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Gilead (GILD) Drops Another Bombshell, Will Shift R&D Cash Away From Hep C

11/3/2016 6:15:36 AM

Gilead Drops Another Bombshell, Will Shift R&D Cash Away From Hep C November 3, 2016
By Mark Terry, Breaking News Staff

A Catch-22 in biopharma is the fallout if you develop a drug that cures the disease. No more customers! Although that hasn’t exactly happened to Gilead Sciences (GILD) and hepatitis C (HCV), it’s definitely a factor in the company’s decision to shift its research-and-development efforts away from HCV. Todd Campbell, writing for The Motley Fool, takes a look.

At yesterday’s third-quarter report, Gilead indicated that its HCV products, Harvoni, Sovaldi and Epclusa, brought in $3.3 billion in this year’s third quarter, down from $4.8 billion in the same period last year.

Prior to about 2013, patients with HCV were treated with several multidrug cocktails that had significant side effects and required about 48 weeks or more of treatment. Sovaldi was approved in 2013 and was largely replaced by Harvoni, although Sovaldi is used in non-genotype 1 patients. HCV has six genotypes, with genotype 1 being the most common, accounting for about 70 percent of chronic HCV cases in the U.S. Harvoni is a combination of Sovaldi and ledipasivir, and mostly used in genotypes 1 and 4.

The company’s latest, Epclusa, is mostly used in genotype 2 and 3 patients. The length of treatment is about 12 weeks, sometimes only 8. The cure rate is pretty close to 100 percent.

So Gilead’s HCV franchise is being hit by its own success—fewer existing patients. In addition, AbbVie (ABBV) and Merck & Co. (MRK) have newer HCV drugs out that are cheaper than Gilead’s products, although not necessarily better. But they’re forcing Gilead to cut prices and offer discounts, which also digs into its revenue.
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The company has a fourth-generation HCV product, a three-drug cocktail, Sof/Vel/Vox that is being evaluated in late-stage trials.

At the company’s third-quarter conference call, John Milligan, Gilead’s chief executive officer, said, “From a pipeline perspective, with SOF/VEL/VOX being our fourth generation of HCV product now being approved, there really isn’t much left in terms of unmet medical need. And so from a pipeline perspective, this is really the end of what we’ll be developing in terms of HCV molecules and that will allow us then to turn our attention to the important aspects in our fibrosis and NASH franchises and our oncology franchises. So, we’ve really largely turned our attention away from HCV to those areas already.”

That may not cheer up investors much. In addition to its dropping HCV sales, the company provided a list of recently failed clinical trials and abandoned programs. Those included terminating GS-5745 for ulcerative colitis and Crohn’s disease. Its eleclazine (GS-6615) failed to meet its primary endpoint in ventricular tachycardia, ventricular fibrillation, or VT/VG, and implanted cardioverter-defibrillators.

And Gilead essentially giving up on pushing forward with its HCV research will give AbbVie and Merck a chance to eat up some of their share if they can come up with drugs that are more effective—which generally speaking means that the treatments don’t take as long—and less expensive. And Johnson & Johnson (JNJ) is currently studying a multidrug cocktail that includes a drug by Achillion Pharmaceuticals (ACHN), that might have a treatment regimen as short as six weeks.

As Campbell writes, “For now, Gilead Sciences’ dominance in the indication doesn’t appear to be in question, but if the company rests too heavily on its laurels, it may see its market share fall if competitors ramp up their efforts.”

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