TICKERS: GILD, KITE

With Acquisition of Kite Pharma, Gilead Becomes a 'Major Player' in CAR-T Arena
Research Report

Source:

Jason Kolbert, analyst with Maxim Group, assesses the billion-dollar transaction that would bring Kite Pharma and the earning potential of its cell therapy programs under the larger biotech's umbrella.

In an Aug. 28 research report, Maxim Group took a look at Gilead Sciences Inc.'s (GILD:NASDAQ) plans to acquire Kite Pharma (KITE:NASDAQ), "an industry leader in the emerging field of cell therapy," as described by analyst Jason Kolbert. The former "is acquiring all of the outstanding shares of common stock at a price of $180 per share in cash" and "plans to finance the transaction with a combination of cash on hand, bank debt and senior unsecured notes."

About the transaction, Kolbert concluded, "The deal is not likely to be accretive near term, but it does position Gilead as a global oncology company and secures the company's future."

The $11.9 billion price "represents a 29% premium to Kite's closing price on Friday, Aug. 25, and a 50% premium to the company's 30-day volume-weighted average stock price," Kolbert indicated.

The analyst assessed that "Kite's acquisition price is reasonable" when "discounting back future sales," which he estimated to be "$1.4B by 2025." He added, "If we assume a similar level of European Union sales and factor in China and Japan, we could see global revenues in the $5B range in the out-years."

Maxim noted it has confidence in Kite's earning potential. "While it will take time for the sales to build, and manufacturing hurdles exist, we think the revenues will materialize," Kolbert said.

As for the commercialization timeline, approval is anticipated near term in the United States and Europe for Kite's most advanced immunotherapy candidate, the CAR-T therapy axicabtagene ciloleucel (axi-cel). "It is expected to be the first to market as a treatment for refractory aggressive non-Hodgkin lymphoma (NHL)," wrote the analyst.

The U.S. Food and Drug Administration has "set a target action date of Nov. 29, 2017 under the Prescription Drug User Fee Act," and "approval in Europe is expected in 2018," added Kolbert.

Regarding Kite's pipeline, it "has additional candidates in clinical trials in both hematologic cancers and solid tumors," wrote Kolbert.

With the acquisition, Gilead will "become a player in the chimeric antigen receptor T cell (CAR-T) space," Kolbert predicted, as Kite "has developed engineered cell therapies that express either a CAR or an engineered T cell receptor, depending on the type of cancer."

Maxim's report also included notes from a recent Gilead press release, which indicated that for its new CAR-T platform and pipeline, the company plans to finish manufacturing preparations, launch axi-cel in the U.S. and build infrastructure for the drug in Europe. It further indicated the company aims to continue with Kite's various programs "to broaden axi-cel utilization in earlier lines of therapy in aggressive NHL and other B-cell malignancies," Kolbert reported. Gilead plans to progress "additional CAR Ts to treat multiple myeloma and acute myeloid leukemia" and "T cell receptors for potential use in solid tumors."

Currently, Maxim has a Hold rating on Gilead and Kite. Gilead's stock is trading at about $75.30 per share and Kite's at $179.19 per share.

Want to read more Life Sciences Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a billboard sponsor of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.




Register For New Orleans 2017

Get Our Streetwise Reports Life Sciences Report Newsletter Free

A valid email address is required to subscribe