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A Reason To Be Bearish On Gilead - Everyone Seems Bullish
- In the wake of Express Scripts' decision to stop covering Harvoni in 2015, several well-written articles were published on Seeking Alpha, suggesting that the shares of Gilead Sciences remain attractive.
- In addition, 23 out of 27 industry analysts currently have a positive rating on the stock.
- Trading at only 9 times projected 2016 earnings, either Gilead is the stock pick of the decade, or risks to its future earnings are substantial.
- The lack of bearish articles and opinions makes me concerned that overall sentiment for Gilead remains too bullish, causing me to be fearful.
- As expected, AbbVie has received approval for its Viekira Pak hepatitis C combination.
- AbbVie surprised the market by undercutting rival Gilead on price.
- As a result, Express Scripts is dropping Gilead's Harvoni from its National Preferred Formulary.
4 Reasons I'm Adding Gilead To My Healthcare Holdings
- After minimizing my risk in the healthcare space, I am buying what many now consider to be a high risk stock in GILD.
- Despite GILD's big stock decline on Monday, there are reasons to believe the stock reaction did not warrant the news.
- Investors often overlook GILD's valuation, its HIV and oncology pipelines.
- Shares in Gilead Sciences dropped more than 14% on Monday.
- The drop can be attributed to a deal between pharmacy benefit manager Express Scripts and primary Gilead competitor AbbVie.
- Gilead's Harvoni is a superior drug to AbbVie's Viekira Pak and should become a blockbuster despite the deal.
- I rate Gilead Sciences a Strong Buy on the drop.
Who Is The Devil? Will Gilead Fall Or Soar In 2015?
- On Friday, AbbVie's Viekira Pak received US approval for HCV GT1 patients with or without ribavirin. Today, Express Scripts said they will exclusively cover AbbVie's regimen and drop Sovaldi-based regimens.
- The real loser today is not Gilead, but the patients that cannot get access to Gilead's safer HCV cure, Harvoni. Despite what you think, AbbVie loses as well.
- Payers may find that treating advanced HCV patients using Viekira Pak and ribavirin for 12-24 weeks is cost prohibitive based on healthcare costs to treat side effects from ribavirin.
- The only winner today is Express Scripts. Even insurance companies that use Express Scripts may lose based on increased healthcare costs to treat patients with hemolytic anemia and lawsuits.
- Despite the decline, Gilead looks solid with a great product portfolio and pipeline. Combined with stock buybacks and a regimen that will maintain majority market share, Gilead is a buy.
- Gilead Sciences is selling off on the announcement of an exclusive deal excluding them from Express Scripts formulary.
- The stock has sold off more than twelve percent which I view as overdone.
- The article below will detail my thoughts on the recent sell-off.
- AbbVie’s hepatitis C treatment was approved by the FDA last Friday.
- AbbVie and pharmacy benefit manager Express Scripts have reached an agreement under which AbbVie’s hepatitis C treatment has been given exclusive status in return for significant discount.
- Gilead shares have tumbled on the news, however, the impact of the agreement could be minimal on Harvoni sales.
- AbbVie has received approval of its widely-anticipated hepatitis C combination, called Viekira Pak.
- This regimen has a high cure rate but certain issues when given with a number of other drugs, and has less convenient dosing than Gilead's Harvoni.
- Express Scripts is dropping Gilead's Harvoni from its National Preferred Formulary as of January 1, 2015.
- Biotech juggernaut Gilead Sciences has provided its shareholders with better than a 30% gain in 2014 so far as we head into the end of the year.
- Although the stock has spent the last three months consolidating those gains in a relatively narrow trading range, the direction for 2015 remains up.
- Gilead has several major positive catalysts on the horizon in 2015. Why I believe the stock will head much higher in the twelve months ahead is detailed below.
While Gilead's Profits Soar, Uncertainty Reigns Supreme At AbbVie
- This article analyzes AbbVie using the DRAG framework and compares the company's fundamental attributes with those of Gilead Sciences.
- While AbbVie's dividend yield and dividend growth profile are impressive, its balance sheet is highly levered and analysts offer only modest earnings growth projections.
- Furthermore, Gilead generates a higher return on invested capital and trades at a lower forward earnings multiple than AbbVie.
