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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.
  • Winners And Losers In Merck Idenix Deal 2 comments
    Jun 9, 2014 3:36 PM | about stocks: GILD, JNJ, ABBV, ACHN, IDIX, BMY, RHHBY

    The winners and losers, based on today's Merck announcement regarding an acquisition of Idenix:


    IDIX (easy)

    MRK …In case there was any doubt that Merck was a solid number 2 behind Gilead, this solidifies it

    GILD…!!...In case there was any doubt that the market was larger (I am at $9 billion and $16 billion in 2014 and 2015, respectively, for Gilead's Hep C drug sales) and of longer duration, this should eliminate those issues, and also make a "price war" less likely.


    JNJ---they must buy to play

    RHHBY---they must buy to play

    BMY---Japan only unless they buy

    ABBV---short term revenue stream unless they buy

    In my opinion, the only asset worth buying is Gilead. Achillion may get bought (AT A DISCOUNT to Idenix), but it is late in development and its drugs do not appear as good. Therefore, BMY and ABBV are unlikely to be able to acquire an NS5B inhibitor. Gilead could decide to buy one of these latter two in order to broaden its pipeline outside of hepatitis, but I put this as highly doubtful at current valuations. I would expect BMY to trade into the 38-42 range, and ABBV into the mid-40s. My target price on Gilead remains $140.


    Disclosure: I am long GILD.

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  • Rondor1
    , contributor
    Comments (36) | Send Message
    bought more GILD on yesterdays dip
    10 Jun 2014, 09:21 AM Reply Like
  • danleeg
    , contributor
    Comments (156) | Send Message
    Almost did a spit take Monday... still hanging on to my IDIX shares... I firmly believe they will deliver at full price of $14.50. MRK needs a nuc at any price.


    On an optimistic timeline, pangenotypic IDX-21437 wouldn't hit market till mid 2017; at least a full year behind GILD's equivalent. Big uncertainty factor here too since IDIX's (previously optimistic) nucs have all failed previously. I believe MRK will push a little harder & get one through eventually.


    The legal battle will get more interesting here, as MRK will have two patent trials against Gilead. But even with a royalty payment required later, GILD is still very attractive here.


    Considering entering MRK after exiting IDIX
    Long GILD & IDIX
    10 Jun 2014, 10:19 AM Reply Like
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