Gilead: A Step in the Right Direction

Includes: GILD, NVS
by: EP Vantage

Gilead Science’s (NASDAQ:GILD) efforts to expand its repertoire beyond its successful HIV portfolio got a small boost this week after the group managed to secure US approval for its cystic fibrosis (CF) drug, Cayston, at the second time of asking.

However, winning approval for the drug is unlikely to take much attention away from the HIV franchise. Cayston is only forecast to have sales of $188m by 2014 and this is a rather small contribution to group sales, compared with $4.87bn combined sales that the group’s two biggest drugs, Truvada and Arplia, notched up last year. The small contribution was reflected in the fact that winning the support of the FDA failed to move the needle on Gilead shares, which finished Tuesday 53 cents lower on the news.

The lack of share price movement was underlined by the fact that approval was widely expected given both the positive advisory committee decision in December and the lack of new treatment options available for CF sufferers as previously pointed out by EP Vantage (Event - Gilead hoping for second chance with Cayston PDUFA, February 02, 2010).

Fresh option

While the markets may not have been excited the approval will be gratefully received by the CF community, which is desperate for new treatments. Gilead is wasting no time meeting any new demand, forging ahead with plans to launch the drug by the end of next week.

Also as a new therapy option take up of Cayston should be good, despite it going up against Novartis' (NYSE:NVS) TOBI, which has pretty much had little competition since it launched in December 1997.

Analysts are predicting that the drug could capture 30% of TOBI's market share, mainly driven by the fact that doctors are worried about growing resistance issues surrounding the older drug, which like Cayston is an antibiotic that treats the chest infections suffered by CF patients.

Gilead is also increasing its chances of taking more sales from the Novartis drug by launching head-to-head trials. The results, which are due in the middle of this year, will determine just how much switching will go on.

The results should also support Gilead’s application to get Cayston approved in Europe, where the drug already has conditional approval and could hit the market before the end of the year if the regulatory path remains smooth.

Continuing the momentum

With the Cayston win under its belt Gilead now needs to get to work on the rest of its drugs outside of HIV, although last week the franchise did receive a big boost in the form of positive data for its Quad pill (Elvitegravir + GS 9350 + Truvada) (Gilead’s Quad could square generic challenges to HIV franchise, February 18, 2010).

But with the failure of hypertension treatment, darusentan, in December of last year, one of the drugs that the group ostensibly used to justify Gilead’s $1.4bn purchase of CV Therapeutics, and less than impressive sales of Ranexa, Gilead looks as if it has its work cut out (Gilead has little to show for its expensive CV push, December 15, 2009).

As such, the group will be hoping that two of the phase III candidates that it inherited from the purchase: Adentri, a drug for heart failure, and CVT-510, an arrhythmia drug, will, like Cayston, eventually make it through to approval.