This slide from Gilead Sciences' (NASDAQ:GILD) JP Morgan Healthcare Conference presentation Tuesday morning shouldn't surprise anyone, but it's a good reminder of how much the big biotech has changed in a year.
The crazy thing about the massive switch in focus is that it hasn't come at the expense of HIV drugs. Sure, they've gone from three quarters of Gilead Sciences' revenue to less than half of its revenue, but it's not like sales have decreased. In fact, the HIV franchise increased 14% year over year from $7.8 billion to $8.9 billion for the two 12-month periods.
Gilead has the top three HIV therapies in the U.S. and the top two in the largest European countries, with its latest offering, Stribild, in the fourth spot among new-to-therapy patients. Being that dominant certainly has its privileges, but having a large portion of the market also opens the company up to a patent cliff when generics become available.
Gilead's counter to the inevitable loss of exclusivity is tenofovir alafenamide, commonly referred to as TAF. The drug is related to one of the staple drugs in Gilead's combination products, tenofovir disoproxil fumarate, which goes by the brand name Viread.
If the switch to TAF was a one-sided benefit for Gilead, the biotech would have a hard time getting patients to make the move. Fortunately though, laboratory tests run during the clinical trial suggest that TAF will reduce the likelihood of kidney failure and keep bone mineral density from declining as much, which is a problem for some patients taking Viread.
Gilead has already submitted the TAF-including version of Stibild to U.S. and EU regulators. Given the equal efficacy and better safety, the new version seems likely to gain approval.
In addition to the improved safety, the swap from disoproxil fumarate to alafenamide makes TAF a lot more potent, so the size of the pill can be smaller. That's not all that important for Stribild -- the pill isn't that big -- but the large volume of Viread makes it impossible to combine Viread with a large-volume protease inhibitor because the pill would be too big to swallow. TAF eliminates that problem, allowing Gilead and Johnson & Johnson to combine Gilead's TAF, Emtriva, and Tybost with Johnson & Johnson's protease inhibitor Prezista in a single pill.
Hepatitis C is key
While the battle with AbbVie for hepatitis C patients rages on, Gilead's president and COO, John Milligan, was pretty mum about the biotech's plan to compete. The price discount the companies have to give will determine exactly how big the hepatitis C opportunity really is. Unlike most diseases, where switching between drugs is possible -- and sometimes even common -- hepatitis C drugs are cures, so the companies need to capture patients before they start another medication.
Of course, there are millions of people with hepatitis C, so even with a fairly low infection rate, it's going to take a while to work through all the patients. There's likely to be opportunities for next-generation hepatitis C drugs to capture some of the market, especially if they can reduce the duration of time that patients currently have to take the drug.
Gilead isn't waiting for the competition to take its market share though; it's working on a couple of combinations that could treat all genotypes and shorten duration of treatment. Data from four ongoing phase 3 trials testing Sovaldi and GS-5816 is expected in the third quarter. And Gilead is also working on a triple-drug combination of Sovladi, GS-5816 and GS-9857, which is in phase 2 trials at the moment.For more Foolish coverage of the JP Morgan Healthcare Conference, click here.