Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Kite Pharma's Stock Caught a Cold in December

By George Budwell - Jan 11, 2016 at 3:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The pharma's shares tanked last month after the company announced a hefty public offering.

KITE Chart

KITE data by YCharts.

What: Shares of the clinical-stage cancer immunotherapy company Kite Pharma (NASDAQ: KITE) dropped 19% last month, according to data provided by S&P Capital IQ. The apparent catalyst behind this downward move was a public offering to the tune of $250 million that closed on Dec. 15.

So what: Public offerings that dilute early shareholders are a common practice among the developmental-stage biotech crowd, especially ones pursuing a super aggressive approach to building out their platform like Kite. Unfortunately, this offering came on the heels of the positive news that the company is in the process of launching a pivotal-stage trial for its lead clinical candidate KTE-C19 as a potential treatment for relapsed or refractory acute lymphoblastic leukemia (ALL) in children and young adults -- essentially killing the stock's upward momentum at the start of the month. 

Now what: Kite is in a heated race to bring a modified T-cell therapy to market with Juno Therapeutics (JUNO) for ALL, among other indications in the multibillion dollar hematology space. However, Kite and Juno's competing therapies have both run into issues regarding their safety due to cases of cytokine release syndrome and neurotoxicity popping up in clinical studies.

While these two leading names in the modified T-cell arena have both suggested that these safety issues are manageable, it's worth noting that there are several other emerging players in this field with perhaps less risky platforms in development that incorporate potent "suicide switches." Put simply, Kite and Juno may turn out to be among the first to market if their drugs are approved, but there are almost certainly going to face still competition -- if this novel approach to fighting cancer ultimately lives up to expectations.  

George Budwell has no position in any stocks mentioned. The Motley Fool recommends Juno Therapeutics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Juno Therapeutics, Inc. Stock Quote
Juno Therapeutics, Inc.
JUNO

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.