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(Bloomberg) -- Novartis AG, set to beat Kite Pharma Inc. to the finish line in one of the most promising new areas of cancer research, is examining how to price a revolutionary therapy patients will need to take just once.

The U.S. Food and Drug Administration is likely to rule in early October on the experimental treatment called CTL019, Vas Narasimhan, global head of drug development and chief medical officer at Novartis, said in an interview. The regulator is due to decide on Kite’s product, designed for a different type of blood cancer, by Nov. 29.

The two therapies are vying to become the first blockbusters in an emerging field known as CAR-T, in which a patient’s immune cells are extracted and genetically modified to hunt and kill cancer before being returned to the body. Novartis may link the price of its treatment to results in each patient, according to Narasimhan. It’s also using stem cell transplants -- which cost as much as $800,000 apiece -- as a yardstick.

“We’re looking at multiple creative options,” Narasimhan said. “We’re still in the forming stages of figuring out what the right approach is going to be.”

The treatments probably can’t be priced much higher than stem cell transplants, according to David Nierengarten, an analyst at Wedbush Securities Inc. Kite and Novartis probably have similar price tags in mind, yet whoever is first may be able to able to lock down beds in medical centers that will do the CAR-T procedures, or work out advantageous reimbursement structures, he said.

‘Collect Something’

CAR-T drugs could be “priced at a level where we collect something for the risk that we took, but also give back a tremendous amount of value,” Novartis Chief Executive Officer Joe Jimenez told investors in Boston on May 31. “This could be a potential new platform that is a very large and profitable business.”

Jimenez cited studies carried out for U.K. health authorities that show the treatments may be cost-effective at about 583,000 pounds ($750,000). Such a hypothetical price is in the “right ballpark,” yet it’s unlikely to be acceptable as a one-time payment, according to Stephen Palmer, a professor at the University of York who helped compile the report.

The Novartis medicine awaits clearance for a severe form of cancer in children and young adults known as acute lymphoblastic leukemia, while Kite’s first target is diffuse large B-cell lymphoma, which afflicts a larger group of people.

The Swiss drugmaker is turning next to that same form of blood cancer. A mid-stage study released Wednesday evaluating the therapy in DLBCL found that more than a third of patients had the disease wiped out. It also didn’t return in those people, the company said. Side effects included nervous-system symptoms and low white-blood cell count that were ranked as severe or life threatening.

Another concern about CAR-T therapies has revolved around manufacturing capabilities for such personalized medicines. Novartis said it’s confident it will be able to meet the demands in producing the cancer treatments, addressing concerns raised by the number of dropouts in the latest trial results.

Drug Leasing

There’s a need for new pricing approaches for medicines that bring uncertainty as well as huge potential benefits, the U.K.’s health-cost adviser found in a study last year. One idea is akin to leasing, with the price spread over monthly fees.

CAR-Ts could command a high price because they’re intended as one-time treatments and have shown benefits in some patients who had no other options. Yet some studies indicate that only about one in three people experience a lasting response. Some sort of pay-for-performance deal may entice insurers to accept higher price tags, because it means they’ll get paid back if the treatment fails.

Kite may charge $325,000 per treatment, the analyst Nierengarten wrote in a March note. To justify the company’s market value -- currently about $4.6 billion -- it would need to charge $500,000 per course or capture as much as 50 percent of the market, a scenario that’s possible but unlikely, he said.

The main goal at first, according to Novartis’s Narasimhan, is ensuring that children who are months away from dying get access to the therapy.

To contact the reporters on this story: James Paton in London at jpaton4@bloomberg.net, Caroline Chen in San Francisco at cchen509@bloomberg.net.

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net, Marthe Fourcade

©2017 Bloomberg L.P.

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