On Wednesday, Gilead Sciences (GILD) announced that it had received FDA approval for its CAR-T therapy Yescarta (axi-cel). Its CAR-T drug was approved to treat adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy. To top it off, the approval also comes with other indications as well and include: large B-cell lymphoma (DLBCL) , primary mediastinal large B-cell lymphoma (PMBCL), high-grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. In my opinion, this puts Gilead in a good spot. That’s because it is the second pharmaceutical company in the U.S. to receive approval for a CAR-T therapy.
This approval comes just six weeks after Gilead Sciences shelled out $11 billion to buy Kite Pharma (KITE). Gilead wasted no time to acquire Kite, and even bought it at a 29% premium at $180 per share. This move came on the heels of Gilead feeling pressure to put its cash to good use. Especially, since its Hepatitis C franchise has been diminishing for quite some time now. Don’t get me wrong, it still produces revenue from its Hep C franchise. The problem is that revenue for its Hepatitis C drug program has been declining. For example, second-quarter 2017 sales of its Hepatitis C drugs (Sovaldi, Harvoni, and Epclusa was $2.9 billion. That is a very good number, even with the shrinking Hepatitis C market. The issue is that in the prior year, in the same quarter, sales of its Hepatitis C drugs was $4 billion. There are a few reasons why sales have dropped so much. For one, increased competition in the HCV franchise from Abbvie (ABBV) and others was an issue. Another problem is that all the hepatitis C drugs are cures and not treatments. Meaning that eventually all patients will be cured of the HCV, and there will be no patient left to treat. Gilead acquiring another company was not just an added bonus for the pipeline in my opinion. It was more of a huge need, because it was essential for it acquire a new product to replace its Hepatitis C franchise.
The approval of Yescarta from Gilead comes months after Novartis (NVS) competing CAR-T therapy Kymriah won approval in pediatric and young adults with acute lymphoblastic leukemia (ALL). The similarity between Yescarta and Kymriah is that they each treat a form of blood cancer. That means that eventually as other blood cancer products are developed, each company will go toe to toe with each other (also if labels are eventually expanded as well). It’s hard to tell which of the CAR-T therapies will eventually come out on top. What is clear is that Gilead is aiming for a lower price point with its therapy Yescarta. It wants to price its CAR-T therapy at $373,000 per patient. Novartis on the other hand, has set Kymriah to cost about $475,000 per patient. There is one quick thing to note on why Novartis may have set its price tag higher. That’s because when it treated patients with ALL with Kymriah, 83% achieved complete remission. That means that those patients had no detectable cancer after only 3 months of treatment. On the other hand, Gilead’s trial treating patients with relapsed or refractory large B-cell lymphoma using Yescarta had 51% of patients achieve complete remission. While Kymriah did perform better than Yescarta, it is important to point out that each drug targeted a different form of blood cancer. To get a real idea of which ends up performing better, there has to be clinical data from the same target indication from each company to evaluate. Only then can you compare which CAR-T therapy works better over the other. Even then, it is tough to do a comparison between two differently designed clinical trials. The important thing to know is that Gilead’s FDA approval will help it achieve a new stream of revenue. It is expected that Yescarta could earn Gilead $1.7 billion in revenue in 2022. That is just for the B-Cell lymphoma indications alone.
There are a few risks associated with the approval of Yescarta. The first risk that must be pointed out, is that CAR-T therapies have a lot of safety risks. More than 43% of patients taking Yescarta had anemia and low amounts of white blood cells. Two patients on Yescarta died due to treatment related complications. In addition, both Yescarta and Kymriah will have a boxed warning about cytokine release syndrome. Cytokine release syndrome (also called cytokine storms) is a reaction patients pertain to CAR-T therapy. In essence it causes a never ending loop between cytokines and white blood cells that is highly dangerous. There are times when this can be dealt with by giving patients immunosupressant drugs. If immunosupressant drugs are unsuccessful, then cytokine release syndrome becomes fatal. With the large price tag, and many safety risks it’s too early to tell how well Yescarta will sell when it launches in the market. On the other hand, most of these patients don’t respond to two or more systemic therapies. Therefore, having a third option after failing other therapies is highly welcomed.
Gilead’s approval of Yescarta will help gets it foot in the door in the CAR-T space. Competition from Novartis will become fierce once its label is expanded with Kymriah. The good part about the acquisition of Kite Pharma is that there are multiple treatments being developed with CAR-T therapy. That means that the Non-Hodgkin Lymphoma indication just approved for Yescarta (relapsed or refractory large B-cell lymphoma) is only the beginning. There are other trials currently underway for pediatric ALL, Adult ALL, CLL, and many other blood cancers. In addition, before Kite Pharma was acquired, it had other pipeline candidates treating solid tumors, head and neck cancer, cervical cancer, and other indications. I feel that this approval for Gilead’s future is only the beginning. If Gilead obtains CAR-T approval for all these other indications, that will open the door to additional sales over time.
This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical investment research service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to my Service, I’m currently offering a two-week free trial period for subscribers to take advantage of. Only the first 25 subscribers will get the lower legacy rate. If you want to secure your spot, please do so as soon as possible!
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