Gilead’s Positive Data

Gilead Sciences Inc. (GILD - Analyst Report) recently presented positive data from a 3 year (144-week) open label two pivotal phase III clinical trials – Studies 102 and 103, evaluating the safety and efficacy of once-daily Viread (tenofovir disoproxil fumarate) among adult patients with chronic hepatitis B virus (HBV) infection. The company will present this data at the upcoming annual meeting of the American Association for the Study of Liver Diseases in Boston this week. The drug was approved by the US Food and Drug Administration for chronic hepatitis B in adults in 2008.

It was observed that 87% and 71% patients of the two study groups, study 102 and 103, respectively, experienced sustained suppression of HBV DNA levels in the blood (below 400 copies/mL) after receiving Viread for up to 144 weeks. In addition, cumulatively over 144 weeks, 8% of patients in Study 103 (HBeAg-positive) experienced “s” antigen (HBsAg) loss, which can contribute to resolution of chronic hepatitis B infection. We note that no mutations associated with resistance to Viread developed in any patient during treatment – a significant finding for the treatment of patients with chronic hepatitis B.
 
Gilead reported strong third quarter results driven by robust performance of its key products. Viread recorded $156 million of sales, up 9% compared to the year-ago period. The company, apart from being a leading player in the core HIV franchise is making significant progress in the HBV market as well. Gilead is trying to transfer patients from Hepsera to Viread for chronic HBV. Hepsera was the market leader along with Bristol Myers Squibb’s (BMY - Analyst Report) Baraclude as recently as August 2008.  However, once Viread was launched, Hepsera has been quickly losing market share to Viread.
 
At the end of September 2009, for total HBV prescriptions, Viread’s estimated market share of total HBV prescriptions was approximately 30% and Hepsera 22%. When added together, Gilead’s HBV franchise is the market leader with 52% market share. We note that Gilead management is no longer actively promoting Hepsera; accordingly, we expect the decline in Hepsera to accelerate as Viread directly benefits. Viread is gaining market share in Europe as well – as of July 2009, Viread’s HBV market share was estimated to be 16% compared to 9% at the beginning of the year. We have a Neutral recommendation on the stock.

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