Gilead (GILD) announced Tuesday that its latest HIV treatment candidate met its primary goal in four late-stage studies, showing "non-inferiority" against existing regimens, including a competitor from GlaxoSmithKline (GSK). With Glaxo shares rising, potentially on the lack of direct outperformance in the studies, Wall Street analysts largely cheered the news and said it could be key in preserving Gilead's spot in the HIV treatment arena.

BACKGROUND: Gilead announced Tuesday morning that four Phase 3 studies evaluating its bictegravir in combination with the already-approved emtricitabine/tenofovir in HIV patients met their primary goals of "non-inferiority" against existing regimens, including GlaxoSmithKline's Tivicay. On the safety front, the bictegravir combination was "well tolerated and no patients discontinued study medication due to renal events." The company noted that it plans an NDA submission in Q2, with an MAA filing in Europe following in Q3.

CITI SEES POTENTIAL FIRST CHOICE FOR PHYSICIANS: Citi analyst Robyn Karnauskas says today's data are "key" to the long-term health of Gilead's HIV franchise and could make the bictegravir regimen the first choice among physicians, adding that a 1Q18 launch of the bictegravir regimen looks "likely" now. While cautioning that Gilead's announcement did not include comment on drug superiority or detailed efficacy metrics, Karnauskas' base case estimates about 25% of patients switching to the bictegravir combo, contributing roughly $6 per share to her discounted cash flow modeling.

JPMORGAN SAYS KEY TO HIV FRANCHISE: JPMorgan analyst Cory Kasimov is "generally encouraged" by Gilead's announcement but "not entirely surprised" given the previous Phase 2 data. Kasimov thinks a 2018 launch, potentially with accelerated FDA review using one of the company's priority vouchers, could be "key" to help the company maintain market share in the face of pending patent expirations as well as continued growth in GlaxoSmithKline's Tivicay. Kasimov adds that he expects sales of the bictegravir product to peak around $5B by 2022.

LEERINK SEES POTENTIAL YEAR-END LAUNCH: Leerink's Geoffrey Porges says the bictegravir news looks "in line" with both his and the company's expectations: While the trials "do not appear to have shown statistical superiority," they also didn't bring new safety concerns. The analyst expects Gilead to use one of its priority review vouchers to obtain an accelerated six month regulatory timeline, potentially allowing for year-end approval and launch, adding that his forecast for the regimen eventually ramps to over $10B in global sales.

PRICE ACTION: Shares of Gilead showed volatility Tuesday, reaching highs near $64.75 before paring those gains into session close. Meanwhile, GlaxoSmithKline is up 1.8% to $43.43.