Jounce Therapeutics Stock Slides On Disappointing Data, Wells Fargo Downgrades

Jounce Therapeutics Inc JNCE shares are tumbling Thursday in reaction to the abstract data for JTX-2011 that was made available in advance of an American Society of Clinical Oncology presentation. 

JTX-2011, the company's lead product candidate, is a monoclonal antibody that binds to and activates ICOS, a protein that stimulates an immune response against solid tumors.

The Analysts

Wells Fargo Securities analyst Jim Birchenough downgraded Jounce from Outperform to Market Perform and lowered the price target from $37 to $13.

HC Wainwright's Debjit Chattopadhyay maintained a Buy rating and reduced the price target from $33 to $19.

Wells Fargo: JTX-2011 Appears Undifferentiated

The overall response rate for JTX-2011 as a monotherapy in gastric cancer and triple negative breast cancer, and for the JTX-2011-Opdivo combo in gastric cancer and TNBC, is underwhelming, Birchenough said in a Thursday note.

"In Phase 2, Grade 3 or 4 drug-related adverse events were observed in 8 percent [of] mono and 13 percent [of] combo patients with drug-related adverse events," the analyst said. 

The modest anti-tumor effects may not translate into clinical benefit, Birchenough said. 

The pipeline candidate is not competitive with other investigational drugs and "appears undifferentiated in a crowded category," the analyst said. 

Jounce will present the first interim clinical data from the ICONIC trial that evaluated JTX-2011's biologic and clinical activity in patients with advanced cancers at the ASCO on June 2, according to Wells Fargo. 

"With follow-up data expected at ASCO in gastric cancer and TNBC, and additional data expected in lung cancer and head and neck cancer, we would take a wait-and-see approach to assess strength of aggregate data." 

HC Wainwright Removes Cancers From Model

Citing the data, HC Wainwright analyst Chattopadhyay said he's removing gastric and TNBC indications from his model. The less positive outcomes for patients receiving the JTX-2011 and Opdivo combo in spite of the high ICOS expression should raise questions about the mechanistic rationale, the analyst said.

The Price Action

Jounce shares were falling 33.25 percent to $11.80 at the time of publication Thursday. 

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