Adding to KITE at these levels?

Is anyone adding to their positions in KITE at these levels? I am inclined to do so, but I always am a bit cautious to add when a stock is on such a tear and is now at or close to its highest price ever.

Hi Speedy,
Ordinarily I add on the way up, and I did add tiny bits to KITE at $63, $66, $69 and $72, but it’s now up about 70% in two weeks. And we’re not talking about a penny stock here, rather one which is selling at $82. I have to wonder just how much of that huge rise is due to a real short squeeze, which eventually will come to an end. So I’d be a little careful, and just add very small amounts until the dust settles.

But that’s just my opinion.

Saul

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I agree with Saul.
If they were a little more established, I wouldn’t be as cautious. Long term, would probably be fine. But I imagine next 3 to 6 months should give a few chances to pick some up.
Pharmaceuticals can be pretty volatile. Any perceived or real bad news will probably mean a decent drop in price. I am currently waiting for to take advantage of a dip.

Kevin

Thank you, Saul and Kevin, for your responses and thoughts. Very much appreciated.

They are probably right, and a small pull back is likely sometime over the next few months.

One final thought is that there is still the drug or, more accurately, therapy approval from the FDA to go. There’s still a lot that can go wrong and a lot that can go right. The therapy definitely works and addresses an unmet need so the pressure will be to approve it. Not a done deal yet. Worst case would be for the FDA to request more information of the process equipment or protocols. My guess is that there is a 75% chance of approval of the application and a 25% chance of a 6 month delay. No data to back that up, just a SWAG. When the approval happens, you will certainly see another big pop.

Best,

bulwnkl

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Bulwnkl
No data to back that up, just a SWAG. When the approval happens, you will certainly see another big pop.

Ant feel for when the FDA will say anything, either approve or ask for more info?

One final thought is that there is still the drug or, more accurately, therapy approval from the FDA to go. There’s still a lot that can go wrong and a lot that can go right. The therapy definitely works and addresses an unmet need so the pressure will be to approve it. Not a done deal yet. Worst case would be for the FDA to request more information of the process equipment or protocols. My guess is that there is a 75% chance of approval of the application and a 25% chance of a 6 month delay. No data to back that up, just a SWAG. When the approval happens, you will certainly see another big pop.

Thanks Bulwnkl.

I guess its hard to tell how much of the above is already baked into the price. And, of course, when the approval happens (if it, hopefully, does), and there is another big pop, it could be a big pop from a price level much lower than the current price.

One more thought: I read somewhere yesterday that there is a pharma company gearing up to compete with KITE over this particular drug. I’ll see if I can find the article again.

Pfizer is the company apparently working on a similar drug. Here is the link to the article:

http://www.investors.com/news/technology/could-this-drugmake…

You also should factor in that kite could be gobbled up at a high premium before FDA approval. The exciting thing is that Kite’s data is good enough to get in line for FDA approval.

If anyone was looking at biotech stocks back in 2013 these stocks were rocket ships. It’s not for the weak hearted however. The election took the wind out of the sales of biotech because Clinton promised to bring down drug pricing and uncertainty kills speculative stocks like Biotechs.

Trump is more risk friendly so you are seeing a resurgence in this area. Would love more discussion on this subject here. So many biotech stocks breaking out right now.

Not just Clinton but Trump as well. Just last week he was shouting off about US drug prices. He also has challenged the FDA to get quicker and more efficient at authorising on new drugs. Kite might be running into some political criss fire for better or worse.

Ant

Yes, with Trump you got to watch his hirings not what he says. Pharma CEO’s have met with Trump and came away refreshed from meetings. Then there is this hiring. Researching this guy he wants to streamline FDA so that gene therapy and newer technology cancer treatments like Kite (IMHO) will have better chances to get approval faster. Posted a link that explains this.

http://www.reuters.com/article/us-usa-health-fda-gottlieb-id…

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thanks for posting the link to the article, Gclever88…very interesting.

I owned Gilead and Celgene until a few months ago. Made a profit on both when I sold them.
But pharma stocks as a whole were getting riskier to own.

Maybe it is time to get back into some of the pharma stocks, or maybe I’ll just stick with KITE for now.

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Because of demographic trends, I think pharmaceuticals make sense to own for the long term. In the short term, I think they are at political risk due to price gouging. What the biotechs are doing to the price of drugs is unsustainable. However, after pricing gets worked out, I think biotechs will eventually be more than fine. We are in the middle of a medical revolution, and they will be rewarded. I have a theory that the recent obscene prices for drugs (e.g Biogen charging $700,000 per year for Spinraza which keeps terminally ill babies alive - truly sickening).

I have about 14% of my portfolio invested in biotech/pharmaceutical stocks, with KITE being 1.2% of my total portfolio. I also own Ionis and Celgene. I think Celgene has a long runway in front of it, and Ionis has an unbelievable pipeline. I sold Gilead this year because I got tired of them having dwindling sales, and them not putting their capital to work growing there business.

If you’re going to be in biotech, Celgene is one of the most conservative ways that you can invest. I have 8.3% of my portfolio with them, but I know them and their pipeline well enough so that high of an allocation does not bother me.

Best,

bulwnkl

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Agree on Celgene. There could be some short term headwinds as Trump addresses pricing. I think the high margin days of big pharma non curative me too treatments are gone.

The money to be made is in emerging pharma (eg Celgene) and perhaps genetic diagnostics/bio markers or maybe BioPharma discovery platform plays. I would not touch anything that has a mature portfolio. If I could figure out the winning stem cell play - I would target a lot of money there.

Ant

Thanks bulwinkl and Ant. Very interesting points.
I am going to take another look at Celgene.

FYI Illumina was on the Stock Advisors recommendation list about a year back. That might be worth a look.

Once we are through the Trump healthcare reform rhetoric and repeals and the interest rate tightening cycle then the healthcare REITs could be left in an excellent position to provide yield and growth with an Ageing America I can’t think of a higher conviction play.

I can see B&W licking his chops right now. Some h/c REITs are already starting to look attractive.

Ant

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Concerning pricing on the CART and TCR, each treatment will likely - at least in the next 3 years - be at least in the $100,000 range/treatment. No president will change that. In fact several comments from the CEOs of KITE and JUNO have said that the preliminary discussions with the ‘Europe FDA’ - which does negotiate prices w/ pharma - price per treatment would be in the 100-300k based on the cure rates and overall cost savings. That amount would be about a 2 week stay in the ICU for a person w bad lymphoma who gets a severe infection. The only link I could find is https://www.google.com/amp/mobile.reuters.com/article/amp/id…. However I’ve been following the CART space for @2years and have read/seen several and those # have been sited several times.

Also to get a magnitude of the individuals who get leukemia/lymphoma in the US see https://www.lls.org/http%3A/llsorg.prod.acquia-sites.com/fac…. So 170,000. Hodgkin and pediatric leukemia have good cute rates but the others don’t.

As such I see a high chance of FDA approval. Obviously a delay would hurt KITE in the next 6-9 months. But an approval would take it higher. So I am staying put even with the run-up and risk of delay.

3 last things. 1 JUNO has a lawsuit against KITE. I’m not a patent lawyer so I don’t know how this will effect things in the long run. But JUNO did have a legal/financial victory over Novartis - another CART competitor- in a similar argument. 2, there are other companies looking at utilizing the immune system to strategically kill and cure cancer. Some if there approach(es) are successful would be significantly cheaper and quicker to manufacture than KITE/JUNO/ADAP. Companies like ZIOP, CLLS, NK maybe the next winners. Cheaper manufacturing may mean more trials and faster data generation. And 3, the larger unmet need, which would mean significant more sales (and hopefully higher cure rates than the past in ways that require less suffering), is in treating solid cancers. So if KITE spikes and you get out. Be on the look out in the future for the best immunooncology solid cancer companies.

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What a great discussion this has been on biotech! Very useful. Thanks to all,
Saul

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For those also curious about jandq’s post about CART and TCR. They have nothing to do with Cloud And Radiation Testbeds or The Colbert Report.

https://en.wikipedia.org/wiki/Chimeric_antigen_receptor

CART - chimeric antigen receptors modified T cells
TCR - T-cell receptor

and by the way, T-cells are a subset of white blood cells and are called T-cells because they mature in the Thymus.

and by the way, a Thymus is lymphoid organ of the immune system located between your heart and your sternum.

That is where I’m going to have to stop as this could continue much longer.

Thanks for the discussions on biotech and for Saul’s encouragement on the topic. Amazing how a successful KITE investment brings on more interest. I think they are very volatile stocks because they have such huge potential, but seem to usually be a hit or miss. I’ve seen many drop all the way back down much faster from a single test result that didn’t hit goals - so be cautious.

Isn’t it great how investing can lead you to learn about topics like biotechnology and biology?

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When I own small caps that take off like this, especially when the hope is based on a lot of speculation, I always sell at least what I’ve invested in the name. Let the houses money ride from there.

Keeps going you are still in the name.
Sells off, you can decide to buy more or sell remainder, depending on the news.

I feel that I’m a much more dissaplined investor when I don’t fall in love with such a speculative name, at least until it’s through the pimple stage.

Chris

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