Johnson & Johnson/Gilead Deal Could Yield More Combinations in HIV

by: EP Vantage

Johnson and Johnson's (NYSE:JNJ) new licensing agreement with Gilead Sciences (NASDAQ:GILD) for its protease inhibitor Prezista to develop a new combination drug using booster drug cobicistat says a lot about the clever life-cycle management strategy J&J has come up with for the drug.

Prezista is the second biggest protease inhibitor on the market (see table), but is due to lose patent protection in 2015. This will coincide with several of the other best sellers in the market also succumbing to generics, one of reasons the whole class is expected to start see falling sales by 2016. By hitching its wagon to Gilead's experimental boosting agent, J&J could extend the drug's patent life out to 2027 according to UBS analysts, a very neat get out of jail card.

Both Teva (NYSE:TEVA) and Mylan (NASDAQ:MYL) have already started to test the patents on Prezista, sales of which are set to peak at $1.46bn in 2016. Prezista is J&J's second most valuable drug and worth $5.71bn, according to EvaluatePharma's NPV Analyzer, so protecting it with a combination would be a big win.

New horizons

The potential deal would also give Gilead an in to the protease market, an area it has previously steered clear of. UBS also believes that the combination would help Prezista, which already has a third of the protease inhibitor market, increase share.

Interestingly, at the same time J&J is trying to negotiate terms for the development and commercialisation of a new quad combination with Gilead, using Prezistam, Emtriva, GS 7340 and cobicistat. The two groups already collaborate over a follow on to Gilead's best selling drug Atripla, dubbed "Btripla" (J&J's Edurant approval sets stage for Btripla main event, May 23, 2011)

How this drug would stack up against Gilead's own Quad is unknown. As approval of any Prezista-based four drug combination would be many years away it is unlikely to cannibalise sales of Quad. But the drug will use the next generation version of tenofovir, so could theoretically have increased efficacy.

Creating more effective combinations of HIV drugs is now a mainstay of drug development for this illness. Fewer pills equal better compliance among HIV suffers and therefore better overall health of patients, playing well with regulators, payers and patients.

Future promise

Under the agreement announced yesterday, J&J would be responsible for developing the Prezista and cobicistat combination. Bringing the new quad pill to the market would remain the responsibility of Gilead. Investors appeared to take the news well and Gilead shares have risen by almost 4% over the last two days.

The timing of the deal, however, has led UBS to question whether the pharma giant might have seen some of Gilead's Quad data, a read out of which is widely expected in the third quarter of the this year, and made its decision based on this (Event - Gilead manufacturing subpoena could steal Quad limelight, June 13, 2011).

If this is the case, then it is unlikely the data is bad, which should bode well for both the final read out and Quad approval.

However, if J&J is doing this blind and the Quad data does not live up to its promise, any negative effects could be mitigated by the prospect of a combination of Prezista and cobicistat.

Annual Sales WW - ($m)
Rank Product Generic Name Company Patent Expiry 2010 2016 CAGR
1 Reyataz atazanavir sulfate Bristol-Myers Squibb (NYSE:BMY) Jun 2017 1,479 1,689 2%
2 Prezista darunavir ethanolate Johnson & Johnson Aug 2014 857 1,238 6%
3 Kaletra lopinavir; ritonavir Abbott Laboratories (NYSE:ABT) Jun 2016 1,255 1,010 (4%)
4 Lexiva/Telzir fosamprenavir calcium GlaxoSmithKline (NYSE:GSK) Dec 2017 240 213 (2%)
5 Aptivus tipranavir Boehringer Ingelheim Jun 2019 69 101 7%
6 Crixivan indinavir sulfate Merck & Co (NYSE:MRK) May 2012 206 98 (12%)
7 Futhan nafamostat mesylate Torii Pharmaceutical (OTC:TRXPF) - 68 47 (6%)
8 Viracept nelfinavir mesylate Pfizer (NYSE:PFE) Apr 2014 53 35 (7%)
9 Prezista darunavir ethanolate Pharmstandard - 31 30 (0%)
10 Norvir ritonavir Abbott Laboratories May 2015 364 27 (35%)

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