Fate on Gilead Quad Set for Aug ཈

Gilead Sciences, Inc. (GILD - Analyst Report) recently announced that the US Food and Drug Administration (FDA) will give its decision regarding approvability of its most anticipated HIV pipeline candidate, the Quad pill, on August 27, 2012. Quad is a combination of Gilead pipeline candidates elvitegravir and cobicistat and its marketed HIV drug Truvada. Gilead had filed the new drug application (NDA) for approval of Quad on October 27, 2011. This means the review will take the standard time of 10 months rather than the six-month priority review which the company had requested.

Last week, Gilead filed a Marketing Authorisation Application (MAA) for Quad in the European Union. Both the MAA as well as the NDA were based on positive data from two late stage studies of Quad, study 102 and 103.

Our Recommendation

We currently have a Neutral recommendation on Gilead. The stock carries a Zacks #3 Rank (short-term Hold rating).

We are optimistic about the growth potential of Gilead’s HIV franchise drugs, Truvada and Atripla. Moreover, Gilead’s strategy of creating fixed-dose combinations of existing HIV drugs has yielded enormous success. We believe the positive outcomes of two late stage trials of Quad pill will lead to its approval. Subsequent to regulatory clearance, Quad has the potential to reach blockbuster status and become a market leading HIV medicine.

We are also encouraged by the approval of Complera/Eviplera, which together with Quad, once approved, will further fortify the HIV franchise and help mitigate the impact of upcoming patent expirations. We are, nonetheless, concerned about patent challenges against Gilead’s key HIV drugs. We maintain a cautious stance until Complera/ Eviplera and the current pipeline proves their worth, compensating for lost revenues from patent expiries.

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