Ahead of the Bell: Analyst expects Gilead momentum
Shares of Gilead Sciences Inc. may gain momentum from a Vertex Pharmaceuticals Inc. decision stop development of a potential hepatitis C treatment, according to a Barclays analyst.
Vertex said Tuesday it will end development of a drug labeled ALS-2158 after a study showed there was "insufficient antiviral activity to warrant proceeding with further clinical development." ALS-2158 was in early-stage development.
But the Cambridge, Mass., company also said it expects to start mid-stage studies by the end of the year on another potential treatment labeled ALS-2200. The drug developer will test that molecule in separate studies that combine it with ribavirin and Incivek to treat people with a form of chronic hepatitis C.
Incivek, from Vertex and Johnson & Johnson, was one of two new hepatitis C drugs approved last year, after a two-decade drought for new treatments. The other was Victrelis from Merck & Co.
Hepatitis C is a virus that can lead to life-threatening liver damage and is the main cause of liver transplants in the United States. As many as 5 million people in the United States are infected with chronic hepatitis C, and most are unaware of their infection, according to Vertex.
Analysts say the market for treatments is potentially lucrative for drugmakers. More people are expected to be diagnosed with the tough-to-treat disease as the baby boomer generation ages.
Last month, drugmaker Bristol-Myers Squibb Co. also said it will scrap development of a potential hepatitis C treatment after at least one patient suffered heart failure. Gilead shares climbed after that announcement.
Analyst Ying Huang said in a research note the Vertex announcement will provide "additional positive momentum" for Gilead heading into November's annual meeting of the American Association for the Study of Liver Diseases in Boston. Gilead, based in Foster City, Calif., has a couple potential hepatitis C treatments under development, including one labeled GS-7977 that many analysts see as promising.
The Barclays analyst expects confidence behind Gilead's potential treatments to remain high.
Gilead shares closed at $67.29 on Tuesday after rising to a 52-week high of $68.08 earlier in the day. Vertex shares closed at $56.26. They are down 14.9 percent since hitting a high of $66.10 on May 15.