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2001 BW 50



Q&A with Gilead Sciences' John Martin
The hot biotech's CEO talks about the three drugs that are pumping up his company's growth

Gilead Sciences (GILD ), this year's No. 1 performer on Standard & Poor's Mid Cap 400 index, has become one of the biotech industry's strongest performers in 2002. Over the last year, its stock has more than doubled, from about $17 to $36. Driving the gains is Gilead's consistent performance in a biotech area where few companies have had repeated success: Effective drugs for viral diseases. Currently, the company has drugs on the market for the flu and for HIV.

BusinessWeek Online reporter David Shook spoke to Gilead CEO John Martin recently about the anti-HIV drug Viread, as well as about the company's antiviral medicine for the flu and a drug under development for hepatitis B viral infections. Here are edited excerpts of their conversation:

Q: Financial analysts are bullish on your company's stock because of Viread's rapid uptake in the U.S. Can you explain where exactly this drug fits in the arsenal of anti-HIV medication?
A: We've had a very successful launch with Viread, and we expect it will continue to go well for us. That's because of the high number of patients resistant to older HIV drugs. Viread is the first of a new class of drugs called nucleotides. Many of the HIV/AIDS drugs already on the market today are known as nucleosides or non-nucleosides. Both block an enzyme called reverse transcriptase, which is instrumental in the replication of the virus.

Viread also blocks this enzyme, but there's a distinct aspect to our drug's mechanism that gives it very durable characteristics. It has the longest duration of action, and it appears to have the least tendency to give rise to viral resistance. That's what makes our drug important.

A lot of patients are running out of options because the virus in many people has built up resistance to the drugs. For many patients who have a virus with resistant mutations, Viread already is working quite well. The drug is well tolerated too. It's a once-a-day pill, as opposed to an injection.

Q: Are there any other possible uses for Viread?
A: We've noticed in clinical studies that Viread also appears to be very good at the prevention of the disease [HIV/AIDS] from, say, a needlestick injury. Such injuries can and often do result in the transmission of the virus to a health-care worker. Only now that we've established a strong safety profile for Viread [the drug appeared to be as safe as placebo in clinical trials], we'll be looking at a pill or possibly a topical gel for the prevention of HIV. This wouldn't be considered a vaccine but a prophylactic used to lower the risk of transmission of the virus.

Q: You expect to file a new drug application with federal regulators before the middle of this year for an antiviral medication for hepatitis B. Why would this drug be an important benefit?
A: Hepatitis is an often silent and asymptomatic disease, but for a lot of people, it can have very bad outcomes -- such as liver failure and the need for a transplant. Plus, there's a large population of undiagnosed people in the U.S. So the need is substantial. We'll have to see how substantial over time as more people are diagnosed.

Q: Gilead also makes Tamiflu, the only prescription flu treatment on the market today. As I understand it, sales have been disappointing, and the implication has been that the drug doesn't work that well. Can you explain?
A: There's nothing disappointing about the drug. We discovered this drug, and we're very proud of it. And it has been proven to work. The problem is that we all have been lucky: We haven't had a significant flu season since the drug hit the market. And this drug is really a consumer product. You have to have a prescription, but the drug works best when taken within 12 hours of flu symptoms. I carry it as a preventative measure in my briefcase.

Q: But as a prescription drug, it's not easy for some people to obtain it in 12 hours. Why not take the drug over-the-counter, eliminating the need for prescription?
A: It's very difficult to get over-the-counter status from the Food & Drug Administration for an infectious-disease product. There are some topical antibiotics [such as Neosporin] and mild antifungals [such as Lamisil] on the market. But the concern is misdiagnosis and overuse, which could lead to bacteria and viruses that are resistant to the medications. So that's why Tamiflu will remain a prescription drug.

Q: So the implication is that if we have a bad flu season, sales of the drug could spike?
A: Yes, that's fair to say. Physicians are aware of the drug and understand how to prescribe it. If we have a bad flu season, we're likely to see many more people turning to it.

Q: Are those three drugs -- the hepatitis B antiviral, the HIV/AIDS drug Viread, and Tamiflu -- the story of this company right now?
A: Those are the two to three immediate things. We do have other drugs under development. But for the most part, this is what we're spending our time with now.

Q: AIDS drugs are expensive, and the disease has taken its greatest toll in Africa, where millions of people are dying because they can't afford treatment. This is a public relations nightmare for the drug industry. And drugmakers are trying to be as humanitarian as possible while still protecting the interest of their shareholders. How will Gilead participate in alleviating the crisis in the developing world?
A: We're working very hard, now that the drug is on the market, to understand its profile for use in the developing world. We will be working with various organizations to better define the drug's role, and we expect to start initiating clinical studies very soon in that part of the world.

The concern in Africa is that there's not much health-care infrastructure for understanding medical management for AIDS drugs. If a patient doesn't follow the required dosing regimen every day at roughly the same time, he or she can fail the therapy very quickly. We're eager to start fostering the knowledge [of how to administer these drugs correctly] in that market so that our drug can be used there. But we need to continue to be successful in the U.S. with the drug -- and at the same time do studies in Africa to understand how best to use the drug there.

APRIL 2, 2002

Edited by Beth Belton

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