Gilead Drug Up for European Review

Recently, Gilead Sciences, Inc. (GILD - Analyst Report) announced that its marketing application seeking approval for its candidate cobicistat in the EU has been validated by the European Medicines Agency (EMA).

Cobicistat acts as a “boosting” agent whose addition causes blood levels of protease inhibitors -- such as Bristol-Myers’ (BMY - Analyst Report) HIV drug Reyataz and Johnson & Johnson’s (JNJ - Analyst Report) Prezista -- to increase, thereby enabling the HIV therapy to be dosed once daily. We note that cobicistat only acts as a boosting agent without any antiviral activity.

The marketing authorization application (MAA) was filed by Gilead on April 26, 2012, the day the company disclosed its first quarter 2012 earnings results. The MAA was filed on the basis of pharmacokinetic data from a study which revealed that the addition of cobicistat boosted the exposure of HIV therapies Reyataz and Prezista similar to Abbott Laboratories’ (ABT - Analyst Report) HIV therapy Norvir.

Currently, Norvir is the only boosting agent available for treating HIV. The MAA also contained data from a phase III study which showed that cobicistat was non-inferior to Norvir over 48 weeks. Gilead intends to seek approval from the U.S. Food and Drug Administration (FDA) for cobicistat in the third quarter of 2012. Positive news from the FDA and EMA regarding cobicistat would boost the HIV portfolio at Gilead further.

We note that Gilead has partnerships with Janssen R&D Ireland (a unit of Johnson & Johnson) and Bristol-Myers for developing cobicistat as a fixed-dose combination therapy. While the deal with Johnson & Johnson pertains to the development of cobicistat with Prezista, the deal with Bristol-Myers pertains to the development of cobicistat in combination with Reyataz.

Neutral on Gilead

We have a Neutral recommendation on Gilead. Our long-term stance is in line with the Zacks #3 Rank (Hold rating) carried by the company in the short run.

We remain optimistic on the growth prospects of Gilead's HIV drugs Truvada and Atripla. 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 the upcoming patent expirations.

Gilead is looking to combat the threat of genericization by inking deals and making acquisitions and introducing new products.