Gilead Sciences, Inc. (GILD): The Heart Of The Matter

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Gilead Sciences, Inc. (NASDAQ:GILD)Gilead Sciences, Inc. (NASDAQ:GILD) has exploded over the last few years as a powerhouse of anti-viral medications.  Its myriad treatments for HIV have brought in $2 billion in Q1 alone, and its hepatitis C drug Sofosbuvir recently showed phenomenal results in a Phase II study.  There’s no doubt these drugs are the lifeblood of Gilead.  But the biotech company has made more quiet attempts to diversify itself through the acquisition of several cancer and cardiovascular biology companies.  Revenues and earnings from Gilead Sciences, Inc. (NASDAQ:GILD)’s cardiovascular program have increased Y/Y and Q/Q, but do these drugs have the staying power to contribute significantly to Gilead’s future?

Letairis (ambrisentan)

Gilead Sciences, Inc. (NASDAQ:GILD) acquired Letairis in 2009 when it bought CV Therapeutics for $1.4 billion.  Letairis is a type A endothelin receptor antagonist, and was approved by the FDA in 2007 for treatment of pulmonary hypertension.  A secondary ailment associated with chronic heart failure, the market for effective drugs that improve pulmonary circulation is likely to increase as the incidence of heart failure rises.  The market for an effective pulmonary vasodilator likely also will rise.

Since hitting shelves under Gilead Sciences, Inc. (NASDAQ:GILD)’s label, sales of Letairis have grown respectably, with 40% growth in 2012 and 35% growth to $410 million in Q1 2013.  Revenues are certainly growing, but Letairis faces stiff competition.  Actelion‘s Tracleer is also an endothelin antagonist, and as the first blockbuster pulmonary hypertension drug it grabbed a large portion of the market share before Letairis was approved.  Tracleer sales have been pretty stagnant around $375 million in the last few quarters, and generic competition when Tracleer loses protection in 2015 may push Letairis sales down.

A larger threat exists with the emergence of other classes of vasodilators that show higher efficacy, such as phosphodiesterase (PDE) inhibitors.  For instance, Pfizer Inc. (NYSE:PFE)‘s oral  PDE inhibitor Revatio did well before losing patent protection.  Pfizer Inc. (NYSE:PFE) sold $338 million of Revatio between Sept. 2011 and Sept. 2012.

Interestingly, Revatio is the re-branded version of Viagra, which was discovered in the search for a vasodilator to treat angina.  Other erectile dysfunction drugs have also been rebranded to treat pulmonary hypertension, including Eli Lilly & Co. (NYSE:LLY)‘s Cialis (Adcirca). Adcirca is marketed in the United States by United Therapeutics Corporation (NASDAQ:UTHR), who paid Eli Lilly & Co. (NYSE:LLY)$150 million for domestic commercial rights in 2008.  United Therapeutics Corporation (NASDAQ:UTHR) reported 73% growth in annual sales of Adcirca in 2012, nearly double the growth rate of Letairis – not accounting for additional sales by Eli Lilly & Co. (NYSE:LLY) in international markets.  Despite growth in Letairis’ market-leading sales, competition from several molecules with diverse functions may threaten continued success beyond 2015 when Tracleer goes generic.

Ranexa (ranolazine)

Ranolazine is a dirty drug.  It acts directly on multiple components of electrical signaling in the heart.  Other studies suggest it also acts as a non-selective adrenergic blocker.  Further studies even suggest it blocks fatty acid breakdown, and therefore alters cellular metabolism.  A drug with so many targets can be a blessing and a curse.  It allows physicians to kill two birds with one stone, but sometimes one of those birds is a delicate little dove.  Cardiac safety is therefore a major issue to keep an eye on as Gilead Sciences, Inc. (NASDAQ:GILD) tests new indications for Ranexa.

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