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Despite Recent Hiccup, Gilead Is Still A Blue Chip Gem
- Biotech juggernaut Gilead Sciences is giving investors a great buying opportunity for the second time in 2014 after a recent 15% pullback in the stock price.
- Even as the stock has declined recently, earnings estimates have increased for 2015 and the company has plenty of positive catalysts ahead.
- Gilead is one of the cheapest large cap growth plays in the market and I believe over the next 12 months the shares could rise 50% from current levels.
Be Careful With Gilead - It May Be Time To Take Profits
- Gilead is a wonderful company trading at a reasonable valuation.
- Yet Gilead's explosive growth has created extremely lofty expectations.
- Last quarter's results were disappointing - the stock has considerable downside if earnings continue to disappoint.
- This article examines the bear case for Gilead - high growth companies are always risky.
- You don't have to be a genius to identify valuation mispricings.
- Gilead is a company that holds a lot of risk but also a lot of promise.
- Let's take a look at the company's most recent performance and assign a valuation to the company.
Gilead: Pipeline Now Includes Potential Renal Blockbuster
- Gilead's near term earnings growth will be driven by its domination of the Hepatitis C market.
- Gilead's drug simtuzumab shows promise as a treatment for liver fibrosis.
- Gilead's pipeline listing now includes a phase 2 drug to treat diabetic nephropathy. This represents a potentially significant market.
Update: Gilead's Harvoni Receives Marketing Authorization In Europe
- The company announced that the European Commission has granted marketing authorization for Harvoni.
- We expected the approval after the European Commission gave favorable opinion to the drug at the end of September.
- This will allow Gilead to capture a segment of the market which was not in its reach before.
Gilead: Rising Net Income, Zero Debt And Strong R&D Pipeline
- Sovaldi carries Gilead to a blowout quarter with net income up 246%.
- Gilead Sciences’ board of directors approved a $5 billion share repurchase program on May 7, 2014.
- Rich R&D pipeline of 27 new drugs.
- Gilead ex-Sovaldi/Harvoni is extremely valuable.
- Even without Sovaldi, 3rd quarter product sales increased 17%, which compares favorably to Gilead's peers.
- Using simple valuation metrics of Gilead’s peers justifies Gilead's current price without Hep C revenues.
- The market is only valuing Gilead based on Sovaldi/Harvoni, discounting its other products and pipeline.
- Given the recent 11% drop from its recent highs, the stock is even more attractive and I maintain a twelve month price target of $150.
Buy Gilead Sciences Now At A Historic Low Valuation
- Gilead is a business that is necessary to its customers survival and quality of life.
- The business is currently priced cheaply based upon historic valuations.
- A rock solid balance sheet minimizes the risk for investors.
Dispelling Some Of The Myths Surrounding Gilead Sciences
- Gilead Sciences has sold off recently over fears the company's growth prospects have dimmed.
- Gilead's best days are yet to come, as the money will continue to roll in.
- The article below will discuss the threat posed by AbbVie in greater detail.
Gilead Has Been Rocked After Earnings, But I'm Looking To Buy!
- I sold half my initial position back around $113 because I had a double in the name but I'm looking to buy full position again.
- The company is extremely undervalued and earnings estimates keep increasing.
- The management team definitely knows how to manage the company financial as it sports top notch returns on assets and equity.
Gilead Sciences Gets Ambushed By The Patent Troll, AbbVie
- AbbVie has been granted five US patents that specifically claim use of sofosbuvir and ledipasvir, the drug combination that Gilead sells under the trade name Harvoni.
- Gilead has been granted no patents for the Harvoni combination, although an application was filed in Sep2011, a month prior to ABBV’s earliest application.
- AbbVie cannot market Harvoni since it does not own patents on either individual drug in the combination, but can potentially compel royalty payments and damages from Gilead.
- Each side has filed lawsuits – resolution could take years.
Sub-Optimal 39% Hep C Cure Rate Keeps Merck In Gilead's Rear View
- Merck's recent attempt to compete against Gilead in the HCV market provided a "sub-optimal" cure rate.
