients who achieved a CR. Median overall survival (OS) for all efficacy-evaluable patients was 8.5 months, and the six month OS rate was 59 percent (95 percent CI: 39-74), presented at ASCO (Free ASCO Whitepaper).

Safety profile across the CD19 portfolio remains consistent with what has been previously reported.

Corporate News:
Entered into a ten-year collaboration with Celgene to leverage T cell therapeutic strategies with an initial focus on CAR T and TCR therapies. Celgene gained the option to commercialize Juno programs outside North America and co-promote certain programs globally. Celgene also purchased 9.1 million of Juno shares. Juno has gained the option to co-develop, co-promote and share profits with respect to select Celgene programs. Juno also received $1 billion in total payments. The collaboration became effective on July 31 after an early termination of the Hart-Scott-Rodino Antitrust waiting period.

Acquired Stage Cell Therapeutics GmbH (Stage), bringing access to transformative cell selection and activation capabilities, next-generation manufacturing automation technologies, enhanced supply chain control, and lower expected long-term cost of goods.
Acquired X-Body, Inc., bringing in-house an innovative discovery platform that interrogates the human antibody repertoire, rapidly selecting fully-human antibodies and single-chain variable fragments with desired characteristics, even against difficult targets.
Entered into an exclusive collaboration with Editas to conduct trials using Editas’ genome editing technologies, including CRISPR/Cas9, in creating improved, next-generation CAR T and TCR products.

Entered into a collaboration with Fate Therapeutics to identify and utilize small molecules to modulate cell signaling pathways in creating improved, next-generation CAR T and TCR products.

Entered into a collaboration with MedImmune to conduct combination clinical trials in immuno-oncology with one of Juno’s CD19-directed CAR T cell candidates and MedImmune’s investigational programmed cell death ligand 1 (PD-L1) immune checkpoint inhibitor, MEDI4736.

Reached a favorable settlement that resolved litigation with the University of Pennsylvania and Novartis Pharmaceuticals Corporation and included an initial payment as well as potential future milestone and royalty payments to Juno.
Appointed Hyam I. Levitsky, M.D. as executive vice president, research and chief scientific officer. Dr. Levitsky is responsible for developing a comprehensive immunotherapy program focused on advancing chimeric antigen receptor and T-cell receptor technologies.

Second Quarter 2015 Financial Results

Cash Position: Cash, cash equivalents, and marketable securities as of June 30, 2015 were $313.4 million compared to $474.1 million as of December 31, 2014. After giving effect to the effectiveness of the Celgene collaboration on July 31, 2015, including the initial purchase of Juno stock by Celgene, the pro forma cash is $1.31 billion.

Cash Burn: Cash burn in the three months ended June 30, 2015 was $134.2 million. This included net cash paid of $77.7 million related to the Stage and X-Body acquisitions and $38.0 million in upfront fees to acquire technology. The additional burn of $18.5 million was primarily due to cash used in operations of $24.0 million related to the overall growth of Juno’s business, including the hiring of key talent, litigation costs, and increased purchases of property and equipment of $6.8 million, offset by cash received in the second quarter of 2015 of $12.25 million in connection with the Novartis sublicense agreement. Cash burn in the six months ended June 30, 2015 was $160.6 million.

Revenue: Revenue was $12.5 million in the three and six months ended June 30, 2015, which consisted primarily of $12.25 million received in connection with the Novartis sublicense agreement.

R&D Expenses: Research and development expenses in the three and six months ended June 30, 2015, inclusive of non-cash expenses and computed in accordance with GAAP, were $60.2 million and $118.0 million, respectively, compared to $6.5 million and $9.4 million in the three and six months ended June 30, 2014, respectively. The increase of $53.7 million and $108.6 million in the three and six months ended June 30, 2015, respectively, was primarily due to increased costs related to acquiring technology, expanding the company’s overall research and development capabilities, hiring key talent, advancing programs at Juno’s founding institutions, non-cash stock-based compensation expense, and expenses related to the change in estimated value and elapsed accrual period for Juno’s potential success payments to the Fred Hutchinson Cancer Research Center (FHCRC) and Memorial Sloan Kettering Cancer Center (MSK).

