#$kite

Biotech Stock Based Compensation

PREFACE While data scraping for executive insider stock purchases and sales are now the new fad in stock picking, that data can be filled with spurious conclusions. Insiders often have scheduled stock sales to diversify their wealth or scheduled option exercises to take advantage of expiring options grants which mean nothing with respect drawing a conclusion on the activity. But, it turns out there is a much larger pool of insiders that may in fact have an even better sense of what's going on inside a company. These insiders are employees, and we can see which biotechs have the largest bets on a large upside move taken by these unique insiders. BIOTECH EMPLOYEE STOCK BASED COMPENSATION We recently looked at the technology companies with the largest stock based compensation and saw a tremendous outperformance in stock returns for those companies that paid out a lot compared to those that did not. It appears that when employees are willing to take a bet on a stock's upside that could be a signal that things are going well for a company. If we take all biotech stocks with market caps above $2 billion and then rank them by the amount of stock based compensation per dollar of operating expense, we can see which companies have the largest bets placed by employees. Here is the chart:

The chart reveals some incredible information in the biotech space. First, we can see that more than $0.33 out of every dollar in operating expense is paid out in stock based compensation to Kite Pharma, Inc. (NASDAQ:KITE) employees. Kite Pharma is famously known by its CEO who has bet the house that the company has in fact cured Non-Hodgkin lymphoma. The company uses CAR-T technology which engineers patients' own immune cells to recognize and attack their tumors. Kite Pharma has built a massive manufacturing plant in El Segundo, California, right next to Los Angeles airport, ready to deliver the individualized immunotherapy as quickly as possible. We can also see that Juno Therapeutics Inc. (NASDAQ:JUNO), which is the other leader in CAR-T immunotherapy for cancer, pays out a massive amount in stock based compensation. Basically, employees are forgoing large amounts of cash compensation for the potential upside in the company stock. If CAR-T works, both Juno and Kite could soar higher, from $2 billion market caps to several fold larger. Employees are making a bet on these biotechs and this technology. Other noteworthy names on this list are Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) and Celgene Corporation (NASDAQ:CELG), which are two of the five largest biotechs in the world, yet pay out substantially more in stock based compensation than their peers Gilead Sciences, Biogen and Amgen. SEEING THE FUTURE This is obviously just the beginning of the analysis, not the end. But there's so much going on in technology and biotechnology we can't cover it in one report. If you look hard enough, have access to the best data and understand the thematic trends that are leading the future, then you can find the "next Apple," or the "next Gilead." But this is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have. Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech, virtual reality, the cloud and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:

The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top three companies that will benefit. Then there's cyber security:

In case you missed it, check out the recording of yesterday’s webinar with Slingshot Insights! 

##Symbol##KITE ##Date##18 Oct 2015

Kite Pharma

Written by Ophir Gottlieb, 10-18-2015 Kite Pharma (KITE) is approaching cancer not to treat it, but to cure it in a radical, revolutionary, promising and in the very sense of the word, transformational way. If successful, Kite Pharma and Juno Therapeutics would together be an end-all-cure-all for cancer. In an incredibly bold step, Kite management, though a year away from completing clinical trials, has just signaled its unambiguous belief that it has in fact found a cure for non-Hodgkin's lymphoma (NHL), a cancer which affects half a million people right now and more than 70,000 new cases every year.

Get Our News An Hour Before Everyone Else (Free Notifications)

Stunning Projection by the Company Keep in mind, the clinical trials will conclude at the end of 2016, meaning even the most optimistic projections are for a yet to be FDA approved treatment to generate revenue in early 2017. But, if you're wondering how bullish management is regarding the current clinical trials check this out:

"Although it could be a year or longer before the FDA approves its treatment for non-Hodgkin's lymphoma, the clinical results are so promising that Kite has forged ahead with constructing a 44,000-square-foot facility that would become its cancer-fighting nerve center." Source: Los Angeles Times

Yes, there is no other way to say this: The company is basically saying out loud that it believes it has cured non-Hodgkin's lymphoma (NHL). Period.

Like This Article? You Can Get Our Free News Notifications Here.

What's Going On Kite is hyper focused on NHL and the 550,000 people in the United States (as of 2012) that are affected as well as the 72,000 new cases every year, according to the National Cancer Institute. Estimates read that 33% of patients die within five years of diagnosis and 45% die within ten-years of diagnosis (Source: University of Marlyand). Kite's treatment is in late stage FDA trials and involves attaching an antibody to a T-cell that enables it to recognize and attack cancer cells. The company is focused specifically on late stage patients (the most critical) and treatment would be the first T-cell modification approved for treatment of cancer (Source: Los Angeles Times). Kite is considered to be "in the lead" with respect to treating curing NHL.