- Until Merck's product can deliver an optimal cure rate at a cheaper price, it poses no threat to Gilead's Harvoni.
- Gilead's earnings growth should outstrip its 32x P/E multiple. I rate the stock a buy.
Update: These 2 Combinations Will Further Strengthen Gilead's HCV Portfolio
- The company announced the results of Harvoni for patients with advanced liver disease.
- The success of Harvoni in this target market opens a revenue outlet for the company.
- Gilead also announced the Phase II results of a combination of Sovaldi and GS-5816, which should eliminate the need for Interferon and Ribavirin.
- The elimination of Interferon and Ribavirin should enhance the sales of Sovaldi.
- We maintain that HCV segment will be a key growth driver for the company and it is a solid long-term investment.
- Despite a very successful 2014 that included an almost quadrupling of earnings, investors remain overly pessimistic on the prospects of Gilead Sciences.
- The stock is cheap, competitors continue to fail to make inroads into its core hepatitis C franchise and sales there are just getting started and should continue to beat expectations.
- Below is profiled why worries about competing products in the hepatitis C space and around pricing are unwarranted as well as why this biotech juggernaut will continue to head higher.
Why Is Gilead Always Holding The Ace? A Prediction Of The Future HCV Market And What Analysts Aren't Talking About
- Gilead is always holding the ace because other regimens don't have sofosbuvir which provides regimens with superior efficacy and low relapse rate in hard to treat HCV GT1 patients.
- Despite new competition, Gilead is still ahead. Harvoni is equal to or better than most upcoming triple combos.
- Gilead's triple combo is probably the least talked about triple combo but provides the most promise for patients.
- Gilead's triple combo will be priced at approximately $63k for a 6-week regimen and will dominate all current and near future therapies once approved.
- Projected Gilead share price will be $120/share YE 2014 and $150/share YE 2015.
- Gilead Sciences will continue to benefit from the success of its new hepatitis C drugs.
- Although GILD's stock has significantly outperformed the market since the beginning of 2012, it still has room to move up.
- Gilead Sciences has compelling valuation metrics, exceptionally strong earnings growth prospects, and a much lower PEG ratio than its competitors.
Gilead Sciences - What Convinced Me To Become Bullish
- I was previously skeptical about Gilead Sciences, but wanted to use my newly developed DRAG framework to re-analyze the company.
- Trading at just 11 times 2015 estimated earnings with a projected growth rate of more than 20%, Gilead seems attractively valued.
- Based on the firm's impressive balance sheet and strong competitive position as it relates to Hepatitis C treatments, the DRAG analysis has a favorable view of Gilead.
- The resulting $386 target price seems incredible, and while I do not expect Gilead shares to reach this level, it speaks to the growth analysts currently expect from the company.
- The shares of biotech juggernaut Gilead Sciences have slid some 5% from recent intra-day highs on worries about a possible competitor and profit taking.
- Any significant dip in this core biotech holding should be viewed as an additional buying opportunity.
- The stock is very cheap given growth prospects and the company is on the way to dominate the hepatitis C space like it currently owns the HIV market.
- AbbVie remains bullish on its prospects to compete with Gilead Sciences in treating hepatitis C, genotype 1.
- This article reviews certain AbbVie clinical data and raises questions about whether its bullishness is well-founded.
- My opinion is that Gilead appears to be well-positioned to dominate hepatitis C treatment for years to come.
Fri, Nov. 21, 8:48 AM
- The European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) adopts a positive opinion supporting approval of AbbVie's (NYSE:ABBV) Viekirax (a combination of ombitasvir, paritaprevir and ritonavir) plus Exviera (dasabuvir), with or without ribavirin, for patients with chronic HCV genotype 1 infection and Viekirax only, with ribavirin, for patients with HCV genotype 4 infection. A final decision by the European Commission usually takes about 60 days.
- The FDA tagged Viekirax a Breakthrough Therapy and granted priority review of AbbVie's NDA in June.
