All,
From the San Mateo County Times.
joarel~
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Tim Simmers Business Writer
Wednesday, January 30, 2002 - FOSTER CITY -- GILEAD SCIENCES' new AIDS drug
is not only a bright ray of hope for HIV patients, but a beacon for the
company's future.
The first AIDS drug on the U.S. market in more than a year, Viread came out
(last November) at a time when demand was heightened for AIDS treatments.
Many patients are desperate for new medicines, because the deadly virus
frequently becomes resistant to the drugs they're taking.
"We knew there was a growing need for new (AIDS) drugs, especially potent
ones that mix with other medications," said John Martin, president and chief
executive officer of Gilead Sciences Inc.
The Foster City-based company knew Viread was special. That's why Gilead
sold its cancer business in November to OSI Pharmaceuticals for about $200
million in cash and stock. The strategy: save costly research money on its
early-stage cancer drugs and use it on the current Viread launch. The move
has refocused the company on its infectious disease-fighting drugs for AIDS,
hepatitis and influenza.
Gilead expects to get U.S. Food and Drug Administration approval for a new
hepatitis B drug later this year. It also produces a potent flu drug,
Tamiflu. But it is Viread that is expected to drive the company's future
growth as well as provide much needed relief for many AIDS sufferers.
"It's made a big difference in my life," said Doug Sharpe, a 57-year-old San
Francisco man who was first diagnosed as HIV positive in 1988. "I've taken a
number of drugs, but the beauty of (Viread) is it's really paying off."
Sharpe takes Viread with a cocktail of other drugs, as do other AIDS
patients, and says "it gives me the strength and stamina I've not had in
years." Fortunately, it has no side effects for Sharpe, and exhibited
practically no side effects in clinical trials.
Few patients taking Viread complain of fatigue, nausea, diarrhea or
depression -- common side effects with many AIDS medications.
In addition, Viread has shown that it can remain effective, while many other
drugs lose their effectiveness quickly as the virus becomes resistant.
Viread stops the virus from replicating while protecting the patient's
immune system.
Another plus for Viread is that it is a one-pill-a-day treatment, said Shay
H. Weisbrich, vice president of sales and marketing for Gilead. "It's not a
pill-burden treatment," she said. "Many treatments require taking up to 18
pills a day."
Gilead doubled its sales force last fall in anticipation of a strong Viread
launch. And the company has not been disappointed.
The sale to OSI of the oncology division, which included three early-stage
cancer drugs, will save the company about $25 million annually on cancer
research. Gilead will direct that savings and a portion of the $200 million
deal with OSI into marketing Viread.
The company owns the rights to Viread, and will reap all profits from sales.
Gilead is not so lucky with its popular Tamiflu influenza drug. For that
medicine, Gilead only receives 10 percent in royalties, because it partnered
with pharmaceutical giant Hoffmann-La Roche Inc. to market the product.
Since Hoffman-La Roche pockets most of the sales, Tamiflu will never be a
huge money maker for the company that developed it.
That's why Gilead is targeting Viread. In fact, the deal it made with OSI is
already delivering benefits. For the first time this Thursday, Gilead will
announce a profit because of cash in its coffers from the OSI deal. The
company doesn't believe this announcement of profitability will be a
one-time event, because continued strong Viread sales are expected to fuel
future profits.
"It's a new drug, but to date it is effective and well tolerated by
patients," said Lawrence Boly, a San Francisco doctor who treats AIDS
patients.
The drug cost about $4,000 a year for patients, but most insurance companies
pick up the costs. There also are programs for patients, including Gilead's
own program, that reduce the cost or deliver the drug for free to those who
can't afford it.
"It's working for patients whose treatments are failing," said Caroline
Copithorne, an analyst with Morgan Stanley in San Francisco. "We don't see
any products coming out soon that would be directly competitive."
Viread likely will remain in the cocktail drug mix for many AIDS patients
for years to come, she added.
Viread sales are expected to hit $145 million this year, after European
approval is received to go along with U.S. sales, and should peak at $600
million a year after 2006, according to Copithorne. Gilead's stock has had a
good year, climbing from the high 20s to close Tuesday at 65.75, down 2.02
on the day.
Gilead's main challenge could be competing against another AIDS drug that is
similar and better than Viread. But there isn't currently one in the
pipeline, so Gilead could retain significant market share with Viread well
into the future.
Furthermore, the company has the capacity to market the drug by itself,
since most of America's 900,000 AIDS patients are in major markets like New
York, Los Angeles, Atlanta, Miami and the Bay Area. That makes it easier to
market than Tamiflu, for which potential patients are everywhere.
"These are very exciting times at Gilead," said Weisbrich. "We feel like
we've broken through with a stronger AIDS drug with few side effects."
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