GILD Gilead Sciences Inc

Gilead Sciences, Inc.(GILD) is having a great year going by the series of good news announced lately. Numbering among these is a recent positive recommendation of the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency for its once-daily single tablet regimen (STR) for the treatment of HIV in previously untreated adults.

The tablet, which will be marketed as Eviplera, is a combination of Gilead’s most popular HIV drug, Truvada (a fixed-dose, once-daily tablet containing Gilead's Viread and Emtriva), and Johnson and Johnson’s (JNJ) recently approved HIV drug Edurant.

The CHMP however limited the use of Eviplera only in patients with low viral load (below 100,000 HIV RNA copies/mL). We believe the positive opinion will lead to European approval. The EMA will pass its decision later this year.

The drug was approved by the US Food and Drug Administration (FDA) in August this year under the trade name of Complera. Complera/Eviplera is the second STR approved for the treatment of HIV, the first being Atripla, which is marketed by Gilead and Bristol Myers Squibb (BMY). The European filing was based on data from two 48-week late stage studies, ECHO and THRIVE.

Gilead’s strategy of creating fixed-dose combinations of existing HIV/AIDS drugs has been a resounding success. Gilead’s most popular HIV combination medicines, Truvada and Atripla (a combination of Truvada and Bristol Myers’ Sustiva), have allowed the company to maintain robust growth in HIV product sales.

Very recently, Gilead announced positive data from two late stage studies of another investigational HIV combination pill, Quad. The much anticipated Quad pill is a combination of Gilead’s pipeline candidate elvitegravir, cobicistat (GS 9350), and Truvada. Gilead hopes to begin regulatory filings in the US by the end of the year. The new drug application (NDA) will include data from both study 102 and 103.

Gilead will request the FDA to grant priority review status to the NDA, which if granted is expected to lead to approval of Quad by mid-2012. If approved, Quad together with Complera/Eviplera will further fortify the HIV franchise and help mitigate the impact of the upcoming patent expirations.

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. We believe Complera/Eviplera together with Quad, 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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