As HCV revenues fall, Gilead faces questions on what's next
- Gilead's top line revenues have been dealt a substantial blow by falling sales of its mainstay hepatitis C franchise, even with a successful launch of Epclusa, its new pan-genotypic hepatitis C drug. Third quarter sales of Harvoni and Sovaldi in the U.S. more than halved compared to the same period last year.
- With $31 billion in cash and equivalents on hand, M&A questions remain paramount for Gilead. CEO John Milligan, speaking on an earnings call Tuesday, indicated the company remains "very active" but that a number of targets are either "too early" or "just overpriced."
- Gilead also gave an update on GS-4997, its leading compound in nonalcoholic steatohepatitis (NASH), now that simtuzumab development has been halted. NASH is seen as the next big opportunity in the liver disease market. Several other drugmakers, such as Allergan, have quickly staked out plans in the space.
Gilead needs to fill the gap left behind by the drop in sales of its treatments for hepatitis C virus (HCV). While Gilead has a triple combination in the pipeline ready to be submitted for marketing approval, its HCV drugs face a shrinking market, as the 'backlog' of untreated patients dwindles, and companies fight over newly diagnosed patients.
As a result, Gilead is staking part of its hopes on the nonalcoholic steatosis (NASH) market, which could be worth as much as $20 billion by 2025, according to Transparency Market Research. Leading Gilead's NASH pipeline is GS-4997, which slowed or reverse fibrosis in patients with NASH, and was more effective than Gilead's simtuzumab, which was discontinued for this indication during the third quarter.
"Based on these exciting data, we will initiate discussions with regulatory authorities and plan to move GS-4997 into Phase III clinical development in patients with NASH. Based on the Phase II results, we intend to evaluate GS-4997 in patients with the highest unmet need, that means those with F3 and F4 stages of fibrosis," said Norbert W. Bischofberger, chief scientific officer at Gilead.
Gilead picked up another NASH candidate in April, acquiring Nimbus Therapeutics subsidiary Nimbus Apollo and its ACC inhibitor for $400 million upfront (plus another potential $800 million in milestones). The first $200 million milestone was paid out on Tuesday.
Yet, Gilead will likely face tougher competition in NASH than it has had to deal with in hepatitis C. Allergan has made it clear it wants to be a major player in the space, betting big to acquire Tobira Therapeutics and Akarna Therapeutics in late September.
Other biotechs such as Galectin, Conatus and Cemprus are working to develop their own NASH drugs as well.
Analysts hope Gilead will deploy its significant cash hoard in a major accusation but outside of Nimbus, Gilead has been quiet.
CEO John Milligan said the company is engaged in M&A, and wants to maintain a capital allocation that would preserve flexibility to capture opportunities that could grow revenues.
"We're actively evaluating a series of different partnerships. We're going to remain disciplined and we're going to keep the bar high," Milligan explained. "There are a number of things that I think are probably too early for us to take part in. There are a number of things that I think are just overpriced."
- Gilead Sciences Statement
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