On May 4, 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 first quarter 2017 (Press release, Juno, MAY 4, 2017, View Source [SID1234518844]). Schedule your 30 min Free 1stOncology Demo! "In the first quarter 2017, we made significant progress with our lead program, JCAR017, and we look forward to presenting updated data in DLBCL at ASCO (Free ASCO Whitepaper)," said Hans Bishop, Juno’s President and Chief Executive Officer. "We also continue to advance our pipeline more broadly with eleven product candidates now in human testing. Already this year, we have initiated a number of trials, including a BCMA CAR T, a CD19-directed 4-1BBL armored CAR, a fully-human CD19 CAR T, a combination trial with JCAR014 and durvalumab, and a combination trial with JCAR014 and ibrutinib. With up to 20 ongoing trials by year end, we expect to gain additional insights that may lead to product candidates that can deliver long-term durable remissions for patients in need."
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First Quarter 2017 and Recent Corporate Highlights
Corporate News:
Hired key talent to our leadership team, including the:
Appointment of Corsee Sanders, Ph.D. as Executive Vice President and Head of Development Operations. Dr. Sanders leads a newly organized Development Operations group that combines clinical operations, biometrics and data management, patient operations, medical writing, and program and project management.
Appointment of Sunil Agarwal, M.D. as President of Research & Development. Dr. Agarwal is responsible for the execution of Juno’s drug development pipeline, integration of translational insights into ongoing programs, and the prioritization of research and development initiatives.
Appointment to Board of Directors of Rupert Vessey, MA, BM BCh, FRCP, DPhil, who is Celgene Corporation’s President of Research and Early Development.
First Quarter 2017 Financial Results
Cash Position: Cash, cash equivalents, and marketable securities as of March 31, 2017 were $850.7 million compared to $922.3 million as of December 31, 2016.
Cash Burn: Cash burn in the first quarter of 2017, excluding cash inflows and outflows from business development activities, was $75.3 million, including $21.2 million for the purchase of property and equipment, the majority of which were non-recurring costs to build out Juno’s planned headquarters facility. Cash burn in the first quarter of 2016, excluding cash inflows and outflows from business development activities, was $61.0 million. The cash burn increase of $14.3 million was primarily driven by cash outflows in connection with the overall growth of the business including clinical, manufacturing, and research, costs to build out Juno’s planned headquarters facility, and purchases of manufacturing equipment. These increases were offset by $11.2 million received from Celgene for the partial reimbursement of costs incurred by Juno in connection with the CD19 program.
Revenue: Revenue for the three months ended March 31, 2017 and 2016 was $19.3 million and $9.8 million, respectively. The increase was primarily due to revenue recognized in connection with the Celgene collaboration and CD19 License for the partial reimbursement by Celgene of research and development costs incurred by Juno in the first quarter of 2017.
R&D Expenses: Research and development expenses for the three months ended March 31, 2017 and 2016, inclusive of non-cash expenses and computed in accordance with GAAP, were $82.9 million and $73.7 million, respectively. The increase was primarily due to increased costs to execute Juno’s clinical development strategy, manufacture its product candidates, and expand its overall research and development capabilities. For the three months ended March 31, 2017 expense related to our success payment and contingent consideration obligations increased $14.0 million and $1.5 million, respectively, compared to the three months ended March 31, 2016. These increases were offset by a decrease in milestone expense.
Non-GAAP R&D Expenses: Non-GAAP research and development expenses for the three months ended March 31, 2017 and 2016 were $74.4 million and $80.1 million, respectively and include $9.6 million and $9.1 million of stock-based compensation expense, respectively. Non-GAAP research and development expenses for three months ended March 31, 2017 exclude the following:
An expense of $7.4 million 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 $0.7 million 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 $0.4 million associated with the change in the estimated fair value of the contingent consideration liabilities recorded in connection with the Stage and X-Body acquisitions.
Non-GAAP research and development expenses for the three months ended March 31, 2016 exclude the following:
A gain of $6.6 million associated with the change in estimated fair value and elapsed service period for Juno’s potential success payment liabilities to FHCRC and MSK.
Non-cash stock-based compensation expense of $1.2 million 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.
A gain of $1.0 million 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 months ended March 31, 2017 and 2016 were $20.7 million and $16.0 million, respectively. The increase of $4.7 million was due to an increase in personnel expenses primarily related to increased headcount to support the business, an increase in consulting and other expenses including costs related to commercial readiness, and an increase in stock-based compensation expense. The increases were partially offset by a decrease in business development expenses. General and administrative expenses include $6.1 million and $4.9 million of non-cash stock-based compensation expense for the three months ended March 31, 2017 and 2016, respectively.
GAAP Net Loss: Net loss for the three months ended March 31, 2017 and 2016 was $82.2 million, or $0.79 per share, and $71.1 million, or $0.72 per share, respectively.
Non-GAAP Net Loss: Non-GAAP net loss, which incorporates the non-GAAP R&D expense, for the three months ended March 31, 2017 and 2016 was $73.7 million, or $0.71 per share, and $77.5 million, or $0.78 per share, respectively.
A reconciliation of GAAP net loss to non-GAAP net loss and GAAP R&D expense to non-GAAP R&D expense is presented below under "Non-GAAP Financial Measures."
2017 Financial Guidance
Juno reaffirms 2017 cash burn, excluding cash inflows or outflows from upfront payments related to business development activities, of between $270 million and $300 million.
Operating burn estimated to be between $245 million and $275 million.
Capital expenditures, net of tenant improvement allowances, estimated to be between $22 million and $27 million, the majority of which are related to one-time infrastructure build-outs.