New to this Site? Get Our News Notifications and Be the Expert in the Room.

If that sounded a bit technical, let's break it down, because those words above are absolutely world changing. This approach is classified as 'Immunotherapy' and here's how it works:

"The Santa Monica company's treatment of non-Hodgkin's lymphoma reprograms a patient's T-cells — the kind that are supposed to fight disease — to seek and destroy only abnormal, cancerous lymph cells, not the healthy ones crucial for human life. But in order to do so, blood must be drawn from a patient, refrigerated and flown to Kite's headquarters, where the cells are modified, frozen and then flown back to doctors who re-inject them into patients." Source: Los Angeles Times

That's right, the firm creates personalized cells for each individual and then reinserts them into the patient so she can attack the cancer herself. That's fighting cancer person-by-person allowing their own bodies to fight and to win. New to This Site? Get News Notifications; Be The Expert in the Room. The Downside Before we get to the upside, let's turn to the difficulties thus far. There is evidence that some patients have had fairly substantial side effects:

"Last year, the company said that several patients experienced side effects that included fever, low blood pressure, neurological deficits and delirium after receiving the infusions." Source: Los Angeles Times

In a rather bold and, I must say, promising response, Arie Belldegrun, the Chairman, President and CEO of Kite, simply blamed the side effects on the extraordinary effectiveness of the treatment, which leads to an accumulation of dead cancer cells in the bloodstream (Source: Los Angeles Times). Further, Belldegrun said "It takes time — sometimes a week, sometimes two weeks, until the body gets it all out [] then the patient has no long-term side effects." Let's hope that's accurate. More downside comes from competition. In particular Juno Therapeutics is in exactly this same field and making incredible progress. While KITE is leading the charge in NHL, Juno has a pipeline deep with 10 candidates potentially in clinical trials using either CAR or TCR by early 2016 (Source: Benzinga). I authored this article on October 5th, 2015: Juno is Simply on the Brink of Changing the World

Get Our News Notifications. Be the Expert in the Room.

The Upside It's just undeniable that the upside for cancer patients, immunotherapy and this company are all extraordinary. KITE has a $2.85 billion market cap with zero revenue and zero products approved for sale. That's not the stock market gone mad, that's the promise of a company that will address and hopefully cure a deadly cancer that affects 1/50 people in the country with nearly 75,000 new cases every year and over half a million cases requiring treatment right now. Even further, KITE is not flying this alone. It has a partnership with the National Cancer Institute and biotech giant Amgen. Dr. David Chang was Amgen's prior vice president of global development and he left Amgen to work as Kite's chief medical officer. Here's what he said, I warn you, it's almost so bullish it sounds impossible:

"The best way to describe where we are now is the early days of Amgen." Source: Los Angeles Times

For the record, Amgen's market cap is nearly $120 billion. Kite CEO Belldegrun has been extremely bullish on the clinical results thus far, although he has chosen to make those results public at the meeting of the American Society of Hematology in Florida in December, rather than as they come out.

Sign Up for Our News Notifications. Be the Expert in the Room.

More Upside Kite is not a one trick pony. Immunotherapy can address dozens of cancer types and in fact the LA Times article sited above reminds us that Kite announced positive results in early testing of a treatment for cancers caused by human papillomavirus, or HPV. The sexually transmitted virus causes cervical, neck and back cancer. Here's a snapshot from Kite's website of its pipeline.

Further, Kite has just under $400 million in cash and equivalents per the most recent balance sheet filed with the SEC and no long-term debt.

Get Our Trading News Notifications (Free. Forever. Period)

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers

Alcoa, Ticker: $AA

Alcoa, $AA, has had a long down trend since topping at the end of 2014. The market low in August may have represented as significant bottom for the stock though as it has risen since. Last week saw the price push through to a higher high, and cross the neckline or an Inverse head and Shoulders pattern. The RSI is rising and on the edge of a push into the bullish zone for the first time since the beginning of May. The MACD crossed at the market bottom and has been rising ever since.

CBOE, Ticker: $CBOE

CBOE, $CBOE, has been stair stepping higher since making a bottom in May. it has been a trade idea a couple of time along the way. Last week it rose to the prior high from January and then pushed lower. It held Friday at what was prior resistance, now becoming support. The RSI is in the bullish zone, but moving lower. The MACD is curling down towards a bearish cross. This is at a place where it could reverse back higher or continue lower, each with good reward to risk. Let it tell which path to follow.

