TAF-Based HIV Drugs Should Boost Gilead’s Revenue in 2016
Gilead Sciences: What's Driving the Company's Valuations?
HIV franchise
According to Wall Street analysts’ projections, Gilead Sciences’ (GILD) total HIV (human immunodeficiency virus) product revenue is expected to rise YoY (year-over-year) by about 3.2% from ~$11.1 billion in 2015 to $11.4 billion in 2016.
The above diagram shows that the revenue from Genvoya’s sales will rise from $45 million in 2015 to $525 million in 2016. In 2016, the revenue from Gilead’s other HIV drugs such as Stribild, Complera, and Truvada will remain more or less similar to those earned in 2015. Atripla’s revenue is projected to decline by about 8.3% from $3.1 billion in 2015 to $2.9 billion in 2016.
TAF-based HIV drugs
Gilead Sciences’ HIV drug, Viread, is expected to lose its patent protection on July 25, 2017. TDF (tenofovir disoproxil fumarate), brand name Viread, is the core component in all of Gilead’s existing HIV drugs. In order to protect its HIV franchise from generic erosion, the company focused on developing superior HIV drugs based on another compound called “tenofovir alafenamide” or TAF. To learn more about Gilead’s TAF-based HIV drug’s development strategy, read Gilead Sciences’ Research and Development in HIV and HCV.
On November 5, 2015, the U.S. Food and Drug Administration approved Genvoya—Gilead’s first TAF-based STR (single tablet regimen) for treating patients with HIV-1. The drug was also given preferred first line therapy status by the Department of Health and Human Services. This underlines the efficacy and safety profile of the drug. On November 23, 2015, Genvoya was also approved for marketing in Europe. The drug has been well received in six countries in Europe.
In 2015, about 80% of the total HIV patients opting for Genvoya switched from Stribild while 10% of the patients switched from non-Gilead drugs. As a result, Gilead Sciences is witnessing a switch from its TDF-based drugs as well as Genvoya’s other competitors.
This trend is positive for Gilead Sciences. To date, many patients in the US and Europe were forced to shift from Gilead’s TDF-based drugs to abacavir-based drug, Triumeq. Triumeq belongs to ViiV Healthcare—a joint venture of Pfizer (PFE), GlaxoSmithKline (GSK) and Shionogi. While prolonged use of TDF-based drugs is associated with changes in kidney function and bone mineral density problems, use of abacavir results in high cardiovascular risk.
Genvoya and other TAF-based drugs are expected to be a better substitute for both Gilead’s TDF-based drugs as well as Triumeq. The company is also expected to launch two more TAF-based drugs in the US and European Union market in 2016. This will give HIV patients more options. Gilead Sciences expects to gradually regain the HIV market share that it lost to competition from ViiV Healthcare and Johnson & Johnson (JNJ).
If Gilead’s successful in its TAF-based HIV drug strategy, it will also benefit the iShares Russell 1000 Growth ETF (IWF). Gilead Sciences accounts for about 1.4% of IWF’s total portfolio holdings.
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