Jefferies says Gilead is poised for turnaround—and JAK inhibitor could be key

Gilead Sciences is eagerly awaiting phase 3 data for its rheumatoid arthritis drug filgotinib in the next few weeks that could be an antidote for the biotech’s hepatitis C hangover.

That’s according to analysts at Jefferies, who see JAK inhibitor filgotinib as a $2 billion to $3 billion product for Gilead if the pivotal data show comparable efficacy to current drugs in the class, led by Pfizer blockbuster Xeljanz (tofacitinib), along with a clean safety profile.

Both Xeljanz and Eli Lilly’s recently approved Olumiant (baricitinib) are saddled with black-box safety warnings that could give Galapagos-partnered filgotinib a chance to quickly catch and possibly overtake its rivals.

Data from the FINCH-2 trial of filgotinib in RA patients who have failed biologics are due imminently and, if positive, could set up another phase 3 win in ulcerative colitis. The latter represents another $2 billion-plus market for the drug, say the analysts in a research note.

They suggest filgotinib’s greater JAK1 selectivity means it is less likely to affect platelets than its rivals, and so could have less risk of clotting side effects. And as it doesn’t appear to decrease hemoglobin levels and natural killer cells it could be less likely to cause other toxicities such as low red cell counts and infections.

That said, if all goes as hoped and filgotinib hits the top-line objective of a 20% to 30% improvement on the ACR 20 symptom scale after 12 weeks—depending on the dose—it could still be the fourth JAK inhibitor to reach the market for RA, behind Xeljanz, Olumiant and AbbVie’s much-touted upadacitinib.  

"Filgotinib could be 'best in class' although fourth to market—and we acknowledge rebating will also be key here in the competitive market, as we note the street currently already appears unclear about how it will play out, hence not enough credit yet for the franchise."

Of course, Gilead is looking for multiple new growth drivers now that sales of its hepatitis C franchise are in freefall, and filgotinib isn’t its only iron in the fire. Jefferies also points to nonalcoholic steatohepatitis (NASH) candidate selonsertib that is due to generate results in the first half next year, although it’s worth noting NASH is viewed as a tricky indication with a lot of companies in the race to market, so it’s a high-risk project.

And while there is a lot of bullishness about the biotech’s pipeline at the moment, there’s also a lot riding on both of these trial read-outs, and sentiment toward the company could be quickly dented if all doesn’t go to plan.

Nevertheless, Jefferies says Gilead "remains our top large-cap idea for a turnaround story and the most under-owned large cap in our coverage universe."

Their turnaround projection is based in the near term on strong demand for three-in-one HIV drug Biktarvy, which has yet to make any meaningful contribution, as well as gradual increases for CAR-T therapy Yescarta and a bottoming out for hepatitis C product sales.

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