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This Biotech Just Bet it Has Cured Cancer


Kite Pharma

Written by Ophir Gottlieb, 10-18-2015

Kite Pharma (KITE) is approaching cancer not to treat it, but to cure it in a radical, revolutionary, promising and in the very sense of the word, transformational way. If successful, Kite Pharma and Juno Therapeutics would together be an end-all-cure-all for cancer.

In an incredibly bold step, Kite management, though a year away from completing clinical trials, has just signaled its unambiguous belief that it has in fact found a cure for non-Hodgkin's lymphoma (NHL), a cancer which affects half a million people right now and more than 70,000 new cases every year.

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Stunning Projection by the Company
Keep in mind, the clinical trials will conclude at the end of 2016, meaning even the most optimistic projections are for a yet to be FDA approved treatment to generate revenue in early 2017. But, if you're wondering how bullish management is regarding the current clinical trials check this out:

"Although it could be a year or longer before the FDA approves its treatment for non-Hodgkin's lymphoma, the clinical results are so promising that Kite has forged ahead with constructing a 44,000-square-foot facility that would become its cancer-fighting nerve center."
Source: Los Angeles Times

Yes, there is no other way to say this: The company is basically saying out loud that it believes it has cured non-Hodgkin's lymphoma (NHL). Period.

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What's Going On
Kite is hyper focused on NHL and the 550,000 people in the United States (as of 2012) that are affected as well as the 72,000 new cases every year, according to the National Cancer Institute. Estimates read that 33% of patients die within five years of diagnosis and 45% die within ten-years of diagnosis (Source: University of Marlyand).

Kite's treatment is in late stage FDA trials and involves attaching an antibody to a T-cell that enables it to recognize and attack cancer cells. The company is focused specifically on late stage patients (the most critical) and treatment would be the first T-cell modification approved for treatment of cancer (Source: Los Angeles Times). Kite is considered to be "in the lead" with respect to treating curing NHL.

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If that sounded a bit technical, let's break it down, because those words above are absolutely world changing. This approach is classified as 'Immunotherapy' and here's how it works:

"The Santa Monica company's treatment of non-Hodgkin's lymphoma reprograms a patient's T-cells — the kind that are supposed to fight disease — to seek and destroy only abnormal, cancerous lymph cells, not the healthy ones crucial for human life.

But in order to do so, blood must be drawn from a patient, refrigerated and flown to Kite's headquarters, where the cells are modified, frozen and then flown back to doctors who re-inject them into patients."
Source: Los Angeles Times

That's right, the firm creates personalized cells for each individual and then reinserts them into the patient so she can attack the cancer herself. That's fighting cancer person-by-person allowing their own bodies to fight and to win.

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The Downside
Before we get to the upside, let's turn to the difficulties thus far. There is evidence that some patients have had fairly substantial side effects:

"Last year, the company said that several patients experienced side effects that included fever, low blood pressure, neurological deficits and delirium after receiving the infusions."
Source: Los Angeles Times

In a rather bold and, I must say, promising response, Arie Belldegrun, the Chairman, President and CEO of Kite, simply blamed the side effects on the extraordinary effectiveness of the treatment, which leads to an accumulation of dead cancer cells in the bloodstream (Source: Los Angeles Times).

Further, Belldegrun said "It takes time — sometimes a week, sometimes two weeks, until the body gets it all out [] then the patient has no long-term side effects." Let's hope that's accurate.

More downside comes from competition. In particular Juno Therapeutics is in exactly this same field and making incredible progress. While KITE is leading the charge in NHL, Juno has a pipeline deep with 10 candidates potentially in clinical trials using either CAR or TCR by early 2016 (Source: Benzinga).

I authored this article on October 5th, 2015: Juno is Simply on the Brink of Changing the World

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The Upside
It's just undeniable that the upside for cancer patients, immunotherapy and this company are all extraordinary. KITE has a $2.85 billion market cap with zero revenue and zero products approved for sale. That's not the stock market gone mad, that's the promise of a company that will address and hopefully cure a deadly cancer that affects 1/50 people in the country with nearly 75,000 new cases every year and over half a million cases requiring treatment right now.

Even further, KITE is not flying this alone. It has a partnership with the National Cancer Institute and biotech giant Amgen. Dr. David Chang was Amgen's prior vice president of global development and he left Amgen to work as Kite's chief medical officer. Here's what he said, I warn you, it's almost so bullish it sounds impossible:

"The best way to describe where we are now is the early days of Amgen."
Source: Los Angeles Times

For the record, Amgen's market cap is nearly $120 billion. Kite CEO Belldegrun has been extremely bullish on the clinical results thus far, although he has chosen to make those results public at the meeting of the American Society of Hematology in Florida in December, rather than as they come out.

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More Upside
Kite is not a one trick pony. Immunotherapy can address dozens of cancer types and in fact the LA Times article sited above reminds us that Kite announced positive results in early testing of a treatment for cancers caused by human papillomavirus, or HPV. The sexually transmitted virus causes cervical, neck and back cancer. Here's a snapshot from Kite's website of its pipeline.

Further, Kite has just under $400 million in cash and equivalents per the most recent balance sheet filed with the SEC and no long-term debt.

All told immunotherapy is hopefully (likely?) a pathway to curing cancer. The approach is transformational in that it is an individualized treatment, using cells from the patient, rather than a violently disruptive outside substance. Kite and Juno are in the lead, and all parties involved, from shareholders to the medical community and families to patients are hopeful of, if not expecting, an end to cancer as we know it.

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