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Gilead Shows More Pipeline Progress

Zacks Equity Research

Gilead Sciences (GILD), which is basking in the glory of the exceptional performance of its newly approved hepatitis C virus (:HCV) drug Sovaldi, announced encouraging results from a phase II study (HARMONY: n=134) on the combination of its chronic angina treatment Ranexa (ranolazine) and Sanofi’s (SNY) heart drug Multaq (dronedarone: given in low dose) in patients suffering from atrial fibrillation (an abnormal heart beat or arrhythmia).

Data from the randomized, double-blind, placebo-controlled, 12-week study revealed that there was greater reduction in atrial fibrillation burden (AFB) from baseline in patients treated with the cocktail therapy compared to those treated with either drug as a monotherapy. The primary goal of the study was the change in AFB over 12 weeks. The time a patient was in atrial tachycardia/atrial fibrillation (percentage of total recording time continuously from 0 to 12 weeks) was defined as AFB in the study.

Following the encouraging results from the phase II study, Gilead intends to evaluate the above combination (fixed dose) in a phase III study. Successful development and subsequent commercialization of the cocktail therapy would augment Gilead’s top line significantly, since the AF market has great unmet medical need.

Detailed data from the study was presented at the heart rhythm society’s annual meeting. At the same forum, Gilead presented encouraging phase I data on its candidate GS-6615.

Data revealed that treatment with the candidate resulted in the shortening of the QTc interval (the time between the start of the Q-wave and end of the T-wave in the heart’s electrical cycle) in patients suffering from long QT-3 (LQT3) syndrome, a cardiovascular disorder. Encouraged by the results, Gilead intends to evaluate the candidate in a phase II study in the above indication later in the year.

Though impressed by the pipeline developments at Gilead, we believe investor focus will remain on the performance of Sovaldi going forward. The drug performed brilliantly (sales of $2.27 billion) in its first full quarter in the market. We expect Sovaldi sales to continue growing throughout 2014.

The blockbuster product should see strong demand until an improved treatment enters the market. The product’s outstanding performance in the first quarter of 2014 should go a long way in justifying its high price tag. The drug costs $84,000 for a 12-week treatment period in the U.S. We remind investors that Sovaldi’s high price had invited criticisms from various quarters.  

Gilead carries a Zacks Rank # 1 (Strong Buy). Illumina (ILMN) and Myriad Genetics (MYGN) carry the same rank as Gilead in the healthcare sector.

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