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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---The Train Has Finally Left The Station 5 comments
    Jul 14, 2014 6:13 PM | about stocks: GILD

    After a severe correction in the Spring (along with the rest of the high-growth pharmaceutical sector), GILD has broken through the $84 resistance level and is making new all-time highs on almost a daily basis. Despite this run up, the stock remains incredibly attractive (more so than any other similarly misclassified "biotech"), trading at less than 11x 2015E EPS, with a forward growth rate of 18%. The argument as to the size of the Hepatitis C drug market is largely resolved but still underestimated, and so to that concerning the duration of significant sales. I would not be short this stock for the expectation of a price war, especially as I expect Gilead's FDC to be priced at a "course of therapy" discount to current regimens (both reflecting a shorter medication period and less use of other drugs). While I believe that, time of introduction independent, Merck has the next best regimen, I maintain that the market is sufficiently large for both companies to do extremely well. In my opinion, the near-term losers are JNJ (Olysio should largely disappear) and Roche (it should have become a factor), with AbbVie unlikely to garner significant share.

    Near term, Gilead's earnings will be driven by its Hepatitis C franchise. Over the intermediate term, and largely absent from discussion, its earnings will be augmented by its research and development efforts in oncology, hepatology and nephrology, as well as its TAF program in HIV.

    Gilead is scheduled to report Q2 results next week, and while I expect them to readily exceed expectations, this is "only the beginning". Q3 results should reflect additional patient warehousing ahead of the FDC launch, whereas Q4 results (as well as Q1'15) should be awesome. The upcoming Q3 warehousing is a known phenomenon, and should not be used as a reason to avoid the stock. My target price remains $140.


    Disclosure: The author is long GILD.

    Stocks: GILD
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  • somedata1
    , contributor
    Comments (2033) | Send Message
    The Smartest Man in Europe Sees a New Industrial Revolution. And biotech is among them. The most important lessons he taught me were (1) that the primary force behind good performance is recognizing important changes before or just as they are starting to happen, and (2) when something significant is happening, put a lot of money behind it. Concentrate on the big ideas; don’t over-diversify....


    14 Jul 2014, 07:04 PM Reply Like
  • Camman1963
    , contributor
    Comments (76) | Send Message
    14 Jul 2014, 09:54 PM Reply Like
  • somedata1
    , contributor
    Comments (2033) | Send Message
    The long term growth of this company is going to be one of the strongest in S&P 500. This is my ticket to 1%.
    14 Jul 2014, 07:18 PM Reply Like
  • virgo349
    , contributor
    Comments (209) | Send Message
    I'm 'guestimating' Q2 EPS of $2.50 based on


    1) Correction of Q4 inventory stockpiling due to anticipated price increases for legacy HIV therapeutics
    2) April VA formulary addition of Sovaldi (& other undetectable sales outside of IMS)
    4) Appearance of (any) International Sovaldi Sales
    5) Accelerating Stribild sales


    Long GILD
    14 Jul 2014, 10:18 PM Reply Like
  • Leonard Yaffe
    , contributor
    Comments (168) | Send Message
    Author’s reply » Many thanks for comments...DO NOT be disappointed if GILD's EPS do not approach $2.50, given its shares outstanding of 1.5 billion. I do agree that Wall Street estimates are too conservative, given the percent of non-traditional prescription channels and the lack of appreciation of international sales. Stribild cannot move the proverbial needle. Len
    15 Jul 2014, 11:20 AM Reply Like
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