U.S. Markets open in 1 hr 26 mins

Missed the Juno IPO? Take a Look at MabVax

NEW YORK, NY / ACCESSWIRE / December 22, 2014 / When an initial public offering soars over 50% right out of the gate, you almost never get a second chance to buy at the IPO price. Juno Therapeutics (NASDAQ:JUNO), an oncology-focused biotech not even a year and a half old, accomplished just that on Friday when it offered shares at $24 a piece and closed its first trading day just below $37.

In rare cases however, there can be a second chance, though not necessarily in the conventional sense of the stock plunging back down to IPO price. First, a little background on the exuberance surrounding Juno.

The pharmacological world of cancer treatments is more often than not a game of degree. Even so-called cancer "miracle drug" blockbusters like Novartis's (NYSE:NVS) Gleevec was approved officially based on a 38% overall response rate (though complete response rates of up to 98% were reported). In oncology, the term "cure" is almost never used because even in a complete response where cancer cells are no longer detectable, the disease nevertheless does sometimes return. In most cases, the best cancer drugs are measured in overall response rate or overall survival extension. Even the best oncology treatments ever developed are almost never knockout punches.

The excitement over Juno lay in the fact that current clinical results for its CAR T-Cell approach to certain types of leukemia look even better than Gleevec. Gleevec was approved in 2002 and was also designed for a type of leukemia called CML. Gleevec sold $1.87B in 2013, 11 years after making it to market.

CAR T-Cell stands for chimeric antigen receptor T-cell, which means a killer immune cell genetically engineered with a targeting mechanism to lock on to cancer cells. The process behind engineering these cells is quite creative, pioneered by Dr. Carl June at University of Pennsylvania, with the first results reported in 2012. A type of attenuated HIV is genetically modified to carry a cancer antigen, used to invade a patient's T-cells (this is what HIV is best at, it being a T-cell-targeting retrovirus), and reprogram them with the new genes to recognize a target antigen on cancer cells.

Since 2012 when this approach reported its first successes, Novartis has swept in and sponsored Dr. June's work, acquiring the rights to it.

Juno (to relation to Dr. June), until Friday a private biotech funded by venture capital, also decided to delve into the genetically reprogrammed killer T-cell sector and its results up to now have been encouraging: Complete remission occurred in 24 out of 27 leukemia patients. Compare that with Gleevec's official 38% overall response rate (overall includes partial responses) on 147 patients and you can start to see why investor response to Juno’s IPO was so positive.

Juno is not alone in pursuing the technology, as Novartis is right on its tail with Dr. June, and there is confirmatory evidence that Juno is also not alone in its positive results in this T-cell-reprogramming field of oncology. Results reported in Dr. June's study show similar statistics. 82% of a group of 20 patients showed a complete response, though 3 subsequently relapsed. Put these two trials together and it is compelling evidence - to investors at least - that genetically modified T-Cells could be the next Gleevec for leukemia.

Back to Second Chances

So what about missing the IPO boat? Barring the possibility that Juno will plummet back down to $24 any time soon if ever, the answer lay in partnerships. Usually, when a developing biotech partners up with a company of Juno's size of $2.75B, notwithstanding its youth and the fact that it has only been trading publicly since Friday, the smaller company gets a big bump.

In this case, that partnership was already cemented back in September before Juno went public with a small biotech called MabVax Therapeutics (OTCMKTS:MBVX). MabVax is not involved directly in reprogramming T-cells for use against cancer and certainly does not have the name recognition of its larger partner, but it is involved in discovering the antibodies that lock onto cancer. MabVax and Juno were both working at the Sloan Kettering Memorial Cancer Center when they were introduced by a mutual acquaintance who worked with both companies.

MabVax has an agreement with Sloan Kettering whereby MabVax has a right to any blood samples taken from patients trialing any of 8 different cancer vaccine adjuvants. MabVax examines these samples for effective, fully human antibodies, and picks the best ones for its product candidates, the best ones being those that lock onto cancer cells most effectively.

MabVax's deal with Juno is actually through Sloan Kettering as middleman. Juno has agreed to work with MabVax through Sloan, testing the antibodies MabVax isolates as targeting agents for its CAR T-cells. Think of MabVax's antibodies as the navigation system for Juno's modified T-cell battle tank. Any of MabVax's antibodies used in Juno's T-cells as a targeting sequence translates into royalties for MabVax. Keep in mind that in order for an antibody on its own to be an effective cancer therapeutic it has to not only lock onto a cancer cell, but also thereby kill it. A T-cell, on the other hand, already has the weaponry to kill a cancer cell. It just has to recognize it using an antibody that need only lock on.

Flush with cash now, Juno is bound to step up its research and efforts at commercializing its CAR T-cells. It will need to develop a host of T-cells with different targeting sequences for different cancers in order to expand its base. If one of MabVax's targeting antibodies gets used, the importance to MabVax will be more in the recognition than the royalties themselves, though both would be a plus.

To be recognized as one of Juno's partners in the promising field of CAR T-cells is a potential windfall for a company of MabVax's size. So while those who missed Juno at $24 probably won't be able to buy it at that price any time soon, a look at Juno's as-of-yet little-known biotech partner MabVax may still provide something like the upside we saw on the Friday IPO.

About Market Exclusive

Market Exclusive www.marketexclusive.com is a financial portal geared to engaging discussion on current financial topics. Market Exclusive is not an investment advisor.

Market Exclusive