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Gilead Collaborates With Insitro to Develop NASH Therapies

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Gilead Sciences Inc. (GILD - Free Report) announced a strategic collaboration with a privately-held, data-driven drug discovery and development company, Insitro, for discovering and developing therapies targeting nonalcoholic steatohepatitis (“NASH”).

Despite the failure of its late-stage NASH candidate earlier this year, Gilead remains committed to developing treatment for the indication.

Insitro, formed last year, focuses on using machine learning, an advanced form computer technology, to help pharma companies discover and develop drugs.

Per the terms of the collaboration deal, Gilead will use Insitro’s proprietary platform over the next three years to develop five potential therapies for NASH. In return, Gilead will pay Insitro an upfront payment of $15 million and $35 million in near-term operational milestone payments. Insitro will also be eligible to receive $200 million for each of the five therapies in pre-clinical, clinical, regulatory and commercial milestones from Gilead. Insitro will also receive tiered royalties on net sales upon potential commercialization of the therapies. The deal also includes profit sharing in China and milestone payments and royalties on other ex-U.S. sales.

Gilead’s stock has gained 3.2% in the year so far compared with the industry's rise of 8.4%.

Earlier this week, Gilead announced its intention to collaborate with Novo Nordisk (NVO - Free Report) for developing treatments for NASH. Gilead also announced a grant program for supporting investigator-sponsored clinical studies for evaluating NASH therapies this month.

A chronic liver disease, NASH is caused by excessive fat accumulation in the liver or steatosis. Per records, it has affected up to 15 million people in the United States and could cause inflammation, hepatocellular injury, progressive fibrosis and cirrhosis. The ailment is anticipated to be the leading reason behind liver transplants by 2020. Currently, NASH is the primary reason for liver transplants in people under 50 in the United States. Such patients also suffer from obesity and type II diabetes. With no treatments currently approved to address this disease, the market opportunity is huge and many companies are investing the major chunk of their R&D budget on the same.

A huge unmet need for NASH therapies has led several pharma giants including Allergan (AGN - Free Report) and Merck (MRK - Free Report) among others to develop their candidates targeting the disease.

Zacks Rank

Gilead currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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