Highlighting the intense competition and sometimes unpredictability of the biopharma space, sector giant Gilead Sciences (NASDAQ:GILD) stock is down roughly 2% today. While the company’s experimental treatment for metastatic non-small cell lung cancer — developed alongside Arcus Biosciences (NYSE:RCUS) — produced some positive results, it failed to compete against a rival therapeutic. GILD stock is slipping conspicuously today, but RCUS stock is absorbing the brunt of the damage. Currently, Arcus is plummeting about 30%.
Specifically, Gilead and Arcus tested three approaches in lung cancer patients integrating a drug called domvanalimab with a backbone immunotherapy drug. Per Investor’s Business Daily, “41% of patients responded to the treatment” overall and, at the median, “patients lived for 12 months before their cancer worsened, a measure called progression-free survival.”
Unfortunately for RCUS stock and GILD stock, rival Roche (OTCMKTS:RHHBY) delivered superior results through the same therapeutic mechanism. At the end of its study, Roche saw an “overall response rate of 45% and a median 16.6 months of progression-free survival.”
Adding to concerns for shares of Gilead, Merck (NYSE:MRK) has also entered this subsegment. Currently, the pharmaceutical stalwart is testing its Keytruda cancer drug, which could compete directly with domvanalimab.
RBC Capital Markets analyst Brian Abrahams stated the following in a research note:
“Domvanalimab shows clear signs of activity, keeping hopes alive for a $5 billion-plus out-year opportunity in lung cancer […] But without certainty around differentiation in an increasingly crowded space with better-entrenched competitors, we believe it will take some time to determine the program’s prospects.”
GILD Stock Suffers From a Lack of Distinction
According to Investor’s Business Daily, domvanalimab belongs to a class of drugs that block “TIGIT, a receptor that interferes with the immune system’s ability to respond to cancer.” Essentially, by blocking that receptor, the drugs “aim to release the immune cells to attack cancer cells hiding nearby.” Presently, several biotech firms are testing their TIGIT blockers in addition to “immunotherapies that target PD-1, a protein tumor cells can use to hide from the immune system.”
Gilead and Arcus’ first approach involved testing a PD-1 drug alone, which yielded competitively disappointing results. The duo’s second approach added domvanalimab to PD-1 blocker zimberelimab. While yielding better results, this treatment failed to match Roche’s results. Gilead and Arcus’ third and final approach led to deeper clinical misses, contributing to the down day for GILD stock. Analyst Brian Abrahams added the following about the data:
“The data clearly show that the program is viable, keeping hope alive for active building blocks within the large lung cancer space, but numerical [overall response rate] may be disappointing to some and it remains to be seen how much GILD/RCUS’s combo can truly differentiate vs. further-ahead regimens from more well-established players in the space.”
Adding pressure to GILD stock is the fact that Gilead exercised a $750 million opt-in deal with Arcus based on the potential of domvanalimab. Still, on a year-to-date (YTD) basis, Gilead shares are up around 17% at time of this writing. That reflects possible resilience.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.