North America Equity Research 13 January 2015 Initiation Overweight Juno Therapeutics JUNO, JUNO US Price: $61.51 A Lot of CARs in the Garage…Initiating at OW Price Target: $66.00 We are initiating coverage of JUNO with an OW rating based on the potential of its CAR-T platform, which we believe has broad and disruptive potential across oncology and is at the forefront of the innovation cycle in biotech. The technology genetically engineers a patient’s immune cells into “homing devices” that seek out and destroy tumor cells. Enthusiasm is understandably high given unprecedented response rates in hard-to-treat cancers, and this has been validated to a certain extent by the lineup of major players with skin in the game (NVS, CELG, AMGN, PFE, JNJ). JUNO, in our view, is particularly well positioned given its relationships with multiple leading medical institutions, thus providing pipeline flexibility/optionality. Bottom line, the CAR-T space is in its early stages, and while we do not think it’s necessary to pick a winner just yet, we think JUNO may have a competitive advantage (plus wholly owned products) that allows it to pull into the lead over time. Shares don’t come cheap, but further data in 2015 as well as progress towards new targets/indications should continue to make JUNO a name investors likely will want to own in 2015. Biotechnology Cory Kasimov AC (1-212) 622-5266 cory.w.kasimov@jpmorgan.com Bloomberg JPMA KASIMOV <GO> Whitney G Ijem (1-212) 622-4668 whitney.g.ijem@jpmorgan.com Brittany Terner (1-212) 622-8527 brittany.terner@jpmorgan.com J.P. Morgan Securities LLC Price Performance 60 Revolutionary-type technology can often appear expensive in its early days… we still think JUNO is a name investors will want to own. In the aftermath of JUNO’s very strong IPO, the company now trades at ~$5.6B valuation, which we acknowledge is steep relative to the scope of the data in hand. That said, given efficacy to date, broad potential of CAR-Ts, and JUNO’s unique position, we believe enthusiasm for the platform is justified and that additional data/INDs throughout the year should help clarify next steps and maintain interest in the name. 50 $ 40 Abs YTD 17.8% CAR-Ts have shown unprecedented efficacy; JUNO looks particularly well positioned. In the initial ALL indication, therapies from JUNO, NVS, and KITE have all produced CR rates in the 80-100% range (though not without safety concerns) vs. ~5-10% expected with current options, triggering FDA Breakthrough Designation. As the data are early, we still have a lot of outstanding questions around optimal construct/product, but JUNO’s diversified pipeline (three CD19targeted assets) facilitates strategic optionality to adapt as knowledge evolves. Rel 19.4% 30 20 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 JUNO share price ($) RTY (rebased) 1m 156.3 % 153.9 % 3m 156.3 % 143.8 % 12m 156.3 % 153.5 % CD19 CARs likely just the tip of the iceberg; we expect this technology to be broadly applicable. Additional targets (e.g., CD22, WT-1) should expand the applicability (and revenue opportunity) far beyond the current indications. As the targets/technology evolve, JUNO’s R&D engine (driven by collaborations with MSKCC, FHCRC, and SCRI) may prove to be an important competitive advantage. DCF-based YE15 target of $66. In our view, JUNO’s platform is the key value driver. We note our models currently assume a 60% probability of success for US ALL, 40% for US NHL, and 40% for EU ALL/NHL. Juno Therapeutics, Inc. (JUNO;JUNO US) FYE Dec 2014E EPS reported ($) Q1 (Mar) Q2 (Jun) Q3 (Sep) Q4 (Dec) (1.59) FY (2.28) 2015E 2016E 2017E (0.49) (0.62) (0.79) (0.92) (2.82) (2.89) (2.90) Source: Company data, Bloomberg, J.P. Morgan estimates. Company Data Price ($) Date Of Price 52-week Range ($) Market Cap ($ mn) Fiscal Year End Shares O/S (mn) Price Target ($) Price Target End Date 61.51 12 Jan 15 61.70-34.71 5,562.10 Dec 90 66.00 31-Dec-15 See page 19 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Table of Contents Investment Thesis ....................................................................3 Risks to Rating and Price Target ............................................5 Company Description ..............................................................6 Upcoming Events .....................................................................6 Pipeline......................................................................................7 Financial Outlook .....................................................................9 Valuation .................................................................................10 Management ...........................................................................12 Models .....................................................................................15 2 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Investment Thesis Juno Therapeutics (JUNO) Overweight T-Cells may represent the future of cancer research Immuno-oncology has been a very hot topic in cancer drug development for a few years now, and its evolution continues. CAR-T technology is a type of immunotherapy that combines the specificity of a monoclonal antibody with the potent cell-killing activity of the immune system’s T cells. A CAR-T product describes a cell-based therapy that comprises a patient’s own T cells that have been genetically modified ex vivo (outside the body) to express chimeric antigen receptors (artificial receptors that bind certain antigens with