What to do after KITE buy-out?

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This is my first post on this forum although I have been following you guys for several months. I would like to thank Saul and TMF2Aruba for inviting me to this forum.

Recently, I noticed that tremendous money has been poured into several CAR-T related stocks like CLLS, JUNO, BLUE because of the KITE buy-out. I admit that my first urge is also to put my cash into these stocks before it is too date. But I didn’t do that as I asked myself one question – what exactly do you know about these CAR-T stocks except KITE, to which my answer is “nothing”. After reading most of the posts related to CAR-T in this forum last weekend, I notice that there are a bunch of people like me who are not clear about what is going on with CLLS, JUNO, BLUE, etc. and just believe what they want to believe.

In this article, I will try to demonstrate the whole picture of CAR-T field in this post-KITE-buy-out stage. I will first recall when KITE started to fly and why it finally got bought out. Then I will evaluate the potential of existing CAR-T stocks by using KITE as a benchmark. Finally, I will give my winner for future investing.

First of all, let’s look at the catalyst that flew KITE at the beginning of this year.
On Feb. 28, 2017, Kite Announces Positive Topline Primary Results of Axicabtagene Ciloleucel from First Pivotal CAR-T Trial in Patients with Aggressive Non-Hodgkin Lymphoma. https://www.drugs.com/clinical_trials/kite-announces-positiv…
On March 31, 2017, Kite Completes Submission of U.S. Biologics License Application (BLA) for Axicabtagene Ciloleucel as the First CAR-T Therapy for the Treatment of Patients With Aggressive Non-Hodgkin Lymphoma (NHL). https://www.drugs.com/nda/kte_c19_170331.html
And we all know the story after that.

Second, let’s look at why KITE was bought out.

  1. Promising clinical results and KTE-C19 will be approved with high probability by this November.
  2. Far along in commercialization
  3. KITE is the only unaffiliated CAR-T company before it got bought
  4. Novartis (NVS) will help to develop the payor system and provide assurance to treatment centers that are investing in cell-therapy capabilities, e.g. set the price standard – $475000 per patient.

From the buy-out of KITE, we can figure out that for a CAR-T company to succeed, it must have convincing clinical results and sufficient manufacturing resource (i.e., ability to commercialize).

Third, let’s look at if GILD is worth buying after it acquired KITE.
From this article, https://www.smarteranalyst.com/2017/06/08/btig-gets-bullish-…, I noticed that “Axi-Cel will garner ~60% of share within the US DLBCL market as a result of first to-market status and lack of differentiation from competitors” . Therefore KITE’s first-year sales would roughly be 60% * 7400 (total patients) * 500K (therapy price) = 2.2B. Note that there won’t be much room for this number to grow as the market is almost fixed. Considering GILD’s TTM revenue which is 28.5B (from Yahoo finance), however, the acquisition will not move the needle, as most folks on this forum have said earlier.

Finally, as GILD is not a good buy, then who will probably be the next KITE, ZIOP, JUNO, BLCM, BLUE, or CLLS?

Before answering this question, let’s first recall Saul’s move on CAR-T stocks. From March to June, Saul added ZIOP, CLLS, and BLUE to his portfolio. Reasons are:
ZIOP – Sleeping Beauty system, which gives them a rheostat switch and should cut serious side effects greatly, as well as other shortcuts to cut time and expense.
CLLS – off-the-shelf CAR-T treatments, which have no manufacturing issues and are available to all appropriately indicated patients.
BLUE – excellent results working with Celgene, and a second possible line of products in gene editing.
However, in July, Saul sold these three stocks and put the money on KITE. Reasons include:
ZIOP – close to run out of money
CLLS – announced an IPO of their agricultural subsidiary at $15 to $18, but ended up having to IPO at $8, which didn’t bring in much money
BLUE – not finish Phase 1 trial yet

One lesson that I have learned from Saul on how to pick stocks is that there must be a hook behind each “Saul stock”. ZIOP, CLLS, and BLUE had their chance to make difference, at least before KITE flew. Next let’s look at the current pipeline of KITE, NVS, JUNO, ZIOP, CLLS, BLUE, and BLCM, and check which one(s) still have hook after the KITE buy-out.

