Gilead Takes Drug-Cocktail Approach to Cancer

Gilead Sciences Inc. (GILD) is on a mission to make cancer more like AIDS -- an illness that can be kept at bay over the long term, rather than a lethal disease.
The company, which leads the market for AIDS drugs, is re- entering the market for cancer medicines a decade after selling its oncology unit. Since December, Gilead has spent $600 million for two companies developing experimental therapies and signed a research deal with Yale University, just as scientists are suggesting that drug cocktails may work as well against cancer as they do against HIV.
Gilead seeks to capitalize on advances in cancer research that help pinpoint the way to fighting tumors, letting it repeat the company’s success in matching combinations of medicines to prolong the lives of AIDS patients. The return to oncology, the world’s top-selling drug category, is a smart move for the Foster City, California-based company because it can expand its portfolio and boost revenue, said Joel Sendek, an analyst at Lazard Capital Markets in New York.
“They have a very strong balance sheet, their HIV business is generating a lot of cash, and they have a clear plan for the next generation of HIV drugs,” Sendek said. “They’re at a stage in their maturity where they need to do more.”
Cancer-drug sales generated almost $56 billion in 2010 and will expand 12 percent to 15 percent annually, reaching as much as $80 billion by 2012, according to Norwalk, Connecticut-based IMS Health.

Beyond Chemotherapy

While traditional cancer treatments use radiation and chemotherapy in an attempt to kill the disease’s spread, that approach can damage healthy tissue. The ability to sequence genomes rapidly has allowed researchers to discover mutations in certain cancers that may be targeted by new drugs without damaging other parts of the body.
Gilead, which sold its oncology business in 2001 to OSI Pharmaceuticals Inc. for about $200 million, is betting it can use these advances to find new medicines.
“Ten years from now, if you have any cancer, or pre- cancer, you will be sequenced, and based on the genetic changes identified, you will be assigned treatments,” Norbert Bischofberger, Gilead’s chief scientific officer, said in an interview.
The company’s most advanced experimental cancer drug is GS- 1101, which blocks the so-called PI3 kinase pathway. Phosphoinositide-3 kinases, or PI3K, are enzymes linked to tumor growth and survival.

Blood Cancer

The drug, acquired with the $375 million takeover of Calistoga Pharmaceuticals Inc. announced in February, is in the second of three stages of clinical trials. It’s being tested on patients with different types of blood cancer.
Still, expanding into different areas may be difficult, said Alan Carr, a Needham & Co. analyst in New York.
“When you spread yourself out like that, you can create some challenges: Can you have expertise in all these different indications?” Carr said. “With their oncology, we’ll have to wait and see how this plays out. It’s very early and they don’t have a track record in this area.”
Gilead also isn’t alone in seeing the potential for new oncology treatments. Companies such as Pfizer Inc. (PFE), Amgen Inc. and Roche Holding AG are testing at least 18 experimental drugs targeting the PI3 kinase pathway.
They’re also using drugs developed from DNA sequencing as part of treatment combinations. Daiichi Sankyo Co., Japan’s third-largest drugmaker, acquired closely held Plexxikon Inc. of Berkeley, California, earlier this year for about $935 million. Plexxikon’s medicine targets the BRAF gene, a cancer-causing mutation expressed only in tumor cells.

Melanoma Experiments

London-based GlaxoSmithKline Plc (GSK) is studying a combination of two experimental medicines in melanoma -- one that tries to block a protein spurring the spread of the disease, the other that thwarts a protein that helps the cancer evade drugs.
Another focus for Gilead is monoclonal antibodies that stimulate a patient’s immune system to attack disease-causing cells. Its acquisition of Arresto Biosciences Inc. for $225 million, gave the company a drug that targets the LOXL2 protein believed to aid in the early spread of tumors. The experimental therapy, GS-6624, is in the first stage of clinical testing. Earlier this month, Gilead purchased a 70,000-square-foot lab from Roche Holding AG (ROG)’s Genentech to make GS-6624.
“We really shied away from being in cancer because typically Phase I studies are about as non-predictable as they can be,” John Milligan, Gilead’s president and chief operating officer, told analysts in March. “What we’ve been doing over the last year or so is we started looking at areas where the biology and the chemistry had matured to the point where parts of human disease were very much well, more well understood.”
More Acquisitions?
Other novel approaches may come from its collaboration with Yale, and through more acquisitions, Bischofberger said.
“We have looked at a number of commercial products that are potentially for sale, or available for licensing,” he said. “We’re getting a huge amount of proposals and requests and we’re spending a fair amount of time sifting through them.”
Future developments may lead to a cocktail of drugs that add years to a cancer patient’s life -- similar to how HIV was transformed from a death sentence 15 years ago. HIV is manageable today with medicines such as Gilead’s two-therapy combination Truvada, Bischofberger said.
“I am absolutely convinced the same will be applicable in cancer,” he said. “That’s where we think the field is going.”
Even after the acquisitions, Gilead will need to boost spending on research and acquisitions to expand into oncology, Bischofberger said. The company spends about 13 percent of its revenue in research, compared with the industry average of about 24 percent, according to Bloomberg data.
“The absolute intent, desire and ambition is that 10 years from now, and hopefully sooner, we will be a major player in oncology,” Bischofberger said. “If we don’t screw it up, and things continue to go well, I think we can do that.”
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.