Kite Pharma, Ticker: $KITE

Kite Pharma, $KITE, had established a rising trend support against flat resistance through July. This led to a break to the upside that was short lived. August saw the price pullback and make a double bottom before starting back higher. Now it has consolidated at that prior resistance for a few days after a rise. The RSI is pushing higher and the MACD is rising, both supporting a break to the upside.

Pandora Media, Ticker: $P

Pandora Media, $P, went through a long pullback in a rounded bottom. This rose to fail at 19 and then made a 'V' that also failed. A Adam and Eve bottom. Now after a minor pullback it has pushed up through resistance and may be ready for significant upside. The RSI is bullish and rising and the MACD is crossed up. The Bollinger Bands® are also opening to the upside.

Palo Alto Networks, Ticker: $PANW

Palo Alto Networks, $PANW, was a stock market darling over the spring and early summer. It made a top in July and pulled back, nearly retracing the entire move up when the market bottomed in August. Since then it has moved back higher and is in a minor consolidation. The RSI is in the bullish zone and the MACD rising, both supporting continued upward price action.

If you like what you see sign up here for how to trade these, more ideas and deeper analysis with better more detailed charts.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Contact me at [email protected] and use the code TRIBETOWN in the message to get either an annual subscription for $556 (10% off) an annual subscription plus my book signed for $600. Last weekend for the sale.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the last week of summer and out of expiration week sees the equity markets looking weak again.

Elsewhere look for Gold to continue the bounce in its downtrend while Crude Oil slows consolidates with a short term bias lower. The US Dollar Index looks better to the downside in consolidation while US Treasuries may reverse higher in the downtrend. The Shanghai Composite looks to continue consolidation in the downtrend and Emerging Markets are biased to the downside after their bounce.

Volatility looks to remain above normal levels in its drift down with a chance of a renewed push higher. This would keep the bias flat to lower for the equity index ETF's SPY, IWM and QQQ. Their charts agree with a downward bias although all are in consolidation ranges, no man’s land. Use this information as you prepare for the coming week and trad'em well.

KITE – (Kite Pharma)  Another day of high flying bios. After watching ESPR go from $78 to $119 in 3 trading days, I was bound and determined to find a bio that I could trade today. And that was KITE, a high flier from several weeks ago that had fallen from $90 to $60. Today it showed up on my Strong Stocks scanner and I traded it twice – once from $70.00 with a $70.33 exit and the second time from $70.10 with exits of $71.40 and $70.94. These are always a challenge because of the spread so I usually take fewer shares with a wider stop.

This week, Wall Street goes ga-ga for cancer immunotherapy.

Bellicum Pharmaceuticals and Juno Therapeutics are expected to raise more than $300 million combined through their respective initial public offering. Both companies are developing so-called CAR-T therapies, which use re-engineered immune cells to seek out and kill blood cancer cells. Early clinical trials involving this new form of cancer immunotherapy have delivered amazing results and generated huge investor interest.

Bellicum is up first on Thursday, expected to offer 6.3 million shares priced between $15-17 with another nearly 1 million shares set aside for over allotments. Nasdaq ticker BLCM. 

Juno's market debut follows on Friday and is probably the most highly anticipated biotech IPO of the year. The company is expected offer 9.3 million shares priced between $15-18. Underwriters have an option to sell another 1.4 million shares. Ticker: JUNO.

CAR-T therapies are personalized for each patient. The process starts by harvesting T cells from the patient's blood. In a lab, scientists add a chimeric antigen receptor (CAR) to the surface of the T cells. This receptor allows the T cells to recognize a protein known as CD19 found on the most leukemic cells. The T cells are also programmed to multiply once attached to the CD19 protein. Once this engineering work is done, the T cells are infused back into the patient where they seek out and destroy leukemic cells. 

CAR-T is not without risks. All the patients who respond suffer from severe flu-like symptoms resulting from the engineered T cells attacking leukemic cells. In some cases, the side effects are life threatening unless managed carefully.

A CAR-T therapy being developed by the University of Pennsylvania and Novartis has put 90% of children with an aggressive form of leukemia into remission, according to interim results from a clinical trial presented last week.

Other CAR-T companies include Kite Therapeutics  and a joint venture between Celgene and Bluebird Bio.

Investor demand for shares in the Bellicum and Juno IPOs is expected to be heavy, setting the stage for big first-day gains.

A Twitter poll conducted last week by healthcare investor Brad Loncar (@bradloncar) asked where will Juno shares open on their first day of trading.