What Happened With CAR-T Stocks in 2018

Last year's launch of new gene therapy's called chimeric antigen receptor T-cell therapies (CAR-T) targeting blood cancer rolled out to blockbuster forecasts, but this year's performance was far shy of those expectations. Were CAR-Ts all hype, or will sales materialize in 2019?

In this clip from The Motley Fool's Industry Focus: Healthcare, analyst Shannon Jones discusses the performance of Gilead Sciences's (GILD 0.91%) Yescarta and Novartis's (NVS 1.93%) Kymriah in 2018.

A full transcript follows the video.

This video was recorded on Dec. 12, 2018.

Shannon Jones: The CAR-T hype train has officially left the station here in 2018. 2017 was really all about CAR-T stocks. The reason why there was so much hype was because it was this new, innovative approach to supercharge the body's own immune system to fight and target cancer. Well, as we have seen with many biopharma stocks along the way, just getting to approval is the first hurdle of many. CAR-T stocks is no different. Todd, CAR-T is just not yet that billion-dollar blockbuster that we were hoping to see.

Todd Campbell: It's a great reminder, Shannon, of how oftentimes, the prelaunch expectations are just too optimistic. Everybody thought that these therapies, which are incredibly complex, and they're incredibly expensive -- what, over $500,000 all in to have these gene therapies given to patients. Yeah, it takes a long time to get these things launched, build up momentum for them. Maybe that's what we saw here in 2018. You have these great expectations coming into the year. You had Gilead Sciences go out and buy Kite Pharma, spending nearly $12 billion to get its hands on that CAR-T. Its sales this year, year to date, are only $183 million. Then, you've got Novartis' Kymriah. They developed that one in-house and launched it last year. Its sales this year are only about $48 million. You've got less than $250 million in sales through the third quarter for CAR-T drugs that are on the market. And that is, like you said, very shy of the blockbuster hype that was associated with these drugs.

Jones: Yeah. I think some of the challenges with CAR-T, they certainly haven't been exclusive to CAR-T, but when you consider that you're taking a patient's T cells, taking them out of the body, then you're actually genetically modifying them in a lab and then putting them back into a patient, you can imagine the logistical steps that are required. Also, the manufacturing variability from patient to patient. And, of course, that also depends on the patient's health. That can change, too. Just the challenge of logistics. Oftentimes, these patients also are in an inpatient setting, so they're hospitalized while they are receiving this CAR-T treatment. The cost, you mentioned $500,000. That goes up exponentially when you start talking about all the other acute care costs that are associated with that, too.

Campbell: Yeah, and I think that for investors listing and saying, OK, yeah, these CAR-Ts haven't lived up to expectations this year, what could happen next year in 2019? Obviously, now we're getting more data in that shows that these therapies are still durable. At ASH earlier this month, Yescarta had data that showed that 39% of patients still were in response after two years. That's good. You see durability like that, that helps to increase confidence in doctors using it and payers using it. So maybe you get a nice little slower-than-hoped build in sales in 2019 that you want to keep an eye on.

Jones: Absolutely. And certainly, keep an eye on the reimbursement end of things. These drugs have had challenges just getting reimbursed by public and private payers. That'll be another issue. But, yes, I do think things will slowly turn around for CAR-T stocks.