The shine has definitely come off the CAR-T space.
If you're reading this miserable little blog then I assume you're already familiar with Chimeric Antigen Receptors and how they can allow T cells to recognize a specific protein (or antigen) on a tumor cell. And with the issue of toxicity and how the companies in this space are attempting to overcome it.
This new and exciting field caught fire in 2014 and 2015 as investors stormed into companies investigating potential treatments for various forms of cancer using this new Immunotherapy.
Kite Pharma (Nasdaq KITE) started trading in June of 2014 around $25 per share, and it didn't take long for it to take off, getting up around $90 by January 2015 and again in November of the same year. KITE is currently trading around $50 per share with a market cap of around $2.5 Billion.
At $50.18 (the most recent close) KITE is trading 44.1% below its 52 week high of $89.84
Juno Therapeutics (Nasdaq JUNO) started trading in December of 2014 in the $35 to $40 range and it too soared, getting up near $70 by June of 2015. JUNO is currently trading under $30 with a market cap of a little over $3 billion.
At $28.83 (the most recent close) JUNO is trading 50.1% below its 52 week high of $57.82
Ziopharm jumped into the CAR T space in January of 2015 after reaching an agreement with the MD Anderson Cancer Center in tandem with partner company Intrexon that included paying Anderson $100 million in shares of the two companies ($50 million each) plus an additional $15 million in shares (also split evenly) to induce Anderson to agree to the deal in time for a JP Morgan healthcare investor conference.
Shares of Ziopharm did as might be expected. After trading under $3 as recently as October of 2014, by March of 2015 they were trading over $14, and ZIOP reached those levels again as recently as November of last year. ZIOP is currently trading under $5 per share with a market cap of about $600 million.
At $4.60 (the most recent close) ZIOP is trading 69.1% below its 52 week high of $14.93
Juno Therapeutics has recently become the target of law suits centred around allegations of violations of Federal Security Laws regarding the reporting of a Phase II trial patient death, and that insiders engaged in the selling of shares before the news was released on July 7th 2016. Before news of the patient death JUNO had been trading around $40, after the news came out the PPS dropped down to its current price around $28.
Here is a link with details of one lawsuit:
Ziopharm also recently reported a patient death in its Phase I trial for Ad-RTS-hIL-12. And as with JUNO the news sent ZIOP's shares sharply lower. Trading in and around $6 in the days prior to the news, shares dropped under $5 on July 15th and closed today's trading at $4.60 There have also been stories written saying Ziopharm was in discussions in regards to a possible $50 million equity offering that has since been withdrawn in the wake of the trial news.
This news has also attracted various law firms, with PRs announcing that Ziopharm is being investigated for possible breaches of Federal Security laws.
Here are some links from law firms seeking to contact Ziopharm shareholders in regards to their investigations:
Does all this activity mean Ziopharm, like Juno, will be sued? I don't know, I'm not a lawyer. The extent of my legal expertise comes largely from reading about a dozen John Grishman novels and watching old episodes of Law & Order.
I do know that this is one of the many risk factors outlined in Ziopharm's SEC Filings. From their most recent 10Q you will find this:
The testing and marketing of medical products entail an inherent risk of product liability. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products, if approved. Even a successful defense would require significant financial and management resources. Regardless of the merit or eventual outcome, liability claims may result in:
| • | Decreased demand for our product candidates; |
| • | Injury to our reputation; |
| • | Withdrawal of clinical trial participants; |
| • | Withdrawal of prior governmental approvals; |
| • | Costs of related litigation; |
| • | Substantial monetary awards to patients; |
| • | Product recalls; |
| • | Loss of revenue; and |
| • | The inability to commercialize our product candidates. |
We currently carry clinical trial insurance and product liability insurance. However, an inability to renew our policies or to obtain sufficient insurance at an acceptable cost could prevent or inhibit the commercialization of pharmaceutical products that we develop, alone or with collaborators.
There is of course insurance for possible securities violations, which is included in a Schedule 14a filing:
We maintain director and officer insurance providing for indemnification of our directors and officers for certain liabilities, including certain liabilities under the Securities Act. We also maintain a general liability insurance policy that covers certain liabilities of directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers. We have also entered into indemnification agreements with each of our directors and named executive officers.
I don't know what "certain" liabilities means. Obviously it means some, but all. So whether they are insured or not...the devil, as is often said, is in the details.
Too often inexperienced investors rush into a stock on hype, excitement and a climbing share price.
It pays to be fully abreast of all the risk factors.
It pays to be fully abreast of all the risk factors.
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