Gilead – Not Your Run of the Mill Mid-Tier Pharma

Gilead - Not Your Run of the Mill Mid-Tier Pharma

At PSW, we have been hemming and hawing about inflation/deflation, how to right Washington, oil exploration, solar flairs, irrational exhuberance in the market, and why Gilead (GILD) has lost its prominence in the market’s eye.  Experts say it is the company’s pipeline, as one of its flagship drugs is expiring in 2013.  Others allege that the company is being shorted by hedge funds because the short interest is currently trading at 1 day.  

Gilead Sciences, founded in 1987, is a leading pharmaceutical player, with more than 2,500 employees. With headquarters in Foster City, California, and operations spanning across the globe, it focuses its research and clinical programs on antivirals, antifungals and antibacterials.  Gilead’s portfolio of 13 marketed products includes a number of category firsts and market leaders. 

Gilead’s first significant entrant into the HIV market in 2001 was Viread (a nucleotide analog reverse transcriptase inhibitor, or NtRTI). Viread was recently approved for the treatment of chronic hepatitis B.  It was followed in 2003 by Emtriva, and then in 2004, Gilead’s current blockbuster product Truvada (a combination of Viread and Emtriva) was launched.  Gilead’s newest HIV product is Atripla, a combination of Truvada and Bristol-Myers Squibb’s (BMS) Sustiva, which has achieved rapid sales uptake since its launch in 2006.  Below are Gilead’s main income drivers, and as one notices, the HIV franchise is the majority of the company’s income.

In July 2009, Gilead announced a collaboration with Tibotec (a division of t Johnson & Johnson) to develop and commercialize a fixed-dose combination (FDC) of Truvada and Tibotec’s TMC278 (rilpivirine). This decision was to develop, in essence, a second generation Atripla.  Many view this as a wise move by Gilead since GSK has its integrase inhibitor, GSK1349572, which has shown positive Phase II results.  Sales of Atripla are expected to decline after 2013 (following the patent expiry of BMS’ Sustiva), so teaming with JnJ should help maintain Gilead’s already dominant FDC market share (which is projected to be 40% of the HIV market).  

As an aside, the antiretroviral sales in 2009 were estimated at $11.8 billion - and Gilead owned more than 20% of that!  But new data with the JnJ drug is starting to raise some concerns.  Overall, JnJ said a combined analysis of its trials found that, after a year of treatment, 84.3 percent of HIV patients treated with TMC278 and Truvada achieved…