From the table below, we can notice that

  1. KITE and NVS are obviously in the leading place with KITE having more indications. Since NVS’s TTM revenue is 49B (from Yahoo Finance), the commercialization of its CAR-T therapy (CTL019) won’t move the needle.
  2. There is some overlapping between JUNO’s JCAR017 and KITE’s KTE-C19 (ZUMA-5). They are both developed for B-Cell NHL. But I am not quite sure about the difference between Indolent and r/r B-Cell NHL. I will appreciate it if someone can clarify this.
  3. ZIOP is working fine except that they are running out of money. Considering the recent KITE buy-out and promising CAR-T market, however, I believe it won’t be a difficult task for them to find new partnership or funding resource in the near future.
  4. BLUE has got some good results. But BB2121 is still in phase 1. In addition, there is some overlapping between BB2121 and KITE’s KTE-585 (also in phase 1) which is not listed in this article, with both of them focusing on multiple myeloma. KITE were so encouraged by the results of 585 that they moved up the IND filing to third quarter with plans to begin trial enrollment by year end.
    CLLS is so lagged behind. They have not started phase 1 trial yet, but administered UCART123 to one patient.
  5. BLCM is undervalued as I did not find many discussions regarding their CAR-T therapy on this forum. BLCM’s market value is only ~0.35B, far away from the likes of JUNO and KITE. I am not quite familiar with their drugs, but it seems that BLCM is working fine with three indications ongoing. I will appreciate it if someone can elaborate more on their drug pipeline.

Only drugs that are beyond phase 1 are listed in this table.

Ticker Drug Indicator Stage Catalyst
KITE Axicabtagene ciloleucel - KTE-C19 (ZUMA-1) Refractory Non-Hodgkin's Lymphoma (NHL) - cancer PDUFA priority review PDUFA date under priority review November 29, 2017.
KITE Axicabtagene ciloleucel - KTE-C19 (ZUMA-2) Relapsed or Refractory Mantle Cell Lymphoma (r/r MCL) - cancer Phase 2 Phase 2 pivotal initiated November 2015. Data due 2018.
KITE Axicabtagene ciloleucel - KTE-C19 (ZUMA-5) Indolent B-Cell Non-Hodgkin Lymphoma Phase 2 Phase 2 commencement of dosing announced August 2, 2017.
KITE Axicabtagene ciloleucel - KTE-C19 (ZUMA-3) Adult patients with r/r ALL - cancer Phase 1/2 Phase 1 data released at ASCO June 5, 2017. Complete remission 73%. Phase 2 data due 2018.
KITE Axicabtagene ciloleucel - KTE-C19 (ZUMA-4) Pediatric and young adult patients with r/r ALL - cancer Phase 1/2 Phase 2 data due 2018.
KITE Axicabtagene ciloleucel - KTE-C19 (ZUMA-6) Refractory diffuse large B-cell lymphoma (DLBCL) Phase 1/2 Phase 1/2 initiated October 2016. Phase 1 data due 2017.
NVS Kymriah (CTL019) Relapsed/Refractory B-Cell Acute lymphoblastic leukemia Approved Approval announced early - August 30, 2017.
NVS GP2013 - Biosimilar rituximab Non-Hodgkin’s Lymphoma Phase 3 Regulatory filing due 2H 2017.
NVS CTL019 - JULIET Cancer - Diffuse Large B-Cell Lymphoma (DLBCL) Phase 2 Phase 2 pivotal primary analysis presented International Conference on Malignant Lymphoma (ICML) on June 14, 2017. Abstract released June 7, 2017. Regulatory filing due 4Q 2017.
JUNO JCAR015 Relapsed/ refractory B cell acute lymphoblastic leukemia Phase 2 Terminated
JUNO JCAR017 r/r B cell non-Hodgkin lymphoma - cancer Phase 1/2 Pivotal trial to be initiated in 2017. ASCO Poster Session June 5, 2017 - ORR 86%.
ZIOP Ad-RTS-hIL-12 + veledimex Glioblastoma multiforme (GBM) Phase 2/3 Phase 3 pivotal trial to be initiated 2017.
BLUE BB2121 Relapsed/refractory multiple myeloma Phase 1 Phase 1 interim data released November 30, 2016 - 78% ORR. Pivotal trial to be initiated 2017. Updated data at ASCO June 5, 2017 - ORR 89%. Pivotal trial to be initiated by the end of 2017.
CLLS UCART123 Blastic Plasmacytoid Dendritic Cell Neoplasm Phase 1 17 Aug 2017, Cellectis’ UCART123 Administered to First Patient with BPDCN in Phase I Clinical Trial at MD Anderson Cancer Center
BLCM BPX-401 Hematological cancers that express the CD19 antigen Phase 1/2 Phase 1/2 planned 2H 2016
BLCM BPX-501 - BP-004 Adjunct T-cell therapy administered after allogeneic HSCT - (hematopoietic stem cell transplantation) - cancer Phase 1/2 Phase 1/2 update June 23, 2017.
BLCM BPX-601 Pancreatic cancer Phase 1 Phase 2 trial initiation of dosing announced February 21, 2017.

