Gilead draws harsh reviews as PhIII for $21B Immunomedics drug underwhelms Wall Street
Back in summer 2020, Gilead acquired Immunomedics for $21 billion hoping to turn its breast cancer drug Trodelvy (sacituzumab govitecan-hziy) into a megablockbuster. On Monday morning, however, Gilead got some news that it won’t be a slam dunk.
The big biotech revealed Trodelvy met its primary endpoint of progression-free survival in a Phase III study Monday, testing the drug in late-line metastatic HR+/HER2- breast cancer. But at the interim analysis, analysts and observers were left questioning just how big the benefit was, as Gilead did not release any hard data.
On Wall Street, the data report essentially amounted to a “put up or shut up” moment, given the huge Immunomedics buyout and the lingering questions over its M&A strategy. Gilead shares $GILD slid about 5% in pre-market trading but rebounded to about flat after Monday’s opening bell.
Analyst reviews flew in fast and harsh, with several biotech reviewers feeling frustrated over Gilead’s lack of numbers. Baird’s Brian Skorney, skeptical and scornful as ever, was not buying into the biotech’s “verbose” explanations, something which “clearly” implies the benefit signal was negative.
“The language Gilead has provided to describe these results … all sound like pretty negative messaging,” Skorney wrote. “But the most negative one, in our view, is: ‘We are evaluating the impact to our in-process R&D on the balance sheet,’ which could signal an impending writedown.”
Evercore’s Umer Raffat came in with a similarly unconvinced perspective, noting there had been other big-dollar Gilead acquisitions that have previously backfired, ticking off Kite, Galapagos and Forty Seven as recent examples. Immunomedics, however, was the biggest at $21 billion, even though the “buzz” indicated other bidders were “miles away” from that price.
Monday’s readout only serves to legitimize the skeptics’ concerns, Raffat wrote, due to how the language reads much more underwhelming than a competitor trial from AstraZeneca.
Much of the consternation stems from a “Q&A” in an 8-K report Gilead filed with the SEC attempting, and apparently failing, to assuage concerns. The answer to the first question Gilead posed itself drew particular ridicule on social media, with the biotech saying there is a “broad range of views” on what represents a clinically meaningful benefit in its study population.
Gilead is saving full results for a medical conference, which Jefferies’ Michael Yee speculated is likely the ASCO conference in June. Though Yee noted the study was “technically positive” and removed a worst-case scenario, investors’ uncertainty will linger over Gilead until at least then.
Should the full data reveal a negative outcome, Gilead’s M&A setbacks will only make the critics’ voices louder. The Galapagos and Forty Seven deals have returned poor results, with the former’s pipeline nearly imploding entirely while the latter’s lead program recently received a clinical hold from the FDA. Kite, meanwhile, has led to the approval of two therapies in Yescarta and Tecartus but it’s not yet clear whether those early successes can be replicated.
March 7, 2022
