Analyst John Newman of Canaccord takes yesterday’s FDA approval of Novartis’ chimeric antigen receptor T-cell (CAR-T) therapy Kymriah as a meaningful victory for Kite Pharma Inc’s (NASDAQ:KITE) fellow CAR-T therapy candidate Axi-cel. Kite’s cancer therapy candidate is designed to treat aggressive Non-Hodgkin’s Lymphoma (NHL), and the analyst sees a green light blinking for a “new era of gene therapy ahead” on back of the path Novartis is forging for the Car-T cancer therapy sphere. Novartis cleared the FDA win earlier than Kymriah’s initially anticipated approval, which Newman believes will bode well for both Kite’s Axi-cel approval timing as well as probability.
Though Kymriah’s price tag towers at $475,000, which Newman highlights is “one of the most expensive non-rare disease therapies on the market,” it is possible that Gilead-acquired Kite could stand to discount the price of its CAR-T therapy to that of Kymriah in light of the fact patient population for relapsed/refractory diffuse large B-cell lymphoma (DLBCL) is roughly quadruple the size of pediatric acute lymphoblastic leukemia (ALL). “Given its break through nature, we are not expecting push back from the regulatory bodies and payors,” says Newman, who finds this could translate encouragingly for when it is time for Kite’s Axi-cel to hit the market, contingent upon its PDUFA date of destiny set for November.
Keep in mind, according to the UK’s National Institute for Health and Care Excellence, CART-therapy could actually be worth more than Kymriah’s initial pricing of $475,000, due to the drug’s ability to significantly add years to the lives of younger patients. “We could see GILD/KITE utilize this rationale to justify potentially higher price tag for Axi-cel” ponders Newman. Likewise, the analyst underscores that “GILD/KITE should be able to benchmark Axicel pricing based on clinical data [….] likely using the pricing flexibility to better devise/negotiate for potential pricing and contracting strategies.” In fact, Newman indicates that NVS is already exploring various options for price innovation and would not be surprised to see KITE/GILD follow suit, noting “~82% ORR for ZUMA-1 suggests this is a viable approach.”
Worthy of note, though Kymriah garnered the agency’s approval, the success brought with it a boxed warning for the potentially fatal cytokine release syndrome (CRS). Yet, this week, the FDA was busy dishing out green lights, as Roche likewise received a key victory from the agency for its orphan drug Actemra, now the first and only approved drug to treat CAR-T-associated CRS for patients 2 years and older. “CRS is certainly a risk for KITE’s Axi-cel,” acknowledges Newman, “but given that KITE has seen minimal grade 5 neurological events thus far and that CART-related CRS is manageable, we do not anticipate a major safety-related challenge ahead.”
As such, the analyst reiterates a Hold rating on KITE stock with a $180 price target. (To watch Newman’s track record, click here)
TipRanks analytics exhibit KITE as a Strong Buy. Out of 10 analysts polled by TipRanks in the last 3 months, all 3 are bullish, while 7 are sidelined on Kite Pharma stock. With a potential downside of near 12%, the stock’s consensus target price stands at $156.86.