- Related tickers: (NASDAQ:ENTA) (NASDAQ:GILD) (NYSE:MRK) (NYSE:BMY) (NASDAQ:RGLS) (NASDAQ:CNAT) (NASDAQ:ACHN)
- Previously: Enanta declines HCV drug co-development option with AbbVie
- Previously: AbbVie presents HCV/HIV and liver transplant HCV data
Thu, Nov. 20, 12:04 PM
- France's hard line negotiations with Gilead Sciences (GILD -0.1%) over Sovaldi (sofosbuvir) pricing paid off. The agreed-upon price per box will be €13,667 which is €5,000 lower than the original price. The full 12-week regimen cost will be €41,000 or ~$51,000. This is the lowest price in Europe and will go down further if volume targets are hit.
- Sovaldi's full regimen price in the U.K. is ~$57,000 and ~$66,000 in Germany. It's $84,000 in the U.S. but this is the list price.
- Recently-approved Harvoni (ledipasvir and sofosbuvir) is available in France on a temporary basis at €48,000 for a full regimen (€16,000 per box). Negotiations over long-term pricing are underway.
Thu, Nov. 20, 7:41 AM
- According to IMS Health (NYSE:IMS) global drug spending will top $1T this year led by Gilead's (NASDAQ:GILD) Sovaldi (sofosbuvir) for hep C and new cancer drugs. The projected spend of $1.06T represents a 7% increase from last year.
- By 2018, drug spending is projected to rise to $1.3T. Hepatitis C and cancer meds will add ~$100B each, while diabetes care will contribute $78B. Leading the charge in cancer will be Roche's (OTCQX:RHHBY) Perjeta (pertuzumab) and Kadcyla (ado-trastuzumab emtansine), Pharmacyclics' (NASDAQ:PCYC) Imbruvica (ibrutinib) and Amgen's (NASDAQ:AMGN) Kyprolis (carfilzomib).
- The ever-increasing tab for meds will be controversial because payers' budgets are being stressed while drug developers defend their prices citing high development costs.
- There is already some push back in cancer. Britain's National Institute for Health and Care Excellence (NICE), which sets guidelines for the National Health Service on costs, procedures and technologies, is balking at approving Roche's Gazyvaro (obinutuzumab) and Kadcyla citing their high cost relative to additional benefits over existing therapies.
- Previously: Roche's Gazyvaro not NICE in the UK
- ETFs: IBB, BIB, IRY, BIS, IXJ, DRGS
Wed, Nov. 19, 3:59 PM
- Gilead Sciences (GILD -1.2%) purchases an FDA voucher from Canadian drug distributor Knight Therapeutics for $125M. The voucher, awarded to Knight for developing a drug to treat the parasitic disease leishmaniasis, can be used by Gilead for faster agency approval for any drug, reducing the review period from 10 months down to six.
- The FDA initiated its voucher program to incentivize drug makers to develop meds for neglected tropical diseases. A company intending to use one must notify the agency at least a year before it submits an application.
- The transaction may signal the ramp up of a secondary market for the vouchers considering the value of a shorter review period. A subsidiary of Regeneron purchased one in July for $67.5M from a subsidiary of BioMarin Pharmaceuticals. It intends to use it in its BLA for alirocumab.
- Previously: Biotechs to use priority review voucher for cholesterol-lowering drug candidate
Tue, Nov. 18, 10:15 AM
Fri, Nov. 14, 12:00 PM| 41 Comments
Thu, Nov. 13, 11:19 AM
- Gilead Sciences (GILD -2.8%) prices its $4B aggregate principal amount of senior notes. The three tranches are: $500M at 2.35% maturing February 2020, $1,750M at 3.5% maturing February 2025 and $1,750M at 4.5% maturing February 2045.
- Proceeds will be used for general corporate purposes which may include the repayment of existing debt, working capital and stock repurchases.
Tue, Nov. 11, 11:03 AM
- At The Liver Meeting in Boston, Gilead Sciences (GILD +1.1%) presented results from several Phase 2 and Phase 3 trials evaluating Harvoni (ledipasvir 90 mg/sofosbuvir 400 mg) for the treatment of chronic HCV infection in patients with limited or no treatment options, including decompensated cirrhosis, HCV recurrence following liver transplantation and patients refractory to other direct-acting antivirals.
