Kite: New National Cancer Inst. study just publi

Investment Analysis Clubs Saul’s Investing Discussions
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Edmund / Chris:

I do care to some degree- I’ve made the mistake of investing with my heart in the past & I dont want to see a few people on a board I enjoy being gutted from a loss that I’ve lived through with DNDN, which went from $40 to $12 in 2 weeks. This has a similar binary outcome with an unclear endpoint.

JLodie:
As for the 3% survival: https://www.ncbi.nlm.nih.gov/pubmed/24132383
great FOAMed review here: http://www.scancrit.com/2014/01/13/country-old-men/

As for the 30% survival, youre right, I misquoted, its 50%: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4512155/ … though likely lower in an oncology patient anyway. I’m sure this is one of those things where there will be wide percentages seen based on which study you look at.

Here’s my biotech rulebook, though its in rough format:
http://discussion.fool.com/rulebook-list-32633498.aspx

:::back to lurking:::

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As with any medicine the risk of early promising results is reversion to the mean, i.e. not effective for the general population as the early studies show and later bad side effects (hello lawyers).

One big difference about KITE cart cd19 is that it’s results are very similar to JUNO’s and CLLS in cure rates, partial response and even side effects. In total (off the cuff #) at least 200 people with a 6-12 months (range is depends upon the lymphoma/leukemia being treated) average life expectancy once cancer returns & no good tools in the toolbox left, now have been given a 30-50% chance to live (with the risk of sudden death of the treatment and prolonged neurological/pulmonary toxicities). That looks pretty good (obviously not great) but pretty good for 15-20k Americans (don’t know Asia and Europe and other countries stats) who die a year from these types of cancer. Also those 6-12 months are usually spent with numerous hospitals visits for infections, blood transfusions, icu stays (costly and not fun)

A 2nd difference b/n cart and DNDN is the target and the weapon. So the current CART type of immunotherapy has other areas of medicine (vaccinations trials) that show cell expansion is often greater when these specific b-cell or t-cell are triggered by a certain protein target. This is different than using a peptide and a growth factor/cytokines to stimulate the immune system- when that is used often attackers and suppressor are stimulated and it’s a ‘stalemate’. There are numerous DNDN examples of using protein and growth factors that have had some good phase 1/2 & then reversion to the mean. Also we now know that solid tumors often have more genetic variation and a very poor blood supply, i.e. It will probably take multiple immunooncology targets to cure those cancers or the should be used early in the cancer’s life (less genetic mutations) and may need to be infused directly. That is why the new studies of cart are in the blood cancers -easier access to the target.

So I am not saying there is no risk (regulatory risk with manufacturing quality; side effect risk per above; and still some - although statistics have swayed a good way towards ‘it works side’ - reversion to the mean.). I am saying that I think then risk is relatively low (low by my standards) 20-25% for KITE not to be approved in June 2017. So I’m not adding but staying put. If it does go up to 100, then likely reasses.

Immunooncology will likely be a bumpy ride but lots of data point to it being a game changer…only time will tell. This is definitely not a classic ‘Saul’ stock’.

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Chris,

I agree this is high risk, high reward for one stock. That is why that I recommended that people open only a SMALL position. In fact, I recommended options to keep investments even SMALLER. I consider this to be much better odds than a toss of the coin. To those who consider this gambling rather than investing I would point out:

  1. There is solid efficacy data.
  2. We have a 3 companies developing technology: Juno, Kite, and Novartis.
  3. One or more of the companies is likely to win big.
  4. There is no law against investing a small amount in each company.
  5. The total addressable market is likely tens of billions of dollars.

If someone were to invest 1% of their portfolio and wait 5 years, what do you think the odds are that this would be a market beating strategy? Can I give you exact drug costs and margins? No. All I can say for sure is that this will be BIG. There are certainly legal risks, but there are no market risks. People will pay a premium to get this treatment. I think that Kite is likely to win approval probably this year or possibly slightly later. I will keep an eye on the other two companies, and be willing to invest in them too if and when they make progress on the legal front or with drug development. As a group, I consider these stocks to be a worthwhile.

Investing is all about taking intelligent risks. For example, you might consider ANET a good investment. It’s performing well in the market, and it seems to have the best networking technology. Is it possible that their product becomes obsolete someday? Sure, but I think it is a winner for the foreseeable future. The key is to know yourself. If ANET and KITE are too risky for you, by all means buy something like Disney. There no right, wrong, or stupid answer. It’s an individual thing. For biotech, most investors either go big and lower risk (e.g. CELG) or get a basket of smaller stocks. In the case of CAR-T therapy, I think the odds are strongly with this group beating the market.

Best,
bulwnkl

Long KITE 1.3%
Long ANET 7.6%
Long CELG 8.0%
Long DIS 5.8% (LOL)

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“:::back to lurking:::”

Fuma,
By all means please keep posting, like I said I can learn a lot from your knowledge of
the biotech industry. This is what we are here for. My only point was that your one statement
which you have clarified.

Guys, thanks for the other names involved in research.

I’ll be monitoring this sector and maybe on the volatility I’ll start a position if we get an opportunity to buy lower.

Chris

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I have a hard time accepting those kinds of numbers for what are presumably treatment-related admissions to the ICU. I haven’t had time to go through the whole publication related to KITE but the need to admit to the ICU could be related to the body’s response to treatment. That’s a very different patient population from a general ICU admission related to shock or sepsis.

As a counter example, I do procedures on patients that require ICU admissions for a day or so because the procedure can cause circulatory instability, or need high level nursing care. Much more than 50% of those patients survive.

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Fuma,
I read your post with great interest. You have raised some points which I had not previously considered. Nevertheless, I have already taken a position in KITE and I’m not yet motivated to sell, yet.

Let me tell you (and others) why.

First and most importantly, no matter what happens, I will not be “gutted.” I don’t know the field well. To be honest, I’m not sure I know any field well. I spent 30 years in IT at a major aerospace firm, but I retired almost 7 years ago. IT changes rapidly, most everything I knew then is stale now. I retired early for two reasons: 1) I felt I could afford to, and 2) I was disgusted with the way the management of the company had changed. I had worked under 5 (or 6) CEOs depending on how you count them. The last two were a travesty, IMO. So, knowing I know very little about any field I don’t make my investment decisions based on intimate knowledge of the industry or a particular company. And also, being aware this is ultra-risky, I’m into KITE at under 2% of my portfolio. I don’t like losing money, but I can sleep easily with what’s at risk, should it go to zip. And just to cut down the risk even further, I think I’ll take another poster’s advice (Bulwnkl, I think) and buy puts to cover my position.

While I had fully recognized the risk of not receiving FDA approval, I had not given any thought to subsequent risk of insurance companies disallowing approval of this treatment. That’s very real. But, it’s also very American. This is along the same lines as KITE’s risk due to litigation. If it is an impact, it will be primarily associated with the American market. In Japan, EU and possibly even China it is not relevant (yes, the Chinese are more prone to adopt this course of treatment than the Americans - My wife spent 34 years working in a major Chinese hospital, she retired as the manager of the transfusion department, so I know a little more than most Americans about health care in China, it’s not all bad news). And then there’s Central/South America, South Africa maybe, and the rest of Asia as well as Australia and New Zealand and maybe some other places as well. It’s a big world. Cancer knows no boundaries.

As for the negatives associated with the outcome, I must agree with Saul. Facing certain death versus a 50/50 chance of complete remission, that’s got to be a no-brainer for almost everyone but those who have fully resigned themselves to “fate.” I would think even these folks might be prone to reconsider. What exactly does “fate” mean?

So, I very much appreciate your depth of knowledge, and I appreciate your cautions. I have habitually stayed far away from biotech and pharma/medical equipment investments due to my ignorance and bewilderment with the entire field. But IMO, in this case, a potentially large reward appears to outweigh the very real and very high risk with respect to a very low speculative investment. Thanks again for you post. I look forward to seeing you post in the future.

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Fellow fools,

I don’t post much and I’ve never posted on this board. I’m more of a lurker most of the time appreciating both sides of the argument. However, I’d like to chime in on this one if I may.

I’m a physician and I take care of critical patients on a daily basis. I am NOT an oncologist… pretty clear from my username, I think, what my specialty is. I appreciate Saul’s post and Fuma’s counterpoints as well, although some of the statistics you quoted, Fuma, boggle my mind as to why they matter much.

When I did my residency at Vanderbilt, I did several rotations through the Oncology/BM transplant unit where febrile neutropenia, readmissions, neurotoxicity, etc. were not unusual occurrences. I think there is a lot of perspective needed here in regards to these readmissions Fuma. These readmits are occurring at tertiary care centers well versed in taking care of these types of patients. They aren’t happening at 100 bed community hospitals in the suburbs of America in most instances. I would compare these patients to someone who is very ill and needs a heart transplant. Heart transplant patients have failed all other medical therapy. They are willing to undergo a tremendously difficult surgery, post operative recovery and take lifelong immunosuppressives, which put them at great risk of infection, in order to live. However flawed the comparison might be, it’s still a valid one I think despite the much better survival for a heart transplant patient. Readmission after transplant is very frequent, often requiring ICU stays for brief periods of time as well.

The point is, when there is nothing left to offer, patients (especially kids with parents who will do anything for them… a friend of mine’s son just had CAR-T therapy) will move mountains to survive. I find the numbers from this study reassuring. Patients essentially on death’s door still alive 12-24 months later? That’s impressive to me. Is neurotoxicity a concern? Absolutely, it’s my main concern in this company as an investment but I sold some positions today in others and will watch KITE for a while and see what it does. I will get in eventually (probably within a couple of weeks) but it should be a small investment for just about everyone, not something that is going to make or break you IMO unless you’ve got bigger balls than me or money to play with.

Anyway fellas… those are thoughts from another MD out here in the investing world. By the way, thanks for the Shopify rec…

MC

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Thanks HeartMD for a great view from the trenches. Appreciate your insights.

Saul

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… all of them went on to have a spinal tap, with a median number of 22 WBC’

I didn’t see that data… are you referring to the bone marrow biopsy that is often required for lymphoma trials?

The following link says the toxicities are manageable… and in any event, if the patient with lymphoma is already refractory and/or chemo resistant to the common therapies (chop, cvp, rituxan, bendamustine, fludarabine, etc), or your indolent disease has become aggressive, then you’re down to clinical trials anyway and have nothing to lose… especially if you’re older and/or not qualified for an autologous BMT.

The scariest side-effect is the encephalopathy, but if your submandibular nodes are already the size of golf balls, what the heck? Right?

Also, anybody who has been dealing with it long enough to become resistant/refractory has had enough CT’s that myelodysplastic risks are well understood and accepted as the normal risks… especially if they’ve already played the Fludarabine card.

http://www.onclive.com/web-exclusives/anticd19-car-tcell-the…

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In the article it says:

Grade 3 and 4 Neurologic Toxicities Were Associated With High Blood CAR+ Cell Levels, and CAR-19 T Cells Were Detected in Cerebrospinal Fluid