Gilead Alberta ULC, a subsidiary of Gilead Sciences, Inc. (GILD), had a ribbon-cutting ceremony yesterday for the first of two new lab buildings at its Edmonton, Alberta (Canada) site. In addition, the company announced it will invest $100 million in expansion and upgrades.

Gilead did not respond to request for an interview in time for deadline.

The two laboratories will house almost 170 additional scientists in Edmonton to support the development and manufacturing of new therapies, supply active pharmaceutical ingredients (API) for clinical research and supply materials for new launches in hepatitis C virus (HCV), HIV/AIDS and oncology. The second building is currently under construction. Completion is expected in spring 2016.

“We are pleased to continue our growth here in Alberta, as evidenced by the significant investment and expansion announced today,” said Norbert Bischofberger, executive vice president of research and development and chief scientific officer of Gilead Sciences in a statement. “Our facility in Edmonton is home to many leading scientists and researchers who are working to improve patient care around the world.”

The company indicates the additional $100 million will go toward building a new process tower for API manufacturing, a maintenance facility and upgrades. The expansion is expected to be completed in 2017.

About 300 Gilead employees work and live in the Edmonton area. The newest facility, worth $200 million, is 45,000 square feet and will house about 83 people. The second building will house another 86 scientists. The two buildings combined will be about 184,000 square feet.

“This is just the first step, there’s lots more to come,” said Robin Nicol, vice president of chemical operations and general manager of Gilead Alberta in a statement. “This is a great opportunity to significantly expand our capacity here in Edmonton and to make drugs across many different therapeutic areas including HIV, cancer, liver disease, and cardiovascular.”

Speaking at the ribbon-cutting ceremony, Edmonton Mayor Don Iveson said, “This is a recession-proof industry. This is another example of it all coming together for something above and beyond oil and gas, which is great news for us at any time, regardless of the price of oil.”

Although biopharma may or may not be recession-proof, as Mayor Iveson said, it is still subject to the vagaries of science and research and development. Yesterday GlobeImmune, Inc. (GBIM) announced disappointing results for its Phase II clinical trial of hepatitis drug GS-4774, which is jointly developing with Gilead. Other companies in the hepatitis B space include Arrowhead Research Corporation (ARWR), Tekmira (TKMR) and Isis Pharmaceuticals, Inc. (ISIS).

The news didn’t seem to have much effect on Gilead. The company’s stock remained steady and is currently selling for $112.46 per share, not far from its high of $114.22 on Oct. 30, 2014.

GlobeImmune stock however, took a hit at the news. Shares were selling for $8.00 before the news on May 27, and are currently selling for $4.01 per share. The company had a high of $14.79 on July 11, 2014.

Gilead has a very strong hepatitis C franchise and a continuingly stable legacy HIV business. Yaron Werber, a biotech analyst at Citigroup, wrote in a note to investors earlier this month that the companies two blockbuster HCV drugs are raking in sales as they establish an even firmer foothold in a market they largely dominate.

“For Gilead in the second quarter of 2015, U.S HCV sales are tracking well at $3.2 billion to $3.4 billion versus Citi $3.3 billion and consensus $3.1 billion assuming flat TRx for the rest of the quarter and assuming a 25 percent to 30 percent gross to net discount for Harvoni,” said Werber. “This assumption for gross to net is higher than the 22 percent gross to net in the first quarter of 2015 based on IMS sales data, due to the expected full impact of agreements completed in Q1:15. There is potential for upside if the TRx come in higher or gross to net discounts are higher. Sovaldi has been priced higher than our expectation in Japan and there is potential for higher global sales driven by higher ex-U.S sales.”

Citi said that Harvoni is tracking at $2.7 billion to $2.9 billion versus its internal estimate of $2.9 billion and consensus $2.7 billion and “assumes no inventory stocking/destocking.” Based on IMS sales data Harvoni gross to net was 22 percent in the first quarter of 2015. Sovaldi is tracking at $449 million versus Citi’s estimate of $404 million and consensus $414 million.

May 28, 2015
By Mark Terry and Riley McDermid, Breaking News Staff