Pl4 schreef op 20 april 2017 13:33:
seekingalpha.com/article/4063667-gile...Apr. 20, 2017 7:26 AM ET
Gilead: Can Psoriatic Arthritis Lift This Sinking Ship
Summary
Gilead and Galapagos recently announced a Phase 2 study for psoriatic arthritis.
Because Galapagos initiated the Phase 2 trial for psoriatic arthritis they are due to receive a $10M milestone payment from Gilead.
According to a recent study it was determined that the market for psoriatic arthritis can become a $3.7B market by 2023.
Gilead Sciences (NASDAQ:GILD) has been a very difficult stock to own the past couple of years due to declining revenues, poor pipeline, and poor prospects of acquisition targets. Instead the company has been focused on collaborations with potential suitors by way of minimizing the technical risks associated with taking products through clinical trials and one such collaboration recently was with Galapagos (NASDAQ:GLPG) for Sjogren 's syndrome. But this isn't the only indication that Galapagos and Gilead are working on together for filgotinib. The two partners recently announced a Phase 2 study for psoriatic arthritis.
The two companies are looking for filgotinib to become the next pipeline within a product with these two indications. Because Galapagos initiated the Phase 2 trial for psoriatic arthritis they are due to receive a $10M milestone payment from Gilead. In a previous article I assessed the implications of filgotinib for Sjogren's syndrome on Gilead and its revenues and this time around I'd like to assess the implications for psoriatic arthritis.
First off this will be Phase 2 trial for the inflammatory disease, psoriatic arthritis. This study will help the duo determine whether or not they have a real solution to the problem based off their lab-scale studies.
Psoriatic arthritis is a form of arthritis which affects individuals who have the skin disease psoriasis. Thus far there is no cure for the disease and can be a lifelong issue for individuals. Usually the only way to treat the disease is by treating the symptoms which include joint pain, stiffness, and swelling. According to a recent study it was determined that the market for psoriatic arthritis can become a $3.7B market by 2023.
But when evaluating a market it's important to keep track of who the competitors are. Given that there is no treatment yet for the disease it leaves a blue ocean to be discovered. The biggest shark in the waters is obviously Abbvie's (NYSE:ABBV) Humira which will be difficult to compete against but only treats the symptoms. But there are other heavyweight competitors in the space which take up the form of Amgen (NASDAQ:AMGN), Celgene (NASDAQ:CELG), and J&J (NYSE:JNJ) just to name a few. With more competitors but no real product on the market this can become a first mover advantage opportunity if Gilead can get in there quickly. Otherwise the quantity of competitors provide a large threat to Gilead and Galapagos at this stage in the game.
Another front to be aware of is the substitutes market. Some of the substitutes include application of ice packs or UV therapy. Standard medications used to treat the disease include anti-inflammatory drugs and the severe cases which involve joint inflammation often times require surgery. The substitutes only really treat the symptoms but not the disease so there is no real threat from that market. So from the substitutes front I believe there is low risk at this time to Gilead's and Galapagos' prospects.
Don't forget though that this is just a Phase 2 study, so it will be at least until June 2018 before we hear any results regarding this topic. Though the substitutes market has many solutions to treat the symptoms if Gilead and Galapagos were to get this correct the substitutes would probably never be considered again but this will be years away from determining. However the biggest threat comes from Gilead's competitors as they are plenty. Though this is anticipated to be a huge market in a few years the risks are high for Gilead but if the risk just comes in the form of $10M milestone payments it may be a good risk. I would nibble at the stock right now for this news alone, but nothing too big as the revenue generating concerns of the product lineup still exist.