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Kite Pharma (KITE) Posts Q1 Loss, Reveals CAR-T Patient Death

Kite Pharma, Inc. KITE reported wider-than-expected loss in the first quarter of 2017. Shares of the biotech company declined more than 13% on Monday after it announced the death of a cancer patient enrolled in a study evaluating axicabtagene ciloleucel, Kite Pharma’s experimental CAR-T therapy for treating aggressive non-Hodgkin lymphoma (NHL).

Other than the sell-off today - which many investors consider a good opportunity to buy the stock – Kite Pharma’s stock has done well so far this year. Shares are up 58.3% this year so far, which compares favorably with the 3.9% increase registered by the Zacks classified Biomed/Genetics industry during this period.

Quarterly Details

Kite Pharma reported a loss of $1.74 per share in the first quarter of 2017, wider than the Zacks Consensus Estimate of a loss of $1.68 per share as well as the year-ago loss of 90 cents.

First-quarter revenues came in at $9.84 million, below the Zacks Consensus Estimate of $15.30 million but up almost 92% from the year-ago period.

While Kite Pharma’s research and development expenses shot up 91.5% from the year-ago period to $65.9 million in the reported quarter, general and administrative expenses were $35.8 million, up 114.5% from the year-ago period.

Kite Pharma ended the year with $804.0 million in cash and marketable securities compared with $414 million at the end of the fourth quarter last year. The increase was due to $409.7 million received from a follow-on offering of common stock and $50 million in upfront payment from Daiichi Sankyo. Kite Pharma has a strategic partnership with Daiichi Sankyo to develop and commercialize axicabtagene ciloleucel in Japan

Will Axicabtagene Ciloleucel Launch Happen in 2017?

With no approved product in its portfolio, investor focus remains on axicabtagene ciloleucel (previously KTE-C19), its lead pipeline candidate.

Kite Pharma is looking to get axicabtagene ciloleucel approved for a broader label for aggressive NHL based on the primary analysis of ZUMA-1 registrational study. In Feb 2017, Kite Pharma announced positive top-line six-month results from the primary analysis of 101 patients in the ZUMA-1 study. Preliminary 12-month follow-up data from ZUMA-1 study are expected to be available by year end.

In a safety expansion cohort to the ZUMA-1 study, the company announced at the call that a “very sick patient” died of multi-organ failure and cerebral edema in late April. The company said that the FDA was informed of the death and there was no clinical hold to the ongoing study.

The shares of Kite Pharma crashed on the news of patient death as cerebral edema was the same adverse event for which Juno Therapeutics, Inc.’s JUNO phase II study (ROCKET) on its most advanced pipeline candidate, JCAR015, for relapsed/refractory acute lymphoblastic leukemia (r/r ALL) was placed on clinical hold. JCAR015 ran into trouble last year when higher-than-expected severe neurotoxicity was observed in a study along with the occurrence of five deaths due to cerebral edema. In March this year, Juno informed it will be discontinuing the development of JCAR015.

Kite Pharma initiated a rolling submission of the Biologics License Application (BLA) for axicabtagene ciloleucel in Dec 2016 and completed the filing for accelerated approval in March this year. Axicabtagene ciloleucel was, until the announcement of the patient death, expected to be approved and launched in the U.S. in 2017.  Many analysts believe that the patient death will not alter the chances of approval this year as the patient was already in poor health prior to treatment with axicabtagene ciloleucel. The efficacy and safety profile of axicabtagene ciloleucel seen to date should support its approval.

In Europe, regulatory applications are expected to be filed in the third quarter of this year.

Meanwhile, Kite Pharma is also evaluating axicabtagene ciloleucel in a phase II study (ZUMA-2) in patients with relapsed/refractory mantle cell lymphoma (MCL) and in two additional pivotal studies (phase I/II) for acute lymphoblastic leukemia (ALL) – ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL.

In the first quarter, Kite Pharma initiated ZUMA-5 study in patients with follicular NHL and ZUMA-9 to provide patients access to axicabtagene ciloleucel during the regulatory review period. A phase Ib/II combination study (ZUMA-6) evaluating axicabtagene ciloleucel plus Genentech’s Tecentriq (atezolizumab) in patients with chemorefractory DLBCL commenced in October. Genentech is a member of the Roche Holding AG RHHBY. Preliminary data from ZUMA-3, ZUMA-4 and ZUMA-6 are expected later this year. The company also plans to move ZUMA-3, ZUMA-4 into phase II studies later this year.

Kite Pharma has a collaboration with the U.S. Department of Health and Human Services’ National Cancer Institute (NCI) under which the company is funding the development of eACT-based candidates utilizing CARs and TCRs for the treatment of advanced solid and hematological malignancies.

The investigational new drug (IND) application for the first of the four TCR/CAR T candidates - KITE-718 - was filed in Jan 2017 and a phase I study is expected to be initiated in second quarter of 2017. KITE-718 targets cancer antigens MAGE A3 and MAGE A6 in solid tumors, including non-small cell lung cancer and bladder cancer.

Kite Pharma plans to file an IND for CAR-T candidate KITE-585 (targeting BCMA antigen for multiple myeloma) in the third quarter of 2017

2017 Guidance

Net cash burn in 2017 is expected to be between $325 million and $340 million.

Operating expenses are expected to be between $490 million and $515 million in 2017.

Kite Pharma carries a Zacks Rank #3 (Hold).

Kite Pharma, Inc. Price and Consensus

 

Kite Pharma, Inc. Price and Consensus | Kite Pharma, Inc. Quote

Stock to Consider

A better-ranked stockin the pharmaceutical sector is Aeglea BioTherapeutics AGLE with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Aeglea have increased 47.8% this year so far while loss estimates for 2017 have narrowed by almost 32% in the past 30 days.

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