Good News Is Balm for Gilead

Gilead Sciences (Nasdaq: GILD) got some good news Feb. 28. That day, the company found out that the results of a study sponsored by the National Institutes of Health (NIH) had confirmed that its Truvada HIV combo drug outperformed GlaxoSmithKline's (NYSE: GSK) Epzicom compound.

Part of the phase 4 NIH combo comparison study of Gilead's Truvada versus Glaxo's Epzicom was stopped early because patients taking the Glaxo drug were faring worse than patients on other therapies. NIH researchers stated, "Treatment combinations that included [Glaxo's Epzicom] were not as effective in controlling the virus as those on regimens containing [Gilead's Truvada]."

Shares of Gilead were up 4% Friday on news of the study results. It sure feels good to be proven right about a drugmaker like Gilead. The additional backing from the NIH for its HIV therapies undoubtedly provides even more of a shield against some of the new, second-line therapies and other front-line drugs making inroads against Gilead's top front-line HIV combination drugs.

As I've said before, the fact that Gilead's HIV combo drugs are entrenched as the standard of care provides a moat of sorts against other HIV treatments -- for example, from Merck (NYSE: MRK) and Johnson & Johnson (NYSE: JNJ) -- because their drugs will probably have to show superiority and not just non-inferiority in order to knock Gilead's compounds off their No. 1 perch. That's a competitive advantage that just can't be overlooked, and that's why I like Gilead as an investment.