As Gilead Plows Ahead on Heart Drugs, Market Frowns on Its Stock

(MoneyWatch)  As summer starts, the bloom seems to be off the rose for Gilead. Its positive Phase III results for heart drug darusentan boosted the stock in April to $48.37, but since then it's fallen back to around $43. (That's not entirely to do with darusentan, of course, as Teva launched a patent challenge to two of its HIV drugs.)

BNET previously suggested that Gilead's foray away from its HIV specialty into the tricky world of general-interest heart drugs may damage its famous efficiency.

The company proved me wrong with its Q1 2009 results, in which its efficiency improved and it doubled quarterly sales of another heart drug, Letairis, to $40 million. That may have been the easy bit: Letairis is still a tiny piece of Gilead's business; making Ranexa (acquired in the CV Therapeutics buy) and darusentan into significant revenue drivers is the real test.

The market is showing that it has some doubts. The details of the darusentan trial followed a month later on May 11 and it was a generally positive but mixed bag. This was the headline:

... more than half of patients treated with darusentan achieved goal blood pressure, as compared to approximately one quarter of patients receiving placebo

But the devil was in the details. "More than half" turned out to be "only a bit more than half" -- in the best result, the 50 mg dose lowered blood pressure in 53.1 percent of patients. Only 27.3 percent of placebo patients saw lower blood pressure, but it still meant whether darusentan works or not is a coin-flip.

Worse, five people in the darusentan arm experienced CV events (some of them had histories). Only one in the placebo had the same -- although that was a fatal heart attack, making darusentan look good. Lastly, there were only 379 patients in the trial.

So there doesn't appear to be a hold-the-front-page case for this drug as yet. Indeed, Gilead admitted as much in its recent 10Q with the SEC:

Darusentan may never be successfully commercialized. As a result, we may make a strategic decision to discontinue development of darusentan if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. If this program cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted.

That's a boilerplate disclosure, of course, but it represents a plausible scenario. Gilead still needs to at least double the size of Letairis and Ranexa's revenues in order to make them significant drugs in its portfolio.

• See BNET's previous coverage of Gilead:
• Gilead Executive Pay: Modest Raises for Outstanding Performance
• Gilead Deal Gives CV Therapeutics CEO $8.4 Million Payday Despite Lack of Profits
• Gilead's FDA Warning Letter Contains Lesson About the Internet
• Ranking of 20 Drug Companies' Sales Forces Shows Productivity Flat or Declining
• Gilead Earnings Sound Death Knell (Again) for Large Sales Forces
• It's Good News, Bad News for Gilead's HIV Pill
• Gilead Q1: Company Is Recession Resistant But Not Lawsuit Resistant