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A Health Care Fortnight for the Record Books

My primary concern is with non-adherence. Would-be PrEP recipients are otherwise healthy individuals, and inconsistent use of Truvada could reduce efficacy and increase the risk of disease resistance. Antiretroviral prophylaxis also has implications for other effective STD prevention strategies, like condom use.

Even if the FDA approves Truvada for the PrEP indication, I expect it to be a niche indication, at best. (Gilead has publicly stated that, even if approved, it will not actively promote PrEP. That's a smart decision by management.)

Either way, the favorable PrEP advisory panel vote reconfirms an important data point for investors: HIV experts are so comfortable with Truvada's efficacy, safety, and resistance profile that these physicians are willing to recommend the drug for use in healthy individuals. I couldn't imagine a clearer signal that Truvada will remain the "gold standard" backbone of HIV therapy for the foreseeable future.

Truvada's ubiquity is essential for Gilead, since it lets the company focus on switching patients to newer regimens like the Quad, which have longer patent protection, rather than on fending off competitors. (Viread, the key component of Truvada, goes generic in 2018. Some investors worry that the HIV franchise will crumble as physicians "de-couple" Gilead's single tablet regimens into cheaper components. I doubt it.)

It's not dirt cheap, but I still think Gilead is worth buying at prices below $50 per share.

Disclosure: Sadeghi has no positions in any of the stocks mentioned in this article.

Follow Nathan Sadeghi-Nejad on Twitter.
Nathan Sadeghi-Nejad has 15 years experience as a professional health-care investor, most recently as a sector head for Highside Capital. He has worked on the sell side (with independent research boutiques Sturzaļæ½s Medical Research and Avalon Research) and the buyside (at Kilkenny Capital prior to Highside). Sadeghi-Nejad is a graduate of Columbia University and lives in New York. You can follow him on Twitter @natesadeghi.
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