Gilead Delivers Once Again - Analyst Blog

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One of the world's largest drug makers Gilead Sciences, Inc. ( GILD ) is riding on the crest of a series of successes. In the third quarter 2011, Gilead announced that the two late stage trials (study 102 and study 103) of its most anticipated HIV pipeline candidate Quad pill (a combination of Gilead pipeline candidates elvitegravir and cobicistat and its marketed HIV drug Truvada) met the primary endpoint. Gilead filed the new drug application (NDA) for approval of Quad in late October 2011.

A couple of months earlier Gilead received approval for Complera, a fixed-dose combination of Truvada and Johnson and Johnson 's ( JNJ ) new HIV drug Edurant. In late November 2011, Gilead received European approval for the Truvada/Edurant combo pill which will be marketed as Eviplera there.

Latest Announcement

Now, Gilead has announced that its investigational boosting agent cobicistat met the primary endpoint in a late stage study (study 114) comparing cobicistat−boosted Reyataz plus Truvada with ritonavir−boosted Reyataz plus Truvada. Cobicistat, which is currently in late stage trials, is a booster for protease inhibitors for the treatment of HIV. Boosting agents like cobicistat or the current market leader ritonavir help in the making of combination pills which can be dosed once-daily by increasing the blood levels of certain HIV medicines. Bristol-Myers Squibb 's ( BMY ) drug Reyataz is indicated to be used in combination with other drugs for the treatment of HIV.

Does the cobicistat data help Quad?

The data presented showed that after a 48-week period of treatment, the cobicistat arm proved to be non-inferior to the ritonavir arm, the primary endpoint of the study. 85% of the patients in the cobicistat arm achieved a viral load reduction (less than 50 copies/mL) versus 87% of those in the ritonavir arm. This study, along with other studies which use cobicistat, will support the filings for cobicistat as a stand-alone agent. An NDA filing for stand-alone cobicistat is expected in the second quarter of 2012. Since cobicistat is a key component of Quad, positive cobicistat data reduces the risk for approval of Quad.

Our Recommendation

We currently have a Neutral recommendation on Gilead. The stock carries a Zacks #3 Rank (short-term Hold rating).

We are optimistic about the growth potential of Gilead's HIV franchise drugs, Truvada and Atripla. Moreover, Gilead's strategy of creating fixed-dose combinations of existing HIV drugs has yielded enormous success. We believe the positive outcomes of two late stage trials of Quad pill will lead to its approval. Subsequent to regulatory clearance, Quad has the potential to reach blockbuster status and become a market leading HIV medicine. We are also encouraged by the approval of Complera/Eviplera, which together with Quad, once approved, will further fortify the HIV franchise and help mitigate the impact of the upcoming patent expirations. We are nonetheless concerned about patent challenges against its key HIV drugs. We maintain a cautious stance until Complera/ Eviplera along with the current pipeline proves its worth, compensating for lost revenues from patent lapses.


 
BRISTOL-MYERS ( BMY ): Free Stock Analysis Report
 
GILEAD SCIENCES ( GILD ): Free Stock Analysis Report
 
JOHNSON & JOHNS ( JNJ ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BMY , GILD , JNJ

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