On November 1, 2017 Juno Therapeutics, Inc. (NASDAQ: JUNO), a biopharmaceutical company developing innovative cellular immunotherapies for the treatment of cancer, reported financial results and business highlights for the third quarter 2017 (Press release, Juno, NOV 1, 2017, View Source [SID1234521435]).
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“We are pleased with the potential best-in-class profile for JCAR017, and we look forward to presenting an updated dataset at the upcoming ASH (Free ASH Whitepaper) conference,” said Hans Bishop, Juno’s President and Chief Executive Officer. “The clinical data continue to support our belief that a defined cell product can improve patient outcomes. Our broad clinical development programs and ongoing infrastructure and manufacturing investments remain a key part of our strategy to deliver on the potential of CAR T cell therapies for cancer patients across a broad array of diseases.”
Third Quarter 2017 and Recent Corporate Highlights
Clinical Update:
Juno and its collaborators will present 15 abstracts at the upcoming American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting (ASH) (Free ASH Whitepaper) and seven abstracts at the upcoming Society for the Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) meetings.
Presentations at ASH (Free ASH Whitepaper) will include data from the ongoing Phase I TRANSCEND study in patients with relapsed or refractory (r/r) aggressive B-cell NHL who were treated with fludarabine/cyclophosphamide lymphodepletion and JCAR017. New data will be available at multiple presentations, including an oral presentation on Monday, December 11 that will include information on safety and responses. JCAR017 is a defined composition CD19-directed CAR T cell product candidate using a 4-1BB costimulatory domain. Juno believes JCAR017’s clinical profile could enable outpatient administration. The primary TRANSCEND abstract included the following data:
The core group (N=49) includes patients that represent the population that Juno is studying in the ongoing pivotal cohort. The core group includes patients with DLBCL (NOS and transformed from follicular lymphoma) that are ECOG Performance Status 0-1. Topline data from the abstract for both dose levels for the core group as of a data cutoff date of July 7, 2017 included:
Dose level 2 (DL2 = 100 million cells), the dose in our pivotal cohort, showed a 3 month overall response rate (ORR) of 80% (12/15) and a 3 month complete response (CR) rate of 73% (11/15) in the core group. Data support a dose response relationship. Dose level 1 (DL1 = 50 million cells) showed a 3 month ORR of 52% (11/21) and a 3 month CR rate of 33% (7/21).
Across both doses in the core group, the best overall response was 84% (41/49) and the best overall CR rate was 61% (30/49).
There was no increase in cytokine release syndrome (CRS) and neurotoxicity (NT) rates associated with the higher dose or between the full and core groups. Across doses in the full group, 1% (1/69) experienced severe CRS and 14% (10/69) experienced severe NT. 30% (21/69) had any grade CRS and 20% (14/69) had any grade NT. 64% (44/69) had no CRS or NT.
The most common treatment-emergent adverse events other than CRS and NT that occurred at ≥25% in the full group included neutropenia (41%), fatigue (30%), thrombocytopenia (30%), and anemia (26%).
Ongoing enrollment for the pivotal cohort of the TRANSCEND trial at DL2 with BLA filing expected to be completed in the second half of 2018 and with approval as early as 2018.
Announced the Regenerative Medicine Advanced Therapy (RMAT) designation for investigational drug JCAR017 for the treatment of r/r aggressive large B cell NHL, including DLBCL, not otherwise specified (de novo or transformed from indolent lymphoma), primary mediastinal B Cell lymphoma or Grade 3B follicular lymphoma. Similar to breakthrough designation, the pathway enables companies developing cell and tissue based therapies to have earlier and more frequent interactions with the FDA and includes opportunities for accelerated approval, priority review, rolling submissions, and alternative provisions to fulfill post-approval requirements under accelerated approval.
Initiated the PLATFORM trial, a Phase Ib study initially evaluating JCAR017 in combination with durvalumab in adult r/r aggressive NHL patients, in collaboration with Juno’s partner Celgene Corporation.
Initiated a clinical trial conducted by the Fred Hutchinson Cancer Research Center to evaluate a CAR T, FCARH143, with a fully-human BCMA binder that preferentially binds membrane-bound BCMA. Juno intends to begin a Phase I trial early next year using this binder in combination with Juno’s cell manufacturing process. This product candidate, JCARH125, recently received orphan drug designation from the FDA for multiple myeloma.
Corporate News:
Closed a follow-on public offering and concurrent private placement in September of 7,773,327 shares of Juno’s common stock at a price of $41.00 per share. This includes the exercise in full by the underwriters of their option to purchase up to an additional 915,000 shares of common stock and a private placement of 758,327 shares of common stock to a subsidiary of Celgene Corporation. Gross proceeds were approximately $318.7 million.
Third Quarter 2017 Financial Results
Cash Position: Cash, cash equivalents, and marketable securities as of September 30, 2017 were $1.06 billion compared to $801.8 million as of June 30, 2017, and $922.3 million as of December 31, 2016.
Cash Used in Operating Activities and Capital Expenditures: For the third quarter of 2017 cash used in operating activities was $40.3 million and cash used for capital expenditures was $13.9 million, compared to cash used in operating activities of $68.1 million and $6.4 million used for capital expenditures for the same period in 2016.
