You'd think that Gilead Sciences (NASDAQ:GILD) would have learned its lesson in hepatitis C, where curing patients is causing the biotech's revenue to shrink as each successful treatment results in a smaller market of patients to work from.

But it's back at it with a potential cure for HIV.

Of course, I'm being flippant. At their heart, most people who go into drug development want to help patients, and cures are undoubtedly the Holy Grail of treatments. And even if Gilead's management was only in it for the money, it's clearly better to be the one doing the curing than letting a competitor take market share by developing one of its own.

Nevertheless, an HIV cure would make for some tricky financials for Gilead, which got around 60% of its revenue in the fourth quarter from its HIV and hepatitis B (HBV) drugs -- there's overlap in treatments, so the company doesn't break out HIV alone, but it's likely a vast majority of the $14.2 billion in annual sales of HIV and HBV products.

Blood vials being tested for HIV

Image source: Getty Images.

Early success

Preclinical data presented at the 2018 Conference on Retroviruses and Opportunistic Infection this month showed that a combination of GS-9620 and PGT121 with a background of anti-retroviral treatments (ART) like the ones Gilead currently sells, knocked down HIV levels so low that when the monkeys stopped getting their ART, five of the 11 monkeys didn't see their viral levels rebound for at least 168 days. And while the other six rebounded, they started resuppressing the virus without ART.

In contrast, only two out of 11 monkeys treated with PGT121 alone, one out of 11 monkeys treated with GS-9620 alone, and none of the control monkeys had a suppressed viral rebound after ART was stopped.

The combination appears to be able to suppress the virus longer than ART because GS-9620 can shock the reservoirs of virus that keep ART from eliminating the virus completely -- and then PGT121 is able to eliminate the virus.

While it's still early, the combination appears to be the closest thing we've got to a drug cure at the moment. GS-9620 is currently being tested in a phase 1b trial in HIV patients taking ART. And Gilead has a derivative of PGT121 called GS-9722 that's in phase 1 testing. Presumably, Gilead plans to test the combination in humans eventually, although it hasn't released a timeline yet.

Best of both worlds?

ART treatments work pretty well, allowing patients to live decades without the viral infection progressing to AIDS. Unfortunately ART treatments have some side effects, which are exacerbated by the fact they have to be taken for the rest of patients' lives.

Even if a combination of GS-9620 and GS-9722 isn't a complete cure, it could allow patients to take a break from ART, reducing the lifetime exposure to side effects. It would also eliminate the daily burden of taking the medication, which can lead to development of resistant versions of the virus if medication adherence isn't high.

Red ribbon on paper with definition of HIV/AIDS

Image source: Getty Images.


In the short term, a cure wouldn't be a problem for Gilead's finances since the biotech could presumably charge the equivalent to multiple years' worth of ART treatment and still be a value to payers. In the long run, coming up with a cure would obviously hurt Gilead's finances as the potential patient population would get smaller with each treated patient.

But Gilead's long-term future doesn't really involve HIV anyway because ART has reached a level at which it can't really be improved upon. Once the patents on Gilead's ART treatments expire and the drugs face generic competition, which will start in the first half of the next decade, the revenue from ART treatments will diminish rather quickly.

Developing the GS-9620 and GS-9722 combination is a good move to diversify away from the eventual ART patent cliff, but investors should be just as focused on other potential sources of revenue beyond HIV drugs, especially if GS-9620/GS-9722 ends up being a cure. Fortunately, Gilead has already started the process, recently purchasing Kite Therapeutics to boost its oncology pipeline with Kite's chimeric antigen receptor T cell therapies. And Gilead has a solid pipeline of drugs for nonalcoholic steatohepatitis, which could end up being the next hepatitis C.