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Leonard Yaffe
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I am an MD by background who runs a healthcare hedge fund. I worked as a sell-side medical analyst for 20 years, covering pharmaceuticals, medical devices, PBMs and drug distributors.
  • GILD-We've Only Just Begun.... 5 comments
    May 23, 2014 11:43 AM | about stocks: GILD

    Gilead's Solvadi recorded new prescriptions for the week ending 5/13 of 3445, down 11% sequentially. Weekly prescriptions have been relatively flat at around 3600 since the end of February. Putting this in perspective, I remain incredibly bullish on the prospects for Gilead as it relates to Hepatitis C.

    1. I have always cautioned against putting too much importance on weekly prescription data, as they are influenced by weather, medical conferences, and as we shall see in 2 weeks reporting time, weekday holidays. I view monthly data trends are more relevant.

    2. That having been said, in 2013, when patients were being warehoused awaiting the introductions of Sovaldi and Olysio, about 1000 new prescriptions per week were written. In 2014, as those warehoused patients are treated, new prescriptions are averaging over 3000 per week. During the past month, warehousing has again begun occurring, with the expectation of Gilead's fixed dose combination tablet coming to market later this year. This will offer the patients the opportunity to be treated without the need for interferon or ribavirin, and will represent a huge advance in the treatment of Genotype 1 patients. Up until now, the patients who have "needed to be treated" have been prioritized for therapy by doctors, despite the frequent concomitant use (though for a lesser duration) of ribavirin, and sometimes, interferon. The elimination of these latter medications will significantly increase the pool of patients willing to be treated. Furthermore, the screening of the 1945-1965 birth cohort, which could add an incremental 800,000 patients diagnosed with Hepatitis C, has just started.

    3. I am estimating Gilead's Hepatitis C related sales to be $9 billion in 2014, and $16 billion in 2015.


    Disclosure: I am long GILD.

    Stocks: GILD
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  • somedata1
    , contributor
    Comments (1931) | Send Message
    80% increase for Hepatitis C related sales next year. Where do you find that kind of growth in a large cap?


    And Q1 2014 GILD net profit margin is staggering 44.46%.


    Disclosure: I am long GILD.
    23 May 2014, 09:57 PM Reply Like
  • danleeg
    , contributor
    Comments (209) | Send Message
    Sovaldi was added to the VA National Formulary during the first week of April. Do these prescriptions show up in that data? How about prescriptions dispensed for the Federal Bureau of Prisons? Are these prescriptions reflected in trx & nrx?
    25 May 2014, 06:14 AM Reply Like
  • Leonard Yaffe
    , contributor
    Comments (168) | Send Message
    Author’s reply » In answer to the muchly appreciated comments above, please realize that the Hepatitis C revenue estimates are mine, and that, as with 2014, analyst expectations for 2015 are much lower. As for VA scrips, it would depend on how they are filled as to whether or not they are captured by the various monitoring services (which is part of my comment on not focusing on weekly scrip data). As for the prison system, I would doubt that they are reflected, but I also expect that it will be some time before there are significant revenues generated from this source. Eventually, I believe that more inmates will be treated, especially given the shorter course of therapy and the expectation of high compliance with an all oral regimen upon release. The latter was an issue with interferon containing regimens.
    25 May 2014, 10:28 PM Reply Like
  • Leonard Yaffe
    , contributor
    Comments (168) | Send Message
    Author’s reply » As I continue to research the Sovaldi scrip capture, I am learning that IMS likely does not capture VA scrip information. Furthermore, I believe that a greater percentage of scrips are being generated through mail order (vs. at the retail pharmacy), and that IMS data does not reflect these as fully as it does retail scrips. Therefore, it is quite likely that actual Sovaldi scrips are increasingly diverging from the reported numbers, though I cannot ascertain the extent.
    27 May 2014, 11:10 AM Reply Like
  • danleeg
    , contributor
    Comments (209) | Send Message
    thanks Len. from my reading I don't believe Tricare reports to IMS either. These are obviously significant patient populations for HCV.


    I still wonder if IMS attempts to "adjust" their data to compensate for non-reporting dispensers or if they are just reporting raw data. I also wonder if IMS mathematically dumps in wholesaler data into their model as well.


    I agree with the significant Mail percentage; and I also think a growing number of clinics will bill sovaldi out on the medical side & dispense in clinic, but I can't quantify.


    At the end of the day, I believe that if the VA can put Sovaldi on formulary that no PBM has an ounce of reason to cry over price. The VA's formulary is so chintzy that they'll routinely make their vets split $0.75 of HCTZ tabs in half.


    I am long GILD
    28 May 2014, 10:20 PM Reply Like
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