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Kite Pharma (KITE) Q1 Earnings: Is a Surprise in the Cards?

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Kite Pharma, Inc. is expected to report first-quarter 2017 results on May 8 before market opens. Last quarter, the company delivered a positive earnings surprise of 2.86%.

Kite Pharma’s shares are up 82% so far this year. This compares favorably with the 5.5% increase registered by the Zacks classified Biomed/Genetics industry during this period.

The company has a fairly decent record of earnings surprises. It delivered positive earnings surprises in three of the past four quarters and a negative surprise in one, bringing the average surprise to a positive 9.52%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Kite Pharma, a development-stage biopharmaceutical company, is looking to transform the paradigm of treating cancer, which involves using the body’s immune system to recognize and destroy cancer cells.

With no approved products in its portfolio, investor focus will primarily be on the company’s cash burn and pipeline updates.

Aaxicabtagene ciloleucel, Kite’s lead pipeline candidate, is currently in the pivotal phase of a phase I-II study (ZUMA-1) in patients with refractory diffuse large B cell lymphoma (DLBCL) including primary mediastinal B cell lymphoma (PMBCL) and transformed follicular lymphoma (TFL).

All these are types of aggressive non-Hodgkin’s lymphoma (NHL).In Feb 2017, Kite Pharma announced positive top-line six-month results from the primary analysis of 101 patients in the ZUMA-1 study. The solid efficacy profile demonstrated by the study furthers the likelihood of FDA approval of the drug.

Kite Pharma is looking to get axicabtagene ciloleucel approved for a broader label for aggressive NHL including DLBCL, TFL and PMBCL indications, based on the primary analysis of ZUMA-1. Kite Pharma initiated a rolling submission of the Biologics License Application (BLA) in Dec 2016 and completed the filing for accelerated approval in March this year.

Axicabtagene ciloleucel is expected to be approved and launched in the U.S. in 2017. In Europe, regulatory applications are expected to be filed in the second half of this year. However,the company does not expect to generate any product revenues from axicabtagene ciloleucel in 2017.

Kite Pharma is also evaluating axicabtagene ciloleucel in a phase II study (ZUMA-2) in patients with relapsed/refractory mantle cell lymphoma (MCL) and in two additional pivotal studies (phase I/II) for acute lymphoblastic leukemia (ALL) – ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL.

Kite Pharma plans to move axicabtagene ciloleucel into a second series of studies for additional indications and earlier lines of therapy in DLBCL patients in 2017. A phase Ib/II combination study (ZUMA-6) evaluating axicabtagene ciloleucel plus Genentech’s Tecentriq (atezolizumab) in patients with chemorefractory DLBCL commenced in October.

Apart from updates on axicabtagene ciloleucel, investor focus will remain on the company’s progress with its collaboration with the U.S. Department of Health and Human Services’ National Cancer Institute (NCI) under which the company is funding the development of eACT-based candidates utilizing CARs and TCRs for the treatment of advanced solid and hematological malignancies.

The investigational new drug (IND) application for the first of the four TCR/CAR T candidates - KITE-718 - was filed in Jan 2017. KITE-718 targets cancer antigens MAGE A3 and MAGE A6 in a solid tumor. Kite Pharma plans to file an IND for CAR T candidates KITE-585 (targeting BCMA antigen for multiple myeloma) in 2017 and KITE-796 (targeting CLL-1 in AML) in 2018 and for TCR candidate KITE-439 (anti-HPV-16 E7 TCR focused on cervical cancer and head and neck cancer) in 2018. The company expects to report data on a number of these candidates from 2017 through 2018.

Earnings Whispers

Our proven model does not conclusively show that Kite Pharma is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Its Earnings ESP is 0.00% as both the Most Accurate estimate as well as the Zacks Consensus Estimate stand at a loss of $1.68 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kite Pharma’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.

Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Kite Pharma, Inc. Price and EPS Surprise

 

Kite Pharma, Inc. Price and EPS Surprise | Kite Pharma, Inc. Quote

Other Stocks to Consider

Stocks in the pharma sector that have both a positive ESP and a favorable Zacks Rank are:

Conatus Pharmaceuticals Inc. , which is scheduled to release results on May 4, has an Earnings ESP of +57.14% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here . 

ImmunoGen, Inc. with an Earnings ESP of +8.33% and a Zacks Rank #3. The company is scheduled to release results on May 5.

FibroGen, Inc. (FGEN - Free Report) with an Earnings ESP of +23.81% and a Zacks Rank #3. The company is expected to release results on May 8.

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