Gilead's new HIV drug: 5 things to watch

The US approval of Stribild is a big plus for the company's AIDS treatment franchise.

By Minyanville.com Aug 28, 2012 5:39PM
The story line for Gilead Sciences (GILD) dramatically changed earlier this year when the company made a big bet on an experimental treatment for hepatitis C. After the company built its reputation as the dominant maker of HIV drugs, its $11 billion takeover of Pharmasset transformed Gilead into a leading developer of hepatitis treatments.

Yet Gilead's just-announced approval of a four-in-one pill to treat HIV is still a very significant event for the large biotech company. The once-daily drug, Stribild, will cost almost $29,000 a year. It aims to make the task of daily drug regimens easier for people infected with the AIDS virus.

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"Therapies that address the individual needs of patients are critical to enhancing adherence and increasing the potential for treatment success," Gilead CEO John C. Martins says in a statement.

Approval was widely expected, which explains why the stock is only up 1% to $57.79 Tuesday. The shares are up more than 40% on the year, largely due to excitement about the company’s prospects for eventually bringing a new hepatitis treatment to market.

Stribild is important to Gilead's near-term strategy. Here are five things to watch as the company is set to launch the drug:
  • The company is offering a drug that -- as Martin notes -- should provide a simpler daily regimen for patients. That is likely to appeal to many prescribing doctors. Gilead, the maker of Viread, Truvada, Emtriva, Complera and Atripla, needs new HIV products to maintain its dominance. Stribild is a combination of two older drugs -- Viread and Emtriva -- and a pair of experimental therapies. The experimental drugs are elvitegravir which is part of a new class known as integrase inhibitors, and cobicistat, a booster drug similar to Abbott Laboratories' (ABT) Norvir.
  • Stribild is Gilead’s third product that contains multiple drugs in a single pill for HIV. But unlike the others, Atripla and Complera, all four drugs in Stribild are owned by Gilead. Therefore it doesn’t have to share any revenue with development partners. Atripla is sold with Bristol-Myers Squibb (BMY) in the U.S. Complera includes a drug owned by Johnson & Johnson (JNJ). Stribild potentially improves Gilead’s overall profit margin.
  • Research being conducted by Gilead may support the benefits of switching from patients’ current HIV regimens to Stribild. There are three studies currently underway. "Positive data from ongoing switching trials could increase confidence amongst physicians reluctant to deviate from existing therapies," Stifel Nicolaus analyst Joel Sendek says in a note Tuesday.
  • There are potential obstacles as well. AIDS patient activists are upset about the drug’s high price and are asking states and private insurers to review the drug’s medical necessity. The AIDS Healthcare Foundation is asking state Medicaid and AIDS program directors as well as insurers to place Stribild on a so-called prior authorization status.
  • GlaxoSmithKline (GSK) and Japanese drug maker Shionogi are testing an experimental HIV treatment, dolutegravir. Study results have been positive, which means the drug may be a tough rival for Gilead if it is approved.

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