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KITE, BLUE - >>> Opinion: Three must-own cancer stocks for your biotechnology portfolio



By Michael Brush

June 19, 2017



http://www.marketwatch.com/story/three-must-own-cancer-stocks-for-your-biotechnology-portfolio-2017-06-19?siteid=bigcharts&dist=bigcharts




Recent medical advances can save lives — and make you money


June should be national cancer month.

Each year around this time, oncology groups and Wall Street brokerages hold a rash of conferences where researchers reveal the latest, greatest potential cancer cures.

This year has been no exception. Above all, we learned about remarkable advances in two exciting cancer therapies — and three great companies that will benefit.

Here’s more detail. (I’ve kept the technical language to a minimum.)


Turbo for the immune system

In another key advance in cancer therapy in the past two years, doctors have learned how to extract a patient’s blood and genetically tweak white blood cells so they override evasive tactics used by tumors.

Then the cells are reproduced in a lab to expand the supply, and put back in the patient’s body so they can move in for the kill. Hopefully, the cells then continue to proliferate and thrive and stay on hand to fight any more cancer that comes along.

Known as chimeric antigen receptor T-cell therapy (CAR-T), this approach has produced remarkable results against blood cancers in patients who otherwise had almost no hope of survival. CAR-T works by unblocking cancer cell receptors normally sought out by the immune system.

“This is one of the most exciting therapies in immunotherapy,” said Jae Park, a Memorial Sloan Kettering Cancer Center cancer researcher and medical doctor, at the Jefferies 2017 Global Healthcare Conference in early June.

Probably the best pure play here is Kite Pharma Inc. KITE, +1.85% At the Jefferies conference, Kite CEO Arie Belldegrun showed images of a patient’s body riddled with tumors, which disappeared about a month after treatment began. The patient showed no sign of the disease a year later.

Kite has a product coming on the market by the end of this year, and probably many more on the way, says Brad Loncar, the cancer research expert behind the Loncar Cancer Immunotherapy CNCR, +1.93% exchange traded fund. This is pretty good progress for a therapy that was considered “science fiction” two years ago.

I suggested Kite in my stock letter at around $71 on May 17, and I think it’s still a “hold” even though it has already risen to $87, because this promises to be a blockbuster therapy. At the time, insiders were big buyers as the stock sold off on news of the death of a patient in one of its studies.

That unfortunate death highlights one of the key risks here. CAR-T patients have died because the therapy can cause brain swelling. Doctors are getting better at staving off adverse side effects, says Park. But they still don’t fully understand what causes them, which should raise a yellow flag for investors.

‘Impressive’ bluebird

Kite also faces competition from other companies developing CAR-T, including power players like Novartis AG NVS, +0.12% Pfizer Inc. PFE, +0.63% Johnson & Johnson JNJ, -0.13% and GlaxoSmithKline PLC GSK, -0.39% as well as Juno Therapeutics Inc. JUNO, +2.79% Cellectis SA CLLS, +0.65% Adaptimmune Therapeutics PLC ADAP, +0.56% and two privately held companies called Poseida Therapeutics and Nanjing Legend Biotech.

Any of these efforts may pan out nicely, but my pick as a third CAR-T play is Bluebird Bio BLUE, +1.77% which is partnering with Celgene Corp. CELG, +0.59% Bluebird just announced really impressive results for its CAR-T candidate called bb2121. In early studies, just released at ASCO, this therapy produced an overall response rate of 90% to 100% among “hospice-type” patients whose cancer was so bad that seven different attempts to cure them, on average, had failed.

“To generate efficacy data on this level with an overall very tolerable safety profile is highly impressive,” says Kasimov, at J.P. Morgan. “With more key updates to come in 2017, we would continue to add to positions in bluebird bio.”

At the time of publication, Michael Brush held INCY. Brush has suggested INCY and KITE in his stock newsletter Brush Up on Stocks. Brush is a Manhattan-based financial writer who has covered business for the New York Times and The Economist group, and he attended Columbia Business School in the Knight-Bagehot program.

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