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Encouraging Results on Gilead's Sovaldi

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Gilead Sciences, Inc. (GILD - Free Report) announced encouraging top-line results from a phase III study (GS-US-334-0118: n=156) in Japan on its potential blockbuster chronic hepatitis C virus (HCV) infection treatment Sovaldi (sofosbuvir: nucleotide analog polymerase inhibitor).

The study is evaluating the all-oral combination of Sovaldi and ribavirin in patients suffering from the genotype 2 version of chronic HCV. Gilead said that the phase III study met its primary efficacy endpoint of superiority compared to a predefined historical control sustained virologic response (SVR) rate. Data from the study revealed that 97% of the evaluated genotype 2 HCV patients on being treated with the cocktail therapy achieved a SVR 12 weeks after completion of the therapy.

Sovaldi was approved in the U.S. in Dec 2013 and launched immediately thereafter. The drug performed impressively in the fourth quarter of 2013 recording U.S. sales of $136.4 million. European approval of the drug came in Jan 2014.

The incidence of chronic HCV is on the rise in Japan with a significant proportion of patients being affected by the genotype 2 version of the virus. Consequently approval in Japan would further boost the drug’s sales potential. Approval would bring down the duration of therapy significantly. Currently, HCV therapy includes up to 48 weeks of treatment with a regimen inclusive of injectable peg-IFN.

Moreover, the current standard of care comes with several side effects which make it difficult for patients to remain on treatment. Encouraged by the positive results, Gilead intends to seek Japanese approval for the drug by mid-2014.

Gilead is also seeking approval to market a fixed-dose combination of ledipasvir (NS5A inhibitor) and Sovaldi (with or without ribavirin) for treating adults with chronic HCV genotype 1 infection in the U.S., EU and Canada. Gilead is evaluating the efficacy and safety of the combination in a phase III study in Japan for treating patients with genotype 1 chronic HCV infection, the most common HCV strain in the country.

Sustained virologic response data 12 weeks after completion of therapy are expected in the latter half of 2014. We note that AbbVie (ABBV - Free Report) is also aiming to bring an all-oral, interferon-free therapy into the market for treating genotype 1 HCV.

Though pleased with the update on Sovaldi regarding the Japanese phase III study, we believe that investor focus will remain on Gilead’s response to the letter issued by the Congress’ Committee on Energy and Commerce last week expressing concerns about the exorbitant price tag ($84,000 for a 12-week treatment period) attached to the drug. Since HCV is more prevalent in the low-income strata of the society, Gilead’s pricing policy has attracted severe criticism.

Gilead carries a Zacks Rank #1 (Strong Buy). Alexion Pharmaceuticals, Inc. (ALXN - Free Report) and Alkermes (ALKS - Free Report) are examples of biopharma stock carrying same rank as Gilead.

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