Kite Pharma Inc (KITE) Hits a Speed Bump

Yesterday, drug maker Kite Pharma Inc (NASDAQ:KITE) disclosed the death of a patient who was treated with KTE-C19, the company’s CAR-T blood cancer drug, sending shares tumbling nearly 13%.

In reaction, BTIG analyst Dane Leone reiterates a Neutral rating without listing a price target.

“We think that the market reaction may be somewhat misguided, as although the Grade 5 cerebral edema leaves a mark on the safety track record of KTE-C19, it does not necessarily change the comparative for CTL019.  We have a confirmed interim analysis for CTL019 in DLBCL at the International Conference on Malignant Lymphoma on June 14th.  We remain Neutral as we continue to be below Street expectations for KTE-C19,” justifies the analyst.

Leone points out that the risk-reward parity is now more balanced following the sell-off. The analyst estimates KITE shares to rise by 20% in case of improving data for KTE-C19 but, prospects a 30% drop in the shares if drug maker’s competitor Novartis were to release better data on their treatment CTL019.

Additionally, the analyst underscores current data suggests CTL019 would win the efficacy battle over KTE-C19 but he asserts “We would expect the toxicity profile to increase for CTL019.”

Leone expects Kite Pharma Inc’s revenues to reach nearly $162m for KTE-C19 sales, which falls below consensus estimate of $175m, although he admits he “may be too aggressive in actual revenues realized versus patients treated.”

According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, five-star analyst Dane Leone is ranked #224 out of #4567 analysts. Leone has a 71% success rate and generates an annual yield of 13.0%. However, when recommending KITE, the analyst earns 0.0% average profit on the stock.

TipRanks analytics show KITE as a Moderate Buy. Based on 17 analysts offering recommendations for this stock, 10 issue a Buy, 6 maintain a Hold, and only one analyst recommends to Sell. The 12-month average price target stands at $87, making a nearly 23% upside from where the stock is currently trading.

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