In what follows, I will mark each stock in terms of investing potential based on my own understanding. Any comments and criticisms are welcome.

Ticker Drug Stage Commericalization Other Mark
KITE KTE-C19 PDUFA review In-house manufacturing facility ready T cell engineering process:14 to 16 days Buy out 5 (but it is already gone)
BLCM BPX-401, BPX-501, BPX-601 Phase 1/2 Final stage of completing their in-house manufacturing pipeline Sharp management 4.5
ZIOP Ad-RTS-hIL-12 + veledimex Phase 2/3 T cell engineering process:2 days 4 (if they can get more money)
BLUE BB2121 Phase 1 Collaboration with CELG 3.5
JUNO JCAR017 Phase 1/2 Collaboration with CELG The management - or at least the way it handles serious issues - is flawed 3
CLLS UCART123 Phase 1 Collaboration with Pfizer The only off-the-shelf CAR-T therapy 2

Alex

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Table updated

Only drugs that are beyond phase 1 are listed in this table.


Company		Ticker	Drug		    Indicator						Stage		Catalyst
Kite Pharma 	KITE	KTE-C19 (ZUMA-1)    Refractory Non-Hodgkin's Lymphoma (NHL)		PDUFA review	PDUFA date under priority review November 29, 2017.
Kite Pharma 	KITE	KTE-C19 (ZUMA-2)    Relapsed or Refractory Mantle Cell Lymphoma		Phase 2		Phase 2 pivotal initiated November 2015. Data due 2018.
Kite Pharma 	KITE	KTE-C19 (ZUMA-5)    Indolent B-Cell Non-Hodgkin Lymphoma		Phase 2		Phase 2 commencement of dosing announced August 2, 2017.
Kite Pharma 	KITE	KTE-C19 (ZUMA-3)    Adult patients with r/r ALL - cancer		Phase 1/2	Phase 1 data released at ASCO June 5, 2017. Complete remission 73%. Phase 2 data due 2018.
Kite Pharma 	KITE	KTE-C19 (ZUMA-4)    Pediatric and young adult patients with r/r ALL	Phase 1/2	Phase 2 data due 2018.
Kite Pharma	KITE	KTE-C19 (ZUMA-6)    Refractory diffuse large B-cell lymphoma		Phase 1/2	Phase 1/2 initiated October 2016. Phase 1 data due 2017.									
Novartis	NVS	Kymriah (CTL019)    r/r B-Cell Acute lymphoblastic leukemia		Approved	Approval announced early - August 30, 2017.
Novartis	NVS	GP2013 		    Non-Hodgkin’s Lymphoma				Phase 3		Regulatory filing due 2H 2017.
Novartis	NVS	CTL019 - JULIET	    Diffuse Large B-Cell Lymphoma (DLBCL)		Phase 2		Phase 2 pivotal primary analysis presented at ICML on June 14, 2017. Regulatory filing due 4Q 2017.
Juno 		JUNO	JCAR015		    r/r B cell acute lymphoblastic leukemia		Phase 2		Terminated
Juno 		JUNO	JCAR017		    r/r B cell non-Hodgkin lymphoma			Phase 1/2	Pivotal trial to be initiated in 2017. ASCO Poster Session June 5, 2017 - ORR 86%.					
ZIOPHARM	ZIOP	Ad-RTS-hIL-12 	    Glioblastoma multiforme (GBM)			Phase 2/3	Phase 3 pivotal trial to be initiated 2017.								
Bluebird	BLUE	BB2121		    Relapsed/refractory multiple myeloma		Phase 1		Phase 1 interim data released November 30, 2016 - 78% ORR. Pivotal trial to be initiated 2017. Updated data at ASCO June 5, 2017 - ORR 89%. Pivotal trial to be initiated by the end of 2017.					
Cellectis	CLLS	UCART123	    Blastic Plasmacytoid Dendritic Cell Neoplasm	Phase 1		17 Aug 2017, Cellectis’ UCART123 Administered to First Patient with BPDCN in Phase I Clinical Trial at MD Anderson Cancer Center
Bellicum 	BLCM	BPX-401		    Hematological cancers that express the CD19 antigen	Phase 1/2	Phase 1/2 planned 2H 2016
Bellicum 	BLCM	BPX-501 - BP-004    Adjunct T-cell therapy after allogeneic HSCT	Phase 1/2	Phase 1/2 update June 23, 2017.
Bellicum 	BLCM	BPX-701		    PRAME (preferentially-expressed antigen in melanoma) Phase 1/2	Phase 1/2 commenced March 2017.
Bellicum 	BLCM	BPX-601		    Pancreatic cancer					Phase 1		Phase 2 trial initiation of dosing announced February 21, 2017.

