PREVIEW-Lofty hopes confront Gilead's 4-drug HIV pill
* Key trial results expected this month
* May need to show superiority to rivals to boost stock
* Sales forecasts vary widely
By Deena Beasley
LOS ANGELES, Sept 9 (Reuters) - Gilead Sciences Inc's (GILD.O) experimental four-drug HIV pill may need to do more than simply match the safety and effectiveness of existing therapies to meet its lofty sales expectations.
Results for the second pivotal clinical trial for the combination drug are expected this month. The pill is likely to meet the study's goal of working as well as a combination of other medicines, analysts said, but it may need to show superiority to convince investors of its commercial potential and send Gilead shares higher.
The biotechnology company said in August that its first pivotal trial of the pill, known as the Quad, met the goal of showing that it worked as well as Atripla, Gilead's current three-drug combination HIV pill.
But shares of the Foster City, California-based company fell as much as 3 percent after the news and the stock has dropped more than 10 percent over the past seven weeks.
"There were some investors who were hoping the trial would show superiority to Atripla," said Needham & Co analyst Alan Carr.
The Quad is seen as Gilead's most important pipeline product -- all of the components are owned by the company, and the Quad would extend the life of the company's lucrative HIV franchise.
As of early 2011, about 80 percent of U.S. HIV patients and 72 percent of European HIV patients were treated with a Gilead drug. Combination drugs are particularly important for HIV patients, who must juggle a huge amount of pills on a daily basis.
The Quad combines experimental integrase inhibitor elvitegravir and boosting agent cobicistat with Truvada, a pill consisting of Gilead's older HIV drugs Emtriva and Viread.
Most of the company's current drug sales -- which totaled $7.4 billion last year -- come from Atripla, a once-daily pill that combines Truvada with Bristol-Myers Squibb's (BMY.N) Sustiva.
Gilead earns no profit from the Bristol drug, and all of the Atripla components lose patent protection in the next few years.
The second pivotal trial of the Quad is designed to show that it works as well as a combination of ritonavir-boosted Reyataz, a protease inhibitor sold by Bristol-Myers, and Truvada.
RBC Capital Markets analyst Michael Yee puts the odds that the Quad will show superiority to the Reyataz regimen at 25 percent.
A lower-cost generic version of Atripla could be on the market in 2018, and Gilead will need a compelling case to convince doctors that the Quad will benefit patients more than existing HIV drugs.
$1.5 BILLION POTENTIAL
If approved, the Quad would be the first single-tablet regimen for HIV to include an integrase inhibitor -- a new class of drugs designed to block the ability of the human immunodeficiency virus to replicate.
The four-drug pill is also seen as potentially safer than Atripla, but Gilead said initial results from the first pivotal trial showed similar rates of adverse side effects and patient drop-out rates for both treatment groups.
Full safety data from the first trial will be presented at a medical conference in March, and Gilead plans to file for U.S. regulatory approval of the Quad in the first quarter of 2012.
U.S. regulators last month approved Gilead's Complera, a three-drug combination of Emtriva, Viread and Johnson & Johnson's (JNJ.N) Edurant. Under its deal with J&J, Gilead will keep up to 30 percent of what it makes off the Edurant component.
Analysts expect Gilead's Complera sales to reach $916 million by 2015, according to Thomson Reuters data. Sales of the Quad are forecast as high as $1.53 billion by 2015, but estimates vary widely.
"While Gilead remains the dominant market leader in HIV ... we believe the overall market trends are slowing and that trends toward earlier treatment have been close to fully realized," BMO Capital Markets analyst Jim Birchenough said in a research note this week.
He forecasts 2015 Quad sales of just $367.3 million.
Gilead licensed elvitegravir from Japan Tobacco Inc (2914.T) in March 2005. The U.S. company has exclusive rights to develop and commercialize the drug everywhere except Japan.
Currently, the only integrase inhibitor approved by regulators is Merck & Co Inc's (MRK.N) Isentress, or raltegravir, but it must be taken twice a day.
ViiV Healthcare, a joint venture between GlaxoSmithkline Plc (GSK.L) and Pfizer Inc (PFE.N), is testing a combination of experimental integrase inhibitor dolutegravir and Epzicom, which consists of HIV drugs Ziagen and Epivir.
Yee at RBC Capital Markets said the Glaxo drug could be competition for the Quad, but noted that dolutegravir will not be co-formulated with Truvada.
He also said Epzicom use is associated with higher cardiovascular risks. (Reporting by Deena Beasley; editing by John Wallace)
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