Sovaldi: Gilead hits pay dirt with a breakthrough hep C drug

Investment Commentary

Sovaldi: Gilead hits pay dirt with a breakthrough hep C drug


Gilead execs didn't appear to mind in the least when winning the race on hepatitis C meant snubbing Bristol-Myers Squibb and a remarkable combination program with daclatasvir.  
Critics howled, but Gilead shrugged it all off, set on sticking with its own in-house cocktail. Analysts responded by driving peak sales estimates ever further north, somewhat awed at the notion that the current standards of care from Vertex ($VRTX) and Merck ($MRK) were about to be swept away shortly after their appearance on the market. Thomas Wei of Jefferies & Co. had initially figured that Gilead would have to hit a peak sales estimate of $4 billion to justify the cost of Sovaldi. Analysts have recently been settling in around $7 billion after calculating the returns on a pill that will cost $1,000 a day--or $84,000 for a 12-week course.
But winning here has come at a cost that may be hard to calculate. Already whipped up by Gilead's steep prices on HIV drugs like the newly approved Stribild, some prominent nonprofits immediately took a swipe at Gilead's pricing strategy.
Patients, though, will benefit enormously from Gilead's work. Sovaldi and soon ledipasvir will wipe out most of the need for interferon, an injected therapy that has a stunningly harsh impact on many patients.
The bottom line for Gilead's Phase III combo program: Researchers say that "of the 1,518 patients randomized to the 12-week arms of ION-1 and to all arms of ION-2 and ION-3, 1,456 patients (95.9%) achieved the primary efficacy endpoint of SVR12. Of the 62 patients (4.1%) who failed to achieve SVR12, 36 patients (2.4%) experienced virologic failure: 35 due to relapse and only one patient due to on-treatment breakthrough (with documented noncompliance). Twenty-six patients (1.7%) were lost to follow-up or withdrew consent."

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John Carroll (email | Twitter)

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