Gilead's Vemlidy Gets Approval In China For HBV Infection

Gilead Sciences, Inc. (NASDAQ:GILD) announced that the China National Medical Products Administration (NMPA) has approved Vemlidy (tenofovir alafenamide, TAF) 25 mg, a once-daily treatment for chronic hepatitis B in adults and adolescents (aged 12 years or older with body weight at least 35 kg).

The approval was supported by data from two international phase III studies (Studies 108 and 110) among 1,632 treatment-naive and treatment-experienced adult patients with HBeAg-negative and HBeAg-positive HBV disease. Importantly, Vemlidy, a targeted prodrug of tenofovir, has demonstrated antiviral efficacy similar to Viread 300 mg but at one-tenth of the dose. The drug has greater plasma stability and delivers tenofovir more efficiently to hepatocytes compared to Viread.

Vemlidy demonstrated improved renal and bone laboratory safety parameters compared to Viread.

We remind investors that Vemlidy is already approved by the FDA and in Japan. The drug was approved in European Commission in 2017.

The market potential in China is quite significant. Per the market, an estimated 20 million patients meet current guidelines for therapy, accounting for almost one-third of all patients currently requiring therapy worldwide. Approximately 300,000 people in China die from cirrhosis of the liver related to HBV each year.

Last month, Gilead reported third-quarter earnings, which beat estimates. However, earnings and revenues declined year over year as the magnitude of decline in hepatitis C virus (HCV) sales continues to deepen.

While the company plans to launch authorized generic versions of Epclusa and Harvoni in the United States in January 2019 through a newly created subsidiary, Asegua Therapeutics LLC, the HCV franchise sales are expected to decline further.

Given the persistent decline in HCV sales, the company is looking to HIV and newer avenues to help the top line. The initial uptake of Yescarta (from the Kite Pharma acquisition) is also encouraging but it will take some time for sales to contribute significantly to the top line, given the high cost of treatment. Moreover, Novartis’ (NYSE:NVS) Kymriah is also there in the market, posing competition.

Gilead’s stock has gained 3.9% in the past six months, compare to the industry's decline of 10.1%.

Gilead has promising late-stage candidates in the NASH and inflammation market, like selonsertib and filgotinib. The company also has a collaboration agreement with Sangamo Therapeutics, Inc. (NASDAQ:SGMO) to use Sangamo’s zinc finger nuclease technology platform for the development of next-generation ex vivo cell therapies in oncology.

Going forward, Gilead will have to generate substantial revenues from its HIV franchise, to offset the HCV sales decline. This will be a challenging task for the company with stiff competition from the likes of GlaxoSmithKline (NYSE:GSK) in the HIV market.

Zacks Rank

Gilead currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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