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Gilead Sciences, Inc. (GILD - Analyst Report) recently settled its dispute with Teva Pharmaceutical Industries Limited (TEVA - Analyst Report) regarding the former’s antiviral drug Viread. Viread is marketed for treating HIV infection as well as chronic hepatitis B. Following the agreement, Teva can launch its generic version of Viread on Dec 15, 2017.

We remind investors that Gilead received a notice in Jan 2010 that Teva had filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (FDA), seeking to market a generic version of Viread. Gilead challenged the application in Mar 2010.

By filing the patent infringement lawsuit, within the required 45-day period, Gilead ensured a 30-month stay.  The stay prevented the FDA from clearing Teva’s ANDA during that time period under the Hatch Waxman Act. The 30-month stay came to an end in Jul 2012.

However, due to the court's scheduling orders, Teva was prohibited from launching at risk its generic version of Viread following the expiry of the 30-month stay. With the settlement agreement being announced, the trial, which was scheduled to commence on Feb 20, 2013 in the US, was adjourned.  We are positive on Gilead’s settlement of its dispute with Teva since Viread is one of the key drugs in the former’s product portfolio.

We note that apart from its settlement with Teva, Gilead was in the news recently when it presented encouraging phase III data on its chronic hepatitis C virus (HCV) candidate sofosbuvir. Gilead intends to seek regulatory approvals for the candidate in the US and EU in the second quarter of 2013.

Successful development of sofosbuvir would not only boost Gilead’s top line, but also would strengthen its position in the lucrative HCV market. A huge population suffers from HCV infection across the world. However, the treated population is much lower.

Gilead, a biopharmaceutical company, currently carries a Zacks Rank #3 (Hold). Biopharma stocks, which are presently well placed, include Array Biopharma (ARRY - Snapshot Report) and Medivation, Inc. (MDVN - Analyst Report). Both stocks carry a Zacks Rank #2.

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