Why an Acquisition of This CAR-T Biotech Makes Sense

Why an Acquisition of This CAR-T Biotech Makes Sense March 10, 2017
By Alex Keown, BioSpace.com Breaking News Staff

LOS ANGELES – If you’re looking to beef up your portfolio with a stock that’s likely to rise, one CAR-T drugmaker to consider is Kite Pharma . Shares have been climbing since the company announced positive results for its experimental cancer drug.

At the end of February, Kite announced it lead CAR-T candidate axicabtagene ciloleucel (previously referred to as KTE-C19) met its primary endpoints in a critical study. Those trial results are expected to pave the way for Kite to seek approval from the U.S. Food and Drug Administration ahead of other CAR-T rivals, particularly Swiss-based Novartis AG . Kite also plans to seek approval for its CAR-T treatment in Europe later this year. Since the announcement, shares of Kite have soared from $56.83 to this morning’s price of $81.98 per share. Writing in the Motley Fool, analyst Keith Speights said that the company still has a “relatively low market cap” and the stock should climb even higher. That stock spike could come from both an FDA approval of its CAR-T therapy and could also come with a possible acquisition. Speights said he’ll be “shocked” if the company is not taken over by a larger pharma company by the end of the year. If multiple companies approach Kite for an acquisition, Speights said it will not be surprising to see the stock climb even higher than expected.

This week Kite announced the closing of an underwritten public offering of 4,750,000 shares of common stock at $75 per share. The sale was expected to raise the company $409 million.

Kite’s Axicabtagene ciloleucel is being studied in patients with chemorefractory aggressive B-cell non-Hodgkin lymphoma (NHL). Kite said the ZUMA-1 study showed 82 percent of the 101 patients who received a single infusion of the drug saw the tumors shrink by half. The company said the results of the study show how effective the CAR-T therapy is for a patient population with multiple types of aggressive NHL, including diffuse large B-cell lymphoma (DLBCL), as well as primary mediastinal B-cell lymphoma (PMBCL) and transformed follicular lymphoma (TFL). Axicabtagene ciloleucel has been granted Breakthrough Therapy Designation status for DLBCL, TFL, and PMBCL by the U.S. Food and Drug Administration and Priority Medicines (PRIME) regulatory support for DLBCL in the EU.

Kite’s cancer news is positive for CAR-T investors who witnessed a setback in rival drug company Juno Therapeutics . Earlier this month, that company pulled the plug on its once-promising lead CAR-T cancer treatment JCAR015. The decision to pull the plug on the therapy came only four months after a clinical trial evaluating of JCAR015 was halted for the second time following patient deaths. In November, the trial was halted after the report of two deaths. It had previously been halted in the summer of 2016 following the deaths of three patients, but was cleared to resume by the U.S. Food and Drug Administration within days of the incident. All five patients suffered from cerebral edemas. The trial included adult patients with relapsed or refractory B cell acute lymphoblastic leukemia.

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