There's an old saying that "sometimes the cure is worse than the disease." For Gilead Sciences (GILD 0.17%), that adage could become reality.
Gilead recently announced results from a preclinical study that showed a combination of two experimental drugs basically cured nearly half of the monkeys taking the drugs. One of the drugs, GS-9620, is currently in an early-stage clinical study, and Gilead has now advanced GS-9722, a derivative of the other drug in the combo, into human testing.
The big biotech has repeatedly maintained its commitment to working on a cure for HIV. But with its HIV franchise generating more than $14 billion in revenue last year, could a cure for HIV actually be a huge threat to Gilead's financial future?
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The next evolution
Gilead won Food and Drug Administration approval for its first HIV drug, Viread, in 2001. In subsequent years, the biotech launched several other more powerful HIV treatments, including Truvada, Atripla, and Stribild. Gilead began rolling out its next generation of HIV drugs in 2015, beginning with Genvoya.
The company's latest HIV therapy, Biktarvy, received FDA approval in February. This new drug is so safe and effective that Gilead's chief scientific officer, Norbert Bischofberger, who's stepping down from his role at the end of April, said recently that Biktarvy would be the last HIV single-tablet regimen that the biotech develops for treatment-naive and stable HIV patients. Bischofberger added that Gilead doesn't "see how we can improve upon" Biktarvy.
Gilead basically has two final hurdles to leap in treating HIV. One is to develop a long-acting injectable that patients could take instead of having to take a daily pill like Biktarvy. The other is to cure HIV. The combo of a toll-like receptor 7 (TLR7) agonist and a broadly neutralizing antibody (bNAb) appears to hold the potential for achieving the latter goal.
In Gilead's preclinical study, 44 rhesus monkeys infected with simian-human immunodeficiency virus (SHIV) were divided into four groups after taking antiretroviral therapy (ART) for 96 weeks. One group received PGT121, a bNAB. Another group received TRL7 agonist GS-9620. The third group received a combination of the two experimental drugs. And the fourth group received placebo.
While most or all of the monkeys in three of the groups experienced viral rebound after discontinuation of ART, five of 11 monkeys that received the PGT121/GS-9620 combo demonstrated no viral rebound for at least 168 days. The other six animals in the combo group initially experienced a viral rebound, but then began resuppressing the virus without ART.
Lessons from hep C
A cure for HIV would be fantastic for patients. It would also likely be very profitable for Gilead Sciences -- at first. But the biotech's experience with its hepatitis C virus (HCV) drugs shows that the long-term impact might not be so great for Gilead.
When Gilead first launched its first HCV drug, Sovaldi, sales skyrocketed. In 2014, Sovaldi's first full year on the market, the drug raked in over $10 billion. Over the next three years, Sovaldi and subsequent HCV drugs generated revenue totaling more than $43 billion.
However, Gilead's HCV revenue peaked in 2015. By 2017, the biotech's total sales for four HCV drugs had dwindled to less than half the peak amount and even below the amount Sovaldi made by itself in its first year.
Still, the introduction of drugs that cured HCV for most patients was great for patients and for Gilead. The company made a lot of money from its HCV franchise (and still does, although at lower levels). But the lesson learned was that the first couple of years after introducing a cure for a chronic disease are the best years from a financial standpoint, and it goes downhill quickly after that. That only makes sense, because as patients are cured, there are fewer patients needing treatment.
So wouldn't launching a cure for HIV be just as great financially for Gilead? Actually, no. With HCV, the rollout of Sovaldi added revenue to the company's coffers without cannibalizing sales of other products. However, introducing an HIV cure to the market would result in significantly lower sales of Gilead's existing HIV drugs. Over time, those sales would shrivel, if not completely evaporate.
By marketing a cure for HIV, Gilead would wipe out the business that has made the company what it is today. The biotech would enjoy a few years of massive profits. But it wouldn't take long for Gilead to be left with nearly nonexistent sales for its HIV treatments and relatively low revenue from its HIV cure.
Counting the cost
Gilead's management has undoubtedly thought about the potential scenario that could unfold. Gilead has used the cash generated by its HCV franchise to fund development of new drugs and acquisitions of companies in other areas outside of HCV and HIV. It could do the same with the potential huge cash windfall that an HIV cure would bring.
But the cold, hard truth is that developing a cure for HIV could be detrimental to Gilead over the long run. That could be the case even if Gilead prices such a cure at an extremely high price.
Of course, it's still too early to know if Gilead's combo will be safe and effective in humans. Hopefully, it will be. Even if not, I think Gilead will develop a cure for HIV sooner or later, and it's likely to pay a heavy price for doing so.
