Investors were jumping for joy today as Gilead Sciences (NASDAQ:GILD) announced what on the surface sounds like rather inconsequential data.
A phase 2 trial of the company's experimental Quad pill "met the statistical criteria of non-inferiority" compared to its current offering Atripla. Basically, the Quad and Atripla worked the same at reducing HIV levels in patients after 24 weeks.
"But wait," you say, "doesn't the Quad have to beat the current standard to be meaningful for Gilead?" No, the Quad pill has one advantage for Gilead even if it isn't an advantage for patients: Gilead owns all four of the drugs. Atripla is a combination of Gilead's Truvada and Bristol-Myers Squibb's (NYSE:BMY) Sustiva. The Quad is a combination of Truvada, and two experimental drugs, elvitegravir and a "boosting" agent GS 9350. (Truvada is itself a combination of two drugs, so that's where "Quad" comes from.)
Teaming up to create superior drugs isn't necessarily a bad thing. Pfizer (NYSE:PFE) and GlaxoSmithKline (NYSE:GSK) established a joint venture to develop HIV drugs, and Gilead recently signed up Johnson & Johnson (NYSE:JNJ) as a partner. But clearly having the profits all to yourself is superior if the company's pipeline can support it.
Gilead is testing GS 9350 in combination with other drugs to see if it can boost their performance as well. The drug is currently in a head-to-head trial against Abbott Labs' (NYSE:ABT) drug booster, Norvir, and the current results should give investors a little more confidence that GS 9350 might work in that trial.
A positive result might mean signing up a few more partners and shared revenue on the combined drugs, but investors should take the revenue any way they can.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value recommendation. Johnson & Johnson is a Motley Fool Income Investor recommendation. The Fool owns shares of GlaxoSmithKline and has a disclosure policy.
