10
BioTech Stock Report, January 2004
B) released encouraging news for em-
tricitabine, its drug to treat patients
with chronic hepatitis B. The drug had
met its primary endpoint in a Phase III
study, with preliminary results demo n-
strating that treatment with emtrici-
tabine once daily for 48 weeks was
associated with improvements in liver
histology in 62% of patients compared
to 25% of patients who received pla-
cebo. Gilead expects to present these
data in detail at a scientific conference
next year. Emtricitabine was approved
in 2003 and is marketed as Emtriva for
use in combination with other antiret-
rovirals for the treatment of HIV infec-
tion in the U.S. and Europe.
The next step for Gilead is to seek
a new FDA-approved indication for
Emtriva, using the Phase II data as a
single pivotal trial for treating chronic
hepatitis B infections. Also Gilead
could develop a co-formulation of Em-
triva and Hepsera. The Lamivudine,
Hepsera and interferon-alpha therapies
that are currently used in the clinic are
not optimal because of the emergence
of resistance and/or adverse effects.
Clinically, Gilead has several key
initiatives that should bring visibility
to the company over the next several
quarters.
Gilead is currently conducting at
least two large clinical trials that hold
the potential to generate meaningful
clinical and marketing data over the
coming quarters. First, Viread Study
903 is a long-term safety and efficacy
study that has enrolled over 500 pa-
tients. Study 903 compares Viread to
Zerit in combination with Sustiva and
Epivir. The company has already pre-
sented analyses of results through 48
and 96 weeks. These results demo n-
strated an excellent safety and efficacy
profile for Viread-treated patients with
durable results, including better lipid
and cholesterol profile and lower rates
of lipodystrophy compared to d4T-
treated patients. We are expecting the
company to present 144-week data
from Study 903 in early 2004, and re-
main optimistic that Viread's safety
and efficacy profile will continue to be
superior to Zerit.
In addition to Study 903, Gilead is
conducting Study 934, which is a non-
inferiority comparison of Viread/
Emtriva plus Sustiva versus Combivir
plus Sustiva. Combivir is an antiretro-
viral agent that combines AZT and
3TC and is an extremely popular cofor-
mulation for HIV patients who are initi-
ating antiretroviral therapy. From a
marketing standpoint, this is an impor-
tant trial for Gilead, as it has the poten-
tial to position the Viread/Emtriva com-
bination competitively. Viread/Emtriva
would have a once-daily dosing ad-
vantage over Combivir, which is dosed
as a single tablet twice daily. The clini-
cal path for Viread and Emtriva is a 6-
month stability data for the coformula-
tion to be filed with the FDA in the
first half of 2004, followed by a 10-12
month review. Approval of the cofor-
mulation could happen in the first half
of 2005.
In our view, Gilead has proven its
ability to compete effectively with big
pharma, and Studies 903 and 934 hold
the potential to add marketing ammuni-
tion to the Viread/Emtriva sales mes-
sage.
We feel the company has pro-
gressed beyond its setback in the third
quarter, the greater than estimated
wholesaler inventory levels of Viread.
We can foresee Gilead's share price
able to reach $71 within 12-18 months
since Gilead's fundamentals remain
strong.
Both Eli Lilly and ICOS/
NASDAQ: ICOS (BSR #32: Stroke)
announced on November 21 that they
had received FDA marketing approval
for ICOS's erectile dysfunction drug
Cialis. In early December, both comp a-
nies launched Cialis with a full stock-
ing of the drug to 40,000 high volume
pharmacies.
With Cialis in the U.S. market, we
believe investors' attention will focus
on the relative strength of the Cialis
label: competition from Pfizer's Viagra
and GlaxoSmithKline's Levitra: early
Rx trends, and the ability of the Eli
Lilly/ICOS joint venture to return a
profit to ICOS. Rx trends will determine
share price appreciation in the near-
term. But ICOS had a good run this
year and doesn't hurt to take some
profits.
On December 15, the U.S. Health
and Human Services Department an-
nounced it bought the remaining in-
ventory of FluMist, three million doses
at $20 per dose. And on December 11,
health insurers Aetna and Cigna said
they would cover FluMist under their
plan this year. Undoubtedly, these
new events should help MedImmune/
NASDAQ: MEDI (BSR #53: Hidden
Value) redeem itself from Wall Street
naysayers, but current trading behav-
ior says on the contrary. Common
sense would say its better for MedIm-
