Yescarta One Of Few Gilead Bright Spots, And Now It Has A Competing CAR-T

Yescarta is off to a strong launch, but with US FDA approval of Novartis' Kymriah in a similar indication it now it has a competing CAR-T product with a similar label. Gilead's HCV business declined as expected, but the HIV franchise had a worse Q1 than anticipated. 

First quarter sales for Gilead Sciences Inc.'s flagship HIV and hepatitis C franchises were below expectations on May 1 and now one of the few bright spots in the company's earnings report has a competing T-cell therapy with a similar indication.

Sales of Gilead's chimeric antigen receptor T-cell (CAR-T) therapy Yescarta (axicabtagene ciloleucel) came in at $40m for the first quarter of 2018, which was up from $7m in the fourth quarter of 2017 and more than doubled analyst consensus estimates of $19m. However, Novartis AG said in a same-day announcement that its CAR-T therapy Kymriah (tisagenlecleucel) – previously approved for certain pediatric leukemia patients – won US FDA approval for its second indication in non-Hodgkin lymphoma (NHL), bringing it into direct competition with Yescarta.

Comparing Lymphoma Indications For Yescarta and Kymriah
Yescarta	Kymriah
Adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, including diffuse large B-cell lymphoma (DLBCL) not otherwise specified, primary mediastinal large B-cell lymphoma, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma.	Adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy including diffuse large B-cell lymphoma (DLBCL), high grade B-cell lymphoma and DLBCL arising from follicular lymphoma.

Kymriah was first approved in August 2017 for pediatric and young adult patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse. (Also see "Novartis Beats CAR-T Competitors To The Pricing Punch With Kymriah Approval" - Scrip, 31 Aug, 2017.) Yescarta's first and, to date, only approval came two months later. (Also see "Gilead/Kite Pricing For Yescarta Undercuts Novartis's CAR-T Kymriah" - Scrip, 18 Oct, 2017.) 

The products are neck-and-neck in terms of the timing of their first approvals in the EU. (Also see "EU CAR-T Race Tightens After Yescarta Reverts To Standard Review" - Pink Sheet, 23 Apr, 2018.) Gilead's Chief Scientific Officer and Head of Research and Development John McHutchison noted, in his first earnings call since taking over from prior CSO Norbert Bischofberger, that the company expects a decision on Yescarta from the European Medicines Agency's (EMA) Committee for the Human Use of Medicinal Products (CHMP) in the second quarter and EMA approval in the third quarter. (Also see "Gilead's R&D Leadership Change Is End Of Bischofberger Era" - Scrip, 12 Mar, 2018.)

"We've now completed the authorization of 40 cancer centers and are on track to have enough centers certified to treat 80% of Yescarta-eligible patients in the United States by the middle of the year." – Gilead CEO John Milligan

Though it still is early in Yescarta's launch, the CAR-T therapy's strong performance in the first quarter was important for Gilead, which paid $11.9bn to acquire the product's original developer, Kite Pharma Inc., in hopes of making the CAR-T technology the center of a cell therapy platform and oncology franchise. (Also see "Gilead Makes Cell Therapy The Base Of Its Oncology Platform With Kite Buy" - Scrip, 29 Aug, 2017.) 

Gilead President and CEO John Milligan said during the company's first quarter earnings call that "we're encouraged by the response from the health care provider and patient communities," and that Gilead has "completed the authorization of 40 cancer centers and are on track to have enough centers certified to treat 80% of Yescarta-eligible patients in the United States by the middle of the year."

Novartis reported last month that Kymriah sales in the first quarter totaled $12m in the product's first indication, but relapsed/refractory pediatric ALL is a smaller indication than the adult NHL indication Yescarta held and that Kymriah will now compete in. Elizabeth Barrett, CEO of Novartis Oncology, said during the company's first quarter earnings call on April 19 that 35 hospitals and cancer centers were certified to treat patients with Kymriah. Barrett also noted that "we have not had any issues with reimbursement. That's going very smoothly."

But Gilead has its eye on a larger, earlier indication for its product and is enrolling patients now in ZUMA-7, a Phase III clinical trial comparing Yescarta to the standard-of-care – salvage chemotherapy followed by autologous stem cell transplantation – as second-line treatment of 350 patients with DLBCL. 

CAR-T A Small Bright Spot In Largely Dark Performance

Mizuho Securities analyst Salim Syed said in a May 1 note that while sales for Gilead's HIV and hepatitis C virus (HCV) drugs were disappointing, the Yescarta sales were good and investors realize the CAR-T business – still a relatively small part of the company's portfolio – is "a long-term play."

However, the $21m in sales that Yescarta delivered above what analysts expected for the quarter pales in comparison to the hundreds of millions of dollars in sales that didn't come through for the company's HIV and hepatitis C virus (HCV) treatments.

Gilead reported $5bn in total first quarter revenue, which was down from $6.4bn for the same period in 2017 and below consensus of $5.4bn. The company maintained its guidance of $20bn-$21bn in full-year 2018 sales.