In what follows, I will mark each stock in terms of investing potential based on my understanding. Any comments and criticisms are welcome.


Ticker	Drug		    Stage	    Commercialization							Other			     	Mark
KITE	KTE-C19		    PDUFA review    T cell engineering process:14 to 16 days				Buy out				5 (but it is already gone)
BLCM	BPX-401, 501, 601   Phase 1/2	    Final stage of completing their in-house manufacturing pipeline	Sharp management	     	4.5	  
ZIOP	Ad-RTS-hIL-12	    Phase 2/3	    T cell engineering process:2 days									4 (if they can get more money)
BLUE	BB2121		    Phase 1	    Collaboration with CELG										3.5
JUNO	JCAR017		    Phase 1/2	    Collaboration with CELG						The management is flawed	3 
CLLS	UCART123	    Phase 1	    Collaboration with Pfizer						Off-the-shelf CAR-T therapy	2
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Great post Fighting 2016!

I am intrigued by BLCM and curious what others in the community have to say about BLCM, especially those that follow CAR-T closely.

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“But I am not quite sure about the difference between Indolent and r/r B-Cell NHL. I will appreciate it if someone can clarify this”

Indolent just means that the initial diagnosis is that the cancer is not aggressive, or it is localized. Sometimes treatment is delayed until symptoms appear, you just monitor and wait.

R/R is when initial treatment didn’t work, or maybe it did, but now the cancer is back. You have to try a different type of drug/combination, sometimes more aggressive.

From looking around, it appears that 25% of all new cases of NHL are considered indolent, and would therefore be the target for KTE-C19. You can figure the numbers based on that. As for R/R, it is harder to get an accurate number of expected cases, although typically you need a stem cell transplant for treatment. JCAR017 could eventually replace the need for the transplant, or at least be a bridge to extend time before the transplant.

All of this stuff is pretty amazing, and bodes well for the future of cancer treatment. Thanks for putting all of this together!

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Alex,

Very happy to see you mention Bellicum (BLCM). I don’t know much about biopharma, but just based on price (it’s less than 1/10th the price of Juno or Bluebird Bio) I would guess it is worth a look.

Bear

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Indolent just means that the initial diagnosis is that the cancer is not aggressive, or it is localized. Sometimes treatment is delayed until symptoms appear, you just monitor and wait.

R/R is when initial treatment didn’t work, or maybe it did, but now the cancer is back. You have to try a different type of drug/combination, sometimes more aggressive.

Epictetus, thank you very much for your explanation. It seems that there is not much overlapping between KTE-C19 (ZUMA-5) and JCAR017 as they target NHL patients in different phases.

Alex

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I have not followed this stock but so far my very look has yielded the following:

  1. cannot find they are partnered with a major firm so I cannot find where BLCM is getting milestone payments.
  2. last March TMF had an article that compared BLCM to KITE and TMF declared BLCM the winner. I looked at the March 21st price of each stock and found from that date to today BLCM stock price has retreated about 30% in value while Kite’s value increased by about 130%. Stock Dilution and cash flow situation led to BLCM decline.
  3. On August 8, 2017 BLCM reported. Several analyst that follow the stock have issued sell and strong sell ratings.
  4. Thomson Reuters rates stocks on a scale of 1 to 10 with 10 being the best. TR rated BLCM a 1.
  5. Market Edge uses a scale that ranges from Avoid to Long. ME rates BLCM as Avoid.

On the issue of the validity of BCLM’s pipeline and quality of Phase 1 & 2 results I have not yet drilled into independent analysis. Plan to start tonight.

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Very happy to see you mention Bellicum (BLCM). I don’t know much about biopharma, but just based on price (it’s less than 1/10th the price of Juno or Bluebird Bio) I would guess it is worth a look.

Will dig more on BLCM and ZIOP this week.

