Kite Pharma Stock Forecast: For many patients, cancer is a death sentence. In the United States, there are 1,762,450 new cases of cancer diagnosed each year, and 606,880 people die from the disease.
The good news is that more and more patients are surviving, thanks to improved therapies that are customized to specific cancers and to individual patients’ genetic profiles.
While the prognosis is better for many patients diagnosed with cancer, the battle isn’t over. Biopharma companies are still hard at work on more effective treatments that come with fewer side effects. Some are actively pursuing an outright cure for cancer in all its forms.
Kite Pharma, with its unrelenting focus on cancer treatment, is one such company. In fact, its work impressed industry leader Gilead Science so much that Gilead acquired Kite Pharma in 2017 at a price of $180.00 per share. This was a win for early Kite Pharma investors, as the company’s 2014 IPO saw shares priced at just $17.00 each.
Investors know that any breakthrough in cancer treatment is sure to deliver substantial profits, and they are buying shares in companies that show the most promise. While it is not possible to purchase Kite shares directly, today’s investors can buy parent company GIlead Science. The question is, does the larger company show the same promise as Kite Pharma? Is Gilead Science a buy?
What Does Kite Pharma/Gilead Do?
Kite Pharma doesn’t bother with small, incremental improvements to existing therapies. Its mission is bold: to cure cancer outright.
Scientists and researchers have made great strides towards this objective throughout Kite Pharma’s 30 year history, leading the field in cancer immunotherapy.
The company has developed transformative engineered T cell therapies that have dramatically improved outcomes for patients, and its team of experts continue to design and test new and better options for battling cancer.
Kite Pharma isn’t taking a one-size-fits-all approach to cancer treatment. Instead, it is working on customized solutions for individual patients.
This is done by removing patients’ immune cells, then making alterations in those cells so they can detect specific antigens related to the patients’ cancer. The cells are returned to the body primed to attack the cancer, where they work to reduce symptoms and improve quality of life in patients. This method has been particularly successful in some types of blood cancer, and Kite Pharma scientists are hard at work on expanding applications.
The product candidate pipeline is exciting, as it includes a selection of engineered cell therapies designed to express chimeric antigen receptors (CAR) or T-cell receptors (TCR), depending on the cancer’s characteristics. Ultimately, this science shows promise for both blood cancers and solid tumor cancers.
While it isn’t possible to invest in Kite Pharma exclusively, buying stock in parent company Gilead exposes investors to even more potential revenue from revolutionary new therapies. In addition to Kite Pharma’s suite of cancer treatment candidates, Gilead has drugs in late-stage clinical trials for the treatment of HIV/AIDS, diseases of the liver, inflammation disorders, respiratory conditions, and ebola.
All of this sounds encouraging, and investors considering the biopharma industry might wonder why anyone wouldn’t buy Gilead stock. The truth is, no matter how promising a company’s pipeline, biopharma investments come with big risks.
What Are The Risks Of Investing in Biopharma?
It’s pretty common to hear of investors who lost big when a biopharma stock tanked. Those who are new to biopharma investing often express surprise when this happens. After all, what could go wrong when a company has reached late-stage clinical trials for a new therapy?
Unfortunately, no matter how effective a drug looks in early testing and Phase I or Phase II trials, there is no guarantee that it will survive the vigorous Phase III studies.
All too often, when applied to a larger population, new treatments turn out to be ineffective. Either they don’t work as anticipated, or they cause unforeseen side effects when used with a diverse mix of patients.
Smaller biopharmas with limited pipelines can have their stock decimated by a Phase III failure. Companies with more product candidates stand a better chance of surviving a single setback. Under the umbrella of Gilead, Kite Pharma has room to fail – a must when reaching for a daring goal like curing cancer.
If one trial returns poor results, Kite Pharma has the resources and support to recover and go on. Of course, no investment is risk-free, but when it comes to biopharma, a large company like Gilead is less likely to see a freefall in stock prices if trials don’t go according to plan.
That assumes that Gilead is in a solid financial position to begin with – so the next question for investors is what does Gilead look like from a numbers perspective?
Is Kite Pharma [Gilead] A Buy?
The truth is that Gilead has been in a slump, and analysts have expressed some concern.
Since 2015, share prices have dropped by 40 percent, and recent results did nothing to boost them. Third quarter 2019 revenues were flat year over year, due in part to a 20 percent decline in Gilead’s biggest sellers, a series of Hepatitis C treatments.
It is interesting to note that part of the problem – from Gilead’s perspective – is that the Hepatitis C treatments are extremely effective. They cure the condition, which means a smaller market and lower revenues.
It was a Kite Pharma product, Yescarta, that kept the company from a serious dip in revenues, but there are other product candidates in the pipeline that are likely to bring in substantial sales once approved. As of November 2019, Gilead Science has 119 active clinical studies, and 41 one of these are in Phase III trials.
Perhaps more importantly, Gilead has the cash on hand for large acquisitions. It obtained its Hepatitis C assets through the 2011 acquisition of Pharmasset, and as discussed, it gained exposure to new cancer therapies through acquisition of Kite Pharma.
Gilead Dividend Yield: Gilead shareholders enjoy a dividend yield of more than 4 percent, which is one of the highest in the industry.
That dividend has grown every year since 2015, and those who have held their stock since the beginning experienced total growth in excess of 40 percent.
Better still, Gilead is still trading at a discount relative to its estimated value, which means those who buy today will see gains if the market catches up. With all of that in mind, is Kite Pharma/Gilead a buy?
Kite Pharma Stock Forecast
The bottom line is that Gilead stock is a buy – and not just because of the potential Kite Pharma brings to the table.
Considered in its entirety, Gilead is in a strong financial position, and it has a busy pipeline of product candidates that could bring life-changing and life-saving new therapies for patients.
Investors willing to take on the risks inherent in biopharma stock purchase improve their odds of success, both short-term and long-term, by adding Gilead to their portfolios.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.