GILD Gilead Sciences Inc

Gilead Sciences (GILD) announced yet another deal to develop a single-tablet HIV combination pill. Gilead finalized a license agreement with Tibotec Pharmaceuticals, a division ofJohnson & Johnson (JNJ), to develop and commercialize a single-tablet regimen (STR) combining four drugs. The STR will combine Tibotec's protease inhibitor Prezista (darunavir), Gilead’s pipeline candidate cobicistat, Gilead’s marketed HIV drug Emtriva, and its HIV candidate GS 7340.

Gilead will be responsible for the formulation, manufacturing, registration, and distribution and commercialization of the STR globally, on approval.

In June 2011, Gilead had entered into a license agreement with Tibotec Pharmaceuticals to develop and commercialize a new fixed-dose combination HIV drug which will bring together cobicistat and Prezista. The agreement to develop the cobicistat/Prezista combination drug was subject to the outcome of the negotiations for the Prezista/cobicistat/Emtriva/GS7340 combination. Both the agreements have now been finalized. Under the cobicistat/Prezista deal, Tibotec holds responsibility for the formulation, manufacturing, registration, and distribution and commercialization of the fixed dose combination globally. We believe these deals will further strengthen Gilead’s already strong HIV franchise.

Gilead has developed another STR, Complera, in partnership with Tibotec. Complera is a fixed-dose combination of Truvada and Tibotec’s HIV drug Edurant which was approved by the FDA in May 2011. Complera was approved by the US Food & Drug Administration (FDA) in August 2011. Gilead also received a positive recommendation for approval of the combo pill in the European Union in late September 2011. The drug will be marketed as Eviplera there.

Our Recommendation

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

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 the pipeline candidate Quad pill (a combination of elvitegravir, cobicistat and Truvada) will lead to its approval. On approval, Quad has the potential to reach blockbuster status and become a market leading HIV medicine. We are also encouraged by the FDA approval of Complera, 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 along with the current pipeline proves its worth, compensating for lost revenues from patent lapses.

 
GILEAD SCIENCES (GILD): Free Stock Analysis Report
 
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
 
Zacks Investment Research