The Hidden Gems in Gilead Sciences' Pipeline

Gilead investors should look beyond the company’s antiviral portfolio and take a closer look at these hidden gems in its pipeline, which could shape the company’s long-term future.

Feb 13, 2014 at 2:30PM

When most biotech investors think about Gilead Sciences (NASDAQ:GILD), they usually think of the company's portfolio of antiviral drugs and its newly approved potential blockbuster hepatitis C treatment, Sovaldi.

Gilead's antiviral portfolio, which mostly consists of HIV drugs, generated $9.3 billion in revenue in 2013, accounting for 86% of the company's top line. Sovaldi, which was approved last December, is expected to hit annual peak sales of $7 billion, eventually offsetting losses from the 2017 U.S. patent expiration of Viread, which is used in five of its main HIV drugs.

However, investors often overlook Gilead's hidden strengths. Let's take a look at some of these hidden gems in Gilead's pipeline and how they could affect companies like Infinity Pharmaceuticals (NASDAQ:INFI), Actelion (NASDAQOTH:ALIOF), and Incyte (NASDAQ:INCY).

Gilead's CLL and NHL drugs
On January 13, the FDA accepted Gilead's new drug application (NDA) for idelalisib, a targeted treatment for indolent non-Hodgkin's lymphoma (iNHL). Gilead also submitted another NDA for the treatment of relapsed chronic lymphocytic leukemia (CLL) last December. iNHL and CLL are both blood cancers. Idelalisib's iNHL indication is scheduled to be reviewed by the FDA on Sept. 11, 2014.

Idelalisib targets a signalling pathway known as PI3K. When the PI3K pathway is overactive, cell death is reduced and cancer cells can proliferate more easily.

If approved for both iNHL and CLL, idelalisib could compete against two other drugs -- Infinity and Takeda's IPI-145, and Pharmacyclics' and Johnson & Johnson's Imbruvica. IPI-145 targets the same PI3K pathway as idelalisib, while Imbruvica directly targets an enzyme known as BTK, which plays a role in multiple signaling pathways that can help cancer cells survive and spread.

Company

Drug

Indications

Status

Peak Sales

Gilead

idelalisib

iNHL, CLL

NDA submitted for both indications

$700 million

Infinity/Takeda

IPI-145

iNHL, CLL

Phase 2

$1.0 billion

Pharmacyclics/J&J

Imbruvica

MCL (mantle cell lymphoma), CLL

Approved for MCL, NDA submitted for CLL

$6.5 billion

Source: Company and industry websites.

In my opinion, the estimates for idelalisib are very conservative, especially when Wall Street already expects blockbuster sales from IPI-145, which could reach the market much later than Gilead's drug. Moreover, the FDA has already granted idelalisib a Breakthrough Therapy designation for CLL, indicating that it could be a significant improvement over current treatment options.

Idelalisib isn't Gilead's only blood cancer drug. Last December, Gilead announced positive interim results from a phase 2 study of GS-9973, an investigational oral drug for patients with CLL and non-Hodgkin's lymphoma (NHL). The company reported that 69% of the CLL patients experienced tumor shrinkage of 50% or more after eight weeks of monotherapy.

Gilead's aggressive defense against Actelion
Meanwhile, Gilead COO John Milligan recently noted in a Bloomberg interview that the company was considering a head-to-head study comparing its pulmonary arterial hypertension (PAH) drug Letairis against Actelion's Opsumit. Opsumit is Actelion's successor to its blockbuster PAH drug Tracleer, which will lose patent protection in November 2015.

The FDA approved Letairis in 2007 and Opsumit last October. Gilead's message is clear -- it wants to assert the superiority of its drug against Opsumit, which analysts believe could generate peak sales of $1.4 billion. By comparison, sales of Letairis rose 27% year over year to $520 million in 2013.

The market for PAH drugs has grown increasingly crowded over the past few years, with new treatments from Bayer and United Therapeutics gaining FDA approval last year. Generic versions of Tracleer will inevitably fragment the market further after 2015.

Going head-to-head against Opsumit is a gutsy move. If the study is successful, Gilead could sap away Opsumit's projected blockbuster sales, but if not, it would do Actelion a major favor.

Gilead's JAK inhibitor
Last but not least, Gilead's momelotinib, an experimental JAK inhibitor, is similar to Incyte and Novartis' drug Jakafi (known as Jakavi overseas). JAK inhibitors target Janus kinase enzymes, which cause interference in a signalling pathway known as the JAK-STAT pathway. Blocking signals along that pathway can be helpful in treating a variety of cancers and inflammatory diseases.

Gilead is recruiting patients for a phase 3 trial testing momelotinib as a treatment for the blood disorder myelofibrosis. Jakafi is currently the dominant myelofibrosis treatment on the market, and is marketed in the U.S. by Incyte and overseas by Novartis. In 2013, Incyte reported $235 million in U.S. Jakafi sales, while Novartis reported $163 million in international sales for a total of $398 million. Analysts believe that Jakafi/Jakavi could eventually achieve peak sales of $1 billion.

Gilead is moving ahead by directly comparing momelotinib to Jakafi in a phase 3 trial. Positive data from Gilead's trial could strike a blow against Incyte and Novartis, as well as Geron, which has been struggling to convince investors that its experimental myelofibrosis treatment, imetelstat, is still a contender after 20 out of 79 patients dropped out of a key Mayo Clinic sponsored trial in January. Investors should also note that momelotinib could also have a future as a treatment for metastatic pancreatic cancer, an indication that Incyte is currently testing Jakafi for in clinical trials.

The Foolish takeaway
In conclusion, there's much more to Gilead Sciences than HIV and hepatitis treatments. These hidden gems in Gilead's pipeline all represent exciting new ways for the company to diversify its portfolio into hematology, oncology, and cardiovascular drugs.

While their success might not be felt in Gilead's stock price in the near term, they could figure prominently into Gilead's future over the next decade. 

Speaking of hidden gems...
The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences. It recommends and 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 www.fool.com/podcasts.

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 www.fool.com/podcasts, 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