GILD Gilead Sciences Inc

Gilead Sciences, Inc (GILD), the world’s largest HIV drug maker, received marketing authorization from the European Medicines Agency (EMA) for the single tablet regimen (STR), Eviplera, for the treatment of HIV in previously untreated adults. The STR combines Gilead’s marketed HIV drug Truvada (a fixed-dose, once-daily tablet containing Gilead's Viread and Emtriva) and Johnson and Johnson’s (JNJ) new HIV drug Edurant. The STR is already marketed as Complera in the US. The EMA however limited the use of Eviplera only in patients with low viral load (below 100,000 HIV RNA copies/mL). Complera/ Eviplera is the second STR approved in the EU for the treatment of HIV, the first being Atripla, which is marketed by Gilead and Bristol Myers Squibb (BMY).

Gilead has a license and collaboration agreement with Tibotec Pharmaceuticals (a subsidiary of Johnson & Johnson) for the development and commercialization of Complera/Eviplera. Gilead will be responsible for manufacturing, registration, distribution and commercialization of Complera in the US, EU, Canada, Brazil, Australia and New Zealand. Johnson and Johnson can co-market the drugs in these territories. The agreement has been expanded to include certain European countries, Latin America and the Caribbean. Johnson and Johnson will be responsible for other territories, particularly Asia Pacific, including Japan, the Middle East, Eastern Europe and all of Africa.

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 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.

 
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