It's FDA-Approved, but Will It Sell?

Stribild is Gilead Sciences' (Nasdaq: GILD  ) third all-in-one combination HIV treatment, but it could be the most important -- commercially speaking, of course.

Gilead sells Atripla, a combination of its Truvada and Bristol-Myers Squibb's (NYSE: BMY  ) Sustiva and Complera, which combines Truvada with Johnson & Johnson's (NYSE: JNJ  ) Edurant.

But the four drugs in Stribild, which was previously referred to as the Quad, are all owned by Gilead. No sharing revenue here.

Gilead is obviously going to prioritize promoting Stribild over the other combination treatments, but I don't think this will be a walk in the park. The drug wasn't appreciably better at knocking down HIV levels than the other treatments. There might be some side-effect benefits, but that probably isn't going to help convert patients who are on a medication that's currently working for them.

The most obvious opportunity is in newly diagnosed patients, but doctors are creatures of habit. I'd expect most doctors to try it on a few patients, especially those who aren't able to tolerate Atripla or Complera, to get a feeling for the drug before making it their go-to drug.

Gilead is pricing the drug considerably higher than Atripla, which might also make it hard to get patients onto the drug. Insurers may require patients to try other drugs before they'll pay for Stribild.

I'm a little surprised Gilead priced the drug so high, considering it gets to keep all the revenue. One possibility is that Gilead knows the drug won't become the first drug to be tried, and it's trying to make up for volume with the higher price.

Whatever its strategy, investors can trust that Gilead knows what it's doing. The biotech has positioned itself as the premier HIV drugmaker, stomping on big names such as GlaxoSmithKline (NYSE: GSK  ) and Pfizer (NYSE: PFE  ) , which were forced to team up to compete. The two formed an HIV-focused joint venture, ViiV Healthcare, in late 2009.

With high expectations, investors should be cautious about adding to their Gilead positions at this point. A slow launch will be seen as a disaster even though Gilead has two other major HIV treatments because they can't deliver the higher profits that Stribild is capable of.

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Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Gilead Sciences and Johnson & Johnson and creating a diagonal call position in Johnson & Johnson. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


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