Gilead's Green-Lighted Drug

Drug development is an inherently slow process, but February has been a busy month for biotech giant Gilead Sciences (Nasdaq: GILD  ) , with activity in three of its top drug candidates.

Building on earlier success this month, when the FDA granted its pulmonary arterial hypertension drug, ambrisentan, a priority review, Gilead announced positive phase 2 clinical study results for its top HIV compound in development, GS 9137.

Despite its lack of a creative name, GS 9137 is in a novel class of HIV drugs called integrase inhibitors. Other HIV treatment powerhouses like Merck (NYSE: MRK  ) , whose drug candidate is in phase 3 testing already, are ahead of Gilead in bringing an integrase inhibitor to market. Others, like GlaxoSmithKline (NYSE: GSK  ) and Bristol-Myers Squibb (NYSE: BMY  ) , aren't far behind Gilead, either, but the market for HIV therapies is big enough for several competitors with compounds sharing the same mechanism of action. It's also a market where combination therapy incorporating several drugs is the rule and not the exception.

Gilead was light on the details of the successful trial, so it's impossible to compare GS 9137's marketability relative to the other HIV compounds. But with drug resistance such a common problem among HIV patients, new compounds with novel mechanisms of action that don't interfere with existing therapies will always be desired.

February wasn't all positive for Gilead's drug pipeline, though. Gilead and partner Achillion Pharmaceuticals (Nasdaq: ACHN  ) discontinued development of hepatitis C treatment GS 9132 after safety concerns came up in the trial. The partnership between the two companies is still being retained, though, as they will attempt to bring to the clinic another compound in this increasingly competitive space.

Drug development is never 100% successful, and there will always be setbacks. Having a diversified drug pipeline is what makes large-cap drug stocks like Gilead so enticing, even to risk-adverse investors. What's important is that Gilead and its large-cap brethren continue to bring new products into the clinic, so their futures aren't leveraged to only one or two compounds. So far, Gilead appears to be doing a good job of accomplishing this.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor recommendation, while Merck is a former selection of that service. The Fool has a disclosure policy.