It's not a vaccine, but it sure looks as if Gilead Sciences'
Whether it'll increase sales of Gilead's Truvada is an entirely different question.
Let's get to the good news first, though. In a trial of HIV-negative individuals, patients taking a daily dose of Truvada had a 44% reduction in their chance of contracting HIV compared to those taking placebo. For patients who were vigilant about taking their medication, the risk dropped a whopping 73%.
The research was funded by a government agency and a nonprofit. Gilead supplied the drug and some travel expenses, but wasn't a major supporter. And for good reason, the sales opportunity is fairly limited.
Condoms do a pretty good job at preventing HIV infection, and they're a heck of a lot cheaper than Truvada. Sure, some high-risk individuals might get a prescription as a backup or because of a general disdain for condoms, but sales to prevent infection aren't likely to be a major contributor to Gilead's sales. I think Church & Dwight's
The bigger issue for Gilead is what happens when Truvada goes off-patent. The company has been combining Truvada with other drugs to improve efficacy and extend the patent life. Atripla is a combination of Truvada and Bristol-Myers Squibb's
That strategy should work for HIV-infected individuals since the combinations work better than Truvada, but what happens if at-risk individuals start taking cheap generic versions of Truvada once they're available? New HIV infections could drop precipitously.
And that's the danger of investing in a focused company like Gilead. There's always the possibility that a vaccine or even a shift in culture could drastically reduce the number of patients who need its money-making HIV drugs. Unfortunately, there's not much investors can do but factor it in and make sure you're getting appropriately rewarded for taking the risk.
Interested in keeping track of Gilead as it expands its HIV franchise? Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Gilead.
Gilead is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson, which is a Motley Fool Income Investor recommendation. The Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.