CAR-T Stocks Rocked Following Mixed AACR Updates (KITE) (JUNO) (ZIOP) (XON)

High-flying CAR-T stocks are getting grounded Monday as traders viewed this weekend's updates from American Association for Cancer Research (AACR) as mixed versus high expectations. One study from Novartis (NYSE: NVS)/UPenn on their CART-Meso program (n=6) in mesothelioma, pancreatic, and ovarian carcinoma, did not show any responses, although the study is early.

Around the sector: Juno Therapeutics (NASDAQ: JUNO) (-8.4%), Kite Pharma (NASDAQ: KITE) (-7.5%), Ziopharm Oncology (NASDAQ: ZIOP) (-7.8%), Intrexon Corporation (NYSE: XON) (-3.1%).

Below are some comments from analysts following this weekend's event:

CANACCORD GENUITY:

Kite Pharma (NASDAQ: KITE) - analyst John Newman reiterated a Buy rating and $90 price target.

NY-ESO-1 TCR data continues to look encouraging, viable approach in melanoma and synovial sarcoma

Dr. Steven Rosenberg (NCI) presented updated data on NY-ESO-1 TCR therapy against melanoma (n=19) and synovial cell sarcoma (n=15), which has demonstrated continued response rates, a positive. Melanoma patients (n=19) had an improvement in ORR of 53% (32% PR, 21% CR) vs. prior results (n=11) ORR of 45% (10% PR, 18% CR, 17% SD), while synovial sarcoma had an ORR of 67% (60% PR, 7% CR) vs. prior results (n=6) and ORR of 67% (all PRs). We find this data very encouraging, particularly since NY-ESO-1 is found in 80% of synovial sarcoma and 25% in melanoma, translating to an addressable market of ~8,000 synovial sarcoma and ~18,500 melanoma patients a year.

Expect near-term publication for TCR in HPV cancers, may be incremental positive

NCI investigators eluded to an upcoming publication focused on top-line data in HPV cancers with their TCR construct, which could be incrementally positive if efficacy is presented. To date, no clinical data is seen with this target. HPV is the most common viral infection of the reproductive tract, believed to cause 70% of cervical and other urogenital cancers. We believe this is an enormous market place, particularly since HPV is associated with nearly 500,000 new cases of cervical cancer and 9,000 oropharyngeal cancers in the US each year, and eagerly look forward to interim analysis with their technology.

EGFRvIII CART for GBM development unclear

After speaking with multiple KOLs and investigators, we believe the EGFRvIII CART therapy for glioblastoma multiform is behind in development, as clinician enthusiasm remains lacking for this program. Prior trials with TKIs and other experimental drugs have remained lackluster, particularly since GBM is such a heterogeneous disease with high cross resistance. Importantly, we do not include any value for solid tumors in our valuation, but continue to remain optimistic on KITE's emphasis on their TCR platform.

Upenn CART-Meso early, clean safety, but no responses

UPenn presented updates on their CART-Meso program (n=6) in mesothelioma, pancreatic, and ovarian carcinoma, which did not show any responses, although the study is early. Four out of six patients showed stable disease, which may suggest some anti-tumor efficacy. We believe UPenn's data is modest at best, but eludes to the fact that safety and efficacy in adoptive T cell therapies may not go hand in hand.

LEERINK PARTNERS:

Juno Therapeutics (NASDAQ: JUNO) - analyst Howard Liang reiterated an Outperform rating and $74 price target:

Liang commented, "Yesterday at AACR, data were presented on NVS (OP)/UPenn’s lentivirally-transduced mesothelin-targeting CAR (CART-meso) showing a lack of on-target, off-tumor toxicities in the first 6 patients. Our initial impression is that these results are a supportive first step, although additional evidence of efficacy would be needed to fully demonstrate the feasibility of a mesothelin-targeting step in solid tumors. During AACR presentations and discussions, it was announced that NCI's mesothelin-targeting CAR has not shown objective responses, although it is still at a low dose in dose escalation. In addition, Memorial Sloan Kettering Cancer Center (MSKCC, an academic founding institution of Juno) is starting a CART-meso using a human antibody binding domain next week. We await further data from higher doses of CART-meso and other mesothelin-targeting CAR constructs from NCI and MSKCC, as well as Phase I results from JUNO’s ongoing trials of an L1-CAM-targeting CAR in neuroblastoma in late 2015/early 2016."

STIFEL

Kite Pharma (NASDAQ: KITE) - analyst Thomas Shrader reiterated a Buy rating and $83 price target.

Shrader commented, "Saturday afternoon Steven Rosenberg gave an invited lecture at the AACR 2015 meeting that we believe could change the oncology landscape. Rosenberg detailed how his lab has identified immunogically active neoantigens or tumor-hunting TILs in most of the important gastrointestinal and epithelial tumor types including lung, ovarian and stomach cancer. We believe TCR-based therapies resultant from all these programs are covered under the NCI’s CRADA with Kite. Perhaps even more importantly from a commercialization point of view, Rosenberg presented data suggesting that tumor attacking TCRs for use in patient-specific therapies may be much easier to identify going forward and, for many patients, may only require routine deep-sequencing methodologies. Overall, we believe these results increase Kite’s potential therapeutic reach from the current expectation of B-Cell tumors and melanoma to at least 50% of all tumors."

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