Gilead Shares Hit All-Time High On Positive Trial For Hep C Drug

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Shares of Gilead Sciences (GILD) jumped nearly 14% and hit a new high Monday after the biotech reported that its hepatitis C regimen produced a 100% cure rate in a late-stage trial.

At the annual Liver Meeting in Boston, Gilead reported that all 25 patients in the study showed a sustained virological response after a 12-week course of treatment with standard oral treatment ribavirin along with Gilead's two drug candidates, GS-5885 and sofosbuvir (formerly known as GS-7977). The group included only patients with genotype 1 of the virus, which accounts for about 70% of all U.S. hepatitis C cases who had never been treated before. Such patients are known as "naives.

Late Monday, another 12-week study was presented combining sofosbuvir with Bristol-Myers Squibb's (BMY) candidate daclatasvir, without ribavirin. It showed a 98% cure rate, with the other 2% representing missing data rather than a negative result.

The simplicity of this regimen makes it even more competitive, analysts say.

"This completes the 'best case scenario' for Gilead at this year's liver meeting," wrote ISI Group analyst Mark Schoenebaum in an email to clients. "One can now reasonably conclude that Gilead has a safe, once-per-day pill that can cure 90%+ of naïve genotype 1 hep C patients.

The market's reaction appeared to put Gilead in the lead again in what is increasingly a two-horse race with Abbott Laboratories (ABT) to produce the first interferon-free treatment for the disease.

Hepatitis C has long been treated with a combination of ribavirin and pegylated interferon, in a regimen that usually lasts six months. But the interferon's flu-like side effects make it a rough experience for patients. And some patients, known as null responders, aren't helped by the treatment at all.

The pursuit of this potential market, which some analysts estimate at $20 billion annually, led Gilead to plunk down $11 billion last year to buy Pharmasset, sofosbuvir's developer.

Last month Abbott, which had been quietly developing its own candidates in-house, surprised Wall Street with an excellent response rate for its own regimen. At this weekend's meeting, Abbott presented more detailed data from the phase 2b trial. The data showed that a combination of three of its candidates with ribavirin yielded a 97.5% response rate in treatment-naive genotype 1 patients.

Wells Fargo analyst Larry Biegelson is currently modeling Abbott's revenue from the hep C franchise at $900 million by 2016.

Abbott's shares rose a small fraction to close at 64.87. Gilead rose 13.7% to close at 73.93.

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