- In a pooled analysis of Phase 2 and Phase 3 open-label studies involving more than 500 HCV-1 patients with compensated cirrhosis who received Harvoni alone or with ribavirin (RBV) for 12 or 24 weeks, 96% achieved SVR12.
- In a Phase 2 open-label study evaluating patients with decompensated cirrhosis and those with HCV recurrence after a liver transplant, 87% of those receiving Harvoni + RBV for 12 weeks achieved SVR12 compared to 89% of the treatment arm receiving a 24-week regimen (subgroup analysis of 108 HCV genotype 1 and 4 patients).
- In another subgroup analysis from the same Phase 2 trial, response rates for patients who developed HCV (genotypes 1 and 4) recurrence following liver transplantation who were treated with Harvoni + RBV were analyzed. SVR12 rates for non-cirrhotic patients were 96% and 98%, respectively, for the 12- and 24-week regimens. For patients with compensated cirrhosis, the SVR12 rate was 96% for both regimens. For patients with decompensated cirrhosis, the SVR12 rate was 81% for both regimens.
- In two studies of HCV patients who failed prior therapy, those receiving Harvoni + RBV for 12 weeks achieved SVR12 rates of 96% and 98%. Those receiving Harvoni alone for 24 weeks (Study GS-US-337-0121) achieved an SVR12 rate of 97%.
- HCV-related tickers: (BMY -0.1%)(MRK +1.4%)(ABBV +0.3%)(JNJ +0.2%)(ACHN -0.6%)(RGLS -2.7%)(CNAT -1.1%)(ENTA -0.4%)
Tue, Nov. 11, 10:07 AM
- At The Liver Meeting in Boston, AbbVie (ABBV -0.1%) presented results from studies in HCV patients co-infected with HIV and liver transplant recipients who received its all-oral, interferon-free investigational treatment combining three antivirals (ombitasvir/ABT-450/ritonavir and dasabuvir)
- SVR12 rates for patients co-infected with HCV/HIV that received the company's investigational treatment plus ribavirin were 93.5% for the 12-week regimen and 90.6% for the 24-week regimen.
- In non-cirrhotic liver transplant recipients with recurrent HCV-1 new to treatment, SVR12 and SVR24 rates were each 97.1%.
- HCV-related tickers: (GILD +0.5%)(MRK +1%)(JNJ -0.1%)(BMY -0.2%)(ENTA +0.2%)(RGLS +0.2%)(CNAT -0.5%)(ACHN -1.7%)
Tue, Nov. 11, 9:37 AM
- At The Liver Meeting in Boston, Merck (NYSE:MRK) presented data from a Phase 2 clinical trial evaluating the combination of the company's investigational NS3/4A inhibitor, grazoprevir, and its investigational NS5A inhibitor, elbasvir, with and without ribavirin, in treatment-naive and treatment-experienced HCV-1 patients. The length of treatment was either eight,12 or 18 weeks.
- SVR12 rates in treatment-naive non-cirrhotic patients were: 8-week regimen with RBV: 80%; 12-week regiment with and without RBV: 93% and 98%.
- SVR12 rates in treatment-naive patients with cirrhosis were: 12-week regimen with and without RBV: 90% and 97%; 18-week regimen with and without RBV: 97% and 94%.
- SVR12 rates for treatment-experienced patients with and without cirrhosis: 12-week regimen with and without RBV: 94% and 91%; 18-week regimen with and without RBV: 100% and 97%.
- SVR12 rates for HCV-1 patients co-infected with HIV: 12-week regimen with and without RBV: 97% and 87%.
- Results from a Phase 3 trial are expected in 1H 2015.