Alex

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I have not followed this stock but so far my very look has yielded the following:
1. cannot find they are partnered with a major firm so I cannot find where BLCM is getting milestone payments.
2. last March TMF had an article that compared BLCM to KITE and TMF declared BLCM the winner. I looked at the March 21st price of each stock and found from that date to today BLCM stock price has retreated about 30% in value while Kite’s value increased by about 130%. Stock Dilution and cash flow situation led to BLCM decline.
3. On August 8, 2017 BLCM reported. Several analyst that follow the stock have issued sell and strong sell ratings.
4. Thomson Reuters rates stocks on a scale of 1 to 10 with 10 being the best. TR rated BLCM a 1.
5. Market Edge uses a scale that ranges from Avoid to Long. ME rates BLCM as Avoid.

On the issue of the validity of BCLM’s pipeline and quality of Phase 1 & 2 results I have not yet drilled into independent analysis. Plan to start tonight.

hydemarsh,

Thank you very much for your information. Look forward to your research on BLCM.

Alex

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Thanks for the great review, Fighting.

Finally, I will give my winner for future investing.

I’m reading between the lines here, and I think I know your pick (or are there 2?) but would you mind spelling it out for a dummy?

It’s great to have M.D.s here to help sort out these pharmas, but a lot of your writing is a bit over my head. Okay, about 1,000’ over. I can live with that, but I wouldn’t pretend to guess which is your favorite.

Dan

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I’m reading between the lines here, and I think I know your pick (or are there 2?) but would you mind spelling it out for a dummy?

Hi, Dan,

Please have a look at thread #2 of this post, I have marked each CAR-T stocks based on my understanding. Sorry for such a confusion. I should have put the tables into thread #1, but I kind of messed up the table format when I submitted the post as this is my first one. Thanks a lot for your question.

Alex

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I’m late to the game here, but my take:

First, congrats to everyone on your big win. Despite my documented sentiment about the current CAR-T therapies, I think this worked out best for KITE, GILD, and patients.

Let me explain:

-There was- and still is- alot of unknowns with KITE and axi-cel. Will it sell? Will some odd reimbursement be instituted like what Novartis did? Will it actually work in the real world? Will it work enough to make people actually consider it in spite of the real risk of CRS and neurotoxicities around CAR-T treatments? How do they survive financially if/when any bumps in the road occur? How will they fund future trials?

Many of these concerns melt away so KITE can focus on what KITE did well- develop an interesting CAR-T drug off a platform. GILD has the salesforce. GILD can weather bumps in the axi-cel development road in a way that KITE probably could not have done well without butchering shareholders. GILD can expand labels. GILD can fund a real trial unlike the crap these CAR-T companies have put out. GILD can fund the KITE pipeline beyond axi-cel whereas KITE would have (& likely has) delayed their pipeline with all focus being on axi-cel. GILD has plenty of cash to go around for these side projects. GILD can weather any CRS or neurotoxic problem without going bankrupt and maintain the CAR-T pipeline

What does GILD get? Well, it gets a platform. A potential platform to print money. It is going to be near impossible to have a cheaper competitor any time in the future because axi-cel is a complex drug, and because the barriers to entry are so costly… because of the costs to entry, CAR-T companies with good data are going to be few and far between for the foreseeable future (hell, I dont think they exist now!)… This is like when monoclonal antibodies came out (except now its on steroids) - generic drugs for axi-cel just wont exist. This is a license to print money if you can develop a best in class platform. If you have the pockets and the patience- which is what GILD has that KITE didnt- you dont need your CAR-T drugs to sell fast and furious out of the gate to keep your head above water. you do need to have a great product that is not going to ruin your reputation. you dont want another Tysabri situation because there frankly isnt going to be any competition, so you just need to get it right out of the gate and the sales will eventually come if you have a superior product.

The question before was did KITE have a superior product (I think the answer to that is still debatable) - but now the question pivots to can they have a superior product- and I think the answer is yes now that time does not matter so much as honing a craft.

Full disclosure: I’ve owned GILD since March of 2017.

For me, I try to keep a small portion of my portfolio in “slow, steady, stodgy” companies that pay a dividend (GILD fell into that category at the time). For you, if you want to follow the CAR-T story without such a gamble and have a slow & stodgy company at the same time, then GILD might be for you. Besides, its probably more fun watching GILD/KITE unfold than watching Pfizer anyway. If you want to try and catch lightning in a bottle twice, I’d be wary as the other CAR-T treatments have way less powerful data than KITE, and its no secret how I felt about KITE’s data. Otherwise, sell your shares, enjoy something with your newfound wealth, and pick another Saul stock!

For the record, truly, congrats to all of you. I’m glad this all worked out so far, and I’m hoping they can hone their craft a bit more for improved patient outcomes.

Cheers.

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