You Shouldn't Ignore Gilead's Idelalisib

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The potential for Gilead Sciences'  (NASDAQ: GILD  ) sofosbuvir to reinvent treatment for hepatitis C means it gets most of your attention. You shouldn't discount other late-stage drugs in Gilead's pipeline, however, including idelalisib, an oral treatment for indolent non-Hodgkins lymphoma, or iNHL.

In early September, Gilead filed a new drug application with the Food and Drug Administration for idelalisib as a treatment for iNHL patients who fail to respond to treatment from current go-to drug rituximab -- marketed as Rituxan by Biogen Idec (NASDAQ: BIIB  ) and Roche's Genentech in the U.S. -- and chemotherapy. In the second quarter of 2013, Rituxan was the 11th best-selling drug in the United States, generating sales of $826 million.

Slow growing, hard-to-treat lymphoma
The majority of iNHL patients are diagnosed at an advanced stage, and median survival from diagnosis with the most common form of iNHL, follicular lymphoma, is eight to 10 years. Those who don't respond to rituximab and chemo face a much poorer prognosis. The need for new treatment is great, as non-Hodgkin's represents one of the top five sources of cancer death in the United States. Importantly, the rate of incidence of NHLs has seen one of the steepest climbs of all cancers from the early 70s to the late 90s, and just 51% of all NHL patients survive beyond 10 years. The National Cancer Institute estimates that nearly 70,000 cases of NHL will be diagnosed, and more than 19,000 people will die from the disease this year alone.

This suggests a big and growing market for idelalisib. The drug had compelling phase 2 trial data showing that more than 50% of refractory iNHL patients responded to the drug, with a median progression-free survival of 11.9 months. 89% of patients treated with idelalisib saw lymph nodes shrink, and the drug's safety profile was solid. The most common adverse affect was neutropenia, or low white blood cell count, at 26%.

In addition to filing in the United States, Gilead plans to file for EU approval in the iNHL indication before the end of the year.

Changing treatment for CLL
Idelalisib's opportunity isn't limited to iNHL, however. Gilead has three phase 3 trials using the drug as part of a combination therapy for patients with previously treated chronic lymphocytic leukemia, or CLL. A study of idelalisib paired with another Gilead compound in relapsed or non-responsive CLL is also in phase 2.

Idelalisib was so effective that the company and FDA ended one of those phase 3 trials early. Idelalisib, when combined with Rituxan, treated patients who weren't fit for chemotherapy and had failed prior therapies. While data from the trial hasn't been publicly released, in an earlier phase 2 trial 78% of CLL patients receiving idelalisib responded, with 74% seeing progression-free survival after one year. That's potentially a game changer for CLL patients.

More than 15,000 people will be diagnosed with CLL, and some 4,500 will die from it this year, according to the National Cancer Institute. Historically, those diagnosed are treated with chemotherapy and immunotherapy. Most relapse after initial treatment, however, and 20% end up not responding and relapsing within six months.

There may be potential for idelalisib as a mono-therapy for CLL as well. Earlier this year, data from a phase 1 study showed that 72% of patients taking five or more prior treatments responded to the drug with progression-free survival of 17.1 months. If that drug continues to produce similar results through clinical trials, it could win plenty of market share from Rituxan.

Competitors aren't rolling over
A number of companies are developing drugs for CLL, including Emergent Biosolutions (NYSE: EBS  ) , which has an ongoing phase 2 study of its otlertuzumab as a combination therapy with Teva Pharmaceuticals' (NYSE: TEVA  ) approved drug Treanda. Treanda sales climbed 27% to $177 million in the second quarter of 2013, and Teva recently reformulated Treanda into a liquid rather than a powder to make it more convenient for health care professionals. If Treanda continues to win market share, it could ultimately increase the market opportunity for Emergent's combination therapy. Emergent announced an expansion of its phase 1b trial in April, citing positive early results. That expansion offers the company additional data for designing a phase 3 trial in 2014.

AbbVie (NYSE: ABBV  ) has a phase 1 trial ongoing for its ABT-199 drug as a treatment for both relapsed non-Hodgkin's lymphoma and CLL. That drug is being co-developed with Genentech.  Earlier this year, AbbVie and the FDA suspended the ABT-199 CLL trial to refine dosing after kidney failure led to patient deaths. Kidney failure was the result of overloading tied to the drug's efficacy in killing cancer cells, however, and after adjusting dosage the suspension has been lifted. Given that patients in the CLL arm saw an 84% response rate during phase 1, the company expects to advance the drug into later-stage trials soon.

Gilead's biggest competitive threat is likely Pharmacyclics and Johnson & Johnson's drug Ibrutinib. That drug was submitted for FDA approval in July for previously treated CLL, small lymphocytic lymphoma, and mantle cell lymphoma indications.  The drug has enjoyed a good deal of attention, receiving breakthrough status for three indications. In phase 2 trials, 96% of treatment-naive and 75% of relapsed, refractory patients are progression-free after 26 months.

The Foolish final take
Gilead has made string of successful acquisitions. The deal to acquire hep-C treatment sofosbuvir from Pharmasset is the most high profile. Acquiring Calistoga Pharmaceuticals for $375 million in 2011 brought along idelalisib, which has the potential to generate significant sales for the company if approved for both the iNHL and CLL indications. Of course, it's risky to buy biotech companies prior to approval. If the FDA does OK idelalisib, though, it would give you yet another reason to buy shares in Gilead.

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Todd Campbell

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.

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