- Kite Pharma, a Gilead company focused on CAR-T cell therapy, recently separated into its own business unit within the big biotech, executives disclosed Thursday.
- The restructuring is the first notable change at Gilead under new CEO Daniel O'Day. On a first quarter earnings call, O'Day said more autonomy will allow Kite to function better and help its parent company maintain a strong position in cell therapy. Kite "will wake up and go to sleep every day thinking about how to be leaders in oncology cell therapy," he said.
- Gilead is now looking to give Kite its own CEO, who will report directly to O'Day.
O'Day described cell therapy as a "critical piece" of Gilead's long-term strategy in oncology, a stance that may reassure some investors. The industry veteran most recently served as head of pharmaceuticals at Roche, which has favored bispecifics over CAR-T therapies for the treatment of blood cancers.
"Cell therapy oncology is in a ultra-competitive area," he said on Thursday's call. "I think we have a leadership position, but I think we need to maintain that leadership position."
Gilead already has one CAR-T product in Yescarta (axicabtagene ciloleucel), which came into its pipeline and later portfolio through the $12 billion acquisition of Kite. Yescarta sales, however, have been modest thus far.
The big biotech is now banking on Yescarta label expansions as well as additional product approvals to drive greater revenue from cell therapies. Giving Kite some breathing room should help in that effort, according to O'Day.
Making Kite its own business unit also resonated well with some investors. Analysts from RBC Capital Markets wrote in a May 3 note that while they "still like the high science and long-term opportunity" of the evolving cell therapy field, some distance between Gilead and Kite "should both improve the platform's agility as well as investor perceptions."
Steven Seedhouse of Raymond James suggested the separation is a win-win for O'Day — it could either foster a more efficient and successful Kite, or make it easier to "cut the cord" if the business struggles.
"This looks like a strategic gambit to us that, if it goes well, could also create O'Day's new version of Roche's Genentech," Seedhouse wrote in a May 2 note.
Kite expects to submit for approval later this year KTE-X19, a follow-up product to Yescarta that targets relapsed/refractory mantle cell lymphoma.
Gilead's focus on the burgeoning area of cell therapy comes as its more established businesses face significant challenges.
In hepatitis C, a combination of generics, branded competition and a shrinking pool of untreated patients has caused Gilead's revenue to nosedive.
And in HIV, the rapid commercial success of Biktarvy (bictegravir/emtricitabine/tenofovir alafenamide) is cannibalizing other Gilead products.
Raymond James notes that Descovy (emtricitabine/tenofovir alafenamide), Genvoya (elvitegravir/cobicistat/emtricitabine/tenofovir alafenamide) and Odefsey (emtricitabine/rilpivirine/tenofovir alafenamide) all "meaningfully missed" consensus estimates.
Gilead recorded $5.2 billion in product sales for the first quarter, a 4% increase from the same period a year prior. Shares of the big biotech were up around 3% in late morning trading Friday.