Kite Pharma Inc (KITE): A Winning Small Cap Cancer Stock? BLCM & JUNO

Small cap cancer drug stock Kite Pharma Inc (NASDAQ: KITE) has surged after announcing a strategic research collaboration and license agreement with Amgen, Inc (NASDAQ: AMGN) involving Chimeric Antigen Receptors (CAR) – meaning its worth taking a closer look at the stock, which had an IPO last June, along with potential peers Bellicum Pharmaceuticals Inc (NASDAQ: BLCM) and Juno Therapeutics (NASDAQ: JUNO) which are players in the CAR therapies space and had more recent IPOs.

What is Kite Pharma Inc?

Founded in 2009, small cap Kite Pharma is a clinical-stage biopharmaceutical company involved in the development of novel cancer immunotherapy products, with a primary focus on engineered autologous cell therapy (eACT™) which is designed to restore the immune system's ability to recognize and eradicate tumors. In partnership with the NCI Surgery Branch through a Cooperative Research and Development Agreement (CRADA), the company is advancing a pipeline of proprietary eACT™ product candidates, both CAR (chimeric antigen receptor) and TCR (T cell receptor) products, directed to a wide range of cancer indications.

As for the other recent IPOs in the CAR therapies space, Bellicum Pharmaceuticals Inc is a clinical stage biopharmaceutical company focused on discovering and developing novel cellular immunotherapies for various forms of cancer, including both hematological and solid tumors, as well as orphan inherited blood disorders while Juno Therapeutics is a clinical-stage company developing novel cellular immunotherapies based on CAR and TCR technologies.

What You Need to Know or Be Warned About Kite Pharma Inc

On Monday, Kite Pharma announced a strategic research collaboration and license agreement with Amgen, Inc to develop and commercialize the next generation novel Chimeric Antigen Receptor (CAR) T cell immunotherapies based on the former's eACT platform and Amgen's extensive array of cancer targets. According to the press release:

"Kite will receive from Amgen an upfront payment of $60 million, as well as funding for R&D costs through IND filing. Kite will be eligible to receive up to $525 million in milestone payments per Amgen program based on the successful completion of regulatory and commercialization milestones, plus tiered high single- to double-digit royalties for sales and the license of Kite's intellectual property for CAR T cell products. Amgen is eligible to receive up to $525 million in milestone payments per Kite program, plus tiered single-digit sales royalties.  Further terms of the agreement are not being disclosed."

It should be noted that Kite Pharma has no revenues and has reported net losses of $2.57M (2012), $6.37M (2013), $9.05M (3 months ending 2014-09-30), $17.36M (3 months ending 2014-06-30) and $3.14M (3 months ending 2014-03-31). At the end of September, the company had $195.39M in cash and short term investments at the end of September.  

Ironically, Barron's just published a research note from Credit Suisse that was apparently written before Monday's announcement and state:

"We believe Kite (ticker: KITE) will benefit in 2015 from the initiation of multiple trials expected to serve as pivotal studies, and we think a lucrative outside-U.S. partner is likely. We are increasing our target price to $71 from $34. Addition of a partnership and the recent equity offering increase our forward earnings-per-share estimates."

And:

"Our model assumes Kite markets its technology in the U.S. and signs a partnership for outside-U.S. markets. There are currently three companies with significantly advanced CAR-T programs -- Kite, Juno ( JUNO ) and Novartis ( NVS ). We believe other global pharmaeutical firms will likely consider an entry into the field, and Kite is well positioned with significant intellectual properties, promising data in DLBCL, and a move into pivotal trials in 2015."

They also assigned a technology value of $1.5 billion to the company's pipeline and technology.

Otherwise and back in June, Kite Pharma's IPO ended up being increased to 7.5 million shares from 6 million shares and priced above the $12.00 to $14.00 range at $17 a share to raise $128 million.

Share Performance: Kite Pharma Inc vs. BLCM & JUNO

On Monday, small cap Kite Pharma jumped 15.08% to $69.75 (KITE has a 52 week trading range of $21.00 to $70.21 a share) for a market cap of $2.56 billion plus shares are up 140.5% since last June for retail investors. Here is a look at the performance of Kite Pharma along with recent IPOs Bellicum Pharmaceuticals Inc and Juno Therapeutics:

As you can see from the above performance chart, Kite Pharma, Bellicum Pharmaceuticals Inc and Juno Therapeutics are all above their IPO prices.

Finally, here are the latest technical charts for all three Chimeric Antigen Receptor stocks:

The Bottom Line. Small cap Kite Pharma was one of last year's best performing biotech IPOs and IPOs in general but after Monday's announcement, investors and traders might want to speculate on Bellicum Pharmaceuticals Inc and Juno Therapeutics.