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.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV