Gilead's (GILD) HBV Drug Vemlidy Receives Approval in Canada

Gilead Sciences Inc. GILD announced that hepatitis B virus (HBV) drug Vemlidy has been approved in Canada.

Health Canada granted a Notice of Compliance NOC for Vemlidy 25mg tablets, a once-daily treatment for adults with chronic HBV infection with compensated liver disease.

The approval was supported by positive data from the 48-week data from two international phase 3 studies among treatment-naïve and treatment-experienced adult patients with chronic HBV infection.

Vemlidy showed antiviral efficacy similar to and at a dose less than one-tenth that of Gilead's other HBV drug, Viread. The data also showed that Vemlidy has greater plasma stability and delivers tenofovir to hepatocytes more efficiently compared to Viread. As a result, it can be administered at a lower dose, resulting in less tenofovir in the bloodstream which in turn leads to better renal and bone laboratory safety parameters compared to Viread.

Both studies met their primary endpoint of non-inferiority to Viread. The study was based on the percentage of patients with chronic hepatitis B with plasma HBV DNA levels below 29 IU/mL at 48 weeks of therapy. Moreover, patients in the Vemlidy arm also experienced numerically higher rates of normalization of blood serum alanine aminotransferase ALT levels.

We note that the European Commission granted marketing authorization to Vemlidy in Jan 2017. The drug was also approved by the FDA in Nov 2016. 

The approval will strengthen Gilead's HBV portfolio which comprises Viread and Hepsara.

However, Gilead's HBV portfolio faces competition from Bristol-Myers Squibb's BMY Baraclude and Novartis' NVS Tyzeka/Sebivo.

We note that Gilead is a leading player in both the HIV and HCV markets. However, the HCV franchise has been under pressure for a while now due to competitive pressure. This in turn has led to a sharp decline in share price.

Shares of Gilead have underperformed the Zacks classified Medical-Biomedical and Genetics industry in the last year, with the stock losing 19.9% during this period, compared with the industry's gain of 2.0%.

The HIV franchise of Gilead is performing well and should help the company combat the persistent decline in HCV franchise.  

Zacks Rank & Key Pick

Gilead currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector worth considering is VIVUS, Inc. VVUS which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

VIVUS' loss per share estimates narrowed from 50 cents to 39 cents for 2017 over the last 30 days. The company posted positive earnings surprises in each of the trailing four quarters, with an average beat of 233.69%.

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