downstream effects that affect/enhance the T cells’ behavior). When the cell product is infused into the body, the CARs recognize and bind to specific markers expressed by target cells, and that binding activates the T cells’ cytotoxic effects (which are enhanced via costimulatory domains of the CAR). The first wave of CAR-T products in the clinic target CD19, a molecule expressed ubiquitously on B cells, though not on hematopoietic cells. As CD19 expression is retained in many B-cell lymphomas and leukemias, it represents an attractive target in the treatment of these diseases. Unprecedented response rates with initial CD19 CAR-Ts are generating significant enthusiasm among doctors, the industry, the FDA…and investors The three highest-profile CAR-T programs are JUNO’s JCAR015 (MSKCC), NVS’s CTL019 (UPENN) and KITE’s KTE-C19 (NCI). Each of these initial products target CD19 and have shown impressive response rates in a variety of indications. In ALL (acute lymphoblastic leukemia), CR rates in the 80-100% range have been observed in highly refractory adult and pediatric patients (in whom CR rates of ~5-10% would be expected with existing therapies). The FDA is also enthusiastic about the potential of CAR-T therapies, having granted both NVS’s CTL019 and JUNO’s JCAR015 Breakthrough Therapy Designation (BTD) in 2014. From “Model-Ts” to “Lamborghinis”…we expect significant evolution in both the science and manufacturing of CAR-Ts in the coming years We expect Juno, with its multitude of collaborations, to be at the forefront of this revolution. As all of these products have looked impressive to date, we think it’s too early (and likely not necessary) to pick a winner, and note that there is still a lot to learn about 1) the optimal CAR-T construct (CAR structure/co-stimulatory domain, cell composition of the therapeutic product, manufacturing procedure, etc.) as well as 2) the actual administration of the product (repeat doses, pre-conditioning, etc.). JUNO’s pipeline of CD19 CAR-T products and multiple R&D collaborations provide strategic flexibility that is relatively unique within the CAR-T space From a competitive standpoint, we believe that JUNO is particularly well positioned given its relationships with Memorial Sloan Kettering (MSKCC; JCAR015), the Fred Hutchinson Cancer Research Center (FHCRC; JCAR014), and the Seattle Cancer Research Institute (SCRI; JCAR017). Importantly, each of the three CD19-targeted candidates has differences that allow JUNO to adapt to new information in choosing the best product (not simply a potentially good one). We suspect this optionality could facilitate a higher level of scientific integrity, and we are already seeing that play out as JUNO has de-prioritized JCAR014 in favor of JCAR017 as its profile may be more favorable in NHL. Such flexibility may be even more important longerterm as the technology and targets evolve. 3 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 CD19 likely just the beginning...the real excitement stems from the potential of CAR-T therapy in the broader oncology space While CD19 CAR-Ts in ALL have provided initial evidence of the exceptional efficacy potential of this approach, this is likely just the tip of the iceberg (as well it should be given the amount of money that is pouring into the field). JUNO and other CAR-T players are investigating the potential of CARs (and TCRs, another type of highly specific T-cell therapy) to target markers other than CD19 and across a range of cancers. JUNO recently in-licensed a CD22-targeted program, and while this is still directed towards B-cell malignancies, it represents JUNO’s first non-CD19 program in the clinic (Phase 1 to start imminently). Other targets identified by JUNO include L1CAM, MUC-16/IL-12, ROR-1, and WT-1, which are all over-expressed in certain cancer types and all of which are expected to be in Phase 1 in 2015. We assume JCAR015 and JCAR017 are JUNO’s first commercial products and model peak US sales of ~$150M in ALL and ~$1B in NHL It is estimated that ~6,000 patients are diagnosed with ALL each year in the US, ~80% of which are of B-cell origin. We estimate roughly two-thirds of those patients could ultimately be considered relapsed/refractory (across all lines of therapy), with about half of patients ultimately being relapsed/refractory 2L+ (driven mostly by adult patients). We assume an overall penetration of CAR-T into 2L+ rrALL of 90% at peak (if it works, we think it will eventually overtake SCTs) and assume a price of $250K. In NHL, we assume there are ~40K cases of aggressive disease diagnosed each year in the US, with roughly one-third of those patients becoming relapsed/ refractory post 2L and eligible for treatment. We assign a slightly lower overall CAR-T peak penetration of 75% in rrNHL. In both, we currently estimate JUNO gets 33% of the total CAR-T share (pending further data clarity). Balance sheet: JUNO appears well positioned financially JUNO ended 3Q14 with ~$238M in cash and subsequently raised ~$246M in an initial public offering of common stock in December (J.P. Morgan acted as a co-lead book-running manager). We estimate that JUNO will end 2014 with ~$430M in cash and believe the company has sufficient capital through at least 2016. Initiate at Overweight: JUNO well positioned within the nascent CAR-T space with its collaborations and diversified platform of wholly owned products We are initiating coverage of JUNO with an Overweight rating and year-end 2015 price target of $66. We believe in the long-term potential of CAR-Ts in general, and see JUNO as uniquely well positioned given its relationships with multiple institutions. Our target is based on a DCF analysis that projects FCF through 2022, assumes a five-year intermediate growth rate of 15%, a terminal rate of 2.5%, and utilizes a discount rate of 13%. 4 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Risks to Rating and Price Target Juno is susceptible to the standard risks that apply to the entire biotech industry, including development, regulatory, commercial, manufacturing, financing, and IP pitfalls. Risks more specific to Juno are outlined below: Competitive risk As highlighted above, there are an increasing number of players involved in the CAR-T arena. It is possible that competitive programs may prove to be superior to JUNO’s. On the other hand, it is possible that any safety issues/other problems with other CAR-T programs may affect perception of JUNO’s programs. It is also possible that resources available to competitive programs (driven by large Pharma partners) could help accelerate development or otherwise benefit competitors. Clinical risk JCAR015, JCAR014 and JCAR017 have been used in a limited number of patients, and there are still a lot of unanswered questions around the optimal CAR-T product. It is possible that additional patients enrolled in JUNO’s trials may respond differently to the various products, and ongoing trials may not meet the safety and efficacy thresholds for further development. JUNO intends to initiate several additional Phase 1 trials with non-CD19-targeted CARs, and it is possible that efficacy in these new indications may not be as robust, and/or that previously unknown safety issues could emerge with the new CARs. Regulatory risk As there are no currently approved CAR-T-based therapies, the hurdles for regulatory approval may be higher/different than currently expected. Given CAR-T products are living cells that respond to in vivo stimuli and grow, there may be additional regulatory hurdles pre- or post-approval, and regulatory agencies may want to see additional or longer-term data before approving one of JUNO’s therapies. If approved, it is possible that the product labels may not be as anticipated, potentially limiting use. Further, regulatory agencies could remove JCAR015, JCAR017, or any other potentially approved product from the market if they show additional/more severe AEs in a real-world setting. Commercial risk CAR-Ts are not simple therapies. They are more logistically complex than most traditional anti-cancer therapeutics, including small molecules and traditional monoclonal antibodies. Moreover, the striking potency of these products seems to come at a price (at least in these early days) with potentially lethal cytokine release syndrome (CRS) the most noteworthy complication. If approved, the complexity and toxicity of CAR-Ts may relegate them to more niche opportunities than we currently anticipate. 5 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Company Description Juno Therapeutics is a Seattle-based biopharmaceutical company focused on developing therapies that re-engage the body’s immune system to fight cancer. The company is developing cell-based immunotherapies based on its chimeric antigen receptor (CAR) and T-cell receptor (TCR) technologies. JUNO’s technology platform revolves around the ability to genetically modify T cells to recognize and kill cancer cells. The company’s lead clinical programs, JCAR015, JCAR017, and JCAR014, use CAR technology to target CD19, a protein expressed on the surface of B cell leukemias and lymphomas. JCAR015 is currently in a Phase 1 trial in rrALL, and JUNO intends to initiate a Phase 2 trial in 2015 that could support accelerated approval in the US. The company intends to initiate a Phase 1/2 trial for JCAR017 in rrNHL in 2015, as well as initiate several Phase 1 trials for new, non-CD19-targeted products during the year. Upcoming Events Figure 1: JUNO News Flow Highlights Anticipated Newsflow Highlights Program JCAR015 Event Initiate pivotal Phase 2 trial in Adult ALL Updated Data from Phase 1 trial in Adult rrALL Expected mid-2015 mid-2015 Significance Low High JCAR017 Initiate Phase 1/2 trial in rrNHL Updated Data from Phase 1/2 trial in pediatric rrALL 2015 mid-2015 Low High JCAR014 Updated Data from Phase 1/2 trial in B Cell malignancies mid-2015 High Source: Company reports and J.P. Morgan estimates. For Juno in 2015, the key catalysts will be presentation of updated data from the ongoing Phase 1 trial of JCAR015 in adult ALL, as well data updates from the Phase 1/2 trials of JCAR017 in pediatric ALL and JCAR014 in B-cell malignancies, all of which we anticipate midyear at ASCO. We also expect additional data updates for each program in December at ASH. During the year, JUNO also expects to initiate a pivotal Phase 2 trial for JCAR015 in rrALL, as well as a Phase 1/2 trial of JCAR017 in adult rrNHL. After JUNO recently in-licensed a CD22 CAR from Opus Bio/NCI, we anticipate initial data from the ongoing trial in rrNHL and rrALL in late 2015/ early 2016 (potentially at ASH). The company also expects to initiate Phase 1 trials for at least three additional CAR product candidates including products targeting L1CAM, MUC-16/IL-12, and ROR-1. JUNO intends to initiate a Phase 1 trial with its WT-1-targeted TCR product in 2015. 