FDA Nod for Gilead's Truvada - Analyst Blog

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The US Food and Drug Administration (FDA) recently approved Gilead Sciences, Inc .'s ( GILD ) once-daily oral Truvada (combination of Viread and Emtriva) in combination with safer sex practices for the reduction of the risk of sexually acquired HIV-1 infection in uninfected adults.

The FDA approval for the pre-exposure prophylaxis (PrEP) indication did not come as a surprise as in May 2012, Truvada received a favorable recommendation from the FDA's advisory panel.

With the FDA approval, Truvada became the first agent to be approved for preventing HIV in uninfected adults or pre-exposure prophylaxis (PrEP). Previously, it was approved in the US in combination with other antiretroviral agents as a treatment of HIV-1 infection in adults. The company believes that the approval will help to reduce the rate of new HIV infections and curb the epidemic.

The company, along with the FDA, developed a risk evaluation and mitigation strategy (REMS) for the safe use of Truvada. Gilead stated that 1.2 million people in the US are living with HIV. Despite increasing awareness, around 50,000 people are being infected each year since the last two decades.

Presently, Gilead's strong HIV product portfolio consists of Truvada, Viread, Atripla and the newly launched Complera/Eviplera. Gilead recorded Truvada sales of $758.3 million in the first quarter of 2012.

Gilead is looking to expand its HIV portfolio. In May 2012 the FDA's advisory panel gave another favorable recommendation on Gilead's HIV combination pill Quad. A final decision from the FDA regarding the matter is expected by August 27, 2012 (target date). The Quad pill is a combination of elvitegravir, cobicistat and Truvada. Gilead is looking to get the pill (once daily) approved as a first-line therapy for treating adults infected with the HIV virus.

We remind investors that recently Gilead announced filing of a marketing application seeking approval for its HIV candidate, cobicistat, in the US. Cobicistat acts as a "boosting" agent whose addition causes blood levels of protease inhibitors -- such as Bristol-Myers Squibb 's ( BMY ) HIV drug Reyataz and Johnson & Johnson 's ( JNJ ) Prezista -- to increase, thereby enabling the HIV therapy to be dosed once daily. In June 2012, Gilead filed another marketing application seeking approval for its HIV candidate, elvitegravir, in the US.

Our Recommendation

We have a Neutral recommendation on Gilead. We expect the sales potential of Truvada will increase with the label expansion. We also believe that Quad (if approved) together with Complera/Eviplera, will further fortify Gilead's HIV franchise.

The stock carries a Zacks #4 Rank (Sell rating) in the short run.


 
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