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Gilead Sciences Soars on Hepatitis Drug Study

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Results for an experimental drug were impressive. Combined with Bristol-Myers' therapy, Gilead treatment reported 100% cure rate in one set of patients.

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Gilead Sciences' (GILD) stock is surging after the company reported impressive results for its experimental hepatitis C drug.

In a study of Gilead's GS-7977 drug in combination with a pill, daclatasvir, developed by Bristol-Myers Squibb (BMY), researchers showed a 100% cure rate for one group of patients and very high efficacy in others. The Gilead-Bristol-Myers trial was one of multiple studies released today but it showed the most dramatic result.

"It obviously doesn't get any better than this," ISI Group analyst Mark Schoenebaum says.

The results bested a recently announced study showing highly effective treatment rates for a drug being developed by Abbott Laboratories (ABT). (See Abbott Laboratories Rises to Record High on Hepatitis Drug Study.)

Shares of Gilead rose 12% to $52 in midday trading and were up even higher earlier in the day. Bristol-Myers rose 1% to $33.89. Abbott fell 2% to $59.30.

While the combination of Gilead and Bristol-Myers drugs was highly effective, both companies hope to develop similar combinations using their own medicines exclusively. In other words, they don't want to share potential sales and profit. Whether Gilead or Bristol-Myers can substitute their own medicines for a similarly effective treatment is a key question for both companies, Schoenebaum says.

The results also appear to put Gilead back in the lead for eventually bringing to market a better treatment option for hepatitis C patients. (At least, that's the view of some analysts and investors.) Gilead paid $11 billion this year to acquire hepatitis drug developer Pharmasset in hopes of gaining dominance.

"This reinforces that '7977 is the best asset in the hep C space and restores world order with Gilead not Abbott as the one to beat," Robert W. Baird analyst Thomas Russo says in a note.

Abbott's recently released study shows cure rates above 90% for the most common and difficult to treat forms of hepatitis C over a longer period of time than what was shown in the Bristol-Myers and Gilead study, a company spokeswoman says.

Gilead is in a race for a better hepatitis C drug with Abbott, Merck (MRK), Vertex Pharmaceuticals (VRTX), Idenix Pharmaceuticals (IDIX), Roche (RHHBY), and Bristol-Myers, which made its own big wager through a recent acquisition. (See Bristol-Myers Enters Hepatitis Drug Race With $2.5 Billion Takeover of Inhibitex.) All the companies aim to develop an all-oral treatment regimen that doesn't require interferon, an older injected medicine that has serious side effects. The study of the Gilead and Bristol-Myers drugs suggests that the next-generation treatment potentially could be reduced to a single pill, Schoenebaum says.

The market for a new drug is big: As many as 170 people worldwide are estimated to have chronic hepatitis C infections. A new drug is estimated to have potential for billions of dollars in annual sales.

Twitter: @brettchase

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