Cash Burn: Cash burn, which is cash used in operating activities and capital expenditures, excluding cash inflows and outflows from upfront payments related to business development activities, was $54.2 million in the third quarter of 2017, of which $59.1 million was operating cash burn and $4.9 million was net cash provided by a tenant improvement allowance offset by capital expenditures. For purposes of comparing the operating cash burn and cash burn for capital expenditures for the third quarter of 2017 to the Company’s financial guidance, a cash inflow of $18.8 million for a tenant improvement allowance was reclassified from operating activities to capital expenditures.
Cash burn in the third quarter of 2016 was $59.5 million, of which $53.1 million was operating cash burn and $6.4 million was cash burn for capital expenditures.
Revenue: Revenue for the three and nine months ended September 30, 2017 was $44.8 million and $85.4 million, compared to $20.8 million and $58.2 million for the three and nine months ended September 30, 2016, respectively. Revenue increased in the three and nine months ended September 30, 2017 compared to the prior year periods due to milestone revenue recognized in the third quarter of 2017 in connection with the Novartis sublicense agreement. Additionally, revenue recognized under our Celgene Collaboration Agreement and Celgene CD19 License increased in the nine months ended September 30, 2017 compared to the prior year period.
R&D Expenses: Research and development expenses for the three and nine months ended September 30, 2017, inclusive of non-cash expenses and computed in accordance with GAAP, were $140.3 million and $324.3 million, compared to $60.9 million and $206.9 million for the three and nine months ended September 30, 2016, respectively. The increases in 2017 compared to 2016 were primarily due to increased costs to manufacture Juno’s product candidates, execute on Juno’s clinical development strategy, expand its overall research and development capabilities, an increase in expense related to its success payment and contingent consideration obligations, expense incurred for the amortization of the intangible asset associated with the AbVitro, Inc. (AbVitro) acquisition, and an increase in non-cash stock-based compensation expense. These increases were offset by a decrease in milestone expense.
Non-GAAP R&D Expenses: Non-GAAP research and development expenses for the three and nine months ended September 30, 2017 were $98.4 million and $250.6 million, and include $10.6 million and $30.3 million of stock-based compensation expense, respectively. Non-GAAP research and development expenses for the three and nine months ended September 30, 2016 were $62.2 million and $214.5 million, and include $7.9 million and $25.8 million of stock-based compensation expense, respectively. Non-GAAP research and development expenses for 2017 exclude the following:
An expense of $37.2 million and $61.8 million for the three and nine months ended September 30, 2017, respectively, associated with the change in the estimated fair value and elapsed service period for Juno’s potential success payment liabilities to Fred Hutchinson Cancer Research Center (FHCRC) and Memorial Sloan Kettering Cancer Center (MSK).
Non-cash stock-based compensation expense of $1.4 million and $3.0 million for the three and nine months ended September 30, 2017, 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.
An expense of $2.4 million and $4.8 million for the three and nine months ended September 30, 2017, respectively, associated with amortization of the intangible asset recorded in connection with the AbVitro acquisition.
An expense of $0.8 million and $4.0 million for the three and nine months ended September 30, 2017, respectively, associated with the change in the estimated fair value of the contingent consideration liabilities recorded in connection with the Stage and X-Body acquisitions.
G&A Expenses: General and administrative expenses on a GAAP basis for the three and nine months ended September 30, 2017 were $26.3 million and $70.7 million, respectively, compared to $18.4 million and $51.2 million for the same periods in 2016. The increases in 2017 compared to 2016 were primarily due to an increase in consulting and other expenses to support the growing organization including costs related to commercial readiness, increased personnel expenses primarily related to increased headcount to support the business, an increase in litigation and patent legal costs, and an increase in stock-based non-cash compensation expense. The increases in the nine month period were partially offset by decreased business development expenses. General and administrative expenses include $6.9 million and $19.9 million of non-cash stock-based compensation expense for the three and nine months ended September 30, 2017, compared to $5.4 million and $15.9 million for the three and nine months ended September 30, 2016, respectively.
GAAP Net Loss: Net loss for the three and nine months ended September 30, 2017 was $118.1 million, or $1.12 per share, and $301.1 million, or $2.88 per share, compared to $56.9 million, or $0.56 per share and $192.8 million, or $1.91 per share, for the three and nine months ended September 30, 2016, respectively.
Non-GAAP Net Loss: Non-GAAP net loss, which incorporates the non-GAAP R&D expense, for the three and nine months ended September 30, 2017 was $76.3 million, or $0.73 per share, and $227.4 million, or $2.17 per share, compared to $58.3 million, or $0.57 per share, and $200.4 million, or $1.99 per share for the three and nine months ended September 30, 2016, respectively.
Reconciliations of cash burn to GAAP cash used in operating activities and capital expenditures, non-GAAP net loss to GAAP net loss, and non-GAAP R&D expense to GAAP R&D expense are presented below under “Non-GAAP Financial Measures.”
2017 Financial Guidance
Juno expects to be in the lower half of 2017 cash burn guidance, which is cash used in operating activities and capital expenditures, excluding cash inflows or outflows from upfront payments related to business development activities, of between $270 million and $300 million.
Conference Call Information
Juno will host a conference call today to review Juno’s financial results for the third quarter 2017 beginning at 1:30 p.m. Pacific Time (PT) / 4:30 p.m. Eastern Time (ET). Analysts and investors can participate in the conference call by dialing (855) 780-7198 for domestic callers and (631) 485-4870 for international callers, using the conference ID# 2899809.
The webcast can be accessed live on the Investor Relations page of Juno’s website, www.JunoTherapeutics.com, and will be available for replay for 30 days following the call.