Summary
GILD may be valued as if its non-antiviral pipeline is nearly worthless.
This article evaluates a potentially important molecule that GILD is studying for numerous indications, GS-5745.
The indications are discussed with the goal of allowing readers to understand GILD's goals, an outline of the commercial opportunity, and rationale for the specific clinical program.
My view is that this is an intelligent program with significant risks, and that success in at least one indication may help GILD's P/E if nothing else.
If broad success in several indications is realized, perhaps GS-5745 can lay the groundwork for another meaningful earnings pillar for the company.
Background
Investors "get it" that Gilead (NASDAQ:GILD) has two best-in-class antiviral franchises, HCV and HIV/AIDS. However, with some reason, the Street is skeptical that GILD can come close to reproducing this degree of success outside of antivirals with an acceptable ROIC.
To evaluate this I begin an occasional series of articles evaluating the promise and perils of some key parts of the company's pipeline.
GILD is currently testing more than one drug for more than one seemingly unrelated disease. Of these, the one that is under consideration for the most diseases and that is farthest along in clinical trials is an antibody called GS-5745. I believe this came along with simtuzumab in 2011 as part of the $225 MM acquisition of Arresto, a privately-held biotech company. GS-5745 is a humanized antibody; the humanization process was performed for Arresto by Antitope, a British company that is now part of Abzena plc (ABZA.L). Abzena is said to be in line for very small royalties on simtuzumab and GS-5745.
Both simtuzumab and '5745' were developed to inhibit enzymes that act outside of cells, such as in the extracellular matrix. Simtuzumab inhibits an enzyme involved in collagen (fiber) formation. It is in Phase 2 for fibrosing stages of the liver disease NASH but failed in clinical trials for cancer and pulmonary fibrosis. GILD's CSO, Dr. Bischofberger, recently admitted that these failures make the drug's chances of success in NASH problematic. None of this was surprising to me; if you go back over my many GILD articles, I've never had anything especially optimistic to say about simtuzumab.
GILD may be valued as if its non-antiviral pipeline is nearly worthless.
This article evaluates a potentially important molecule that GILD is studying for numerous indications, GS-5745.
The indications are discussed with the goal of allowing readers to understand GILD's goals, an outline of the commercial opportunity, and rationale for the specific clinical program.
My view is that this is an intelligent program with significant risks, and that success in at least one indication may help GILD's P/E if nothing else.
If broad success in several indications is realized, perhaps GS-5745 can lay the groundwork for another meaningful earnings pillar for the company.
Background
Investors "get it" that Gilead (NASDAQ:GILD) has two best-in-class antiviral franchises, HCV and HIV/AIDS. However, with some reason, the Street is skeptical that GILD can come close to reproducing this degree of success outside of antivirals with an acceptable ROIC.
To evaluate this I begin an occasional series of articles evaluating the promise and perils of some key parts of the company's pipeline.
GILD is currently testing more than one drug for more than one seemingly unrelated disease. Of these, the one that is under consideration for the most diseases and that is farthest along in clinical trials is an antibody called GS-5745. I believe this came along with simtuzumab in 2011 as part of the $225 MM acquisition of Arresto, a privately-held biotech company. GS-5745 is a humanized antibody; the humanization process was performed for Arresto by Antitope, a British company that is now part of Abzena plc (ABZA.L). Abzena is said to be in line for very small royalties on simtuzumab and GS-5745.
Both simtuzumab and '5745' were developed to inhibit enzymes that act outside of cells, such as in the extracellular matrix. Simtuzumab inhibits an enzyme involved in collagen (fiber) formation. It is in Phase 2 for fibrosing stages of the liver disease NASH but failed in clinical trials for cancer and pulmonary fibrosis. GILD's CSO, Dr. Bischofberger, recently admitted that these failures make the drug's chances of success in NASH problematic. None of this was surprising to me; if you go back over my many GILD articles, I've never had anything especially optimistic to say about simtuzumab.
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