GILD Gilead Sciences Inc

Gilead Sciences, Inc. (GILD) recently announced positive long-term data from a late-stage pivotal trial (study 145) evaluating its HIV pipeline candidate elvitegravir.

The study assessed the non-inferiority of ritonavir-boosted elvitegravir dosed once daily, as compared to Merck’s (MRK) Isentress dosed twice daily in treatment-experienced HIV patients. Earlier this year in March, the study met the primary endpoint, when Gilead had announced 48 week data. In January 2011, the company had extended the period of the study to 96 weeks to gain longer-term efficacy and safety data to support the regulatory filing of elvitegravir.

The latest data showed that elvitegravir continued to be non-inferior to Isentress after two years in viral load reduction (HIV RNA levels under 50 copies/mL). It was observed that after 96 weeks, 48% of the patients who were dosed with elvitegravir achieved and maintained viral load reduction as compared to 45% of the patients who were given Isentress. At 48 weeks this proportion was 59% for Elvitegravir and 58% for Isentress. Gilead hopes to file the new drug application (NDA) for elvitegravir in the second quarter of 2012. The long-term data now hugely increases the chance of elvitegravir’s approval.

We note that elvitegravir is an important component of Gilead’s most anticipated HIV pipeline candidate Quad pill (a combination of Gilead elvitegravir and another HIV pipeline candidate cobicistat and its marketed HIV drug Truvada). Two late-stage trials (study 102 and study 103) evaluating Quad pill have already met the primary endpoint. Gilead filed the NDA for approval of Quad in late October 2011.

Last week Gilead announced that its investigational boosting agent cobicistat met the primary endpoint in a late-stage study (study 114), which was comparing cobicistat−boosted Reyataz plus Truvada with ritonavir−boosted Reyataz plus Truvada. Bristol-Myers Squibb’s (BMY) drug Reyataz is indicated to be used in combination with other drugs for the treatment of HIV. Since elvitegravir and cobicistat are key components of Quad, positive elvitegravir and cobicistat data greatly reduce 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.

 
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