Gilead Sciences, Inc. (NASDAQ:GILD) witnessed a flurry of Wall Street speculation regarding its potential involvement in the obesity drug market. But, the biotech company, renowned for its cancer and HIV treatments, has not positioned itself as a contender in this lucrative field.
Most recently, Gilead shared topline results from an interim analysis of its Phase 3 PURPOSE 1 trial indicating its twice-yearly injectable HIV-1 capsid inhibitor, lenacapavir, demonstrated 100% efficacy for the investigational use of HIV prevention in cisgender women.
The Wall Street Journal (WSJ) noted last week, Michael Yee, a Jefferies analyst, published a note that stirred interest by highlighting patents and early-stage data suggesting a possible metabolic program which might evolve into an obesity treatment.
The insights spurred a 3.6% surge in Gilead's shares, marking their most significant one-day gain in a year. But, this optimism was short-lived.
Gilead clarified that its focus remains on liver treatments, specifically targeting nonalcoholic steatohepatitis (NASH), a metabolic disease often linked to obesity.
The WSJ cited a company spokesperson and noted Gilead was conducting a mid-stage study on potential combinations with a GLP-1 drug for NASH treatment.
While Jefferies analyst maintained this focus on NASH does not preclude an eventual pivot toward obesity, analysts remained skeptical.
BMO Capital Markets analyst Evan Seigerman expressed doubts about Gilead's competitiveness in the obesity drug space, emphasizing that Gilead did not intend to enter this market.
The broader health care finance landscape underscores the allure of the obesity drug market. GLP-1 drugs like Zepbound and Wegovy have captivated both the public and investors, with high-profile figures like Oprah Winfrey and Elon Musk among their users.
Companies like Eli Lilly And Co (NYSE:LLY) and Novo Nordisk A/S (NYSE:NVO) are approaching unprecedented market capitalizations driven by the success of their weight-loss medications.
According to Jared Holz, a healthcare equity strategist at Mizuho, the popularity of obesity drugs significantly boosted sector-specific ETFs, such as health care.
In contrast, established pharmaceutical giants like Bristol-Myers Squibb & Co (NYSE:BMY), Pfizer Inc (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), and Merck & Co Inc (NYSE:MRK) faced growth challenges as patents expire on blockbuster drugs.
Many are now eyeing the obesity market, with Roche Holdings AG (OTC:RHHBY), AstraZeneca Plc (NASDAQ:AZN), Amgen Inc (NASDAQ:AMGN), Pfizer Inc. (NYSE:PFE) and Regeneron Pharmaceuticals Inc (NASDAQ:REGN) all developing their own weight-loss drugs.
Merck even hinted at pursuing oral obesity treatments during a Goldman Sachs conference.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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