Jefferies’ analyst sees more potential in the Hepatitis-C Vaccine maker
After establishing itself as the leading HCV and HIV drug maker, Gilead Sciences, Inc. (NASDAQ:GILD) is all set to make its mark in the hepatitis B market. Brian Abrahams, an analyst at Jefferies, believes the $121 billion company has the potential to prove itself in the hepatitis B (HBV) market as well, but will take time to do so.
Gilead has led the HCV space with blockbuster drugs, Harvoni and Sovaldi, up until 2014; both the drugs accounted for 60% of the drug maker’s overall sales. However, in December 2014, rival drug maker AbbVie Inc. launched its competing drug Viekira Pak. Two quarters later, Gilead started witnessing declines in its HCV drugs’ prescription volumes in the US, suggesting that they are headed toward maturity. It only makes sense for the company to look ahead of its HCV franchise.
Last month, Gilead reported its fourth quarter of fiscal year 2014 (4QFY14) earnings. Even though the drug maker beat the Street on both its top and bottom line numbers, Harvoni sales in the US declined to $1.7 billion. Sovaldi sales fell even more drastically, plunging from $1.18 billion to $660 million.
Unlike Hepatitis C, Hepatitis B vaccines are more complicated in terms of development. Although curing the disease is possible, it would require combination therapy, in which immuno-enhancers and direct-acting antivirals get incorporated. However, a deeper understanding of integration of these parts is required.
Mr. Abrahams held a meeting with experts to discuss Gilead’s non-HCV pipeline. He remained positive on the drug maker’s efforts, and particularly praised candidate GS-5475. GS-5475 is a pipeline drug being tested against a number of conditions, including ulcerative colitis, crohn’s disease, gastric cancer, solid tumors, and rheumatoid arthritis.
The analyst believes Gilead could conquer the HBV space as well, as it has potential to make meaningful revenues in the market. He reiterated his Hold rating and $100 price target on the stock. For the month ended February 29, Gilead shares rose 3.81%, while the Nasdaq iShares Biotechnology (IBB) Index declined 5.37%.
Gilead has other HBV drugs moving up the pipeline as well. Another investigational HBV candidate, tenofovir alafenamide fumarate (TAF), received approval on its Marketing Authorization Application (MAA) from the European Medicines Agency late last month. This represents a vital milestone for the drug maker, given that its previous HBV treatment, Viread, will expire in 2017.
The hepatitis B virus is about 100 times more infectious than the human immunodeficiency virus (HIV). This adds another reason for Gilead to expand into the attractive market.