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J&J /Gilead HCV Combo Drug Filed

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Janssen Research & Development, LLC, a part of the Johnson & Johnson (JNJ) family of companies, announced the submission of a supplemental New Drug Application (sNDA) in the U.S. seeking approval to market the combination of its Olysio (simeprevir) and Gilead Sciences’ (GILD) Sovaldi (sofosbuvir) for treating HCV. While Olysio is an NS3/4A protease inhibitor, Sovaldi is a nucleotide analog NS5B polymerase inhibitor.

Johnson & Johnson is seeking to expand Olysio’s label for treating genotype 1 chronic HCV infected treatment-naïve adults with advanced fibrosis and null responders with all stages of liver fibrosis. Approval for the cocktail therapy has been sought on the basis of data from a phase II study (:COSMOS), which included treatment-naïve patients with advanced fibrosis and null-responders with all stages of liver fibrosis.

Last month, Johnson & Johnson commenced phase III trials (:OPTIMIST) to evaluate the safety and efficacy of the combination without interferon or ribavirin for the treatment of chronic genotype 1 HCV infection.

Olysio is currently available in the U.S. (following approval late last year) in combination with pegylated interferon and ribavirin for treating chronic HCV (genotype 1) infected adults with compensated liver disease. The drug recorded sales of $354 million in the first quarter of 2014. Sales of Olysio will pick up in the event of its label being expanded to include use in combination with Gilead’s blockbuster HCV treatment.

Sovaldi, which was approved in the U.S. for HCV treatment in Dec 2013, performed brilliantly in the first quarter of 2014. The drug recorded sales of $2.27 billion in its first full quarter in 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.

Apart from the filing, Gilead was also in the news when it announced that its board of directors has cleared a plan to buy back up to $5 billion of its common stock. The scheme is in addition to the $5 billion repurchase plan which was announced in Jan 2011. Gilead said that it is expected to be completed by Sep 2014 (currently $2.9 billion remain). The new program will expire three years after the completion of the present repurchase program. The authorization of the new buyback program highlights Gilead’s efforts to enhance shareholder value.

While Johnson & Johnson carries a Zacks Rank #2 (Buy), Gilead is a Zacks Rank #1 (Strong Buy) stock. Stocks such as Alexion Pharmaceuticals (ALXN) and Emergent BioSolutions (EBS) carry the same rank as Gilead.

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