What's In The Cards For Kite Pharma (KITE) In Q2 Earnings

Kite Pharma, Inc. (NASDAQ:KITE) is expected to report second-quarter 2017 results on Aug 8 before market opens. Last quarter, the company delivered a negative earnings surprise of 3.57%.

Kite Pharma’s shares are up 146.5% so far this year. This compares favorably with the 9.3% increase registered by the industry during this period.

The company has a mixed record of earnings surprises. It delivered positive earnings surprises in two of the past four quarters and negative surprise in the other two, bringing the average surprise to a positive 2.07%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

With no approved products in its portfolio, investor focus will primarily be on Kite Pharma’s cash burn and pipeline updates.

Kite Pharma’s lead drug axicabtagene ciloleucel is currently under priority review in the U.S. for treating aggressive non-Hodgkin lymphoma (NHL) with a FDA decision expected on Nov 29. The Biologics License Application (BLA) filing was based on data from a phase I-II study (ZUMA-1) in patients with refractory diffuse large B cell lymphoma (DLBCL) including primary mediastinal B cell lymphoma (PMBCL) and transformed follicular lymphoma (TFL). All these are types of aggressive non-Hodgkin’s lymphoma (NHL). Kite Pharma is looking to get axicabtagene ciloleucel approved for a broader label for aggressive NHL including DLBCL, TFL and PMBCL indications.

Axicabtagene ciloleucel is expected to be approved and launched in 2017. In Europe, a regulatory application was filed last week.

Meanwhile, other studies with axicabtagene ciloleucel are also advancing. These include a phase II study (ZUMA-2) in patients with relapsed/refractory mantle cell lymphoma (MCL) and two additional pivotal studies (phase I/II) for acute lymphoblastic leukemia (ALL) – ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL.

ZUMA-5 study is evaluating axicabtagene ciloleucel in patients with indolent NHL. Earlier this week, the company announced that the first patient was dosed in this phase II study.

ZUMA-9 study is being conducted to provide patients access to axicabtagene ciloleucel during the regulatory review period. A phase Ib/II combination study (ZUMA-6) evaluating axicabtagene ciloleucel plus Roche Holding (SIX:ROG) AG’s (OTC:RHHBY) Tecentriq (atezolizumab) in patients with chemorefractory DLBCL is also ongoing.

Preliminary data from ZUMA-3, ZUMA-4 and ZUMA-6 are expected later this year. The company also plans to move ZUMA-3 and ZUMA-4 into phase II studies later this year.

Apart from updates on axicabtagene ciloleucel, investor focus at the call will remain on the company’s progress with its other CAR-based candidates, including KITE-585 and KITE-718.

Earnings Whispers

Our proven model does not conclusively show that Kite Pharma is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Its Earnings ESP is -0.51% as the Most Accurate estimate stands at a loss of $1.98 per share while the Zacks Consensus Estimate is pegged at a loss of $1.97 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kite Pharma’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.

Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Kite Pharma, Inc. Price and EPS Surprise

Kite Pharma, Inc. Price and EPS Surprise | Kite Pharma, Inc. Quote

Stocks to Consider

Stocks in the pharma sector that have both a positive ESP and a favorable Zacks Rank are:

Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) , which is scheduled to release results on Aug 7, has an Earnings ESP of +5.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma Biotechnology, Inc. (NASDAQ:PBYI) has an Earnings ESP of +3.33% and a Zacks Rank #3. The company is expected to release results later this month.

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