Will KITE be acquired?

Interesting Seeking Alpha article that asserts KITE is one of the strongest KAR-T (pure-play) organizations and that there’s a reasonable likelihood they’ll be acquired at a hefty premium.

Interested in opinions re: if/how this impacts investment thesis and as a biotech stock (most seem to eventually be acquired)my fellow friends on Saul’s board have considered acquisition as part of the reason for your original purchase. Thank you in advance for your feedback.

…"All other players in CAR-T benefited from CTL019 regulatory success. One of the strongest, Kite, has already begun the marketing campaign ahead of the November 29 FDA action date regarding its own rolling Biologic License Application for KTE-C19 to treat relapsed or refractory aggressive B-cell non-Hodgkin’s lymphoma, letting the world know that it is the CAR-T company.

The Kite pipeline portfolio appears to have a distinct advantage in developing additional indications and new CAR-T therapies. Furthermore, its pipeline portfolio also highlights already running programs for the development of solid tumor T-cell Receptor therapies based on the CAR-T technology whereas CAR-T therapies are primarily for blood cancers. The aforementioned manufacturing site also signals it has applied its proactive approach to readying for commercial scale up.

From MarketWatch, Kite closed on July 12 at $103.70 with a market cap of $5.9B. Kite has quickly become a very expensive acquisition target for good reason; it is not only the most attractive acquisition target, it is the only standalone CAR-T company remaining. This does not mean Kite can dictate all terms as it would clearly benefit from the resources a large established biopharmaceutical brings. Therefore, I believe a deal can be made here.

Celgene (CELG) is lurking. While its most prominent partner, Juno (JUNO) has suffered some serious setbacks resulting in the discontinuation of their lead candidate development, Celgene has a proven track record of adjusting its resources to best fit strategic positioning for follow-on growth as the second mover initially; but, then first mover in the key growth areas of new indications and new therapies. For example, Celgene’s agreement with BeiGene (BGNE) giving it access to BeiGene’s ex-Asia PD-1 checkpoint inhibitor is a play to dominate the combination therapies in the checkpoint inhibitor sector of immuno-oncology.

Evidence suggests that Celgene will apply this same strategy in the CAR-T sector to dominate the additional indications and new therapies as the Juno collaboration may still generate products from other CAR-T programs. Furthermore, Celgene may be the best at identifying and structuring the right deal to fill gaps.

Who Will Win? – My predictions…
Kite will be purchased at a hefty premium and the buyer will hold a strong leader position in the CAR-T market for the foreseeable future. Despite the valuation, Kite can drive both revenue and earnings growth in that it will be new revenue. CAR-T products will make their entries into markets that have no other options. The uncertainty and therefore risk for Kite as an all-CAR-T company has been the ability for regulatory agencies to approve a high-risk therapy for market that also has significant manufacturing and supply challenges.

The FDA advisory committee meeting outcome from the review of Novartis’ CTL019 is a significant regulatory endorsement of CAR-T technology as a therapy that should be commercialized to meet the most dire needs of oncology. By extension, it’s reasonable to expect the same type of endorsement and approval for Kite’s KTE-C19 which is already in FDA review as a fast-track rolling BLA.

The competitive advantages Kite possesses are multi-tiered and multi-leveled. The Kite pipeline has many more programs running (shots on goal) to develop additional indications and new therapies than the Novartis Immune T-Cell Modulation pipeline. This makes sense given the aforementioned shutdown of Novartis’ Cell & Gene Therapies unit, which also underlines the assumption that Kite’s development capabilities are well ahead of Novartis’.

Another dominant player I expect to emerge in this sector is Celgene, which will continue to deliver significant profit growth as it establishes itself with the most approved CAR-T indications and new immuno-oncology therapies. I believe it will do so by leveraging highly skilled resources in clinical development and manufacturing both already in-house and bolt-on acquisitions/licensing.

A collaboration worth watching is between Celgene and Bluebird Bio (BLUE). Reiterating, Celgene’s ability to collaborate, partner, and acquire has a proven track record and the precursors for dominance in CAR-T and to a greater extent in immuno-oncology are already in place.

• Post market launch safety monitoring will be done to document long-term effects. CAR-T has many side effects and no one has long-term data.
• Commercial scale-up is still unproven."


Betting On The CAR-T Race $CELG