The Financial Associated Press reported that the USA Food and Drug Administration (FDA) announced on Tuesday that it has accepted Gilead Sciences (GILD.US)'s new drug application (NDA) for its breakthrough long-acting HIV therapy lenacapavir, granting this application priority review, with a completion of review expected by June 19 this year. If approved, lenacapavir will become the first HIV prevention option that requires only two injections per year for pre-exposure prophylaxis (PrEP) against HIV infection.

Meanwhile, Deutsche Bank will upgrade Gilead Sciences' stock rating from "Hold" to "Buy", with the Target Price significantly raised from $80 to $120. Deutsche Bank Analyst James Shin stated that assuming Gilead Sciences will have five long-acting anti-HIV pharmaceuticals—including the lenacapavir, which is expected to be approved—these drugs will bring additional income to the company and offset the revenue decline caused by the loss of market exclusivity for its HIV treatment drug Biktarvy at the end of 2033.

James Shin stated, "Biktarvy is gradually approaching the patent cliff in 2033. We believe that the company's combination of long-acting oral and injectable drugs will bring approximately $19 billion in revenue for the HIV business."

According to reports, the HIV business is the cornerstone of Gilead Sciences. Data shows that Gilead Sciences' revenue for the entire year of 2024 is expected to grow by 6% year-on-year to $28.754 billion, with HIV business revenue growing by 8% year-on-year to $19.612 billion, accounting for 68.2% of the company's total revenue. In the HIV drug field, Gilead Sciences maintains a leading market position with multiple products, and its core product Biktarvy has seen annual sales growth since its launch in 2018, surpassing $10 billion in 2022. In 2024, Biktarvy's sales reached $13.423 billion, a 14% year-on-year increase, capturing 50% of the USA market share.

Data shows that the new drug application for lenacapavir is based on positive data from the phase 3 clinical trials PURPOSE 1 and PURPOSE 2 conducted by Gilead. In PURPOSE 1, the data showed that no female participants receiving half-yearly lenacapavir injections experienced HIV infection, with a 100% reduction in infection risk, demonstrating a significant advantage compared to background HIV incidence rates. In PURPOSE 2, 99.9% of participants in the lenacapavir treatment group were not infected with HIV, with a 96% reduction in infection risk compared to background HIV infection rates.

In both trials, the half-yearly lenacapavir injections showed significant advantages in preventing HIV infection compared to daily oral Truvada, while overall tolerance was good with no major or new safety issues.

Globally, approximately 1.3 million new HIV infections occur each year. Recent studies have found that taking antiviral medications before exposure can reduce the risk of HIV infection. This method of preventing HIV infection is called PrEP therapy. The first approved PrEP medication for HIV is the daily oral Truvada developed by Gilead Sciences, which is significantly effective in preventing HIV when taken as directed. Although daily oral PrEP therapy can nearly avoid HIV infection by almost 100%, many people find it difficult to adhere to the daily medication due to factors such as the cost of the medication and the stigma associated with taking drugs related to HIV. Consequently, the actual effectiveness of oral PrEP therapy is far below theoretical values. Therefore, there is a significant demand for the development of a long-acting PrEP therapy to improve medication adherence.

In addition, Deutsche Bank has downgraded Merck's (MRK.US) stock rating from 'Buy' to 'Hold', and the target price has been lowered from $128 to $105. James Shin believes that the 'real culprit' behind the recent drop in Merck's stock price since the release of its latest Earnings Reports is that some key patents for its cancer drug pembrolizumab (Keytruda, also known as K-drug) will expire in 2028. He stated, 'Although Merck is building its product line, past experience shows that when large pharmaceutical companies face Loss of Exclusivity (LOE) for their drugs, Wall Street tends to be very skeptical.'

Merck's Earnings Reports released in early February showed that the company's Q4 revenue and earnings exceeded expectations for 2024. Thanks to its blockbuster cancer drug Keytruda continuing to drive sales growth, the company's Q4 revenue increased by 7% year-over-year to $15.62 billion, with adjusted EPS at $1.72, both of which surpassed the general expectations of Analysts.

However, Merck's guidance for 2025 is weaker than Analysts' expectations. The company forecasts that its global revenue for the full year of 2025 will be between $64.1 billion and $65.6 billion, while Analysts generally expect $67.36 billion; the expected adjusted EPS is estimated to be between $8.88 and $9.03, while Analysts generally expect $9.23.