NEW YORK (AP) -- Shares of Gilead Sciences Inc. jumped Friday after the company reported further progress of GS-7977, a newly-acquired hepatitis C treatment still in clinical testing.
THE SPARK: Gilead said Thursday that in a clinical trial, two groups of patients who were treated with GS-7977 had undetectable levels of the hepatitis C virus after four weeks. The patients took GSI-7977 and ribavirin, an older treatment for the virus, and they had either failed to respond to previous therapies or had not been treated before. In November, Pharmasset Inc. — which developed the drug and was acquired by Gilead in January — said 100 percent of patients in a study responded to the drug.
THE BIG PICTURE: Gilead, of Foster City, Calif., bought Pharmasset to get the rights to that drug and other compounds Pharmasset was developing. The GS-7977 pill may be the most promising of several experimental therapies for hepatitis C, which helps explain why Gilead paid $11.1 billion for Pharmasset — a figure that on a per-share basis amounted to more than twice what Pharmasset's stock was trading at before Gilead made its offer.
Gilead also reported its fourth-quarter results after the market closed on Thursday. Its profit of 97 cents per share fell short of Wall Street estimates, and the company also forecast disappointing revenue in 2012.
THE ANALYSIS: Cowen and Co. analyst Phil Nadeau said Gilead's quarterly results were somewhat disappointing because the company is spending more money on drug development, but key drugs like the HIV therapies Atripla, Viread, and Truvada met expectations. Nadeau said he believes that investors are paying more attention to Gilead's drug pipeline than its current results.
"With '7977 continuing to look like the next standard of care in hepatitis C, we think investors are less focused on Gilead's near-term fundamentals," he wrote.
The Food and Drug Administration is scheduled to make a decision on Gilead's four-in-one "Quad" HIV pill by Aug. 27.
SHARE ACTION: Gilead shares rose $5.50, or 11 percent, to $54.81 in late trading. With Friday's rise, the stock is more than 40 percent since Dec. 20, when Gilead asked European Union regulators to approve the "quad" pill.
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