Gilead shares rise as new HIV study begins

The stock rose $1.60, or 3.1 percent, to close at $52.70 on heavier than average volume. Shares have traded between $35.22 and $56.95 over the last 52 weeks.

The Phase III clinical trial will compare Gilead's once-daily drug candidate elvitegravir with Merck & Co.'s twice-daily Isentress. The program will involve about 700 HIV-infected people, with the goal of assessing whether Gilead's new drug is just as effective as Isentress.

Gilead already dominates the HIV therapy market with Truvada and the three-in-one, once-daily drug Atripla.

HIV patients often remain on one treatment for a long time, eventually growing resistant to the drug. If Gilead's elvitegravir proves just as effective as Isentress, then it would become both a new treatment on the market and an option for patients who have grown a resistant to their current therapy.

If it works equally well, elvitegravir would also be desirable because of its once-daily dosing regimen, said Leerink Swann analyst William Tanner, in a note to investors. But, the drug needs a boost from the antiretroviral treatment Ritonavir in order to achieve the once-daily dosing.

That could possibly cut out approval of the drug as an initial HIV treatment, leaving it only as a secondary therapy, Tanner said. But, Gilead is currently developing its own boosting agent, called GS 9350, which doesn't have antiviral activity. That could increase elvitegravir's potential to be approved as an initial therapy.

Tanner and several other analysts have been maintaining that the company has a strong market position, following what was perceived by some investors to be a weak second-quarter profit report last week.

Robert W. Baird analyst Thomas Russo reaffirmed a "Neutral" rating and $57 price target, urging patience after the earnings report. He said it showed that positive earnings surprises are no longer certain from Gilead.

"That said, this is by no means a broken story, and we retain sufficient confidence in estimates," he said.