Source: Gilead Sciences.

On Oct. 10, the FDA is expected to make a decision on Harvoni, Gilead Sciences' (NASDAQ:GILD) second-generation hepatitis C drug. Industry watchers broadly expect an FDA greenlight for sales in the U.S.; if that happens, Harvoni will likely notch billions of dollars in sales for Gilead over the coming year.

But Harvoni isn't the only one of the company's drugs investors should be watching. Gilead also recently updated investors on late-stage performance of next-generation HIV drug TAF that clears the way for an FDA filing before the end of this year. Since Gilead's HIV pipeline accounts for billions of dollars in revenue every year, let's look at TAF and its potential impact.

First, a bit of background
HIV remains one of the world's biggest health concerns. More than 35 million people globally had the virus or AIDS as of 2012, and 1.6 million people died from AIDS-related illnesses in that year.

However, there are significant signs that global efforts to boost prevention and provide life-preserving treatment (and provide it faster) are working.

In 2013, the number of people tested for HIV jumped by 33% worldwide, helping lead to more than 2 million people newly enrolling in antiretroviral treatment last year -- the biggest annual increase on record.

Dominating a market
Gilead is the globe's No. 1 maker of HIV medicine. Its HIV product franchise includes five different therapies that conceivably could hit billion-dollar blockbuster status this year.

Sales of Gilead's HIV drugs totaled more than $9 billion in 2013, and sales climbed 9.5% to $4.7 billion through the first six months of this year.

Source: Gilead Sciences.

Gilead's top-selling HIV drug is Atripla, a single tablet that combines three other high-selling medications: Bristol-Myers Squibb's Sustiva, and Gilead's Emtriva and Viread. But Viread is arguably Gilead's most important drug.

Viread is not only marketed as a stand-alone drug, but it is also a key component of Atripla, Complera, and Stribild. As a result, Viread plays a part in generating two-thirds of Gilead's HIV drug sales.

New and improved
Viread won FDA approval in 2001, which means the drug is getting a bit long in the tooth. Patent protection is set to expire in 2018, and that has Gilead eager to launch a next-generation replacement.

That replacement is TAF, a reformulated version of Viread that works as effectively as its predecessor, but (crucially) at a lower dose.

In phase 3 trials, Gilead replaced Viread with TAF in Stribild and then compared its efficacy against original Stribild. That testing showed  91.6% of patients taking the TAF version of Stribild achieved HIV RNA of less than 50 copies/mL at week 48, versus 88.5% of patients taking original Stribild. 

While that wasn't statistically superior, it demonstrated TAF's equivalency, which shifts attention to the important secondary endpoints of toxicity.

And this is where TAF shines.

In these studies, TAF outperformed Viread in both kidney and bone safety measures. That's important because it could eliminate long-standing concerns doctors have had about prescribing Viread, particularly in patients with compromised kidneys or those taking other widely used medications.

Potential impact
The potential FDA approval of TAF would allow Gilead to begin replacing Viread in its multidrug cocktails and would insulate the company against the threat of market share erosion to a generic version of Viread in 2018.

TAF's more favorable safety profile could also increase Gilead's patient pool beyond what Viread addresses today. If that proves true, then Gilead's HIV franchise would become stronger even as more people are being prescribed HIV medicine and those medicines are helping patients live longer. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.