If you're a Gilead Sciences' (NASDAQ:GILD) shareholder or you're thinking about buying the stock, you probably have a lot of questions. And if you don't, you should have.
It hasn't been a pretty picture for the biotech for quite a while now. Gilead's hepatitis C virus (HCV) franchise is flailing. Some are worried about cracks in the company's foundation -- its HIV franchise. The biotech's pipeline generates another set of concerns.
Gilead Sciences COO Kevin Young and chief scientific officer Norbert Bischofberger took some challenging questions at the Goldman Sachs healthcare conference on Thursday. Here are five answers to questions that Gilead's investors probably have.
1. How confident is Gilead about its HIV franchise?
Young said that he's "very confident" about growth for the company's HIV franchise through the next decade. Although Gilead loses patent exclusivity in Europe for Viread in July, Young thinks the impact will only be felt in 2017 and 2018. By 2019, he predicts a return to growth in Europe for Gilead HIV franchise.
There are two primary reasons for Young's confidence: Genvoya and bictegravir. Genvoya is having the most successful launch of any HIV drug ever. Gilead recently submitted its bictegravir/F/TAF combo to the FDA for approval. Young wouldn't go so far as to predict that the bictegravir combo would be a bigger winner than Genvoya, but he thinks Gilead will have another major success story on its hands assuming the combo wins approval.
2. Will competitors in HIV and HCV be big threats?
The primary challenger for Gilead in HIV right now is GlaxoSmithKline's (NYSE:GSK) Viiv Healthcare. GlaxoSmithKline recently used a priority voucher to the FDA to hopefully speed approval for a two-drug HIV combo. Will this combo present a serious threat to Gilead's HIV franchise? Gilead's chief scientific officer Norbert Bischofberger doesn't think so.
Bischofberger responded bluntly that Glaxo's first "doublet" that was recently submitted for approval "is not competitive." He added that the two-drug combo "won't be approved for naive patients, won't make it into treatment guidelines, has no cost advantage, and is stuck with all the disadvantages" of older products. As for the next doublet HIV therapy that Glaxo is developing, Bischofberger said that he would need to see the late-stage results before commenting -- and those won't be available for a while.
In HCV, Young acknowledged that competition is coming later this year from AbbVie's combo for treating all hepatitis C genotypes, adding that "it's probably the most competitive regimen we will face." However, he emphasized that the biggest factor affecting Gilead's HCV fortunes is the number of patients. Young said that Gilead feels that the guidance for HCV previously given is "solid for the U.S."
3. What are the prospects for filgotinib?
The FDA stunned Lilly (NYSE:LLY) and Incyte (NASDAQ:INCY) by not approving JAK inhibitor baricitinib for treating rheumatoid arthritis. What does Gilead make of the situation, since the biotech has its own JAK inhibitor, filgotinib, in phase 3 testing for rheumatoid arthritis as well as Crohn's disease and ulcerative colitis?
Bischofberger said that he has "no insights beyond what was published" regarding the FDA decision. However, he noted that Gilead first approached the FDA about conducting a study with only one dose, but the FDA pushed the company to use two doses. He now wonders if perhaps the FDA knew something about baricitinib then, since the agency requested more clinical data from Lilly and Incyte for determining the appropriate doses.
Filgotinib, which Gilead licensed from Galapagos (NASDAQ: GLPG), now has 1,700 patient-years of safety data, according to Bischofberger. It was the safety data that Galapagos presented from phase 2 studies that was really attractive to Gilead. He added that he feels "very confident that this compound will make it through" to the approval process.
4. Will Gilead's NASH strategy pay off?
Gilead is focusing its non-alcoholic steatohepatitis (NASH) strategy on patients with F3 and F4 fibrosis, the most advanced stages of the disease. Bischofberger said that no other company is focusing on F4 patients, but that's where the greatest unmet need is.
Enrollment is moving along with no issues in the phase 3 study of ASK-1 inhibitor selonsertib. Gilead expects to have results from phase 2 studies of FXR agonist GS-9674 and ACC inhibitor GS-9776 next year. In addition, Bischofberger stated that the company is doing small combination studies of the drugs that could move into phase 2 in 2018.
When asked if payers will be willing to pay for NASH treatments, Kevin Young replied that "the best way to start is with the most in-need patients" (i.e., those patients with F4 fibrosis). He said these patients are costing payers a lot of money, implying that effective treatments for the most advanced cases of NASH would be likely to receive reimbursement.
5. Why hasn't Gilead made an acquisition yet?
This is undoubtedly the single most pressing question on investors' minds. Young acknowledged that people keep asking this question and think that Gilead is moving slowly. He said that Gilead prefers a "thoughtful approach" in finding innovation. This response echoes comments made by Gilead CEO John Milligan last year.
Young also mentioned that the biotech is "looking far and wide" at potential assets in liver disease, inflammation, oncology, hematology, and other therapeutic areas. The only other hint he gave as to which companies or products Gilead might be evaluating was that they're looking for something that will be "on the front of the wave of new classes of drugs" that help address unmet needs and provide a platform for Gilead. At least that narrows down the field to fewer than 100 companies.
Keith Speights owns shares of AbbVie and Gilead Sciences. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has the following options: short June 2017 $70 calls on Gilead Sciences. The Motley Fool has a disclosure policy.