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RBC Hints At Potential M&A For Kite Pharma

Jayson Derrick

Michael Yee of RBC Capital Markets reiterated an Outperform rating on Kite Pharma Inc (NASDAQ: KITE) with a price target boosted to $95 from a previous $85.

According to Yee, competition from Novartis AG (ADR)'s (NYSE: NVS) CTL019 CAR-T isn't too concerning as Novartis' prior studies showed a key manufacturing failure rate of 12 percent versus Kite's manufacturing failure rate of just 1 percent.

As noted by STAT, Kite and Novartis are racing to gain approval for their respective gene therapy that turns a patient's own blood cells into "cancer killers."

Yee also noted Novartis' progress is a few quarters behind Kite's while at the same time Novartis cut back its headcount in 2016, which may give Kite the advantage for the time being in a one-on-one comparison.

M&A

Yee also argued that if Kite gets approval from the U.S. Food and Drug Administration for fast approval to meet the need of the cancer population, then the question of M&A comes into play.

The prospect of FDA approval could make it more attractive to the likes of Gilead Sciences, Inc. (NASDAQ: GILD) after the company acknowledged that M&A is a priority for 2017. The analyst argued that acquiring Kite would give Gilead exposure to an un-traditional cancer product that will generate revenue growth.

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Latest Ratings for KITE

Date Firm Action From To
Mar 2017 Stifel Nicolaus Downgrades Buy Hold
Mar 2017 Citigroup Downgrades Buy Neutral
Feb 2017 Standpoint Research Reiterates Buy Buy

View More Analyst Ratings for KITE
View the Latest Analyst Ratings

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