Does Gilead’s CAR T Approval Vindicate the High Acquisition Price for Kite Pharma?

Gilead Sciences Inc. (NASDAQ: GILD) has seen many analysts raise their price targets in recent weeks, and now there is a new U.S. Food and Drug Administration (FDA) approval that has created at least some buzz for Gilead. The FDA has approved Gilead’s CAR T lymphoma treatment named Yescarta.

There remains a debate over whether Gilead overpaid for Kite Pharma in its $11 billion or so acquisition. This was Kite’s flagship cell-therapy treatment and will come with a more rapid payoff for Gilead’s first large acquisition.

While a $373,000 start price target sounds off the charts, Yescarta is actually cheaper than a rival CAR T treatment from Novartis at $475,000.

Gilead’s new approval is also for a broader patient population than the Novartis treatment Kymriah. Yescarta is also said to have a boxed warning on its product label regarding the risks of cytokine release syndrome and neurologic toxicities.

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Diffuse large B-cell lymphoma is the most common aggressive non-Hodgkin lymphoma, roughly three out of every five cases. In the United States alone, there are approximately 7,500 patients each year with refractory diffuse large B-cell lymphoma who are said to be eligible for CAR T therapy.

If you were to assign an all-in acceptance for Yescarta with 100% of the patients, that would generate close to $2.8 billion at the listed price from the full 100% patients per year.

Gilead shares were up 1.1% at $80.90 Thursday morning, in a 52-week trading range of $63.76 to $86.28 and with a consensus analyst target price of $84.20. Gilead’s prior high was closer to $120, back in the summer of 2015.

Gilead’s press release describes Yescarta as follows:

The first chimeric antigen receptor T cell (CAR T) therapy for the treatment of 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 (PMBCL), high-grade B-cell lymphoma, and DLBCL arising from follicular lymphoma (transformed follicular lymphoma, or TFL). Yescarta is not indicated for the treatment of patients with primary central nervous system lymphoma.

The big question that remains is to how many more cancers Gilead’s CAR T therapy targets can be applied. This newer class of therapy is not immune to problems, but it also brings great promise for those patients who struggle to beat cancer.

Kite Pharma’s site for the chimeric antigen receptor shows multiple targets in various investigational and clinical stages. That class and its T-cell receptor class show multiple candidates in preclinical and Phase 1 stages. These are the other various areas of research being targeted:

• PMBCL, primary mediastinal b-cell lymphoma
• TFL, transformed follicular lymphoma
• NHL, non-Hodgkin lymphoma
• CLL, chronic lymphocytic leukemia
• MM, multiple myeloma
• MCL, mantle cell lymphoma
• AML, acute myeloid leukemia
• ALL, acute lymphoblastic leukemia

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