- Previously: Merck triple therapy HCV candidate fails as a four-week regimen
- HCV-related tickers: (GILD +0.4%)(JNJ -0.2%)(BMY -0.1%)(ABBV +0.3%)(ACHN +3%)(ENTA +0.4%)(CNAT)(LGND +0.5%)(RGLS)
Tue, Nov. 11, 9:05 AM
- At The Liver Meeting in Boston, Gilead Sciences (NASDAQ:GILD) presented data from three Phase 2 studies evaluating an all-oral pan-genotypic regimen, Sovaldi (sofosbuvir) + the company's investigational NS5A inhibitor GS-5816, for the treatment of HCV infection. The specific regimens were Sovaldi 400 mg plus GS-5816 25 mg or 100 mg, with and without ribavirin, for eight or 12 weeks.
- The first study, GS-US-342-0109, evaluated Sovaldi + GS5816 with and without ribavirin for 12 weeks in treatment-experienced HCV-1 and HCV-3 patients with and without cirrhosis. SVR12 rates: SOF + GS-5816 100 mg: 100% for GT1 with and without cirrhosis; 100% for GT3 without cirrhosis and 88% for GT3 with cirrhosis. SVR12 rates: SOF + GS-5816 + RBV: 100% for GT1 without cirrhosis and GT3 without cirrhosis; 90% in GT1 with cirrhosis and 96% in GT3 with cirrhosis.
- The second study, ELECTRON 2, evaluated the same regimen as the first study for eight weeks in non-cirrhotic treatment-naive genotype 3 patients. The SVR12 rate inclusive of ribavirin was 100% and 96% for the ribavirin-free approach.
- The third study, GS-US-342-0102, evaluated the same regimen as first study in non-cirrhotic treatment-naive patients. Results from Part A evaluating 12 weeks of treatment were presented at The International Liver Congress in April 2014. The results from Part B, presented this week, evaluated eight weeks of treatment in HCV-1 and HCV-2 patients. SVR12 rates were: G1: 81% and 90% with and without RBV; G2: 88% with and without RBV.
- HCV-related tickers: (NASDAQ:ACHN) (NYSE:BMY) (NYSE:JNJ) (NYSE:ABBV) (NASDAQ:ENTA) (NASDAQ:CNAT) (NASDAQ:LGND) (NASDAQ:RGLS)
Mon, Nov. 10, 7:49 AM
- At The Liver Meeting in Boston, Merck (NYSE:MRK) presented interim data on its triple-therapy regimen for HCV-1 infection. The investigational product combines the company's NS3/4A protease inhibitor, grazoprevir and its NS5A inhibitor, elbasvir, with Sovaldi (sofosbuvir).
- SVR4/8 for the 8-week regimen in treatment-naive cirrhotic patients was 94.7% (18 of 19). SVR4/8 values for other treatment groups, however, appear low. For the six-week regimen in treatment-naive cirrhotic patients, SVR4/8 was only 80% (16 of 20) with four relapses. For treatment-naive non-cirrhotic patients, the six-week regimen SVR4/8 was 86.7% (26/30) with four relapses while the four-week regimen failed to come anywhere close to efficacy at 38.7% (12/31) with 19 relapses.
- Of the 28 total relapses, 25 were genotype 1a and three were genotype 1b.
- The company plans to initiate Phase 2 clinical trials to assess the safety and efficacy of two short-duration triple therapy regimens: MK-3682 in combination with grazoprevir/elbasvir and MK-3682 in combination with grazoprevir and MK-8408 in non-cirrhotic HCV patients. MK-3682 is an investigational oral prodrug HCV nucleotide analogue NS5B polymerase inhibitor. MK-8408 is an investigational early-stage NS5A inhibitor.
- HCV-related tickers: (NASDAQ:GILD) (NYSE:BMY) (NYSE:JNJ) (NYSE:ABBV) (NASDAQ:ENTA) (NASDAQ:CNAT) (NASDAQ:LGND) (NASDAQ:RGLS)
Sun, Nov. 9, 6:04 PM
- At The Liver Meeting in Boston this week, Bristol-Myers Squibb (NYSE:BMY) presented data from its Phase 3 UNITY program investigating a 12-week all-oral TRIO regimen of daclatasvir (DCV) with asunaprevir and beclabuvir for the treatment of HCV-1 infection.
