Introduction and Background Information
Kite Pharma is a biotechnology public company that was founded in 2009 in California by Arie Belldegrun. The company is primarily focused on the treatment of cancer for the future with various technologies being employed to do this. The treatment therapies employed are far more advanced than chemotherapy and basically entails the removal of immune cells and then modifying them in such a way that they will be able to identify cancer and finally infusing them to the body. By doing so, the cells will be able to identify tumors, before they grow into cancer cells, and destroying them. It is simply called engineered T cell therapy.
The geographical region that Kite Pharma operate in is mostly the United States and roughly around Europe, but it is considered a U.S based company. In recent developments, Gilead Sciences Inc. has bought the company on an $ 11.9 billion deal which is just a tip of the iceberg, considering the growth potential of this company and the importance of treatment services to the world. Gilead Company has basically ventured into the treatment of various diseases and produces the top-selling methods of treatment for HIV and Hepatitis C virus. On this regard, Gilead has already brought about plans for the expansion of the company. The need for service delivery has thwarted the company to expand the area of operation which basically Los Angeles and the El Segundo facility.
It is very difficult to establish the market that Gilead will focus on considering the treatment technique is going to be expensive, which is the same case as all the other cell treatment techniques. It is in this that the company has come under heavy fire from various parties.
Operation Cost, Profitability, and the Estimated Growth
Revenues for the fourth quarter of 2016 were $4.9 million and $22.2 million for the full year of 2016; Research and development expenses for the fourth quarter of 2016 were $58.9 million, which includes $8.9 million of non-cash stock-based compensation expense. Research and development expenses were $197.9 million, which includes $34.7 million of non-cash stock-based compensation expense for the full year of 2016. The expected revenue for the full year of 2017 is between $40 and $50 million. “Kite expects the full year 2017 net cash burn to be between $325 million and $340 million, which includes approximately $30 million in capital expenditures but excludes cash inflows or cash outflows from business development activities, if any, and excludes planned upfront payments totaling $90 million from recently announced strategic collaborations in Asia. Estimated the full year 2017 cash burn is driven primarily by a projected GAAP net loss of between $450 million and $465 million.
The 2017 projected net loss includes non-cash stock-based compensation expenses of approximately $135 million” (Kite Pharma, 2017).
In terms of the growth of the company, Kite Pharma has increased in price f by over 226% which is just an indication of the growth potential of the company. This may be attributed to the change in institutional ownership over the last quarter. This ownership has been estimated to have increased by a net of 2.39 million shares, or roughly 4.7%. (Tyler, 2017).In effect, there was a change in the ownership positions with 100 and 24 decreased and increased positions respectively. This change might be said to have resulted in 41 different new positions and 28 sold out stock.
On to the aspect of earnings, the company has been estimated to have increased by over 50.55% to a share of $8.22 in the current year, a comparison with the previous year. Furthermore, considering the acquaintance of the company by Gilead, the latter is required to pay $180 per share, which was as a result of the increase in stock by 28% subsequently leading to the increase in shares at Gilead by 1% (Jim, 2017).This purchase might have been brought about by the quadrupling of the stock price at kite pharma (Jim, 2017).
- P. (2017, August 28). Gilead is Buying Kite Pharma, a cancer-fighting Santa Monica biotech firm, for $11.9 billion. Retrieved September 25, 2017
Tyler, M. (2017, September 25). What recent Ownership trends Suggest about Kite Pharma, Inc.(KITE)’s Future Performance. Retrieved September 25, 2017