Gilead's new launch Genvoya racks up big script growth in fastest HIV rollout since Atripla

Looking for a bright spot in the gloom of Gilead Sciences’ ($GILD) second-quarter numbers? Look no further than its HIV franchise, where the latest generation of meds is grabbing market share--and the single product Genvoya is taking on patients lickety-split.

There’s a down side to that script growth--which we’ll get to in a minute--but first, the numbers. After just 6 months on the market, Genvoya is already the most-prescribed HIV drug for patients new to antivirals and those switching from another regimen, COO Kevin Young said during the company’s Q2 earnings call. Sales nearly doubled for the quarter compared with Q1, he said, coming in at $302 million worldwide. Overall HIV revenue grew to $3.1 billion for the period.

Genvoya “represents the most successful HIV launch since the introduction of Atripla, the first single-tablet regimen, a decade ago,” Young told analysts on the call.

But here’s a caveat: More than three-quarters (78%) of Genvoya scripts have been switches, most of them from Gilead’s “quad” pill Stribild, some from its predecessor Atripla. Only 10% of those switches came from Gilead rivals.

And Gilead’s even newer meds--Odefsey and Descovy--are also nabbing most of their new scripts from fellow Gilead treatments. More than 90% of those prescriptions are switches, Young said, with only 6% and 11% of those from non-Gilead meds.

The company sees those switch patients as more loyal: “Among all patients who switch, we have seen an increase in our ability to retain patients on a Gilead product,” Young said. But no doubt Gilead would be happier if more patients were moving into the Gilead fold from elsewhere.

This new group of HIV meds is a follow-up to a previous generation, with one big difference: Based on a new formulation of staple med tenofovir, known as TAF, the new drugs are safer than the previous versions. That’s one big reason for the mass switching.

But there’s another that could fuel more switches in Q3 and beyond. Gilead hiked its prices on the older meds, a common move for drugmakers looking to usher in newer products. The idea is to tempt patients over to the next generation before patents on the older drugs expire. Building up the newer drugs ahead of time can cushion the blow from generic competition.

In a departure from its usual once-yearly price increases in January, Gilead recently raised the stickers on a range of older meds by 7% to 10%, Cowen & Co. analysts report. The price hikes make Gilead’s older HIV drugs more expensive than its neophytes.

Stribild, for example, saw a 7% boost to wholesale acquisition cost as of July 1, on top of January’s 5% hike. Stribild’s wholesale cost now runs at $2,890 a month, more than its successor, Genvoya.

“We suspect that these increases were taken on the TDF-based regimens to help accelerate the switch from TDF to TAF in advance of TDF patent expirations beginning in 2018,” the analysts said in a recent investor note.

Gilead has been a perennial target for AIDS activists, which famously protested the costs of its earlier meds with sit-ins and other events. More recently, the Los Angeles-based AIDS Healthcare Foundation launched a “Gilead Greed Kills!” campaign with an elaborate protest at the Goldman Sachs Healthcare Conference. The group lost a legal battle with Gilead over its TAF drug development timeline earlier this month, but says it plans to appeal. Meanwhile, it has asked lawmakers and the FDA to investigate the company for patent manipulation and antitrust violations.

But there’s no arguing that Gilead has pushed HIV treatment forward, and the TAF generation of drugs is likely to pay off as well as previous advances did for the company, analysts say. Gilead’s head-to-head HIV competitor ViiV Healthcare has been aggressive in its new drug development, with its brand-new Triumeq and Tivicay growing fast. But Gilead’s TAF trio will help the California-based company “face ViiV’s aggressive strategy to further strengthen its already large HIV portfolio,” GlobalData analyst David Fratoni said in a recent report.

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