What happened

After Juno Therapeutics(NASDAQ:JUNO) disclosed that it had halted a trial evaluating its lead CAR-T drug, JCAR015, for a second time this year, shares in Kite Pharma, Inc. (NASDAQ: KITE) soared 14.5% last month, according to S&P Global Market Intelligence.

So what

Juno Therapeutics and Kite Pharma are among the front-runners in developing chimeric antigen receptor T-cell (CAR-T) therapies to fight cancer. CAR-Ts effectively supercharge a patient's immune system to better discover and destroy cancer cells, and early results have shown them to be effective in tough-to-treat cases.

However, cancer drug development is incredibly difficult, and failure is common. Historically, 93% of cancer drugs come up short in clinical trials, and unfortunately, it appears that Juno Therapeutics' lead CAR-T drug may not be an exception. Last month, Juno Therapeutics voluntarily halted JCAR015's development in acute lymphoblastic leukemia (ALL) after two patients passed away because of brain swelling.

JCAR015's trial halt means that Kite Pharma's CAR-T therapy, KTE-C19, could reach the market long before its rival does. Unlike JCAR015, KTE-C19 is being studied for use in diffuse large B-cell lymphoma (DLBCL), which is the most common form of non-Hodgkin lymphoma. Neurotoxicity is less common in NHL patients than it is in ALL patients, and Kite Pharma's preconditioning regimen for KTE-C19 relies on chemotherapies that are given at much lower doses than in JCAR015's now-halted study. As a result, KTE-C19 has avoided JCAR015's safety risks (so far).

This week, Kite Pharma reported results showing significant efficacy in subsets of tough-to-treat patients: The best overall response rates among the groups of patients tested ranged from 52% to 91%.

Importantly, there were no deaths due to brain swelling in this trial. 

Now what

Kite Pharma told industry watchers this week that it has begun a rolling application for KTE-C19's FDA approval. The application should be finished in Q1 2017, clearing the way for a FDA decision late next year.

Management thinks they'll be able to produce enough KTE-C19 to treat 4,000 patients in the first year post-launch, and because KTE-C19 is likely to carry a six-figure price tag, an approval of KTE-C19 could mean that the company starts generating meaningful revenue as early as 2018. 

The potential for major revenue growth on the horizon is good news, because CAR-T development is expensive, and Kite Pharma is conducting additional trials across multiple indications. Assuming there are no safety surprises, Juno Therapeutics' stumble could mean that Kite Pharma is now the best pure-play CAR-T stock.