6 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Pipeline Figure 2: JUNO Pipeline Product Pipeline Highlights Program P/C Ph 1 Ph 2 Ph 3 FDA Mkt. Partner Comments JCAR015 Adult ALL and Adult NHL MSKCC JCAR017 Pediatric ALL and Adult NHL SCRI JCAR014 Adult B Cell Malignancies FHCRC CD22 CAR rrALL and rrNHL NCI/Opus Bio WT-1 TCR AML, NSCLC CD19 "Armored" CARs CLL CD19 Fully Human scFV CAR Adult NHL L1CAM CAR Neuroblastoma MUC16 & IL-12 "Armored" CAR Ovarian Cancer ROR-1 CAR CLL, Solid Tumors Source: Company reports. Juno’s lead product candidates are CD19-targeted CAR products currently in Phase 1 and Phase 1/2 development. JCAR015 – JCAR015 was developed at MSKCC; it makes use of a CD28 costimulatory domain, and the cell product is CD3+ enriched PBMCs. The drug is currently being evaluated in a Phase 1 trial in adult rrALL patients. Data presented at ASH 2014 (11/14/2017 cut-off), showed treatment with JCAR015 resulted in an 89% CR rate in 27 evaluable patients, with 78% of patients achieving CRm. As has been the case with virtually all CD19-targeted CARs in ALL, severe cytokine release syndrome (CRS) was the most notable AE; in 28 patients evaluable for safety, 28% experienced severe CRS (0% in patients with low disease burden, 33% in patients with high disease burden). There have been two deaths in patients with severe CRS. Protocol changes allowed for the use of a lower dose of cells in patients with high-burden disease, and the safety/efficacy of the lower dose is currently being evaluated, as is the safety/efficacy of a second scheduled dose of cells roughly three weeks following the initial dose. JCAR017 – JCAR017 was developed at SCRI and utilizes a 4-1BB costimulatory domain. The cell product is made up of a defined cell composition of CD4+ and CD8+ T cells. A Phase 1/2 trial is currently ongoing in pediatric ALL patients and recently updated data (11/26/2014 cut-off) show that 85% of the 13 treated patients achieved CR. Ten of the 11 CR patients remained in CR as of the data cut-off date. About 39% of patients in the trial experienced CRS, and ~31% of patients experienced febrile neutropenia. Interestingly, patients treated with JCAR017 have experienced the highest cell expansion and longest cell persistence in the body relative to JUNO’s other products. As those two metrics 7 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 are thought to correlate with clinical benefit, the company plans to take JCAR017 forward into adult rrNHL, as well as continue development in pediatric rrALL. JCAR014 – JCAR014 was developed at FHCRC, and makes use of the 4-1BB co-stimulatory domain, with the final product being composed of a defined ratio of CD8+ and CD4+ T cells. JCAR014 is currently being evaluated in a Phase 1/2 trial in patients with rel/ref B Cell malignancies. The most recently presented data is as of 11/25/2014. In 13 patients treated with rrALL, 11 received product with a 1:1 ratio of CD8+ to CD4+ cells (due to manufacturing issues). In those patients who received the proper cell product, the investigator-reported CR rate is 100%, with an 82% CRm rate. In rrNHL, ten of 12 patients received a cell product with the proper ratio, and in those ten patients the investigator-reported CR+PR rate was 60%. Initial data from this trial indicates that duration of response in rrNHL correlates with cell expansion and cell persistence. As noted above, JCAR017 has had the highest expansion/longest persistence, which is why JUNO is moving it forward into rrNHL (and deprioritizing JCAR014). The company intends to continue to enroll patients in the ongoing Phase 1/2 trial to explore additional treatment strategies, though at this point does not intend to move JCAR014 forward into pivotal trials. 8 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Financial Outlook Juno Therapeutics is a developmental-stage biotechnology company with upcoming clinical catalysts (Phase 1 updates for various products anticipated in mid-2015) with potential for approval and launch of the latest-stage product (JCAR015, expected to start a pivotal Phase 2 trial in 2015) in 2017. Currently, we do not model profitability until 2019. Juno has worldwide commercialization rights to all of its CARs; the company intends to commercialize in the US on its own, and we expect clarity on the ex-US strategy in 2015. Given the highly targeted physician audience for the initial indications, we currently assume the company commercializes JCAR015 and JCAR017 on its own in the EU. OpEx Expectations: Below we briefly highlight our assumptions for Juno’s key operating spend line items. COGS. Given Juno’s products are cell-based therapies, we expect biologic-like COGS in the 15-30% range, though the company has indicated it is targeting the lower end of that range. At peak, we model COGS of 25%, inclusive of ~10% in royalties owed to the various academic collaborators. R&D trends. We assume R&D will continue to ramp as Juno executes the various early-stage trials, initiates a pivotal Phase 2 for JCAR015, and brings at least four new products into the clinic. In the outer years, we assume the company will continue to aggressively invest in R&D on additional products given its technology platform and eventual commercial infrastructure. SG&A trends. We anticipate Juno will begin to build commercial infrastructure in 2017, ahead of the potential launch of JCAR015 which we assume will occur during the year. Our model reflects an expected field force of ~20 reps to start. Juno’s current cash position should be sufficient through at least 2016. JUNO ended 3Q14 with ~$238 million in cash JUNO ended 3Q14 with ~$238M in cash, and subsequently raised ~$246M in an initial public offering of common stock in December (J.P. Morgan acted as a co-lead book-running manager). We estimate that JUNO will end 2014 with ~$430M in cash, and believe the company has sufficient capital through at least 2016. Share count We estimate Juno currently has ~93 million fully diluted shares outstanding, including ~90 million common shares and ~3 million stock options post-offering. Figure 3: JUNO Key Financial Metrics Key Financial Metrics In $ thousands December financial year-end Cash Debt 2013A 2014E 2015E 2016E 2017E 2018E 2019E 36.1 - 459.0 - 135.0 - 122.9 - 153.6 - 37.9 - (30.6) (69.3) 150.0 (324.0) - (212.1) 200.0 (219.3) 250.0 (215.7) 100.0 (8.6) - Revenue EPS - (3.37) (2.82) (2.89) 41.3 (2.90) 161.8 (1.93) 360.6 (0.31) Average shares outstanding Fully diluted shares outstanding - 97.04 90.93 99.92 91.13 CFOp + CapEx (burn) Expected financing 43.21 59.23 90.83 90.53 93.15 90.73 29.3 - 100.33 90.83 Source: Company reports and J.P. Morgan estimates. 9 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Valuation We are initiating coverage of JUNO with an Overweight rating and a December 2015 price target of $66 per share. Our year-end 2015 price target of $66 per share is based on a DCF analysis (100%). Figure 4: JUNO Valuation Summary Juno Valuation Summary Discount rate 4Q15 Fully Diluted Shares (m) 13% 93.5 Main value drivers US ALL US NHL Valuation methodology DCF P/E 2016 Real options scenario analysis Risk adjusted NPV analysis Total Catal yst/liquidity discount YE15 Price Target Prob of approval 60% 40% Peak WW sales est (avg. scenario) $ 156 $ 1,250 Value / share $ 65.73 Weighting 100% $ $ 74.23 59.85 Avg peak yr 2021 2022 Adj. value/ share $ 65.73 0% 0% $ $ $ $ 65.73 0% 66 Source: J.P. Morgan estimates. Discounted cash flow analysis (100% weighting) We utilize a DCF to value JUNO. We believe this may prove to be more appropriate longer-term than our NPV analysis given that it assigns some terminal value. With this model, we project cash flows out to 2022 at which point we assign an intermediate growth rate of 15% based on the potential for additional product launches for five years followed by a terminal rate of 2.5% assuming continued growth in revenues as additional products/indications come on line. Our DCF utilizes a discount rate of 13%. We currently do not model for “IP expiry”-related revenue erosion for this technology, and instead we think it’s eventually at greater risk of some other potentially superior technology/approach coming along. Figure 5: JUNO DCF Sensitivity Analysis Termina l Growth Rate $65.73 -2% -1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 8% $102.60 $110.58 $120.56 $126.54 $133.38 $141.28 $150.49 $161.37 $174.43 $190.39 $210.35 9% $88.40 $94.41 $101.76 $106.08 $110.94 $116.45 $122.75 $130.01 $138.49 $148.50 $160.52 10% $76.77 $81.38 $86.92 $90.12 $93.69 $97.67 $102.14 $107.22 $113.02 $119.71 $127.52 Discount Rate 11% 12% $67.11 $58.98 $70.70 $61.82 $74.96 $65.14 $77.39 $67.02 $80.06 $69.06 $83.01 $71.30 $86.30 $73.77 $89.96 $76.50 $94.09 $79.52 $98.77 $82.91 $104.12 $86.72 13% $52.07 $54.34 $56.97 $58.44 $60.04 $61.77 $63.66 $65.73 $68.00 $70.52 $73.31 14% $46.15 $47.99 $50.09 $51.26 $52.52 $53.87 $55.35 $56.95 $58.69 $60.60 $62.71 15% $41.03 $42.53 $44.23 $45.17 $46.18 $47.26 $48.42 $49.68 $51.04 $52.51 $54.13 Source: J.P. Morgan estimates. What’s the value of a novel technology platform with potential broad applicability? In our view, this is currently the key question when considering the investment merits of JUNO. At this stage in its maturation, we believe most of the value inherent in JUNO is driven by its novel technology platform as opposed to any individual product candidate. Although this value is admittedly subjective and difficult to estimate (and is primarily based upon one’s view of comparable companies), we believe the broad applicability and game-changing potential of Juno’s technology needs to be taken into account. Not only has the platform been validated through the 10 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 generation of very exciting early-stage data and collaborations with multiple worldleading cancer research institutions, but we also believe the number of large pharma/biotech companies entering the space (e.g., NVS, CELG, PFE, JNJ, and AMGN) lends further credibility to this groundbreaking approach. 11 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Management Below we highlight key executives at Juno. Hans Bishop, President and CEO Hans Bishop is a co-founder of Juno and has served as CEO and a member of the Board since September 2013. Mr. Bishop has also served as a member of the Board of Avanir Pharmaceuticals (acquired by Otsuka Pharmaceutical) since May 2012. Mr. Bishop previously served as Chairman of Genesis Biopharma from January 2012 until November 2012. From February 2012 until October 2012, Mr. Bishop was the COO of PhotoThera (owned by Warburg Pincus), and he continued working with Warburg Pincus as an Executive in Residence until October 2013. Mr. Bishop previously served as EVP and COO at Dendreon from January 2010 to September 2011. Mr. Bishop has also served as the President of the Specialty Medicine Business at Bayer Healthcare Pharmaceuticals from December 2006 to January 2010. Mr. Bishop worked at Chiron Corp as SVP of Global Commercial Operations until its sale to Novartis. Mr. Bishop received