Gilead's Yescarta Cancer Treatment Approved, Some Analysts Shrug

The U.S. Food and Drug Administration approved Wednesday Gilead Sciences, Inc. GILD's therapy for the treatment of non-Hodgkin's Lymphoma (NHL) called YESCARTA. The announcement helped boost Gilead's stock higher by more than 1 percent Thursday, yet some on Wall Street aren't ready to move bullish on the stock.

Morgan Stanley: No Surprise

The FDA's approval of Yescarta shouldn't have come as a surprise, Morgan Stanley's Matthew Harrison said in a research report. As expected, the label contained a boxed warning for Cytokine Release Syndrome and Neurologic toxicities and an indication that Yescarta will be available through a restricted program. Moreover, the list price of $373,000 did come in ahead of what the analyst had modeled but was still in line with the consensus commentary of $350,000 to $400,000.

Moreover, the approval was highly anticipated considering Novartis AG (ADR) NVS received approval for its Kymriah therapy, which was approved one month earlier than expected in August, the analyst said.

Finally, Gilead's management team is likely to offer additional commentary during its third-quarter earnings conference call scheduled for Oct. 26.

Harrison maintains an Equal-Weight rating on Gilead's stock with an unchanged $83 price target.

Wells Fargo: Competitive Pressure Ahead

Gilead will likely benefit from pre-identified patients who are being treated at larger transplant sectors, Wells Fargo's Jim Birchenough said in a research report. However, the company's broader launch prospects could be impacted by "significant" center losses under the current DRG code.

Over the longer-term, Gilead will face intense competition from Juno Therapeutics Inc JUNO, the therapy of which is entering a pivotal study in aggressive NHL, the analyst also said. In fact, Juno's therapy could show a higher response rate and lower toxicity.

Birchenough maintains a Market Perform rating on Gilead's stock with a price target boosted from $81 to $84 (see his track record here).

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