BioPharm Executive: Shareholders Before Patients?

Published: Apr 25, 2012

Shareholders Before Patients

It's been a great month for Gilead Sciences in the clinic; when it comes to public relations, maybe not so much.

It all happened in Barcelona, where the European Association for the Study of the Liver (EASL) annual meeting just wrapped up (without me in attendance, unfortunately). All eyes were on Gilead and GS-7977, the hepatitis C nucleotide NS5B inhibitor it acquired for the kingly sum of $11 billion.

Gilead has lately seen volatility around its hep C program that brings to mind the Republican presidential primary. Early data seemed to justify--at least to Gilead's management--the high price it paid for Pharmasset's assets. But subsequent data on GS-7977 in "null" responders--folks who'd failed previous treatments and turned out to fail GS-7977 as well--understandably got a lot of investors worried.

Gilead is back on top, at least for now. Data from two studies presented at EASL confirmed earlier results, and then some. Particular impressive was a phase 2 study that showed a 100%--100%!--success rate in genotype 1 patients treated with GS-7977 plus the Bristol-Myers Squibb NS5A replication complex inhibitor daclatasvir. (Success in this case was measured by SVR4, a sustained viral response four weeks after the end of treatment and an early indicator of a possible cure).

And there's the rub. GS-7977 + daclatasvir now looks like it stands head-and-shoulders above other hep C contenders working their way through development. But according to a report from The Street, Gilead has said it is "not interested" in pursuing further development of the combination with BMS. Why? Because it doesn't want to give up full ownership of a blockbuster therapy.

That's brought scorn on the company from some commentators (like The Street's Adam Feuerstein) as well as some less-than-charitable comments in the Twitosphere and from some patient groups. However, I think Gilead is not only following a reasonable path, but indeed the one it must in order to meet its fiduciary duty to shareholders.

First of all, Gilead hasn't said that a deal with BMS is off the table--it just hasn't reached a decision yet. The company has its own NS5A inhibitor, GS-5885, which may work as well or better than daclatasvir. It behooves management to explore the possibility of an all-Gilead therapy, and to at least use this potential strategy as leverage for more favorable deal terms with BMS. (In this regard it also doesn't hurt that BMS's other hep C candidates--most notably BMS-986094, which the company got by acquiring Inhibitex for a hefty price--didn't come out of EASL looking so strong. If BMS-986094, a nuke in the same category as GS-7977, was really looking good, BMS might also take a page from Gilead's book at refuse to share its toys.)

While it would be disappointing to see Gilead truly close the books on a superior therapy, the realities of drug development sometimes call for companies to do selfish things. Recall how about a year and half back, Plexxikon (now part of Daiichi Sankyo) raised an ethical debate by continuing to amass survival data on the melanoma drug Zelboraf even after it produced clearly life-extending results in clinical trials.

It's a little like securing your own air mask before helping those around you. It doesn't feel right, but it's selfishness with a purpose. In an industry where great science is nothing without generous capital, investors need to believe their interests come first. Otherwise, those fantastic new therapies will dry up and nobody wins. And Gilead is playing to its strength by following a path parallel to its HIV strategy. It is moving into hep C with patients in mind: Through an all-oral, once daily regimen with a high cure-rate and a good side-effect profile.

-Karl Thiel

Read the BioPharm Executive online newsletter April 26, 2012.

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