Have I lost faith in JUNO?

Juno got another hit recently as two more deaths occurred in a pivotal clinical trial that was put on hold by the FDA just a couple of months ago and now they’ve volunteered to hold the trial again. A huge setback for sure for Juno! Since I have been “promoting” JUNO before, the obvious question is whether I have lost faith in Juno now. NO, that’s my short answer!

Don’t call me pigheaded too quickly before seeing why and how I’m playing with JUNO. As I have explained before, there is a unique aspect regarding cancer drug development. You can see it here. But briefly while fatality can easily kill most of drugs in development, it is a very common toxicity that can be accepted for cancer drugs, as long as it is in the right ratio related to efficacy. Overall I haven’t seen any meaningful new development that will change my mind regarding the effectiveness of CAR-T therapy. As I said, if the general efficacy of this new therapy is questionable, I’ll certainly change my mind and run away from it. Apparently there is something wrong with Juno’s trial which could be for example the study population not suitable for the treatment regimen, or the wrong combo agents involved, or something not sufficient in monitoring that couldn’t identify the signs/symptoms causing brain edema early enough. I’m pretty sure the company is very busy in trying to identify the real issues and come up with the targeted risk minimization activities that could help control the fatality risk. This is just the normal part of drug development for any drugs and more so for cancer drugs that are always associated with more serious toxicities. Let me give you two examples that I know very well. Heard about ipilimumab (Yervoy)? This is the historical minestrone drug that was first ever approved in the world for melanoma as a grandfather immune-oncologic therapy. But simply check its product information. Yervoy can cause deadly toxicity such as GI perforation or liver failure. Such kind of deaths were already occurring during its clinical development and its clinical trial was also put on hold as well. Then panobinostat (Farydak) for multiple myeloma. This drug was also put on clinical trial hold during development and was even in a need to be discussed at ODAC, the famous FDA public advisory committee during the submission process. If you reviewed the public information from the pivotal trial, its mortality (death rate) for the active arm was even higher than the comparative arm. Actually ODAC had advised FDA not to approve the drug but at the end, the drug got approved! Why? Because the drug was definitely showing efficacy and MM patients are desperate for new treatment options when facing inevitable death. I bet we may likely see a similar situation for JUNO as long as they can come up with some good management strategy in the context of an effective therapy.

But I don’t want to leave you with an impression that I seem to know something that gives me enough confidence to believe that Juno will for sure succeed in its drugs. No I don’t and as with any biotech stocks, the risk is very high and there is no guarantee whatsoever. So let me be very clear that I’m not betting on Juno with certainty and it may turn out that I’m totally wrong. But till now, I still hold enough confidence to continue to bet on it. Actually I’m using a unique way with call spreads to bet on such a high risk biotech stock with a goal to substantially minimize my downside risk but with unlimited upside potential. As of now with a few adjustments along the way, I have taken more gains from the short arm that is much more than the premium that I paid for the long arm. In other words, even if Juno goes down to zero, I’m for sure having some profits already (about 20% minimal profit). But if Juno can survive the setback and regain its footing on the therapy which I’m betting on, my upside potential is unlimited. I’m holding 2018 call options now for free and worry-free for the bet.