Say Hello to the New Fastest Growing Drug in History!

This drug absolutely shattered Vertex Pharmaceuticals' record for bringing a new drug to market and hitting the $1 billion sales plateau, accomplishing the feat in just a quarter.

Apr 23, 2014 at 10:03AM

Take every guess you had as to how well Gilead Sciences (NASDAQ:GILD) would perform in the first-quarter, no matter how outrageous, and completely throw them out the window because Gilead would have trumped it!

Break out your thesaurus because you'll need every word that is a synonym to "phenomenal" to describe exactly what Gilead delivered last night. For the quarter Gilead reported a 98% increase in revenue to $5 billion, saw product revenue in the U.S. skyrocket 159%, and recorded a 209% increase in net income. You know, just another quarters' work for Gilead.

Keeping in line with the jaw-dropping nature of the quarter, Wall Street estimates had called for Gilead to earn just $0.90 per share on $3.9 billion in sales. Gilead trumped that by $1.1 billion in revenue and $0.58 in EPS.

But, that still wasn't the single greatest figure from Gilead's report. No, that goes to hepatitis C drug Sovaldi which delivered (get this!) $2.27 billion in sales despite being approved by the Food and Drug Administration in December.

Images

Sovaldi is revolutionary oral hepatitis C pill that in genotype 2 and 3 patients can be given without the need for interferon. Interferon has been associated with unpleasant flu-like side effects in patients, therefore Sovaldi offers a big improvement in patients' quality of care. Of course, there's a statistically significant benefit to the pill as well. In many instances during its clinical studies Sovaldi delivered a sustained virologic response (SVR) (i.e., an undetectable level of disease) of 90% or higher over 12 weeks in almost every instance (some cohorts required 24 weeks of treatment). When combined with ledipasvir in ongoing studies Sovaldi demonstrated SVRs of 93%-94% in just eight weeks. Long story short, Sovaldi really is impressive.

It's so impressive in fact that it just unseated Vertex Pharmaceuticals' (NASDAQ:VRTX) hepatitis C therapy Incivek as the fastest growing drug in history. If you recall, Incivek took less than three quarters from its launch to obtain blockbuster status (i.e., sales in excess of $1 billion annually). Sovaldi just blew that out of the water. With sales hitting $2.27 billion during the quarter one can only assume it took just weeks for Sovaldi to crest the billion-dollar plateau. That's is truly astounding in every respect of the word.

But is it sustainable?
The real question we need to ask, though, is whether or not this growth is sustainable.

In spite of its strong sales, there's quite a bit of backlash against Gilead Sciences' Sovaldi because the company priced its revolutionary drug at $1,000 per day, or $84,000 for a standard course of treatment. According to certain members of Congress and some U.S. citizens, that's far too steep a price to pay for a number of hepatitis C sufferers who simply can't afford the treatment. It's even more irritating to U.S. citizens considering that Sovaldi will likely be approved in ex-U.S. markets, including emerging markets, and be priced at a discount to its U.S. price point.

There's also the reality that Sovaldi won't be the lone hepatitis C therapy to make it to market. AbbVie's (NYSE:ABBV) direct-acting antiviral (DAA) combo has demonstrated 90%-plus SVRs over 12 weeks in a number of studies, with the company just yesterday submitting its new drug application to the FDA for its DAA as an interferon-free treatment for genotype 1 HCV patients (the most common form of the disease). Considering that its DAA has been designated as a breakthrough therapy, a fast-track and potential approval before 2014 is over wouldn't be completely out of the question.

Bms Scientist

Source: Bristol-Myers Squibb

We also have Merck (NYSE:MRK) and Bristol-Myers Squibb (NYSE:BMY) ready to stick their feet in the door as well.

Bristol-Myers Squibb, for example, hit the magic 90% SVR mark over a 24-week period with its combination of daclatasvir and asunaprevir in genotype 1b patients. Keep in mind that although genotype 1 is the most common form of HCV, it's also the toughest to treat, so these 90% SVRs and higher really represent incredible improvement from the previous standard of care. Bristol's drug combo also produced an SVR of 82% over 12 weeks in patients that were non-responders to prior therapy. 

Merck, on the other hand, has a relative wet-behind-the-ears midstage study under way with the combination of MK-5172 and MK-8742. This experimental combo delivered impressive SVRs ranging from 90% to as high as 100% over 12-to-18 weeks in a number of cohorts including treatment-naive, cirrhotic patients, as well as prior null responders.

The Foolish bottom line
In short, I think it would be foolish for investors to expect Sovaldi's sales to grow at the ridiculous pace they did in the first quarter once additional competition enters the frame. The data surrounding AbbVie's DAA has been solid and would certainly be indicative of an approval within the next year.

But I also believe Sovaldi, barring an extremely undercut price point from the likes of AbbVie's DAA, should be able to hold its own and retain existing sales. Unless there's formal Congressional action taken against the company's chosen price point for Sovaldi I believe its revenue stream is pretty safe and investors can continue to expect around $6 billion-plus in annual sales from the blockbuster therapy. Hepatitis C is a big enough treatment space (an estimated 3.2 million people in the U.S. and 180 million worldwide) that it can accommodate multiple blockbuster therapies.

Investors should also take into account that Gilead's remaining infectious disease portfolio delivered healthy returns. Stribild, its HIV-1 therapy saw sales grow 134% while Complera/Eviplera sales gained 69%. While its future is very much tied to the success of Sovaldi, Stribild, an entirely in-house therapy, has the potential to garner blockbuster status in its own right a few years down the road.

I'm still, personally, quite bullish on Gilead Sciences and am waiting for any sizable pullback to consider establishing a position in my portfolio.

If you want more phenomenal growth stocks, check out these 6 free picks highlighted by our co-founder David Gardner
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool recommends Gilead Sciences and Vertex Pharmaceuticals. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

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.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

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. It's also featured on several dozen 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 ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers