Gilead lost several billion dollars in market value Wednesday after unnerving investors with updates about a key clinical trial of its most closely watched breast cancer drug.
The drug, called Trodelvy, was the centerpiece in Gilead’s largest-ever acquisition — the $21 billion purchase of Immunomedics — and as such acts as an important test of the company’s dealmaking acumen. Trodelvy is already approved to treat a less common, “triple negative” form of breast cancer, but Gilead is hoping to expand its use into another type that accounts for the vast majority of cases.
An approval in this type, known in short as HR-positive, HER2-negative breast cancer, hinges on positive results from a large study that began in 2019 and enrolled just shy of 550 participants whose tumors have spread to other parts of the body. Titled TROPiCS-02, the study is evaluating whether Trodelvy offers a safer and more effective option than some frequently used chemotherapies.
Gilead had planned to disclose early this year whether Trodelvy hit the study’s main goal of preventing patients from dying or having their cancer progress. While that timeline remains intact, executives clarified on Tuesday that those results will be presented in March, alongside an initial look at whether treatment keeps patients alive for longer, which doctors value most when assessing the value and power of a cancer therapy.
Executives said they have confidence the results will show Trodelvy outperforms chemotherapy on that primary endpoint, known as progression-free survival. On the secondary measure of overall survival, though, they were less optimistic to have clear-cut data by then.
“I would not expect statistical significance [on overall survival] at this first interim,” Merdad Parsey, Gilead’s chief medical officer, said Tuesday afternoon, as the company reported its latest round of earnings.
Parsey went on to argue that it’s likely too early in the span of the trial to draw definitive conclusions about whether Trodelvy extends survival. Rather, he and the Gilead team expect the data collected so far to be “supportive.”
“As the events accrue, we’ll see where we’re headed with [overall survival] down the road,” he said.
But investors didn’t seem to find much assurance in that commentary. Gilead shares fell by as much as 6% Wednesday before recovering to close down by nearly 4%, erasing $3 billion from the company’s market value. “Gilead’s messaging around [the data] keeps getting worse by appearances,” wrote Steven Seedhouse, an analyst at Raymond James, in a Feb. 1 note to clients.
To analysts, the TROPiCS-02 data are vital to Trodelvy’s growth. It’s estimated that peak yearly sales of the drug could reach $2 billion to $3 billion, with a major portion of that sum stemming from use in HR-positive, HER2-negative breast cancer. Trodelvy, which is currently approved as a “third-line” treatment for metastatic triple negative breast cancer and a type of advanced bladder cancer, had sales of $118 million in the fourth quarter and $380 million over all of 2021.
On a larger scale, the data will also affect how investors view Gilead’s ambitions and progress in cancer research. Though historically known for its work in viral diseases like HIV and hepatitis C, Gilead envisions that a third of its business will be dedicated to oncology by 2030. Notably, the company ended last year with $27 billion worth of product sales, just under 5% of which came from cancer drugs.
To rapidly build up its presence in the market, Gilead pursued a series of high-profile deals. It acquired the cell therapy developer Kite Pharma in 2017 for $12 billion. Then, in 2020, it bought Immunomedics and another biotechnology company named Forty Seven, at a combined cost of $26 billion.
Those purchases have so far netted Gilead three approved products in Trodelvy, Yescarta and Tecartus, with the latter two used to treat blood cancers. They’ve also helped stock Gilead’s research pipeline with experimental drugs like Forty Seven’s main asset, magrolimab, which is being tested in both blood cancers and solid tumors.
Still, recent challenges have led some investors to question whether Gilead has deployed its money well.
The Kite cell therapy business, for instance, hasn’t taken off as much as Gilead once hoped, leading the company to admit that it overpaid. And just last week, the Food and Drug Administration suspended almost half of the clinical studies involving magrolimab, after trial investigators reported an “apparent imbalance” in suspected unexpected adverse reactions.
These setbacks, combined with the amount of money Gilead shelled out to take control of Trodelvy, have put Gilead under immense pressure to notch a win from TROPiCS-02. If Tuesday’s call with analysts was any indication, that pressure may only get weightier over the next two months.
Michael Yee, an analyst at Jefferies, wrote that if the data “are marginal or fail, sentiment will get hit hard, reflecting weak conviction” in Gilead’s business development strategy. Conversely, “if data are good, [Wall] Street will be relieved, and we can move on.”