- While much uncertainty exists surrounding the future of hepatitis C treatment, AbbVie shares appear slightly overvalued at the current time, making Gilead the more compelling opportunity.
The 2015 Calendar Of NASH Trial Catalysts IV: GENFIT And Gilead
- Non-alcoholic steatohepatitis (NASH) became a buzzword when Intercept Pharmaceuticals shares nearly tripled with positive results from the FLINT trial in January. There are several companies presenting NASH data next year.
- With a minimum 6 million Americans at risk for NASH, each company's product has blockbuster potential, given that an already approved product being re-purposed for NASH has an $18,000/month price tag.
- GENFIT and Gilead are two of the companies with the best-designed ongoing NASH trials.
Update: News On Gilead From The California Technology Assessment Forum
- I attended the CTAF session today on treatments for Hepatitis C, Genotype 1.
- Unlike the prior CTAF meeting, I felt the panels were more positive regarding the clinical benefits of the newer therapies.
- Hepatitis C pharmacotherapy pricing remains an issue, though evidence suggested a favorable QALY cost for Harvoni versus an Interferon/Ribavirin regimen.
Ho Ho Harvoni: Gilead Sciences Is A Gift That Should Be Under Every Investor's Tree.
- Whether you're a value or a growth investor, GILD belongs in your portfolio.
- Gilead Sciences is at the forefront of worldwide HCV eradication with its combination tablet: Harvoni.
- Regardless of anticipated competition, Gilead is a rapidly growing, highly profitable and cash-gushing machine.
- GILD is one of my top picks to significantly outperform the S&P 500 in 2015.
- A relatively straightforward screen meant to help me find attractive growth stocks located only one result: Gilead Sciences.
- Although I have had mixed feelings about Gilead in the past, it compares favorably to wide variety of similar companies, including Biogen Idec, using several criteria.
- Based on Gilead's return on invested capital, estimated future earnings growth and forward price to earnings ratio, it should be included in nearly every growth portfolio.
- The drug pipeline is the lifeblood of all research-based companies.
- A thorough understanding of the potential embedded in a company's pipeline offers a glimpse into potential for future revenue and profits.
- Gilead Sciences currently has a real gem in development which I will detail below.
- GILD's forward P/E ratio (10) is well below its competitors (~19-35) and this is an anomaly as Gilead’s Free Cash Flow will continue to grow at >20% each year.
- EBIT margins are growing and this shows that Gilead has control over its cost base. These alone should ensure above average forward P/E and PEG ratios when compared to S&P.
- Gilead is on track to achieve US HCV revenue consensus of $2.75B in Q4 and $12B in 2015.
- The 2014 revenue consensus assumes a 25% market share for Abbvie’s HCV drug. This is a worst case scenario that assumes that all GT1b patients will switch to Abbvie.
- Recent results clearly show that Abbvie’s cure rates are 10% less than Gilead’s for GT1a patients but are very similar (99% vs 100%) for GT1b patients.
How To Beat The Market - My Best Large-Cap Stock Portfolio: Gilead Sciences
- I have developed a large-cap stock selection strategy that can beat the market by a large margin with lower risk.
- A 16-year simulation of the strategy has given an annualized return of 11.51%, while the S&P 500 index has increased only 3.07% during that period.
- I also focus in this article on the first ranked stock by that strategy, Gilead Sciences.
- Gilead has surged more than 40% this year, driven by the tremendous success of its hepatitis C treatment.
- Despite the significant surge in Gilead shares, the stock has further upside.
- The risk to Gilead’s hepatitis C treatment market share is minimal.
Gilead Sciences' Stock Forecast: Algorithmic And Fundamental Analysis
- Gilead Sciences has had one of its most successful years, with growth in Q3 2014 exceeding 100% growth over last year's Q3.
- Sovaldi currently profits on being the first to market; the single product is currently responsible for almost 50% of the company's revenues.
- The current product portfolio poses a high risk, and is dependent on competitors' failures/successes in the upcoming months.
- I Know First algorithmic forecast suggest the stock will increase in the next 3-7 days, but is no longer the optimal long-term investment.
Tue, Dec. 23, 10:49 AM
- Biotech's negative money flow notwithstanding, investors shun Gilead Sciences (GILD -7.3%) and Achillion Pharmaceuticals (ACHN -17.5%) in light of AbbVie's (ABBV -2.5%) exclusive HCV deal with Express Scripts.
