GILD Gilead Sciences Inc

Gilead Sciences Inc. (GILD) recently announced its decision to discontinue the use of its pipeline candidate GS 9190, which is a polymerase inhibitor, in trials evaluating GS 9190 in combination with pegylated interferon, ribavirin (standard of care) and other agents in patients infected with the hepatitis C virus (HCV).

Gilead is hoping to build one of the largest hepatitis C pipelines with six compounds in clinical development. Moreover Gilead is also developing proprietary drug combinations which aim to reduce treatment duration to 12-16 weeks and spare the use of pegylated interferon associated with some serious side effects.

The company is conducting a mid-stage study that evaluates four oral drugs [GS 5885 (NS5A inhibitor), GS 9451 (protease inhibitor), GS 9190 and ribavirin] for the treatment of hepatitis C virus (HCV) infection. The company is also conducting another combination study of GS 9190 and a protease inhibitor (GS 9256) with standard of care (peg-interferon/ribavirin).

Though the studies will continue as planned, Gilead has decided to stop dosing of GS 9190 in these studies due to reports of two serious adverse events in the patients enrolled. Moreover, studies that include GS 9190 but do not include pegylated interferon will also continue as planned. Other combination studies that include GS 9451, GS 5885 and pegylated interferon and ribavirin will also continue.

Our Recommendation

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

We are optimistic on 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 Complera [a fixed-dose combination of Truvada and Johnson and Johnson’s (JNJ) Edurant which was approved in August 2011, together with Quad (a combination of pipeline candidates elvitegravir and cobicistat, and Truvada), once approved, has the potential to drive sustainability of the HIV franchise.

However, we are concerned about patent challenges to its key HIV drugs. We maintain a cautious stance until Complera along with the current pipeline proves its worth, compensating for lost revenues from patent lapses.

 
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