Gilead Sciences' (NASDAQ:GILD) planned $11.9 billion acquisition of Kite Pharma (NASDAQ: KITE) nets it axi-cel, a CAR-T therapy that's already under FDA review. However, axi-cel isn't the only intriguing therapy in development at Kite Pharma. Gilead Sciences also gets its hand on next-generation TCR-targeting drugs that could someday change how doctors treat patients with solid tumor cancers.

First, some background 

Gilead Sciences has been planning for years to make a big splash in oncology, and on Monday, it announced that it is acquiring Kite Pharma for nearly $12 billion in cash.

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Kite Pharma's lead product candidate is axi-cel, a chimeric antigen receptor T-cell therapy (CAR-T) that reengineers a patient's T-cells so that they can better find and destroy certain B-cell cancers.

In March, Kite Pharma filed for axi-cel's FDA approval based on impressive overall response rates in heavily pre-treated patients diagnosed with non-Hodgkin lymphomas. In axi-cel's phase 2 Zuma-1 trial, the overall response rate and complete response rate to it were 82% and 54%, respectively. Historically, the overall response rate and complete response rate for patients with this diagnosis have been 26% and 8%, respectively.

The FDA is expected to announce an official go/no-go decision on axi-cel on Nov. 29, and if it's approved, then Kite Pharma's prep work will allow Gilead Sciences to launch it soon thereafter. It's anyone's guess what axi-cel will generate in revenue for Gilead Sciences, but industry watchers estimate that axi-cell will cost $300,000 per year and generate up to $2 billion in peak annual sales.

A rich pipeline of cancer drugs

Axi-cel is the main reason why Gilead Sciences is spending billions to buy Kite Pharma, but axi-cell isn't the only drug under development at Kite Pharma that could justify this acquisition.

Kite Pharma has 14 clinical trials ongoing or planned targeting 10 cancer indications. Its trials include multiple CAR-T studies, as well as studies evaluating T-cell receptor (TCR) technology that allows T-cells to target tumor-specific proteins expressed inside cancer cells. Because CAR-Ts only target proteins expressed on the surface of cancer cells, TCRs may work better than they do in patients with solid tumors.

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One of the most intriguing early-stage drugs in Kite Pharma's pipeline is KITE-718, a TCR-targeting MAGE A3/A6, two proteins found in non-small cell lung cancer, bladder cancer, and other solid tumor cancers.

Despite recent advances in treating lung cancer and bladder cancer, there's still a big unmet need for new drugs that work in advanced cancer patients. Non-small cell lung cancer accounts for about one-quarter of the country's cancer deaths, and it will cause an estimated 156,000 deaths in the U.S. in 2017. Similarly, the long-term survival rate for advanced bladder cancer patients is poor, with only about 5% of these patients surviving at least five years.

Kite Pharma kicked off a phase 1 trial in May that's currently enrolling patients, so it will be a while before we know if this drug works and if it's safe. Nevertheless, the size of the addressable patient population and the big need for new treatments in these indications makes KITE-718 a must-watch drug. 

Investors will also want to keep tabs on KITE-585, a CAR-T that's targeting B-cell maturation antigen, or BCMA, in multiple myeloma. Multiple myeloma is a major disease indication that accounts for billions of dollars in drug sales annually, and earlier this yearCelgene and bluebird bio reported phase 1 results for their own BCMA CAR-T that were impressive. If KITE-585 produces similar results in trials, then it could become a significant driver of sales growth for Gilead Sciences down the road. Kite Pharma filed for FDA approval to start a phase 1 trial of KITE-585 on Aug. 8, so trials could begin soon.

Gilead Sciences also gets KITE-439 and KITE-796, two drugs that Kite Pharma planned to advance into human trials in 2018. KITE-439 is a TCR that targets HPV-16 E7, an oncoprotein found in cervical cancer and head and neck cancer, and KITE-796 is a CAR-T targeting C-type lectin-like molecule 1 (CLL-1), which is found in acute myeloid leukemia (AML) patients.

Delivering on its goal

Gilead Sciences has long said it wants to be a dominant player in oncology, and acquiring Kite Pharma's CAR-T and TCR product pipeline appears to position it perfectly to do so. CAR-T therapies allow Gilead Sciences to quickly establish itself in hematological cancer, and TCRs give it the chance to establish a toehold in solid tumor cancer treatment someday. With an opportunity to leverage these two approaches to address a significant proportion of cancer patients, this acquisition could eventually turn Gilead Sciences into one of the world's biggest oncology drugmakers.

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