Kite Pharma, Inc. reported narrower-than-expected loss in the fourth quarter of 2016. Despite announcing a lower-than-expected sales guidance for 2017, shares of the biotech company shot up almost 25% on Tuesday. The reason behind it was the announcement of better-than-expected results from a drug trial evaluating axicabtagene ciloleucel (previously KTE-C19), its experimental CAR-T therapy, for treating aggressive non-Hodgkin lymphoma (NHL).

In fact, so far this year, Kite Pharma’s shares are up 57.6%. This compares favorably with the 8.6% increase registered by the Zacks classified Biomed/Genetics industry during this period.

Quarterly Details

Kite Pharma reported a loss of $1.70 per share in the fourth quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $1.75 per share but wider than the year-ago loss of 85 cents.

Fourth-quarter revenues came in at $4.9 million, below the Zacks Consensus Estimate of $5.4 million but up 0.4% from the year-ago period.

While Kite’s research and development expenses shot up almost 105% from the year-ago period to $58.9 million in the reported quarter, general and administrative expenses were $31.8 million, up 122.1% from the year-ago period.

Axicabtagene Ciloleucel Poised for Launch in 2017

With no approved product in its portfolio, investor focus remains on Axicabtagene ciloleucel (previously KTE-C19), its lead pipeline candidate.

Axicabtagene ciloleucel is being evaluated in 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).

In a separate announcement today, Kite Pharma announced positive top-line six-month results from the primary analysis of 101 patients in the ZUMA-1 study. The study met the primary endpoint. At month 6, after axicabtagene ciloleucel treatment, 41% of patients achieved a response, including 36% achieving a complete response. Full data from the primary analysis will be presented at the American Association for Cancer Research in Apr 2017. The solid efficacy profile demonstrated by the study furthers the likelihood of FDA approval of the drug.

Kite Pharma is looking to get axicabtagene ciloleucel approved for a broader label for aggressive NHL including DLBCL, TFL and PMBCL indications, based on the primary analysis of ZUMA-1. Kite Pharma initiated a rolling submission of the Biologics License Application (BLA) in Dec 2016 and still expects to complete the filing by the end of the first quarter of 2017. Axicabtagene ciloleucel is expected to be approved and launched in 2017. In Europe, regulatory applications are expected to be filed this year.

We remind investors that in Sep 2016, the company announced encouraging top-line results from the phase II part of ZUMA-1 study.

Kite Pharma is also evaluating KTE-C19 in a phase II study (ZUMA-2) in patients with relapsed/refractory mantle cell lymphoma (MCL) and in two additional pivotal studies (phase I/II) for acute lymphoblastic leukemia (ALL) – ZUMA-3 for adult ALL and ZUMA-4 for pediatric ALL. Kite Pharma plans to move KTE-C19 into a second series of studies for additional indications and earlier lines of therapy in DLBCL patients in 2017. A phase Ib/II combination study (ZUMA-6) evaluating KTE-C19 plus Genentech’s Tecentriq (atezolizumab) in patients with chemorefractory DLBCL commenced in October.

Note that Kite inked the collaboration with Genentech, a member of the Roche Holding AG (RHHBY Quick QuoteRHHBY - Free Report) in Mar 2016, with an aim to evaluate the safety and efficacy of the combination therapy.

Full Year 2016 Results

Full year 2016 loss per share was $5.46 per share, narrower than the Zacks Consensus Estimate of a loss of $5.47 per share but wider than the year-ago loss of $2.33.

Full year 2016 revenues came in at $22.2 million, marginally below the Zacks Consensus Estimate of $22.7 million but up 28.5% from the year-ago period.

Kite had approximately $414.4 million in cash and investments at the end of 2016. Kite Pharma received an upfront payment of $50 million from Daiichi Sanko in January this year.

2017 Guidance

Net cash burn in 2017 is expected to be between $325 million and $340 million.

While revenues are expected to be between $40 million and $50 million, net loss is expected to be between $450 million and $465 million in 2017. The revenue expectations fell short of the Zacks Consensus Estimate of $58.42 million.

Meanwhile, Kite Pharma said it has sufficient funds to carry it through the first half of 2018.

Stocks to Consider

Kite carries a Zacks Rank #4 (Sell). Better-ranked stocks in the pharmaceutical sector are Celgene Corporation and Summit Therapeutics plc (SMMT Quick QuoteSMMT - Free Report) , both with a Zacks Rank #2 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Celgene rose 17.9% in the past one year while earnings estimates for 2017 rose 1.3% in the past 60 days.

Shares of Summit Therapeutics rose 42.6% in the past one year while loss estimates for the current year ending Jan 2018 have narrowed by around 2% in the past 30 days.

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