Why is Kite Pharma (KITE) Stock Up Close to 100% this Year?

Shares of Kite Pharma, Inc. KITE were up around 5.6% on Thursday. In fact, shares of this small biotech are up a massive 93.3% this year so far, outperforming the 1.8% increase registered by the Zacks classified Biomed/Genetics industry during this period. Here we analyze the factors that led to the rally.

Kite Pharma is focused on the development of immuno-oncology treatments, which is a hot therapeutic area with huge commercial potential. The basic concept of cancer immunotherapy or immuno-oncology is to utilize certain parts of the immune system to fight the disease. This can be done by stimulating the immune system to attack cancer cells or by introducing immune system components into the body.

Kite Pharma's lead drug axicabtagene ciloleucel (previously KTE-C19) is an anti-CD19 CAR-based therapy currently under priority review in the U.S. for treating aggressive non-Hodgkin lymphoma (NHL) with a FDA decision expected on Nov 29. The Biologics License Application (BLA) filing was based on data from the ZUMA-1 study. In Europe, a regulatory application is expected to be filed in the third quarter of this year.

In April, Kite Pharma presented detailed data from this study at the annual meeting of the American Association of Cancer Research (AACR). The study met the primary endpoint of objective response rate, or ORR, recorded after a single infusion of axicabtagene ciloleucel, with 82%. Previously, top-line data announced in February from the study showed that at month 6, after axicabtagene ciloleucel treatment, 41% of the patients achieved a response, including 36% achieving a complete response CR. Ongoing analysis demonstrated that axicabtagene ciloleucel's efficacy was stable with 44% ORR and 39% CR.

We believe that the solid efficacy profile demonstrated by the pivotal ZUMA-1 study should support the drug's approval this year.

Meanwhile other studies with axicabtagene ciloleucel are also advancing. Kite Pharma is also evaluating axicabtagene ciloleucel in a phase II study (ZUMA-2) in patients with relapsed/refractory mantle cell lymphoma (MCL) and in two additional pivotal studies (phase I/II) for acute lymphoblastic leukemia ALL – ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL.

In the first quarter, Kite Pharma initiated ZUMA-5 study in patients with follicular NHL and ZUMA-9 to provide patients access to axicabtagene ciloleucel during the regulatory review period. A phase Ib/II combination study (ZUMA-6) evaluating axicabtagene ciloleucel plus Roche Holding AG's RHHBY Tecentriq (atezolizumab) in patients with chemorefractory DLBCL commenced in Oct 2016

A number of key data readouts are expected in 2017, which should keep investors glued to the stock. Preliminary data from ZUMA-3 announced earlier this month showed that 73% of the patients achieved CR. Shares of the company are up more than 17% ever since this data was announced.

Preliminary data from ZUMA-4 and ZUMA-6 are also expected later this year. The company also plans to move ZUMA-3 and ZUMA-4 into phase II studies later this year.

Apart from axicabtagene ciloleucel, Kite Pharma is also developing additional CAR-based candidates. Studies on these additional candidates including KITE-585 and KITE-718 are also advancing rapidly.

Immuno-oncology is one of the most actively pursued areas of research today. There are several other companies working to bring innovative immuno-oncology treatments to market. Juno Therapeutics Inc. JUNO and Novartis AG NVS are also developing JCAR017 and CTL019, respectively utilizing the CAR T cell technology. Though the efficacy profile of all the three candidates is comparable, axicabtagene ciloleucel looks set to hit the markets first.

Kite Pharma carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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