a B.Sc. in Chemistry from Brunel University. Steve Harr, M.D., CFO and Head of Corporate Development Steve Harr is CFO and Head of Corporate Development and joined Juno in April 2014. Dr. Harr was Managing Director and Head of Biotechnology Investment Banking at Morgan Stanley from May 2010 until he joined Juno. Prior to his investment banking role at Morgan Stanley, Dr. Harr was Morgan Stanley’s lead biotech research analyst and Co-Head of Global Healthcare Research. Dr. Harr received a B.A. in Economics from College of the Holy Cross and an M.D. from The Johns Hopkins University School of Medicine. Dr. Harr was a resident in internal medicine at the University of California, San Francisco. Mark Frohlich, M.D., EVP, Research & Development Mark Frohlich is EVP, Research & Development, and joined Juno in February 2014. Prior to joining Juno, Dr. Frohlich served as EVP of Research & Development and CMO at Dendreon, where he served in various capacities beginning in August 2005. Dr. Frohlich received a B.S. in Electrical Engineering and Economics from Yale University and an M.D. from Harvard Medical School. Dr. Frohlich was a resident in internal medicine and a fellow in oncology at the University of California, San Francisco. Mark Gilbert, M.D., CMO Mark Gilbert is CMO and joined Juno in March 2014. Prior to joining Juno, Dr. Gilbert served as an interim CMO or consultant in strategic drug development and portfolio management in medical oncology for several US biotech and pharma companies. Previously, Dr. Gilbert served as VP and Head Global Clinical Development, Therapeutic Area Oncology, at Bayer Schering. Prior to Bayer Schering, he held several executive positions with Berlex Pharmaceuticals and its parent company Schering AG, mostly as VP and Head of Global Medical Development Group, Oncology. Dr. Gilbert joined Berlex from Immunex. Dr. Gilbert received a B.S. in Biochemistry from the University of Iowa and his M.D. from the University of Iowa Medical School and trained in internal medicine, 12 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 infectious disease, and medical oncology at the University of California, San Francisco, and the University of Washington, respectively. Ken Mohler, Ph.D., CSO Kendall Mohler is CSO and joined Juno in October 2013. Previously, Dr. Mohler was CSO at ZetaRx Biotherapeutics. In addition, he was a co-founder of Trubion Pharmaceuticals, and during his tenure served as SVP, R&D and CSO. Prior to Trubion, Dr. Mohler served as VP of Biological Sciences at Immunex Corp, where he was employed for 13 years. Dr. Mohler has published more than 35 manuscripts and has four issued patents and six pending patent applications. Dr. Mohler received a B.S. from the University of Kansas and a Ph.D. in Immunology from University of Texas Health Science Center at Dallas, Southwestern Medical School. Elizabeth Smith, SVP, Regulatory Strategy & Portfolio Management Elizabeth Smith is SVP, Regulatory Strategy & Portfolio Management, and joined Juno in November 2013. Ms. Smith has over 20 years of experience in the field of regulatory affairs, quality, and manufacturing, with an emphasis on biologics and advanced cellular therapies in oncology. Most recently, Ms. Smith served as the VP of Regulatory Affairs at Dendreon and led the regulatory efforts resulting in FDA licensure of Provenge. Prior to Dendreon, Ms. Smith held regulatory and manufacturing positions at Genentech and Immunex. She holds B.A. in Biology from Central Washington University. Barney Cassidy, J.D., General Counsel and Secretary Barney Cassidy is General Counsel and Secretary and joined Juno in January 2014. Prior to joining Juno, Mr. Cassidy served in various roles at Tessera Technologies from November 2008 to July 2013, including as its EVP, General Counsel, and Secretary, and as President of Tessera Intellectual Property. He served in various roles at Tumbleweed Communications from May 1999 to September 2008. Mr. Cassidy practiced law at Wilson Sonsini Goodrich & Rosati from August 1992 to May 1999, and at Skadden, Arps, Slate, Meagher & Flom from September 1989 to July 1992. Mr. Cassidy received a B.A. in Philosophy from the Jesuit House of Studies, Loyola University, an M.A. in Philosophy from the University of Toronto, and a J.D. from Harvard Law School. Andy Walker, Ph.D., SVP, Manufacturing Andrew Walker is SVP, Manufacturing, and joined Juno in April 2014. Prior to joining Juno, Dr. Walker served in senior leadership roles at CMC Biologics. While at CMC Biologics, Dr. Walker’s roles included serving as the Head of the GMP Manufacturing Department. Dr. Walker also served as Head of the Process Development organization where he oversaw all aspects of drug development. Over the course of his career, Dr. Walker has worked on the development and manufacturing of approximately 50 different biologic drug candidates. Andy earned his Ph.D. in Chemical Engineering from the University of California, Berkeley, and a B.S. in Chemical Engineering from the University of Washington. Robin Andrulevich, VP, People Robin Andrulevich is VP of People and joined Juno in October 2014. Ms. Andrulevich has more than 20 years of experience in HR at high-growth companies. Most recently, Ms. Andrulevich served as the Talent Director for the early-stage technology venture capital firm, Madrona Venture Group. 