FOSTER CITY, Calif. ( TheStreet) -- Gilead Sciences ( GILD) will start phase III studies next year with a second-generation version of its core HIV drug Viread, the company said Wednesday. The new HIV drug GS-7340 -- nicknamed "Son of Viread" by investors -- is an important component in Gilead's strategy to extend the life of its HIV franchise through the expiration of Viread patents starting in 2018. GS-7340 is designed to better deliver tenofivir, the active ingredient in Viread, while also reducing kidney toxicity and other side effects. Best yet, patents on GS-7340 extend out to 2025 in the U.S. and 2027 in Europe. In addition to patent expiration concerns, Gilead's market-leading HIV franchise faces a threat from dolutegravir, a new but still expiremental HIV drug being developed by GlaxoSmithKline ( GSK), Pfizer ( PFE) and Shionogi. On Wednesday, Gilead announced results from a mid-stage study that compared the efficacy and safety of GS-7340 and Viread as part of a single-pill combination regimen. Efficacy was similar after 24 weeks, with 87% of patients on the GS-7340 regimen achieving a viral load response compared to 90% of patients treated with Viread regimen. The single-pill combination regimen used in the study was Gilead's newly approved Stribild, with GS-7340 swapped for the Viread component. Compared to Stribild, the GS-7340 regimen resulted in a smaller loss of bone mineral density and improved creatinine clearance (a biomarker for kidney health.) The frequency and nature of adverse events reported were similar between both patient arms, Gilead said. "These interim findings are encouraging and warrant advancing this TAF-containing single tablet regimen into Phase 3 development," said Gilead R&D chief Norbert Bischofberger, in a statement. TAF refers to GS-7340. In a research note to clients Wednesday morning, Wells Fargo analyst Brian Abrahams said, "Although we expected '7340 to demonstrate advantages vs. Viread over the longer term based on pilot data and the drug's improved targeting, the fact that the agent already showed clear bone and safety benefits even in a relatively short, small study is impressive, in our view. This should address some of the outstanding concerns that GILD wouldn't be able to clearly demonstrate the commercial advantages of '7340 within the durations of standard ph.III HIV studies."