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(Recasts first paragraph, adds company comment, analyst comment, share price, PIX available)
May 2 (Reuters) - Gilead Sciences Inc, which hired Roche veteran Daniel O'Day to be its new chief executive, on Thursday said Kite Pharma, the cancer-focused cell therapy company it acquired in 2017, will become a separate business unit.
The U.S. drugmaker also reported higher first-quarter earnings as stronger demand pushed sales of its HIV drugs to $3.6 billion from $3.2 billion.
On an adjusted basis, Gilead said it earned $1.76 per share in the quarter, helped by share buybacks. Wall Street analysts, on average, expected $1.61, according to IBES data from Refinitiv.
The results were helped by strong sales of Biktarvy, a new HIV drug, lower-than-expected research and development expenses and a one-time tax benefit, RBC analyst Brian Abrahams said in a research note.
O'Day, leading his first quarterly conference call since taking the Gilead helm on March 1, said the company has initiated a search for a new CEO at Kite, which Gilead bought for $12 billion.
"Kite itself in cell therapy oncology is in an ultracompetitive area," O'Day said. "We have a leadership position, but I think we need to maintain that."
The new CEO said his first priority is strengthening Gilead's drug development pipeline, both internally as well as through acquisitions or partnerships.
Kite is mainly known for Yescarta, a CAR-T cell therapy currently approved to treat certain types of lymphoma.
Gilead said first-quarter sales of Yescarta totaled $96 million, which was short of the average analyst estimate of $103 million.
Sales of Gilead's hepatitis C drugs continued to fall, dropping to $790 million from $1 billion a year earlier.
Once a major growth driver for Gilead, hepatitis C revenue has declined as many patients have been cured of the liver-damaging virus and rival products, particularly from AbbVie, have seized market share from a diminishing patient pool.
Gilead said it still expects relatively flat full-year 2019 product sales of $21.3 billion to $21.8 billion.
Total revenue for the quarter rose to $5.3 billion from $5.1 billion a year earlier, matching Wall Streets forecast.
Net income rose to $2 billion, or $1.54 per share, from $1.5 billion, or $1.17 per share, a year earlier.
Shares of Gilead were up 30 cents at $65.60 in after hours trading. (Reporting By Deena Beasley Editing by Bill Berkrot)