13 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Ms. Andrulevich also held several key, senior leadership human resources and talent roles at Amazon and worked closely with its management team to significantly scale the company’s growth. A graduate of the University of Connecticut, with a B.A. in Communications Science, Ms. Andrulevich also attended Barnard College and Columbia University. 14 North America Equity Research 13 January 2015 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com Models Figure 6: JUNO Income Statement Juno Therapeutics Income Statement Cory Kasimov cory.w.kasimov@jpmorgan.com 212.622.5266 Comments: 2013A JCAR15 (Adult rrALL) JCAR17 (peds rrALL and NHL) Total Product Revnue Other Rvenue Total Revenues - COGS R&D SG&A Litigation GAAP Total Operating Expenses Non-GAAP Total Operating Expenses 46.2 4.2 1.2 51.7 GAAP Operating Income Non-GAAP Operating Income Other income ( expenses) GAAP pre-tax Income (loss) Income Tax (benefit) GAAP Net Income GAAP Basic EPS GAAP Diluted EPS (51.7) (0.1) (51.8) (51.8) 1Q14A 2Q14A 3Q14A 2014E 2015E 2016E 2017E 2018E 2019E - - 41.3 41.3 41.3 107.0 54.8 161.8 161.8 151.1 209.4 360.6 360.6 - - - - 2.9 3.4 2.0 8.3 6.5 4.6 1.6 12.7 13.0 5.4 1.4 19.8 17.0 86.0 6.0 2.0 94.0 27.0 108.4 19.4 7.0 134.8 61.3 217.0 37.0 2.0 256.0 112.0 226.2 43.0 269.3 155.0 12.4 249.4 61.1 322.9 208.4 46.9 234.5 73.5 354.9 265.2 97.3 220.2 74.2 391.7 326.7 (8.3) - (12.7) - (19.8) (17.0) (94.0) (27.0) (94.0) (94.0) (1.59) (1.59) (134.8) (61.3) (10.7) (145.5) (145.5) (3.37) (3.37) (256.0) (112.0) (256.0) (256.0) (2.82) (2.82) (269.3) (155.0) (269.3) (269.3) (2.89) (2.89) (281.6) (167.1) (281.6) (281.6) (2.90) (2.90) (193.1) (103.4) (193.1) (193.1) (1.93) (1.93) (31.2) 33.9 (31.2) (31.2) (0.31) (0.31) (27.0) (27.0) (0.46) (0.46) (72.0) (72.0) (1.67) (1.67) (112.0) (112.0) (1.23) (1.23) (155.0) (155.0) (1.66) (1.66) (167.1) (167.1) (1.72) (1.72) (103.4) (103.4) (1.03) (1.03) 33.9 33.9 0.34 0.34 27.2 59.2 59.2 43.2 43.2 90.8 90.8 93.1 93.1 97.0 97.0 99.9 99.9 100.3 100.3 - Non-GAAP pre tax income (loss) Income Tax (benefit) Non-GAAP Net Income Non-GAAP Basic EPS Non-GAAP Diluted EPS Basic Shares Outstanding Diluted Shares Oustanding Margin Analysis: Gross margin Operating margin Net margin Tax Rate Cost Analysis: COGS as % of tot. prod. sales R&D as % of tot. revenue SG&A as % of tot. revenue Year-over-year growth: Total revenue R&D Expense SG&A Expense Total operating expenses Operating income Net income EPS Basic Shares Diluted Shares 4Q14E NM NM NM 0.0% NM NM NM 0% NM NM NM 0% NM NM NM 0% NM NM NM 0% NM NM NM 0.0% NM NM NM 0.0% NM NM NM 0.0% 70% NM NM 0.0% 71% NM NM 0.0% 73% NM NM 0.0% NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM 0.00% NM NM 0% NM NM 0% NM NM 30% 604.35% 147.94% 29% 144.89% 45.44% 27% 61.07% 20.57% NM #REF! #REF! #REF! NM NM NM NM NM NM #REF! #REF! #REF! NM NM NM NM NM NM #REF! #REF! #REF! NM NM NM NM NM NM #REF! #REF! #REF! NM NM NM #REF! NM NM #REF! #REF! #REF! NM NM NM #REF! #REF! NM 134.51% 357.36% 160.88% 160.88% NM #DIV/0! #DIV/0! #DIV/0! NM 100.10% 90.89% 89.89% 89.89% NM -16.31% 110.19% #DIV/0! NM 4.25% 16.30% 5.18% 5.18% NM 2.56% 2.55% 0.88% NM 10.27% 41.90% 19.92% 4.59% NM 0.40% 4.18% 4.21% 292.07% -6.00% 20.44% 9.93% -31.43% NM -33.40% 2.97% 4.15% 122.80% -6.09% 0.86% 10.36% -83.86% NM -83.93% 0.42% 0.92% <--- Assume core R&D spend continues to increase; outer year decline due to lower success payment liability Source: Company reports and J.P. Morgan estimates. 15 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Figure 7: JUNO Balance Sheet Juno Therapeutics Balance Sheet ($ millions) Cory W. Kas imov cory.w.kasimov@jpmchase.com 212.622.5216 2013A 2014E 2015E 2016E 2017E 2018E 2019E Assets Cash and cash equivalents Prepaid Expenses Total Current Assets PPE, Net Fair value of covertible preferred stock Other Total Assets 36.0 0.2 36.1 0.0 3.8 0.1 40 459.0 0.2 459.2 0.0 459 135.0 0.2 135.2 15.0 - 122.9 0.2 123.1 30.0 - 153.6 0.2 153.8 40.0 - 37.9 0.3 38.2 40.0 - 29.3 0.3 29.6 40.0 - 150 153 194 78 70 Liabilities & Equity Accounts Payable Accrued expenses Total Current Liabilities Deferred Rent Total Liabilities 1.1 10.0 11.1 0.1 11.19 2.5 76.5 79.0 0.1 79.10 2.8 1.5 4.2 0.1 4.35 3.0 51.5 54.5 0.1 54.62 3.3 101.5 104.8 0.1 104.92 3.7 56.5 60.1 0.1 60.26 4.0 56.5 60.5 0.1 60.62 72.6 0.0 8.1 (51.8) 28.9 40 TRUE 387.7 0.0 254.1 (261.7) 380.1 459 TRUE 0.0 254.1 (108.3) 145.9 150 TRUE 0.0 454.1 (355.6) 98.5 153 TRUE 0.0 704.1 (615.2) 88.9 194 TRUE 0.0 804.1 (786.2) 17.9 78 TRUE 0.0 804.1 (795.2) 9.0 70 TRUE 380.2 131.0 (22.0) (30.9) Convertible preffered Stock Common Stock Additional Paid in capital Accumulated Deficit Total Shareholders' Equity Total Liabilities & Equity check Working Capital Source: Company reports and J.P. Morgan estimates. 16 25.0 68.6 49.0 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Figure 8: JUNO Cash Flow Statement Juno Therapeutics Cash Flow Statement ($ millions) Cory W. Kasimov cory.w.kasimov@jpmchase.com 212.622.5216 2013A Non-GAAP Net Income (loss) Adjustments to reconcile net loss to net operating cash Depreciation & Amortization Stock based compensation expense Non-cash expense in connection with equity issuance Loss from remeasurement of fair value of convertible stock ooption Changes in operating assets and liabilities Prepaid expenses and other assets Accounts payable Accrued lia bilities and deferred rent Cash Flow from Operations Purchase of PPE Other Cash Flow from Investing Issuance of common stock, net of costs Issuance of convertible preferred stock, net Cash Flow from Financing Total Change in Cash Beginning Cash Bala nce Ending Balance: Cash and Investments $ 2014E 2015E 2016E (112.0) $ 2017E (72.0) $ 0.0 0.1 10.2 0.1 5.0 13.0 10.7 $ (0.3) 1.1 10.0 (30.5) $ (7.0) 1.0 (15.0) (64.3) $ (7.0) 1.0 (205.0) (304.0) $ (7.4) 1.0 (50.0) (192.1) $ (7.7) 1.0 (50.0) (204.3) $ (8.1) 1.0 (120.0) (210.7) $ (8.5) 1.0 (50.0) (3.6) $ (0.04) (0.0) $ (5.00) (5.0) $ (20.00) (20.0) $ (20.00) (20.0) $ (15.00) (15.0) $ (5.00) (5.0) $ (5.00) (5.0) $ 0.0 66.5 66.5 $ 246.0 246.4 492.4 200.0 200.0 $ 250.0 250.0 $ 100.0 100.0 $ 36.0 36.0 $ 423.0 36.0 459.0 (12.1) 135.0 122.9 $ 30.7 122.9 153.6 $ (115.7) 153.6 37.9 $ $ $ - 5.0 14.3 - $ (324.0) 459.0 135.0 $ (167.1) $ 2019E (51.8) $ 5.0 14.0 - (155.0) $ 2018E 5.0 14.5 - (103.4) $ 5.0 14.8 - 33.9 5.0 15.0 - $ (8.6) 37.9 29.3 Source: Company reports and J.P. Morgan estimates. 