Gilead Science: Complera Approval Is Positive, But Quad Remains Main Event

Aug.14.11 | About: Gilead Sciences, (GILD)

As only the second complete HIV therapy in a once-daily pill to reach the market, approval of Complera should represent something of a milestone. A combination of Gilead Science’s (NASDAQ:GILD) Truvada, itself a combination of two drugs, and Johnson & Johnson’s (NYSE:JNJ) Edurant, the product follows in the wake of Gilead's $3bn-a-year Atripla.

However, the drug is not expected to become as big a commercial success – consensus data from EvaluatePharma shows sales of $507m by 2016, a figure that masks very different views of Complera’s future. Gilead shares climbed 2.5% on Thursday to $36.09, largely due to a recovery after Wednesday's sector-wide declines as this approval was widely expected - all eyes remain fixed on the impending data from a quad pill that is much more likely to move the needle.

In the bag

Approval of Complera, previously called Btripla, was widely expected given the green light for Edurant earlier this year, the only new component of the triple combination.

The drug has been priced at a very similar level to Atripla, so the choice between the two will come down to the drugs’ relative attributes. Most believe Atripla will continue to be the first choice.

Analysts point out that many patients with very high viral loads treated with Edurant experienced virologic failure, which conferred a higher rate of overall treatment resistance to the NNRTI class compared to Bristol-Myers Squibb’s (NYSE:BMY) Sustiva – a component of Atripla. This means Complera is likely to be reserved for patients with lower viral loads, thought to account for about a third of new patients.

Still, others believe that this will be offset by the fact that Atripla cannot be used in women of childbearing age, due to a teratogenicity risk. Complera has no such restriction.

Analysts at UBS believe many are underestimating the potential of the new agent. They have pencilled in sales of $537m for 2012, compared to EvaluatePharma consensus of $201m. Conversely, Goldman Sachs is particularly pessimistic on the drug’s chances of commercial success, modelling just $63m of sales in 2012.

All eyes

Although Complera is a fairly important cog in Gilead's life-cycle management wheel, the product that analysts believe could make the biggest difference is quad.

Gilead is testing the quad pill against Atripla in 700 patients in a 48-week trial, with non-inferiority in viral load the primary endpoint. The hope is that the addition of booster cobicistat to the combination of Truvada and elvitagravir will help the combination achieve superiority over Atripla, but the belief is that even non-inferiority will result in significant sales because of fewer side effects.

The trial is expected to read out in the third quarter.

Continuing to deliver effective HIV products to the market will assure Gilead's dominance in this field, built on the strength of such products as Viread and Truvada. Looming patent losses means new and differentiated products are essential.

Approval of Complera will help, but quad remains Gilead's main event this year.
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