Gilead Sciences (NASDAQ:GILD) stock has been sliding for years, but the biotech has the right ingredients to stage a comeback and provide market-thumping gains down the road. Gilead's new HIV pill is a hit, and it has a couple of drugs in late-stage trials that could do just as well.
Of course, this biotech stock isn't going anywhere if ongoing clinical trials don't produce the right results. Here's what you need to know about three clinical trial readouts on the horizon that could smooth out a path to growth for Gilead -- or put up barriers.
1. Glaxo's new two-drug HIV combo
Last February, Gilead introduced Biktarvy, a single-pill regimen for HIV that's already the company's lead growth driver. Biktarvy's approved to treat patients switching from another antiviral, and those new to treatment. A large patient population on the lifelong medication is expected to drive annual sales to $5 billion by 2022.
Gilead Sciences investors want to keep an eye on a two-drug combination from GlaxoSmithKline (NYSE:GSK) that's in a pair of head-to-head studies with an older three-drug regimen still used to treat newly diagnosed patients. Glaxo's next challenger to Gilead's lead in the HIV space combines dolutegravir with lamivudine (which suppressed the virus after 48 weeks), as well as dolutegravir, tenofovir disoproxil fumarate, and emtricitabine for patients new to treatment.
In the third quarter, GlaxoSmithKline will present 96-week results for its two-drug candidate. Gilead investors will want to keep an eye open for the results to see how the potential competitor stacks up to Biktarvy.
2. Selonsertib for NASH
Nonalcoholic steatohepatitis (NASH) is a progressive condition that describes an immune system persistently attacking fatty liver tissue. Around one-third of American adults have livers with dangerous fat levels, or nonalcoholic fatty liver disease (NAFLD), but few realize it unless they become one of an estimated 20 million in the U.S. with the persistent inflammation that defines NASH.
NASH progresses so slowly that the Food and Drug Administration is willing to grant accelerated approval of treatments for advanced-stage patients with liver tissue already scarred and stiffened by inflammation. Specifically, it wants to see drugs that stop the inflammation without fibrosis worsening, or reduce fibrosis without inflammation worsening.
In the first half of the year, Gilead will present top-line data from pivotal studies with selonsertib as a treatment for patients with bridging fibrosis, and another for patients with compensated cirrhosis caused by NASH. If Gilead's NASH candidate performs in line with earlier observations, it could carve out a niche among severely affected NASH patients capable of driving annual sales past $1 billion in a few short years. During a mid-stage study, selonsertib helped 43% of patients achieve a fibrosis score improvement compared with just 2 out of 10 patients given a placebo.
Selonsertib's mid-stage data was positive but difficult to interpret because of the small groups. That means anything can happen when Gilead reads out the results.
3. Filgotinib for rheumatoid arthritis
The world's top-selling drug, Humira, hauled in around $20 billion last year as an anti-inflammatory injection for people with rheumatoid arthritis (RA), psoriasis, and inflammatory bowel disease. Gilead's filgotinib is an easy-to-swallow tablet in late-stage pivotal trials for the treatment of RA, which puts it far behind a couple other similar candidates ready to break into this space.
Last year, Eli Lilly (NYSE:LLY) launched a new, easy-to-swallow tablet for rheumatoid arthritis called Olumiant, but the FDA restricted the dosage to a level that probably won't be very effective. The agency was troubled by a very small number of patients who experienced life-threatening blood clots during studies with Olumiant. AbbVie (NYSE:ABBV) is waiting for the FDA to review an application submitted late last year for upadacitinib, another oral RA therapy with a safety record besmirched by a small number of lethal clots during phase 3 trials.
During the Finch-2 study with filgotinib, RA patients who didn't respond well to Humira, or other injectables, achieved improvements after 12 weeks that suggest filgotinib can stand up to Olumiant and upadacitinib. Moreover, it hasn't been associated with dangerous blood clots yet.
Investigators will present data from two more Finch studies before the end of the first quarter. If Gilead's RA hopeful can maintain a squeaky-clean safety profile, there's a good chance it will also become the best-selling new rheumatoid arthritis treatment, with potential expansions to inflammatory bowel disease down the road.
A bargain now?
Gilead's diminished hepatitis C franchise contributes just 16% of total revenue now. That means continued commercial success with Biktarvy might be enough to return the company's sagging top line to growth on its own.
Shares of the biotech have fallen to just 10.2 times forward earnings expectations. That looks like a bargain compared with the average S&P 500 stock, which currently trades at around 15.7 times estimates.
Gilead also offers a nice 3.3% dividend yield at recent prices, and HIV sales generate plenty of cash to make the payments and keep raising them each year. It's hard to predict what's going to happen with filgotinib and selonsertib, but those quarterly payouts are yours to keep.