- In the UNITY-1 trial, a 12-week regimen of DCV-TRIO without ribavirin was evaluated in treatment-naive and treatment-experienced non-cirrhotic HCV patients. SVR12 was 91% overall, 92% for the treatment-naive group and 89% for the treatment-experienced group.
- In UNITY-2, a 12-week regimen of DCV-TRIO was evaluated in cirrhotic patients. SVR12 was 98% in the treatment-naive group and 93% in the treatment-experienced group with ribavirin and 93% and 87%, respectively, without ribavirin.
- In October, the company announced it would not pursue FDA approval for the dual regimen of asunaprevir and daclatasvir for the treatment of HCV-1b infection.
- HCV-related tickers: (NYSE:MRK) (NASDAQ:GILD) (NYSE:ABBV) (NASDAQ:ENTA) (NYSE:JNJ) (NASDAQ:CNAT) (NASDAQ:LGND) (NASDAQ:RGLS)
Sun, Nov. 9, 5:37 PM
- At The Liver Meeting in Boston this week, Bristol-Myers Squibb (NYSE:BMY) presented data from its ALLY Phase 3 clinical trial investigating a 12-week ribavirin-free regimen of daclatasvir in combination with Sovaldi (sofosbuvir) in HCV genotype 3 patients, a population that has emerged as one of the most difficult to treat. The SVR12 in treatment-naive patients was 90% and 86% in treatment-experienced patients. SVR12, sustained viral response 12 weeks after the completion of therapy, is considered cured.
- The results compare favorably with SVR12 in 89% of patients with HCV-1,2 and 3 in an open-label randomized study of a 24-week regimen of the two drugs.
- HCV-related tickers: (NYSE:MRK) (NASDAQ:GILD) (NYSE:ABBV) (NASDAQ:ENTA) (NYSE:JNJ) (NASDAQ:CNAT) (NASDAQ:LGND) (NASDAQ:RGLS)
Sun, Nov. 9, 5:06 PM
- At this week's Annual Meeting for the Study of Liver Diseases in Boston, Achillion Pharmaceuticals (NASDAQ:ACHN) gave poster presentations on two of its HCV product candidates.
- In a Phase 2 pilot study evaluating eight-week treatment of its NS5A inhibitor, ACH-3102, in combination with Sovaldi (sofosbuvir) in treatment-naive HCV genotype 1 patients, the interferon-free, ribavirin-free regimen demonstrated 100% SVR12 in 12 patients. SVR12 or sustained viral response 12 weeks after the completion of therapy, is considered cured. Sovaldi's SVR12 (in combination with peg-interferon alfa and ribavirin) is 90% for HCV-1. Harvoni's (sofosbuvir + ledipasvir) is 94 - 99%.
- The company presented three posters on preclinical results for its uridine analog prodrug, ACH-3422. The data showed improved potency against HCV-3 compared to sofosbuvir. The combination of ACH-3422 with ACH-3102 or sovaprevir (Achillion's Phase 2 NS3/4A inhibitor) displayed additive synergistic activity in vitro. Also, ACH-3422, in combination with other direct-acting antiviral agents, demonstrated the ability to block the appearance of resistant colonies in vitro.
- According to recent research, the global prevalence of HCV genotypes is: type 1: 46%; type 2: 13%; type 3: 22% and type 4: 13%.
- HCV-related tickers: (NASDAQ:GILD) (NYSE:ABBV) (NYSE:JNJ) (NYSE:BMY) (NASDAQ:RGLS) (NASDAQ:ENTA) (NYSE:MRK) (NASDAQ:LGND) (NASDAQ:CNAT)
Thu, Nov. 6, 9:34 AM
- Gilead Sciences (GILD +1.8%) submits its NDA for a once-daily single tablet HIV-1 regimen containing elitegravir 150 mg, cobicistat 150 mg, emtricitabine 200 mg and tenofovir alafenamide (TAF) 10 mg.
- TAF is an investigational prodrug of tenofovir, the active ingredient in Viread (tenofovir disoproxil). It has demonstrated high antiviral efficacy at a 10x lower dose with an improved renal and bone safety profile.
- The company expects to submit an MAA to the EMA for the product candidate by the end of 2014.
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