E Gilead Crohn's Treatment Is Not The Solution To GLD Revenue Issues

A good friend and I volunteered to help feed the homeless one day and when the time came to head out I never heard from him which I thought was pretty weird. His wife then called me later that night and let me know that he had been in the ER that day because of a flare up due to Crohn’s disease. That bit of news got me thinking about Gilead (GILD) because I knew they have a product in the pipeline for the disease. With this article, I will look into what the disease actually is and what Gilead’s prospects are in trying to capitalize on it.

For those of you that don’t know, Crohn’s disease is a bowel disease which causes inflammation that affects the lining of the digestive tract. Currently, there are no known cures for the disease, just treatments, which means it is an unmet need that Gilead can capitalize on if it can come to market first with a cure. The disease usually causes diarrhea, weight loss, and fatigue. The patient has to undergo colonoscopies as well because there are at increased risk of having colorectal cancer. As of 2014, 1.3M people have been diagnosed with Crohn’s disease and only 800,000 are being treated with sales projected to be at $4.2B by 2022.

Currently, Gilead has partnered with Galapagos (GLPG) to test their JAK1 inhibitor, filgotinib in two Phase 2 trials; one for Crohn’s disease and the other for fistulizing Crohn’s. Gilead has been partnering with Galapagos for about a year now in several mid-stage clinical trials trying to assess their JAK1 inhibitor.

The Crohn’s Phase 2 trial has registered 100 patients and will compare two different doses of filgotinib against a placebo for a duration of 24 weeks. The clinical team is looking for remission as a successful result. In the fistula trial, 75 individuals have been registered and will also evaluate two different doses when compared to a placebo.

So what does all this mean for Gilead you ask? To put things into perspective, Gilead earned $32.2B in revenue during 2015 and saw that number decline to $30B for 2016. What is worse is that the company is projecting 2017 revenues to come between $22.5B and $24.5B. Even if Gilead were to grab the entire projected Crohn’s market for $4.2B by 2022 it doesn’t put them anywhere near what they were earning in 2015. I would go out on a limb to say that Galapagos would be the better stock to own out of the two right now and into the future.

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Disclaimer: This article is in no way a recommendation to buy or sell any stock mentioned. This article is meant to serve as a journal for myself as to the rationale of why I ...

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Kurt Benson 3 years ago Member's comment

I have to agree with your assessment on $GILD. Do you know anything about $VBIO? I read a promising article here about their having a major breakthrough in #Crohn's research.

www.talkmarkets.com/.../interview-with-vitality-biopharma-inc

Not a lot of info on the company though.

Alpha Stockman 3 years ago Member's comment

I picked up some $VBIO but it hasn't done well for me since. But it's a longer-term play. I'm not expecting a quick flip.

Kirk Sheffield 3 years ago Member's comment

I think $GILD will rebound. This isn't the only product they have in their pipeline.

Alpha Stockman 3 years ago Member's comment

I've been rather disappointed with #Gilead myself. After reading your article, I'm planning to offload some $GILD.

Angry Old Lady 3 years ago Member's comment

How long will it take for the results of the filgotinib trial to become known?