Bullish on Gilead

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Gilead Sciences, Inc. (GILD) had a very successful 2013 driven by its strong product portfolio. The biopharmaceutical company ended the year on a high with its blockbuster hopeful, Sovaldi, gaining U.S. approval for treating patients suffering from chronic hepatitis C virus (:HCV).

Sovaldi, with its high cure rates, a short treatment period and reduction/elimination of the need for interferon injections, has the potential to change the treatment paradigm in the HCV space. The approval has been highly welcomed by HCV patients, many of whom have postponed their treatments waiting for a better therapy like Sovaldi to gain approval. We expect uptake in Sovaldi sales to be rapid, given its broad label and the pent-up demand for new HCV therapies.

The U.S. approval for Sovaldi comes a few weeks after the clearance of Johnson & Johnson’s (JNJ) Olysio in combination with peg-IFN and ribavirin for treating chronic HCV patients.

The European approval of Sovaldi is also on track with the European Medicines Agency’s (:EMA) Committee for Medicinal Products for Human Use (CHMP) recommending its approval in the EU in Nov 2013. The positive opinion by the CHMP will be reviewed by the European Commission, which will issue final opinion on whether to approve the HCV candidate in the EU.

Other newly launched drugs like HIV therapies Complera/Eviplera (launched in 2011) and Stribild (launched in 2012) also performed very well during 2013. These drugs are expected to continue their strong performance in 2014 as well. In Dec 2013, Complera/Eviplera’s label was expanded. Complera can now replace the existing antiretroviral treatment regimen in HIV infected adults. This should boost the sales potential of the drug further. The European approval of HIV drug Vitekta (elvitegravir) in Nov 2013 is another positive for Gilead.

Apart from the strong product portfolio, Gilead boasts of a robust pipeline. One of the most interesting candidates at Gilead is idelalisib (formerly GS-1101). The candidate, added to Gilead’s pipeline through its acquisition of Calistoga Pharmaceuticals in 2011, is being developed for multiple indications.

At the annual meeting of the American Society of Hematology (ASH) in Dec 2013, Gilead presented encouraging data on the candidate from a phase II study (101-09: n=125) in the indolent non-Hodgkin’s lymphoma (iNHL) indication, for which Gilead is seeking U.S. approval. Gilead also intends to seek approval for idelalisib in the chronic lymphocytic leukemia (:CLL) indication and is in discussions with the FDA regarding the same. Idelalisib is under review in the EU in the CLL as well as iNHL indications. With the acceptance of Gilead’s request for accelerated assessment by the European Medicines Agency’s (:EMA) Committee for Medicinal Products for Human Use (CHMP), idelalisib is expected to be available in the EU in the latter half of 2014 (assuming approval).

Idelalisib on approval will augment Gilead’s top line further. Another promising candidate in Gilead’s pipeline is GS-9973. Encouraging interim data on the candidate from a phase II study was also presented at the ASH in patients with relapsed or refractory CLL or NHL. The successful development and subsequent commercialization of the pipeline candidates would boost Gilead’s top line further.

In view of the above positives, we expect the company to perform well in 2014 as well. The company carries a Zacks Rank #3 (Hold). Some better-ranked companies include Jazz Pharmaceuticals (JAZZ) and Forest Laboratories Inc. (FRX). Both stocks carry a Zacks Rank #1 (Strong Buy).

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