Non-GAAP R&D Expenses: Non-GAAP research and development expenses in the three and six months ended June 30, 2015 were $23.8 million and $40.8 million, respectively. Non-GAAP research and development expenses in 2015 exclude the following:
Success payment expense of $4.0 million and $42.9 million for the three and six months ended June 30, 2015, respectively, associated with the change in estimated value and elapsed accrual period for Juno’s potential success payment liabilities to FHCRC and MSK.

Upfront payments related to license agreements of $30.8 million for the three and six months ended June 30, 2015 associated with the Editas and Fate Therapeutics collaborations.

Non-cash stock-based compensation expense of $1.7 million and $3.6 million for the three and six months ended June 30, 2015, respectively, related to a 2013 restricted stock award to a co-founding director that became a consultant upon his departure from Juno’s board of directors in 2014.

Non-GAAP research and development expenses in the three and six months ended June 30, 2014 were $6.3 million and $9.0 million, respectively, and exclude success payment expense of $0.2 million and $0.4 million, respectively.
G&A Expenses: General and administrative expenses in the three and six months ended June 30, 2015, inclusive of non-cash expenses and computed in accordance with GAAP, were $14.9 million and $21.5 million, respectively, compared with $4.6 million and $8.0 million in the three and six months ended June 30, 2014, respectively. The increase of $10.3 million and $13.5 million in the three and six months ended June 30, 2015, respectively, was primarily due to increased personnel expense, including non-cash stock-based compensation expense, transaction costs associated with the Stage and X-Body acquisitions as well as the Celgene, Fate, and Editas collaborations, and an increase in patent and corporate legal fees.

Litigation Expense: Litigation expense in the three and six months ended June 30, 2015 was $5.3 million and $6.0 million, respectively, compared with $1.6 million and $3.6 million in the three and six months ended June 30, 2014, respectively. All litigation expense in those periods were comprised of costs Juno incurred with respect to Trustees of the University of Pennsylvania v. St. Jude Children’s Research Hospital, Civil Action No. 2:13-cv-01502-SD (E.D. Penn.), as well as expenses Juno was required to reimburse to St. Jude Children’s Research Hospital with respect to such litigation. In April 2015 this litigation was settled favorably, and Novartis agreed to execute a sublicense agreement with Juno, in connection with which Novartis paid Juno $12.25 million.

GAAP Net Loss Attributable to Common Stockholders: Net loss attributable to common stockholders for the three and six months ended June 30, 2015 was $66.0 million, or $0.79 per share and $130.9 million, or $1.58 per share, respectively. This compares to $38.1 million, or $5.80 per share, and $47.1 million, or $7.06 per share, respectively, for the same periods in 2014.

Non-GAAP Net Loss Attributable to Common Stockholders: Non-GAAP net loss attributable to common stockholders, which incorporates the non-GAAP R&D expense, for the three and six months ended June 30, 2015 was $29.5 million, or $0.35 per share, and $53.7 million, or $0.65 per share, respectively.

For the three and six months ended June 30, 2014, non-GAAP net loss attributable to common stockholders, which incorporates the non-GAAP R&D expense, was $12.5 million, or $1.90 per share and $20.6 million, or $3.09 per share, respectively. Non-GAAP net loss attributable to common stockholders for the three and six months ended June 30, 2014 exclude the following:

Success payment expense of $0.2 million and $0.4 million for the three and six months ended June 30, 2014, respectively, associated with the change in estimated value and elapsed accrual period for Juno’s potential success payment liabilities to FHCRC and MSK.

Non-cash convertible preferred stock option expense of $10.1 million and $10.7 million in the three and six months ended June 30, 2014, respectively.

A non-cash charge of $15.4 million for the three and six months ended June 30, 2014 related to deemed dividends upon issuance of convertible preferred stock.

A reconciliation of GAAP net loss to non-GAAP net loss is presented below under "Non-GAAP Financial Measures."

2015 Financial Guidance
Juno expects 2015 cash burn, excluding cash inflows or outflows from business development activities and the now-settled litigation, to be at the higher end of its guidance of between $125 million and $150 million.