What: Despite a competitor's stumble in clinical trials evaluating a similar pipeline drug candidate to its KTE-C19, shares in Kite Pharma, Inc. (NASDAQ: KITE) jumped 11.1% last month, according to S&P Global Market Intelligence.
So what: Enthusiasm for next-generation cancer drugs that superpower the body's immune system to locate and destroy cancer cells took a hit in June when regulators temporarily halted Juno Therapeutics' (NASDAQ:JUNO) clinical trial of JCAR015, an acute lymphoblastic leukemia therapy.
Juno Therapeutics' JCAR015 is a chimeric antigen receptor T-cell therapy (CAR-T) that engineers T-cells to bind to and destroy cancer cells expressing the CD19 protein. The trial stoppage came following patient deaths due to brain swelling. The trial was quickly restarted after Juno Therapeutics provided information to the FDA suggesting the deaths were due to a change in a chemotherapy preconditioning regimen.
Although the stoppage didn't impact Kite Pharma's trials, it's KTE-C19 for B-cell lymphoma, including diffuse large B-cell lymphoma (DLBCL), works similarly to Juno's JCAR015 and Kite Pharma uses a preconditioning regimen that includes the same chemotherapies as JCAR015 study did.
Investors initially sold off Kite Pharma's shares on the Juno Therapeutics news, however, they quickly realized that the dosing of KTE-C19's preconditioning regimen was much lower than Juno Therapeutics', suggesting that Kite Pharma's trials don't pose the same risks.
As a result, investors flocked back to Kite Pharma in anticipation that any delay to Juno Therapeutics could give KTE-C19 an edge at reaching the market sooner. Kite Pharma expects to report results from a DLBCL study that could support FDA approval by the end of this year.
Now what: All eyes are on Kite Pharma's study results. If KTE-C19 is proven effective in this tough-to-treat indication, then the FDA might accelerate approval without expensive late-stage phase 3 studies. If so, then Kite Pharma could begin generating revenue from KTE-C19 next year. The company has already invested heavily in production capacity and it believes that it can produce up to 5,000 patient therapies per year. Given that next-generation CAR-T therapies are expected to carry six-figure price tags, a launch of KTE-C19 could be worth hundreds of millions of dollar per year in sales to the company.
While the opportunity is clearly big, investors should remember that cancer research is notoriously hit-and-miss. Historically, over 90% of cancer clinical trials have fallen short. Therefore, there's no guarantee that KTE-C19 will be proven effective and safe enough to warrant a FDA green light.
Nevertheless, Kite Pharma has plenty of cash on hand and results for KTE-C19's prior trials have been impressive enough for me to think that Kite Pharma might be worth taking a risk on.