Gilead Wins OK for Its 2nd Anti-HIV Drug

An HIV medication made by Gilead Sciences Inc. received regulatory approval Wednesday, positioning the Foster City, Calif.-based company to become a formidable competitor in the multibillion-dollar AIDS drug business.

It was the second potentially lucrative HIV drug from Gilead to win approval from the Food and Drug Administration in less than two years.

Called Emtriva, it is a once-daily pill similar to GlaxoSmithKline’s widely used Epivir, or 3TC. Analysts expect Emtriva to steal a significant amount of sales from the Glaxo drug, which must be taken twice daily.

HIV patients take daily drug cocktails, some including a dozen or more pills, to control the AIDS virus. Once-daily medications that reduce the number of pills are seen as having a marketing advantage.

Wall Street pushed Gilead’s stock to a 52-week high of $57.50 on Wednesday before it closed at $56.36, up $1.36 on Nasdaq.

Gilead’s first HIV drug, Viread, is a once-a-day pill expected to have sales of $500 million in 2003, its second year on the market. Its success is coming at the expense of Bristol Myers-Squibb’s Zerit, or d4T, which is taken twice a day and had sales of $443 million in 2002, off 15%.

The wholesale cost of Emtriva will be $253 a month, or $3,036 a year, comparable to Epivir, Gilead said. The company expects to begin shipping Emtriva next week.

Gilead’s goal is to overtake Glaxo’s Combivir, the bestselling HIV medication, with U.S. sales of about $530 million in 2002. Combivir is a single pill that combines Epivir and Retrovir, also known as AZT. It is taken twice daily.

Gilead said it could successfully market a cocktail of its two HIV drugs as an alternative to Combivir. John F. Milligan, Gilead’s chief financial officer, said he believes Combivir is vulnerable because AZT is associated with side effects not seen to the same degree with other HIV drugs, such as bone marrow suppression.

“AZT is a tough drug to take,” Milligan said, noting that it is seldom used as a single agent. “It is protected by Combivir and being used, we think, inappropriately.”

A representative of Glaxo couldn’t be reached for comment.

Analysts say Gilead is being overly ambitious and probably won’t damage Combivir’s sales until it has its own combination pill. A single pill from Gilead isn’t expected before 2005.

“AZT is very old and not great, but I think Combivir will continue as the standard of care for some time,” analyst Thomas Dietz of Pacific Growth Equities said.

Emtriva has a better shot against Epivir, which had sales of $263 million in 2002, analysts say. John Sonnier of Prudential Securities said in a research note that half of Viread regimes include the Glaxo drug. He forecast Emtriva sales of $17.5 million this year, swelling to $200 million in 2005.

Emtriva was the crown jewel of Gilead’s $464-million acquisition of struggling Triangle Pharmaceuticals in January and a key to the company’s growth in the HIV marketplace. The drug also is being tested in patients with hepatitis B.

The company, which was profitable for the first time last year, has other antiviral drugs in development that should further advance its stature in the AIDS drug marketplace, analysts said.

“Gilead has the potential to become the No. 1 antiviral franchise in the world,” analyst David Bouchey of C.E. Unterberg Towbin said.

Emtriva belongs to the most widely prescribed class of HIV drugs that disrupt the enzyme reverse transcriptase, which HIV uses to replicate inside human cells. As a class, the drugs had sales of $2.5 billion in 2002, according to IMS Health, a market research company that analyzes the pharmaceutical industry.

An HIV cocktail typically consists of three drugs, with at least two of them reverse transcriptase inhibitors. Charles Farthing, chief of medicine of the AIDS Healthcare Foundation, said the longer-acting nature of Emtriva is an advantage. But he said patients who have developed resistance to Epivir probably would be resistant to Emtriva.

“Some doctors may be enthusiastic about it because of its longer half-life, but others may not be because it is not very different” from the Glaxo drug, he said.

Gilead recently made Viread available at cost in poor countries, reducing its price in Africa and elsewhere to $468 from the $4,320 the company charges for a year’s supply in the U.S.

But Milligan said the company isn’t prepared to offer its new drug at cost in underdeveloped nations.

Milligan said the cost of producing the drug is so high that it would not be affordable even if it were sold at no profit.

But, he said, Gilead is developing a process that should reduce manufacturing costs to one-tenth their current level. At that point, Gilead would offer Emtriva at reduced prices in Third World nations, he said.