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New Licensing Venture Is a Plus for a Drug Holding

This remains an HIV story, but new exposure to hep B in Asia will help the company.
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Gilead (GILD) announced today that it reached a licensing agreement with GlaxoSmithKline (GSK) to further commercialize its chronic hepatitis B drug Viread in the Asia/Pacific region. This agreement will go into effect once Viread is approved in the region; Viread is currently approved for hep B in the U.S., EU, Turkey, Australia, New Zealand and Canada and is also used in combination therapies for the treatment of HIV.

These two companies have partnered before using Gilead's older hep B drug Hepsera, so this modification isn't a surprise. But the Asian markets are a big growth opportunity for both firms; 280 million of the 350 million total worldwide hep B population live in the region. Gilead will retain the rights in Hong Kong, Singapore, South Korea and Taiwan, while Glaxo will have exclusive rights in China. Royalties will be exchanged by both companies in their respective regions, and expansion into other countries is likely.

Gilead still remains an HIV story, and the recent IMS data out this week continues to support strong growth and dominant market share. Truvada (a combination of Emtriva and Viread) posted a 12% year-over-year improvement in prescriptions and a 2% increase from its third-quarter results. Atripla, a more powerful combination of Emtriva, Truvada and Sustiva, was up 17% year over year and 3% sequentially from the third quarter. These numbers generally support what the analysts are expecting, but the monthly positive data say the growth story at Gilead continues.

Regards,

Jim Cramer

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DISCLOSURE: At the time of publication, Cramer was long GILD.