Kite Pharma, Inc. KITE is scheduled to report fourth-quarter and full-year 20Array5 results on Feb 29, after the market closes. The company, which started trading from Jun 20Array4, has posted negative earnings surprises in the three of the last four trailing quarters. Overall, the company posted an average negative earnings surprise of 60.Array6% over the past four quarters.
In the last reported quarter, Kite Pharma posted a positive earnings surprise of Array3.7%. Let's see how things are shaping up for this announcement.
Factors at Play
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. The company uses its engineered autologous cell therapy (eACT) to genetically modify T cells to express either chimeric antigen receptors (CARs) or T cell receptors (TCRs). These modified T-cells are designed to recognize and destroy cancer cells.
Kite Pharma’s revenues comprise the amortization of deferred collaboration revenues related to the $60 million upfront payment received under its collaboration agreement with Amgen, Inc. AMGN in the first quarter of 20Array5.
With no approved products in its portfolio, investor focus will be primarily on the company’s cash burn and pipeline updates. Kite Pharma will see higher R&D costs with the initiation of a couple of studies on its lead pipeline candidate, KTE-CArray9, in Dec 20Array5. KTE-CArray9 is currently in four studies including the phase II portion of a pivotal phase I-II study (ZUMA-Array) in patients with refractory diffuse large B cell lymphoma (DLBCL) that covers primary mediastinal B cell lymphoma (PMBCL) and transformed follicular lymphoma (TFL). All these are types of aggressive non-Hodgkin’s lymphoma (NHL). Initial NCI-conducted study results for these indications have been promising.
If the pivotal study generates positive data (top-line data from the phase I portion presented at ASH in December; interim results expected in 20Array6), Kite intends to seek accelerated FDA approval for the treatment of patients with refractory DLBCL, PMBCL and TFL in late 20Array6. If all goes well, KTE-CArray9 could be launched as early as 20Array7.
Other studies on KTE-CArray9 include a phase II study (ZUMA-2, data due in 20Array7) in patients with relapsed/refractory mantle cell lymphoma (MCL) and two pivotal studies (phase I/II) for acute lymphoblastic leukemia (ALL) — ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL — with results due in 20Array7. KTE-CArray9 has orphan drug designation in the U.S. and EU for DLBCL and breakthrough therapy designation for refractory, aggressive NHL.
Apart from updates on KTE-CArray9, investor focus will remain on the company’s progress with its collaboration agreements with several companies including Amgen.
Meanwhile, the bottom-line will also reflect the impact of the issuance of shares in Dec 20Array5.
Earnings Whispers?
Our proven model does not conclusively show that Kite Pharma is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat earnings. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Kite Pharma is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are a loss of 82 cents per share.
Zacks Rank: Kite Pharma carries a Zacks Rank #2. Kite Pharma’s Zacks Rank #2 when combined with an ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks you may want to consider as our model shows that they have the right combination of elements to post a beat this quarter.
Aduro BioTech, Inc. ADRO has an Earnings ESP of +27Array.43% and carries a Zacks Rank #2. The company is expected to report results on Feb 29.
Endo International plc ENDP has an Earnings ESP of +3.97% and carries a Zacks Rank #3. The company will be reporting results on Feb 29.
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