Gilead’s FDA-Approved Drug Still Faces an Uphill Battle in HCV Ring

Gilead Sciences, Inc. (NASDAQ:GILD) just scored a green light from the FDA for its triple Vosevi combination of sofosbuvir, velpatasvir and voxilapreviri, designed to treat hepatitis C. So why does Leerink analyst Geoff Porges remain unimpressed with the biotech giant, even on the heels of agency approval? Porges believes in the competition arena, Gilead is ultimately “disadvantaged” when heading up against AbbVie’s rival hepatitis C drug Maviret.

Sidelined on Gilead’s HCV prospects, the analyst rates a Hold on Gilead stock, with a price target of $74, which implies a slight upside from current levels. (To watch Porges’ track record, click here.)

A key part of Gilead’s approval for the analyst is that the Vosevi combo will treat patients who have already been treated using every HCV genotype, with POLARIS trial-based approval not including Europe’s once-recommended 8 week treatment duration. This is significant as AbbVie in turn has high chances for gaining the FDA nod for an 8-week course of treatment for all genotypes, even if genotype 3 continues to be “somewhat uncertain.”

Porges underscores his deep-seated caution on the biotech giant, asserting, “Gilead already has the approval for Harvoni for the 8 week course in the US for treatment-naïve genotype-1 HCV, but is otherwise restricted to 12 weeks duration for all others. Gilead has priced Vosevi at $24,920 per bottle (August 8/shipping product asap/next business day), which means Vosevi is priced at parity with Epclusa at $74,760 for the 12-week course. Effectively Gilead is giving the third component of Vosevi free of charge to maintain the price point of their 12 week treatment course. In most cases Vosevi will be given after a patient has already been treated with either Harvoni, or Epclusa, or a competitive regimen from AbbVie or Merck (MRK, MP), and in some respects, given this label and position in the treatment hierarchy, Gilead could have priced Vosevi higher and probably not lost significant share.”

By 2021, the analyst projects total HCV revenue for the giant will reach $2.9 billion, or 12% of Gilead’s total revenue, marking quite the sharp decline compared to 50% of total revenue the HCV segment had captured just last year.

TipRanks analytics reveal GILD as a Strong Buy. Out of 12 analysts polled by TipRanks in the last 3 months, 9 are bullish on Gilead stock while 3 remain sidelined. With a return potential of nearly 15%, the stock’s consensus target price stands at $83.56.

Vertex’s Camp Gets Another Bull

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) shares were climbing almost 21% yesterday thanks to the biotech firm’s “breakthrough-quality” showcase of cystic fibrosis (CF) triple regimens marking improvements in FEV1 in F508del/Min and F508del homozygous patients alike. The firm’s first proof-of-concept efficacy data read-out indicates encouraging success in Phase I and Phase II studies of tezacaftor/ivacaftor as well as second-generation correctors VX-152, VX-440, or VX-659.

In reaction, Cowen analyst Phil Nadeau finds these three regimens came in strong with the production of “very compelling” data that has the analyst upgrading from a Market Perform to an Outperform rating on the stock while boosting the price target from $105 to $200, which represents a 25% increase from current levels. (To watch Nadeau’s track record, click here)

Moreover, Nadeau anticipates this success will “very likely illuminate a 10 year path of revenue growth for VRTX,” with all three regimens exhibiting a “well tolerated” profile. When looking at the promising efficacy read-outs in full context, the analyst underscores that Kalydeco scored roughly 10 percentage point improvements in FEV1 when assessing pivotal studies in G551D patients. “Our consultants consider Kalydeco a true breakthrough therapy that dramatically improves the quality of life and very likely significantly lengthens the lifespan of G551D patients. In the past, 4 week Ph. II data from VRTX’s CFTR modulators has been very predictive of their long term benefits, and therefore we think the triple regimen’s Ph. I/II data strongly suggests that these regimens will be similar ‘breakthroughs’ for the 80% of CF patients with one copy of the F508del mutation,” continues the analyst.

Overall, “Based on its compelling clinical profile Kalydeco has very high penetration, persistence and compliance in the 10% of CF patients in its labeled populations. With just as strong clinical data, we expect the triple regimens to have similar adoption among the 80% of CF patients who have at least one copy of the F508del mutation. Moreover, the second generation correctors will be patent protected into the early 2030’s, extending the commercial life of VRTX’s franchise by 5-6 years,” Nadeau concludes, seeing fit to cheer for Vertex’s commercial potential and step forward from the sidelines.

TipRanks analytics exhibit VRTX as a Strong Buy. Based on 18 analysts polled by TipRanks in the last 3 months, 16 rate a Buy on Vertex stock while 2 maintain a Hold. The 12-month average price target stands at $161.79, marking a 1% upside from where the stock is currently trading.

Keryx Does Not Face Near-Term Significant Threat from Auryxia’s Renvela Approval

Keryx Biopharmaceuticals (NASDAQ:KERX) shares were on a just under 7% stumble yesterday on back of Indian competitor Aurobindo’s FDA stride of approval for a generic take on Sanofi’s Renvela tablet, which leads the market in the phosphate binder. In other words, Keryx investors took this as a sign to quake for the biotech firm’s Auryxia.

Cowen analyst Boris Peaker sees “likely no impact on Auryxia,” in the short-term, but nonetheless continues to be cautious on the biotech firm’s long-term trajectory, reiterating a Market Perform rating on KERX without listing a price target. (To watch Peaker’s track record, click here)

Peaker notes, “In the near term we see minimal impact on Auryxia due to minimal price advantage and possible manufacturing constraints; however, in the long term generic Renvela may be a significant overhang.”

In the bigger picture, “Aurobindo plans to launch generic Renvela tablets in the US immediately, which will make it a competitor to Keryx’s Auryxia […] The timing is in line with expectations given Aurobindo received FDA approval for an oral suspension formulation of Renvela in June 2017. […] In the near term we do not view generic Renvela as a significant threat to Auryxia as a 10% discount to Sanofi’s Renvela WAC is not cost competitive with Auryxia. […] Additionally, patients on Auryxia average 7 pills per day versus 9 pills per day with Renvela […] Auryxia is ~26% less expensive than Sanofi’s Renvela. As such, we anticipate generic Renvela to remain at a premium to Auryxia. We believe that in order for generic Renvela to pressure Auryxia on price, additional generic entrants will be needed,” surmises Peaker, who may not be throwing a bullish parade for Keryx, but does not join the worried investors from yesterday.

TipRanks analytics demonstrate KERX as a Buy. Out of 3 analysts polled by TipRanks in the last 3 months, 1 is bullish on Keryx stock while 2 remain sidelined. With a return potential of nearly 12%, the stock’s consensus target price stands at $8.00.