Good Tidings for Gilead

Friday brought positive news, but that wasn't the case for Encysive.
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Friday was a good day for Gilead Sciences (GILD) - Get Report. Not only did it win U.S. marketing approval late Friday for a new drug to treat a life-threatening lung disease, but the drug's FDA-approved label should also give the company an advantage over its competition.

The drug, ambrisentan, which will now go by the brand name Letairis, will be used to treat pulmonary arterial hypertension (PAH), a chronic disease caused by constriction of the blood vessels that bring blood from the heart to the lungs. The disease affects about 200,000 patients worldwide.

However, Friday was a bad day for

Encysive Pharmaceuticals


, which failed yet again to convince the FDA to approve its PAH drug Thelin. U.S. drug regulators sent Encysive its third "approvable letter" on Thelin, this time telling the company that it lacked enough evidence of efficacy to justify approval.

Before the FDA announcements, Gilead and Encysive shares closed Friday at $80.83 and $4.10, respectively. In Monday's premarket, Gilead shares traded for about $82, while Encysive shares were at $2.10.

With Encysive out of the way, Gilead's competition for PAH patients will come mainly from Tracleer, an older drug sold by


. And that's a very good thing for Gilead, because the FDA-approved label for Letairis includes efficacy and safety data that show the drug to be best in class, with significant advantages over Tracleer.

Last year, Actelion booked Tracleer sales totaling $722 million. This year, the company is on track to sell about $800 million of the drug.

But not everything went Gilead's way Friday. Letairis' label does include a so-called "black box" warning regarding potential serious liver damage in patients treated with the drug. As a result, patients will be required to undergo monthly liver safety monitoring.

In an

interview last month, Gilead Chief Scientific Officer Norbert Bischofberger said Letairis patients might not require regular liver safety monitoring because the incidence of liver toxicity associated with the drug is so low.

The FDA didn't concur. However, Tracleer's label contains the same safety warning and requirement for regular liver monitoring, signaling that the FDA views the risk of liver damage as belonging to the entire class of drugs -- endothelin receptor antagonists -- that includes both Tracleer and Letairis.

The agency did OK a Letairis label that gives the Gilead sales force a lot to work with. Significantly, it includes safety data demonstrating a relatively low incidence of liver toxicity compared to a placebo, as well as a lack of interactions with other drugs used to treat PAH patients. These data should give Letairis a leg up on Tracleer when doctors consider treatment for newly diagnosed PAH patients.

The FDA also allowed Gilead to include data from a recently concluded study showing that Letairis is effective and safe in patients who had to stop taking Tracleer or Thelin because of liver toxicity. This will help Gilead convince doctors to switch patients from Tracleer to Letairis.

Gilead is pricing Letairis at parity with Tracleer

-- about $3,940 per month -- and will launch the drug this week.

Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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