Shares of Gilead Sciences Inc. (GILD) were up 3.3% after the company announced that its hepatitis C virus (HCV) drug, Harvoni, gained approval from the European Commission for treating adults suffering from chronic hepatitis C genotype 1 and 4 infection. Following the EU approval, Harvoni becomes the first single tablet regimen to treat the majority of chronic HCV patients with genotype 1 and 4 infection.
EU approval was largely expected as the Committee for Medicinal Products for Human Use (CHMP) had issued a favorable opinion on the drug this September.
We note that Harvoni is a once-daily combination treatment of Gilead’s highly successful HCV drug Sovaldi (sofosbuvir: 400 mg) and ledipasvir (an NS5A inhibitor: 90 mg). Harvoni was approved by the FDA and Health Canada last month. Gilead is also looking to get Harvoni approved in Japan and Switzerland.
We are positive on Harvoni’s approval. The EU approval of Harvoni will not only boost Gilead’s top line but also strengthen its position in the lucrative European HCV market which holds significant commercial potential. However, we note that several companies including AbbVie Inc. (ABBV) and Merck (MRK) are also looking to bring their next generation HCV treatments to the market. AbbVie’s HCV treatment could gain FDA approval by year end.
We expect investor focus to remain on the commercialization and sales ramp up of Harvoni.
Gilead currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Biogen Idec Inc. (BIIB), carrying a Zacks Rank #1 (Buy).
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