Gilead Sciences, Inc Has a Potential Blockbuster Drug for 2014

Gilead's (GILD) may hit blockbuster $1 billion a year status in its first year on the market.

Feb 5, 2014 at 6:30PM

Blockbuster status -- the gold medal term awarded to therapies racking up sales of more than $1 billion per year -- is the Holy Grail for drug developers. Arguably, it's the chance to discover blockbusters that fuels industry R&D spend and offsets the loss of billions spent working on drugs that end up on the cutting room floor.

However, knowing which drugs will become blockbusters isn't easy. Industry watchers often predict big bucks for compounds in development that fail to live up to expectations. So, instead of guessing which clinical drugs might end up becoming the next big winner, in this article series I look at recently approved drugs already notching big time sales that are on their way to blockbuster levels in 2014.

First up is Gilead's (NASDAQ:GILD) hepatitis C drug Sovaldi, a highly anticipated drug that won approval in December and stands a very good chance of hitting blockbuster levels in its first full year of sales. Despite potential competition from Johnson & Johnson (NYSE:JNJ), AbbVie (NYSE:ABBV) and Bristol-Myers Squib (NYSE:BMY), investor optimism has pushed Gilead's shares to all time highs over the past year.

GILD Chart

GILD data by YCharts

Addressing a big and growing need
Gilead spent more than $11 billion buying Pharmasset in 2011 to get its hands on Sovaldi, and now that Sovaldi has won FDA approval, Gilead will find out if that was money well spent.

Market leadership could mean billions in sales for Gilead over the coming years given spending on hepatitis C drugs is expected to climb from $3 billion annually in 2011 to more than $20 billion in 2018, according to Decision Resources Group, LLC. That spending jump will be driven not only by the size of the market -- there are 170 million infected with hepatitis C worldwide -- but also because of pricing. At $84,000 for a 12 week course of treatment, Sovaldi is far more expensive than the $66,000 charged for prior generation treatments.

Although there's been pushback against Gilead on pricing, there remains a significant need for new, more effective treatments and, while payers may be reluctant to pay for Sovaldi, it is unlikely they'll avoid it given that it is still more expensive to treat liver failure than prescribe the treatment.

Paving the path to a blockbuster
Sovaldi put up impressive results in trials, arguably outperforming its closest competitior -- Johnson's Olysio, which won FDA approval last November. Sovaldi cleared hepatitis C in 89% of patients with genotype 1 versus 84% treated with Olysio during their respective phase 3 trials. Importantly, Olysio stumbled in treating patients with the Q80K polymorphism, a frequent polymorphic variant found in up to 50% of those with genotype 1.

In fact, expectations for oral Sovaldi have been so high that doctors in the U.S. chose to warehouse patients rather than treat them with Vertex's injectible Incivek -- a drug that quickly won blockbuster status in 2011 only to lose it a year later. Given Sovaldi's effectiveness, it is unlikely that doctors will hold off treating those warehoused patients in hope of competitors AbbVie and Bristol garnering the FDA go-ahead.

AbbVie's three drug cocktail remains in development, however, and is arguably less attractive than a potential two drug combination being worked on by Gilead. AbbVie's combination may also be less intriguing than an eventual off-label combination of Bristol's daclatasvir and Sovaldi.

That combination posted nearly a 100% clearance rate in patients during phase two before Gilead walked away from advancing the approach into phase 3 to work on its own combination instead. Bristol hasn't filed for daclatasvir's approval in the U.S., but it has filed for approval in Japan and the EU, suggesting a U.S. application may come soon.

Fool-worthy final thoughts
Sovaldi's strong showing in trials, a significant pent-up demand from warehousing, and its hefty price tag suggests the drug will quickly capture the lion's share of treatment dollars this year. Following its approval on December 6th, distributors bulking up inventory resulted in fourth quarter sales of nearly $140 million for Sovaldi. If Sovaldi maintains that run rate, it will hit blockbuster levels and significantly move the revenue needle for Gilead this year. After all, Gilead didn't include Sovaldi sales in its guidance for $11.3 to $11.5 billion in sales this year, up $10.8 billion in 2013.

2 more companies changing how we think about disease
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In the Motley Fool's brand-new FREE report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC.  E.B. Capital's clients may or may not have positions in the companies mentioned.  Todd also owns Gundalow Advisor's, LLC.  Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Gilead Sciences and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers