Patent, schmatent

Gotta say, didn’t see this coming. Recently, Gilead announced “plans to launch authorized generic versions of Epclusa and Harvoni, Gilead’s leading treatments for chronic hepatitis C virus (HCV), in the US, through a newly created subsidiary, Asegua Therapeutics. The authorized generics will launch at a list price of $24,000 for the most common course of therapy and will be available in Jan 2019.” Wait a minute. The patents for these products do not expire for another 10 years. What gives? According to Gilead, “due to the complexity and structure of the US healthcare system, discounts provided by Gilead may not always translate into lower costs for patients.” Take that US healthcare system. That said, we guess Gilead had to try something as they have seen Hep C product sales drop from ~$19B in 2015 to a 2018 estimate of ~$4B. Ouch.

Gilead searching to cure hep C sales forecasts

Let this be a lesson to us all. If you do your job too well, you won’t be needed anymore. Gilead has cured a lot of their target market. Combine that with the goldrush mentality surrounding the hep C marketplace and you have analysts forecasting a decline in quarterly sales from $2B in Q3 to $1.36B in Q4. Sure, InsightCity would probably be content to generate that kind of quarterly cheddar, but at that rate of decline, analysts are suggesting 2018 hep C sales could fall to approximately $4.5B, half what the company will have seen in 2017. (For perspective, if InsightCity revenue were cut in half it would still be approximately $0 USD, per quarter). But don’t forget, Gilead is sleeping on stacks of cash and they’ve been shopping.

Well, isn’t that special

Specialty pharmaceutical products are doing quite well these days and many have progressed in their life cycle to the point where they are obtaining approvals for new indications. See here for a 2017 list. If you look about half way down the list you will see Sovaldi and Harvoni (both Hep C medications from Gilead). FYI, sales of these two products were ~$14B (with a B) in 2016. As the Church Lady would say, “Isn’t that special?” (Side note: it doesn’t hurt having the CDC help your marketing efforts.) There could be a trend emerging that boosts recommended testing for various conditions. By programming alerts into EMR systems, researchers found hepatitis C virus (HCV) screening rates jumped five-fold. Maybe soon we will see pharma companies helping EMR companies program alerts into their systems.

Hep C, all the cool kids are treating it

Gilead isn’t the only Hep C game in town but, to date, has held strong to its first-mover advantage. According to a recent article in Investor’s Business Daily, that may soon change. And not because of a lower price. AbbVie’s competitive offering will still list for around $28,000 per month. Its competitive advantage lies in its 4-week shorter treatment regimen. Also, AbbVie’s glecaprevir and pibrentasvir drug combo is likely to be approved with few conditions. Where Gilead’s treatment combo is a 12-week regimen for patients who have not previously responded to a single drug treatment, AbbVie’s combo is taken for only 8 weeks and will probably be approved as a first-line treatment. “Aw, crap,” thought someone at Gilead, probably.

5. Gilead’s got cash to spend

Gilead, the once-tiny biotech that made headlines with its Hep C blockbuster, told Bloomberg that it’s looking to “do important deals.”  CEO John Milligan said that the company has $21.3 billion in cash and Gilead is looking to expand its oncology platform with a drug they can “rally around.” TBD on whether Milligan can repeat the success of his predecessor, whose $11 billion acquisition of Pharmasset and its hepatitis C drug, Solvaldi, doubled Gilead’s revenue. Milligan’s announcement comes after sales of Gilead’s two Hep C pills, among the fastest-selling drugs of all time, fell for the first time last quarter.