"We do believe that 2018 is a trough year for us on which we can grow. We'll have seasonality fluctuations from quarter-to-quarter, but we're very confident and reiterated our overall guidance for the year and expect to be able to grow off of our 2018 base going forward," Chief Financial Officer and Executive Vice President Robin Washington told the call.

Investors appeared skeptical, however, sending the company's stock down 5.6% in after-hours trading on May 1 to $68.50 per share – a new low for 2018.

HIV, Gilead's Biggest Franchise, Disappoints

HIV and hepatitis B products delivered $3.3bn in the first quarter, which was 2% higher than the $3.27bn in sales for the year-ago period but fell below consensus of $3.5bn. The top HIV product was Genvoya (elvitegravir, cobicistat, emtricitabine and tenofovir alafenamide (TAF)) with $1.08bn in sales versus $769m last year and analyst consensus of $1.1bn.

Closely-watched Biktarvy (bictegravir, emtricitabine and TAF) – the company's newest single tablet regimen for HIV containing Descovy (emtricitabine and TAF) – delivered $35m in first quarter sales following its Feb. 7 FDA approval, which was below consensus of $50m. (Also see "Gilead's Biktarvy Approval Heightens HIV Competition With ViiV" - Scrip, 7 Feb, 2018.)

Biktarvy's approval in the EU is expected within the next few months after a recent positive CHMP opinion. (Also see "Gilead's Biktarvy Profile Rises As CHMP Backs Daily HIV Therapy " - Scrip, 30 Apr, 2018.) The drug and Gilead's industry-leading HIV franchise are facing tough competition from the GlaxoSmithKline PLC/Pfizer Inc./Shionogi Inc. joint venture ViiV Healthcare .

However, Washington said during the earnings call that the company is "encouraged by the initial uptake among prescribers" and "Biktarvy is tracking very well against our expectations."

"With this trajectory, we anticipate over time Biktarvy will become the number one single-tablet regimen for treatment-naive and switch patients, a distinction currently held by Genvoya," Washington added. "Approximately 80% of Biktarvy's prescriptions came from switches, of which approximately one-third came from Genvoya and two-thirds from other regimens, including approximately 20% from regimens that contain dolutegravir, confirming Biktarvy's broad utility across patient types."

Tivicay (dolutegravir) is Viiv's integrase inhibitor contained in products like Triumeq (abacavir, dolutegravir and lamivudine), which is expected to be Biktarvy's biggest competitor.

Jefferies analyst Michael Yee was not troubled by Gilead's first quarter HIV performance, however, referring to seasonal inventory issues cited by the company, including the impact of generic versions of Gilead's legacy antiviral therapy Viread (tenofovir disoproxil fumarate). Yee said in a May 1 note that Gilead's first quarter usually looks relatively weak, so he expects the HIV franchise performance to improve significantly in the second quarter.

HCV Decline Not Too Shocking After AbbVie's Earnings Surprise

While Gilead's HCV sales are expected to continue their decline this year in light of the waning market and increased competition for the largely curative treatments for hepatitis C, the company's first quarter revenue in this area came in mostly below expectations, which isn't necessarily a big surprise after AbbVie Inc.'s impressive first quarter HCV results.

Gilead reported $1.05bn in HCV sales for the first quarter, down from $2.58bn in the year-ago period and below consensus of $1.16bn despite revenue from top-seller Epclusa (sofosbuvir and velpatasvir) coming in at $536m, which was down from $892m for the like period in 2017, but beat consensus of $454m.

"Consistent with our expectations, in Q1 we observed a downward pricing and market share trend across the major geographies as a result of a more competitive environment." – Gilead CFO Robin Washington

But AbbVie is catching up with $919m in first quarter HCV sales, which beat consensus of $572m, including $850m in Mavyret (glecaprevir and pibrentasvir) sales. It was anticipated that Mavyret stole considerable market share from Gilead's products. (Also see "HCV Sales Drive AbbVie's Great Quarter, But Gains Won't Last" - Scrip, 26 Apr, 2018.)

Indeed, Gilead's newer product Vosevi (sofosbuvir, velpatasvir and voxilaprevir) generated sales of just $107m in the first quarter versus consensus of $142m. The drug's approval in July marked the end of Gilead's HCV drug development; the company has said it expects a declining market for hepatitis C therapies going forward and ceased R&D efforts in the space. (Also see "Gilead Completes HCV Clinical Development With Vosevi Approval" - Scrip, 18 Jul, 2017.)

"Consistent with our expectations, in Q1, we observed a downward pricing and market share trend across the major geographies as a result of a more competitive environment. Price has now largely stabilized, and we expect market share to stabilize by mid-year," Washington said. "In addition, patient starts have become more predictable, and we expect a slow and steady decline moving forward. We continue to see the HCV market as durable, and albeit a smaller component of our revenues going forward, there are still many patients that remain to be treated."