Gilead’s cell therapy business outperformed Wall Street expectations during the second quarter. The unit — which currently consists of two products, Yescarta and Tecartus, used to treat various blood cancers — generated $368 million in the three-month period, an increase of 68% year over year, earnings numbers released Tuesday show.
Key to that growth was a recent, first-of-its-kind approval from the Food and Drug Administration. In April, the agency cleared Yescarta as a so-called second line therapy for large B-cell lymphoma that resists or returns within a year of initial treatment with chemoimmunotherapy. Before, Yescarta was used only when patients either relapsed after or hadn’t responded to at least two other kinds of therapies.
Gilead had anticipated that, with this approval in hand, uptake would increase as more patients became eligible to receive Yescarta. Indeed, Christie Shaw, head of the company’s cell therapy unit, said on an earnings call Tuesday how her team has seen “patients that are going for stem cell transplants are the ones that are getting referred, instead of that transplant, to second-line Yescarta.”
Still, analysts hadn’t expected such a dramatic rise in sales, which surged 66% to $295 million. That figure was 26% higher than the average analyst estimate, according to the investment firm SVB Securities, which has subsequently raised its Yescarta sales forecast by 11% for this year, to $1 billion.
In a note to clients Tuesday, RBC Capital Markets analyst Brian Abrahams wrote that Yescarta’s performance has been “particularly strong” following its recent approval, “suggesting that despite increasing competition in cell therapy, use in earlier-line settings is growing.”
Bristol Myers Squibb recently won a similar second-line approval for its rival treatment Breyanzi, but sales have been comparatively slower.
Abrahams added that Gilead’s report could be a sign the logistical challenges that have hindered Yescarta and other treatments like it, known as CAR-T cell therapies, may be easing. Notably, the FDA recently cleared a new manufacturing facility in Maryland to start commercial production of Yescarta. Johanna Mercier, Gilead’s chief commercial officer, pointed to a 67% increase in Yescarta deliveries as evidence of the manufacturing expansion’s value.
Steven Seedhouse, an analyst at Raymond James, called Yescarta the “brightest spot” in Gilead’s latest earnings report. At $6.1 billion, sales across the company were flat in the second quarter compared to the same period a year prior, as gains in Gilead’s HIV and cancer units were offset by weaker sales from hepatitis C products and its COVID-19 drug Veklury.
Gilead executives cautioned that Yescarta’s growth should “normalize” in the third quarter, as usage moves beyond early adopters and toward community centers that treat a lower volume of patients. Even so, “the result is clearly bullish for the end market opportunity,” according to Seedhouse, who models $2.2 billion in Yescarta sales by 2030.
Abrahams and the RBC team, meanwhile, believe Gilead’s CAR-T products will ultimately reach about $3 billion in annual sales.
Gilead’s share price was up more than 6% late Wednesday morning, to trade around $63.30.
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