Cancer Kick ? Gilead Seeks Blood Cancer Drugs to Bolster HIV ...

Gilead Sciences Inc. (GILD), the world?s
largest maker of HIV drugs, has spent $1.2 billion in two years
to buy blood cancer drugs. It?s looking for more.

Treatment for leukemia and other blood cancers is one of
the fastest growing markets for cancer drugs. Gilead?s recent
string of four deals is intended to tap into that market and set
the stage for the company?s growth for years.

In the last year, 11 of 39 new drug therapies approved in
the U.S. involved stopping cancers by targeting their underlying
genetic structure. As of October 2012, investors were focused on
at least 14 medicines in final testing for blood malignancies
with the potential to move stocks, according to a report by
Cowen Co. analysts.

Gilead Chief Operating Officer John Milligan said the
company is eying possible new deals in this universe.

?Oncology is entering an era where significant advances
are going to be made, far above and beyond what?s been made
previously,? Milligan said. ?It?s a field where there?s always
the possibility of acquiring other molecules and companies as
their technology or pipelines mature. We?re certainly keeping
our eye on it.?

While Milligan wouldn?t discuss possible acquisitions, they
may include Ariad Pharmaceuticals Inc. (ARIA) and Infinity (INFI)
Pharmaceuticals Inc., said Raghuram Selvaraju, at Aegis Capital
Corp.

?There is a massive amount of untapped potential in the
hematological malignancy space,? said Selvaraju, who is head of
health-care equity research at the New York-based company.

Potential Targets

Ariad, with a market value of $3.6 billion, had a leukemia
drug approved for sale in December and is in final testing on a
second. Infinity, valued at $1.6 billion, is in early trials on
a therapy for leukemia.

Gilead?s shares rose 79 percent in 2012, the Foster City-
based company?s best annual increase in 17 years. While sales of
HIV drugs increased, that growth was largely based on optimism
about its experimental hepatitis C drug, acquired for $10.8
billion last year in its purchase of Pharmasset Inc.

Analysts share that optimism. Twenty-six of 32 analysts
have a ?buy? rating on the stock with a price target of
$44.39, according to data compiled by Bloomberg. The shares
closed yesterday at $39.45 in New York.

If approved, the hepatitis C treatment may generate as much
as $3.8 billion in sales by 2020, according to an estimate from
Ravi Mehrotra, an analyst with Credit Suisse Group AG in New
York. That would make it the biggest product for Gilead, which
generated $8.4 billion in revenue in 2011.

Acquisition Strategy

The move into hepatitis C is just one part of a strategy
that included acquisitions of three blood-cancer companies in
the 28 months prior to its December pickup of YM BioSciences for
$510 million, according to Gilead?s Milligan. The little-noted
acquisitions should give investors another reason to be positive
about the company?s growth in the future, he said.

?That?s why we started to participate, acquiring assets
and bringing in people,? Milligan said. ?For us, it?s a very
nascent early investment in something that will probably play
out over the next decade or so.?

It can?t hurt, said Michael Yee, an RBC Capital Markets
analyst in San Francisco.

?HIV and hepatitis C are going to lead an enormous growth
phase from 2014 to 2018? for the company, he said in an e-mail.
?Meanwhile, Gilead is quietly building a hematology franchise
as another additional growth driver? to take the company
further into the future.

The science behind blood-cancer treatments has been
advancing steadily since 2001, when the leukemia treatment
Gleevec, made by Novartis AG (NOVN), first proved that precisely aiming
drugs at the genetic underpinnings of cancer can work.

Oncology Market

In the last year, four drugs have been approved by U.S.
regulators to attack various forms of blood cancer, a section of
the targeted oncology market that Gilead is suited to advance
in, Aegis?s Selvaraju said.

Gilead?s most-advanced experimental blood-cancer product is
aimed at chronic lymphocytic leukemia, or CLL, a slow-moving
disease that can require treatment over years, opening up an
opportunity for billions of dollars in revenue. The company
acquired the medicine, called idelalisib, in its February 2011
purchase of Calistoga Pharmaceuticals Inc. for $375 million.

CLL is one of four main types of blood cancer, along with
acute myeloid leukemia, acute lymphoblastic leukemia and chronic
myeloid leukemia that was responsible for 23,720 deaths last
year, according to the National Cancer Institute.

Pharmacyclics Therapy

Gilead?s main competitor in the CLL market may be
Pharmacyclics Inc. (PCYC), of Sunnyvale, California, which also has an
experimental therapy in the final stage of testing needed for
U.S. approval. Gilead?s drug, though, is being tested in
combination with other medicines, while Pharmacyclics? treatment
is taken alone.

There?s likely to be room for both treatments, said Gregory Wade, an analyst at Wedbush Securities Inc. in San Francisco.

?There?s about 115,000 people in U.S. alone with CLL,?
Wade said in a telephone interview. ?With common prices for
these type drugs at $80,000 to $90,000 a year, it?s easy to see
how you get to a very big number.?

Together, these drugs from Gilead and others ?have the
potential to completely change the landscape, where treating CLL
with just targeted therapies, as opposed to the chemotherapies
of the past,? said John Byrd, leukemia research professor at
Ohio State University Medical Center, in a telephone interview.

?Promising Future?

?The Phase 3 studies are going to tell us if the end
points justify that,? Byrd said. ?But if I had to guess, the
future looks really promising for this possibility.?

Other blood cancers being pursued by Gilead as a result of
its acquisitions include indolent non-Hodgkin?s lymphoma, which
develops in the lymphatic system from a type of white blood cell
that helps the body fight infections, and myelofibrosis, a bone
marrow disorder where excessive scar tissue impairs the body?s
ability to produce normal blood cells.

The former is being targeted in a drug from Arresto
Biosciences, which Gilead acquired for $225 million in December
2010, the latter by an experimental medicine from YM BioSciences
Inc. (YM), Gilead?s latest purchase.

The push into blood-cancer research has helped redefine the
lives of people who have these diseases, said Hildy Dillon,
senior vice president of patient services at the Leukemia
Lymphoma Society

?I?ve been in oncology for over 30 years, and people did
not survive these diseases,? Dillon said. ?And now, as we
develop newer therapies, we are extending the life of these
patients.?

To contact the reporter on this story:
Ryan Flinn in San Francisco at
rflinn@bloomberg.net

To contact the editor responsible for this story:
Reg Gale at
rgale5@bloomberg.net

Article source: http://www.bloomberg.com/news/2013-02-01/gilead-seeks-blood-cancer-drugs-to-bolster-hiv-business.html

Source: http://cancerkick.com/2013/02/01/gilead-seeks-blood-cancer-drugs-to-bolster-hiv-business/

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