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DoctoRx
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Over 30 years of investing in individual stocks. Extensive business experience with small to mid-size companies, including as CEO. Many hundreds of blog posts on financial and economic matters since 2008. Focus on value with catalysts for upside price action. Background as a physician and... More
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  • Gilead Sciences Price Target Update

    A brief update on a short-term price target. On its web site, Gilead Sciences (NASDAQ:GILD) publishes analyst's EPS estimates for 2014, 2015 and 2016. Consensus estimates are as follows:

    Analyst Forecasts - EPS
     Last Month Revisions
    Fiscal Period MeanHighLowMedian# of Estimates#Up#DownMean % Change
    AnnualDec 1610.1513.707.5510.002319111.60
    AnnualDec 159.0712.027.009.232621015.56
    AnnualDec 147.679.165.007.982522021.52

    My sense is that given low and dropping interest rates available to owners of capital, an implied 10% earnings yield two years from now will be viewed as attractive, given Gilead's long-term growth potential. Thus I think that $100 is a reasonable short-term price target. Investors should be aware, though, that I do not leverage positions and do not own or intend to own any weekly or 1-2 month options on GILD. Thus I actually have bought GILD shares and long-term GILD naked calls this week.

    Disclosure: The author is long GILD.

    Additional disclosure: Not investment advice. I am not an investment adviser.

    Tags: GILD, Biotech
    Jul 29 10:39 AM | Link | 2 Comments
  • More Good News For Gilead

    More good news for Gilead Sciences (NASDAQ:GILD). The newsflow coming into earnings has been enhanced. Bloomberg News reports Gilead Drug Combination Cures Hepatitis C in HIV Patients. From the article:

    In a study of 223 HIV-infected patients, Solvadi combined with ribavirin cleared the most common U.S. strain of hepatitis C in 76 percent of newly treated patients over 24 weeks. Only seven participants stopped treatment because of side effects and there were no adverse effects on HIV treatment, according to a report in the Journal of the American Medical Association.

    Complications from hepatitis C are the leading cause of death for those with HIV, according to the research. In the past, treatment for 7 million patents co-infected with the viruses globally have been limited because older hepatitis C regimens that include interferon interact badly with HIV drugs, with more anemia, fatigue and depression, researchers said.

    This is "the first clinical trial to demonstrate that we can cure hepatitis C in patients with HIV co-infection without the use of interferon," said Mark Sulkowski, the study author and medical director of the John Hopkins Infectious Disease Center for Viral Hepatitis in Baltimore. "It represents a transformative step in our approach to this therapeutic area."

    This is nice to see, both for GILD and for patients. One of these days, I hope to see something similar appear using not Sovaldi plus ribavirin, but sofosbuvir (the drug in Sovaldi) plus ledipasvir, the combo awaiting FDA approval with a PDUFA date in October.

    Another bit of good news is steadily and rapidly-rising earnings estimates, from Yaoo! Finance:

    EPS TrendsCurrent Qtr.
    Jun 14
    Next Qtr.
    Sep 14
    Current Year
    Dec 14
    Next Year
    Dec 15
    Current Estimate1.771.616.718.22
    7 Days Ago1.701.576.488.00
    30 Days Ago1.591.506.287.78
    60 Days Ago1.591.496.197.71
    90 Days Ago1.011.014.096.00

    GILD is trading at less than 11X consensus 2015 earnings. Since its historical P/E is more like 20-22, its valuation currently assumes that 2015 earnings are peak or near-peak and will decline.

    I remain comfortable that GILD has a reasonable margin of safety and believe that upside potential exceeds downside risk at current trading levels.

    Disclosure: The author is long GILD.

    Additional disclosure: Not investment advice. I am not an investment adviser.

    Jul 20 4:25 PM | Link | 5 Comments
  • Portola Sells Off On Hawkish Fed Comments, Fundamentals Unchanged

    I recently wrote an article about a development-stage biotech/biopharma company, Portola Pharmaceuticals (NASDAQ:PTLA). This was written shortly after a large run-up in the stock. Following Janet Yellen's hawkish statements about companies such as Portola, or yet riskier stocks, PTLA has taken a big dive to below $25, from $29-30 when I wrote that article. I have been buying the "dip" (which feels more like a crash). I came across this professional article yesterday:

    Apixaban Most Cost-Effective of New Oral Anticoagulants

    July 10, 2014

    As the disease burden of atrial fibrillation (NYSE:AF) increases along with the aging US population, cost-effectiveness of therapy is becoming an important consideration when deciding which anticoagulant therapy to prescribe. Although vitamin K antagonists (VKA), such as warfarin, have been traditionally the most inexpensive agents, their efficacy profile is less favorable than the novel oral anticoagulants (NOACs); other considerations, such as drug-drug interactions and tedious monitoring parameters also make VKAs less desirable than NOACs...

    Table. Comparison of Annual Cost Based on Major Events: Novel Oral Anticoagulants vs Warfarin
     Strokes
    per 100 PY
    Major bleeding
    per 100 PY
    +/- medical costs per patient per year,
    absent incident
    stroke/major bleeding
    Apixaban vs warfarin1.1 fewer2.1 fewer$1245 saved
    Dabigatran vs warfarin1.9 fewer0.7 more$555 saved
    Rivaroxaban vs warfarin0.8 fewer1.4 more$144 increased
    PY = patient years.

    Portola has in late-stage development an antidote that reverses Factor Xa inhibitors such as apixaban, a Xa inhibitor marketed in the U.S. as Eliquis by Bristol-Myers Squibb (NYSE:BMY) and Pfizer (NYSE:PFE).

    My guess is that its Xa inhibitor andexanet alfa is worth a good deal more than the company is now valued at, which is $1 B (which includes net cash). It has not been submitted for FDA approval, so anything could happen, but I think this stock is now a very interesting potential value in a rich market.

    Disclosure: The author is long PTLA.

    Additional disclosure: Not investment advice. I am not an investment adviser.

    Jul 15 1:32 PM | Link | 3 Comments
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