Gilead: All Eyes On FDA This Week

| About: Gilead Sciences, (GILD)

Summary

Gilead is seeking approval for Hepatitis C Genotypes 1-6.

Approval would help to expand patient population eligible for Gilead products.

Gilead's last two Hepatitis C treatments have been blockbusters.

Click to enlargeWhile the world pays attention to Brexit, investors in pharmaceutical stocks will be watching the FDA for decisions on PDUFA dates. One big decision that is expected out this week, has the potential to substantially expand Gilead Sciences (NASDAQ:GILD) pipeline of treatments for HCV. This treatment has the potential to be very important for Gilead Investors and has the potential to help revolutionize the way that we treat HCV in the United States.

Gilead's Existing HCV Pipeline

Gilead is very well known for its pipeline of drugs for Hepatitis C Virus. It has two of the best selling HCV drugs, Harvoni and Sovaldi brought in a combined $4.29 billion last quarter. Both of these drugs have been controversial for their high price tag, and have even been the subject of patent litigation between Merck (NYSE:MRK), Ionis Pharmaceuticals (NASDAQ:IONS) and Gilead, which Gilead recently won. Clearly, protecting its dominance in the HCV space is important for Gilead's long term vision for the company.

Gilead's New HCV Treatment

Gilead is seeking approval for a combination of Sovaldi, and investigational drug Velpatasvir in Hepatitis C genotypes one through six. The drug has a PDUFA date of June 28, 2016. One of the biggest problems with Harvoni and Sovaldi are that the drugs are indicated for only certain genotypes of Hepatitis C. Patients with genotypes outside of the ones that Harvoni and Sovaldi are approved for, are not eligible for the drug. Hepatitis C has six genotypes. Numbers one through four are eligible for use with Harvoni and Sovaldi. While genotypes five and six are rare within North America, most of the treatment options that exist for Hepatitis C do not cover genotypes five and six. Having a treatment that has the potential to cover all six genotypes of Hepatitis C could be a game changer for doctors. Should the pill be approved, it would make it easier for doctors to start treatment without having to test patients for their genotype of Hepatitis C. One of the biggest differentiators in Harvoni vs. Sovaldi is that Harvoni is not approved for Genotype 2 and is only approved for some types of Genotype three. While Sovaldi covers the gaps for genotypes 1-4, it still would be easier for doctors if they did not have to test genotypes and instead could move straight into treatment options with a relative degree of certainty. This could also help to give Gilead a leg up in the market.

Competition

Gilead has been facing intense competition from AbbVie (NYSE:ABBV) with its competing drug Viekira Pak, and Merck with its competing drug Zepatier, which is priced well below Viekira Pak and Harvoni and Sovaldi. While Gilead may be feeling pricing pressure, I would expect for Gilead's new pill to be priced in line with Harvoni and Sovaldi, and the benefits of the new pill may give it a leg up on its lower priced competition. Gilead needs a differentiator to continue to help its Hepatitis C pipeline standout, and it might be about to receive a gift from the FDA.

Conclusion

Gilead may once again be set to help revolutionize the treatment of Hepatitis C. Should it obtain approval, Gilead's new drug will be able to treat Genotypes 1-6, expanding the patient population eligible for Gilead's drugs. Gilead investors should be watching closely as the FDA is set to make a decision on the drug this week.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in GILD over 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.