17 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Juno Therapeutics: Summary of Financials Income Statement - Annual Revenues Cost of products sold Gross profit SG&A R&D Operating income EBITDA Net interest (income) / expense Other income / (expense) Income taxes Net income - GAAP Net income - recurring Diluted shares outstanding EPS - excluding non-recurring EPS - recurring Balance Sheet and Cash Flow Data Cash and cash equivalents Accounts receivable Inventories Other current assets Current assets PP&E Total assets FY13A FY14E FY15E FY16E 0 0 0 0 0 0 (19) (37) (43) - (108) (217) (226) - (135) (256) (269) - (135) (256) (269) 0 0 0 0 0 0 - (135) (256) (269) - (135) (256) (269) 7 59 91 93 - (2.28) (2.82) (2.89) - (2.28) (2.82) (2.89) FY13A FY14E FY15E FY16E 459 135 123 0 0 0 459 135 123 0 15 30 459 150 153 Total debt Total liabilities Shareholders' equity - 79 380 4 146 55 99 Net income (including charges) D&A Change in working capital Other Cash flow from operations - (72) 5 (21) 24 (64) (112) 5 (211) 14 (304) (155) 5 (56) 14 (192) Capex (5) Free cash flow (69) Cash flow from investing activities (5) Cash flow from financing activities 492 Dividends Dividend yield Source: Company reports and J.P. Morgan estimates. Note: $ in millions (except per-share data).Fiscal year ends Dec (20) (324) (20) 0 - (20) (212) (20) 200 - 18 Income Statement - Quarterly Revenues Cost of products sold Gross profit SG&A R&D Operating income EBITDA Net interest (income) / expense Other income / (expense) Income taxes Net income - GAAP Net income - recurring Diluted shares outstanding EPS - excluding non-recurring EPS - recurring Ratio Analysis Sales growth EBIT growth EPS growth - recurring 1Q14A 0A 0A (3)A (3)A (8)A (8)A 0A 0A (8)A (8)A 0A FY13A - 2Q14A 0A 0A (5)A (6)A (13)A (13)A 0A 0A (13)A (13)A 0A FY14E - 3Q14A 0A 0A (5)A (13)A (20)A (20)A 0A 0A (20)A (20)A 0A FY15E 89.9% 23.8% 4Q14E 0 0 (6) (86) (94) (94) 0 0 (94) (94) 59 (1.59) (1.59) FY16E 5.2% 2.6% Gross margin EBIT margin EBITDA margin Tax rate Net margin - 0.0% - 0.0% - 0.0% - Net Debt / EBITDA Net Debt / Capital (book) - - - - Return on assets (ROA) Return on equity (ROE) - (58.7%) - (70.9%) (84.0%) (97.3%) (177.5%) (220.3%) Enterprise value / sales Enterprise value / EBITDA Free cash flow yield - NM (5.8%) NM (3.7%) NM (1.9%) Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures Market Maker: JPMS makes a market in the stock of Juno Therapeutics. Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Juno Therapeutics. Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Juno Therapeutics within the past 12 months. Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Juno Therapeutics. Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Juno Therapeutics. Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Juno Therapeutics. Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendium reports and all J.P. Morgan–covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-4770406 or e-mail research.disclosure.inquiries@jpmorgan.com. Juno Therapeutics (JUNO, JUNO US) Price Chart 102 85 68 Price($) 51 34 17 0 Dec 14 Dec 14 Dec 14 Jan 15 Jan 15 Jan 15 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) 19 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Kasimov, Cory W: ACADIA Pharmaceuticals (ACAD), Acorda Therapeutics Inc. (ACOR), Aegerion Pharmaceuticals (AEGR), Alkermes, Inc. (ALKS), Amgen Inc (AMGN), Ariad Pharmaceuticals (ARIA), BioMarin Pharmaceuticals (BMRN), Biogen Idec (BIIB), Celgene (CELG), Clovis Oncology (CLVS), Gilead Sciences (GILD), Incyte Corporation (INCY), Keryx Biopharmaceuticals (KERX), MannKind Corporation (MNKD), Novavax (NVAX), Otonomy (OTIC), Pharmacyclics, Inc. (PCYC), Regeneron Pharmaceuticals (REGN), Sage Therapeutics (SAGE), Sangamo BioSciences (SGMO), Seattle Genetics (SGEN), Ultragenyx (RARE), Vertex Pharmaceuticals (VRTX), ZIOPHARM Oncology (ZIOP), ZS Pharma (ZSPH), bluebird bio (BLUE) J.P. Morgan Equity Research Ratings Distribution, as of January 1, 2015 J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients* Overweight (buy) 45% 56% 45% 75% Neutral (hold) 43% 49% 48% 67% Underweight (sell) 12% 33% 7% 52% *Percentage of investment banking clients in each rating category. 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Morgan) do not warrant its completeness or accuracy except with respect to any disclosures relative to 21 Cory Kasimov (1-212) 622-5266 cory.w.kasimov@jpmorgan.com North America Equity Research 13 January 2015 JPMS and/or its affiliates and the analyst's involvement with the issuer that is the subject of the research. All pricing is as of the close of market for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. 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