Don't Count Out Gilead's Oncology Portfolio Just Yet

| About: Gilead Sciences, (GILD)

Summary

Recent findings cast a pall on Zydelig in CLL, but all is not lost in the CLL space.

Ongoing studies are characterizing new drugs in hematologic malignancies and poor-prognosis solid tumors.

GILD could still make waves in the treatment landscape and in the market with its oncology portfolio, and investors should watch carefully.

A great heap of analysis has been spent on Gilead Sciences (NASDAQ:GILD) following its numerous pieces of bad news in 2016. Perhaps most notably was the stoppage of six trials containing its flagship leukemia drug idelalisib on the basis of increased risk of infection and subsequent death.

Certainly, GILD currently lives and dies on its antiviral portfolio which commands $7.2 billion of its $7.7 billion sales. Idelalisib, its only approved anticancer therapy, contributes a mere $49 million. So, it would seem insane to gauge the future trajectory of GILD on anything other than its antiviral portfolio, right?

Well, let's do just that anyway.

Future prospects of idelalisib

The first approved oncology drug for GILD was idelalisib (Zydelig) in relapsed chronic lymphocytic leukemia and other forms of non-Hodgkin lymphoma. This agent looked poised to take a significant share of the CLL market, which has become increasingly crowded, with agents like ibrutinib, bendamustine and new antibodies directed against CD20 entering the market.

Still, idelalisib was a viable treatment option in patients who failed other lines of therapy, and it looked like it could become a useful treatment option in the first line, as well, which would significantly expand its reach.

As it turns out, though, when you combine idelalisib with Rituxan, there's an alarming increase in the risk of death due to infection, as announced by the EMA this past March. Three trials were flagged by the agency, all combining idelalisib with Rituxan, and two adding bendamustine to the mix as well.

As a result, GILD suspended six of its clinical trials. More alarming, its current approval in CLL (though not follicular lymphoma or small lymphocytic lymphoma) is in combination with Rituxan, which does not bode well for expansion of the drug.

Still, exploration continues for combinations of other agents with idelalisib in previously treated CLL, which remains a high priority for therapeutic development. Ofatumumab is one such combination partner. The EMA adopted a positive opinion of this combination in previously treated disease back in February, just a month before issuing the warning for toxicity.

One encouraging finding from the phase 3 study of ofatumumab+idelalisib was the 12.7% rate of pneumonia in patients, which is comparable to historical rates of pneumonia in patients treated with Rituxan alone. The combination of idelalisib and Rituxan yields a 16% rate of pneumonia in patients.

All in all, it is difficult to say how far idelalisib can go now, but I don't feel that its story is done quite yet. It may never reach the more-than $500 million valuation that optimistic analysts predicted, but idelalisib remains an important treatment option for patients with relapsed CLL.

Other oncology drugs in the GILD pipeline

One of the most advanced developmental programs in GILD's arsenal is the development of momelotinib, a small molecule inhibitor of Janus kinases that functions similarly to Incyte's ruxolitinib. In a phase 1/2 study, momelotinib was able to achieve disease control in a high proportion of patients.

An ongoing study is conducting a head-to-head comparison of momelotinib and ruxolitinib in myelofibrosis. If it proves more efficacious, then momelotinib could capture a substantial portion of the $400 million-plus market for myelofibrosis treatment.

Momelotinib also is being assessed in combination with chemotherapy for the management of pancreatic cancer, which would be a major boon for patients if it provides benefit. However, we have not yet heard any results from these studies.

GILD also has another B-cell receptor pathway inhibitor, entospletinib, in development. This agent targets the splenic tyrosine kinase (SYK), and it has been shown to yield promising response rates (49%) and a 70% rate of 24-week progression-free survival in patients with relapsed disease. It may even prove useful in patients who have failed prior treatment with other B-cell receptor pathway inhibitors.

One wild card player in the oncology space is GS-5745, an antibody directed against the matrix metalloproteinase 9 molecule, which is implicated in gastric cancer development and metastasis. No results have been published from studies on this agent, but it did receive orphan designation from the FDA in 2015. The company subsequently initiated a study combining this antibody with doublet chemotherapy in previously untreated gastric cancer.

This form of cancer remains a high unmet need, with few treatment options providing much punch.

Conclusion

Clearly, the future outlook of a big pharmaceutical company like Gilead is based on more than one type of disease. Antivirals will make up the bulk of the company's sales for the next several years. However, the company has products in the pipeline that can be disruptive in several forms of cancer, if approved. Moreover, idelalisib is not a totally dead entity. We may see a re-emergence of this small molecule in CLL treatment with the careful conduct of clinical studies.

Given these observations, I feel that, on the oncology side of things, Gilead remains a promising player in the pharma market. I would factor its potential growth in the oncology sector into all due diligence and not focus solely on the antivirals and other agents. Long term, I believe this company has legs in cancer treatment.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.