- Previously: Express Scripts/AbbVie HCV deal should not be surprising (Dec. 22)
Tue, Dec. 23, 10:40 AM
- Stoked by the perception of future price constraints precipitated by the Express Scripts (ESRX +0.6%)/AbbVie (ABBV -2.5%) exclusive deal at the expense of Gilead (GILD -6.4%), the iShares Biotech Index (IBB -5.1%) retreats in early trading.
- Previously: AbbVie's new hepatitis C drug gets boost (Dec. 22)
- Previously: Express Scripts/AbbVie HCV deal should not be surprising (Dec. 22)
- ETFs: BIS BIB
Mon, Dec. 22, 9:19 AM
- TheStreet's Adam Feuerstein says the price-containing Express Scripts/AbbVie exclusive Viekira Pak agreement may be a fatal blow to the current biotech bull market. He believes that PBM's like Express Scripts will be highly motivated to enter into exclusive deals in exchange for hefty discounts. Likely candidates for these arrangements would be cancer immunotherapies, many of which will cost $300K or more.
- The deal between a drug manufacturer and a pharmacy benefit manager (PBM) like Express Scripts should not be surprising considering the exorbitant prices for new therapies. This is one reason the FDA and EMA have extended priority review to new HCV drugs. Establishing a competitive market is be most effective way to moderate prices.
- The breathtaking ascent of Gilead's (NASDAQ:GILD) Sovaldi may be difficult to replicate, but there still is plenty of business out there for biotech firms.
- (NYSE:ABBV) (NASDAQ:ENTA) (NASDAQ:ESRX)
- Previously: Global drug tab will breach trillion dollar mark this year (Nov. 20, 2014)
- Previously: UniQure sets price record with Glybera (Nov. 26, 2014)
Mon, Dec. 22, 9:17 AM
Mon, Dec. 22, 7:53 AM
- AbbVie (NYSE:ABBV) is up 4% on moderately-higher volume and Enanta Pharmaceuticals (NASDAQ:ENTA) is up 11% on light volume in response to AbbVie's deal with Express Scripts (NASDAQ:ESRX).
- Gilead Sciences (NASDAQ:GILD) is off 7% on high volume.
- Previously: AbbVie's new hepatitis C drug gets boost (Dec. 22, 2014)
Mon, Dec. 22, 2:09 AM
- The price war over hepatitis C drugs continues, after Express Scripts (NASDAQ:ESRX) announced that it will only cover AbbVie's (NYSE:ABBV) newly approved Viekira Pak, which received clearance from the FDA on Friday.
- The move will help the drug maker take market share away from Gilead Sciences (NASDAQ:GILD) and J&J (NYSE:JNJ), which make blockbuster hep C drugs, including Sovaldi, Harvoni and Olysio.
- AbbVie's Viekira Pak will have a price of $83,319, although the agreement with Express Scripts involves a significant discount to that price.
- Previously: FDA clears AbbVie HCV combo (Dec. 19 2014)
Fri, Dec. 19, 3:46 PM
- The FDA approves AbbVie's (ABBV) Viekira Pak (ombitasvir, paritaprevir and ritonavir tablets co-packaged with dasabuvir tablets) for the treatment of HCV genotype 1 infection, including those with compensated cirrhosis.
- Related tickers: (GILD +3.2%) (ENTA +3.9%)
- Previously: PDUFA date approaches for AbbVie HCV combo therapy (Dec. 18, 2014)
Fri, Dec. 19, 11:19 AM
- Gilead Sciences (GILD +1.1%) and Osaka, Japan-based Ono Pharmaceutical Company (OTC:OPHLF) (OTCPK:OPHLY) enter into an exclusive license agreement to develop and commercialize ONO-4059, Ono's oral Brutons tyrosine kinase (BTK) inhibitor, for the treatment of B-cell malignancies and other diseases.
- Under the terms of the agreement, Gilead will pay Ono an upfront fee plus development, regulatory and commercial milestones.
- Gilead will have exclusive rights to develop and commercialize ONO-4059 worldwide except Japan, South Korea, Taiwan, China and the ASEAN countries, where Ono retains development and commercialization rights.
Thu, Dec. 18, 10:23 AM
- Chimerix (CMRX +5%) and ContraVir (OTCQB:CTRV +14.5%) enter into a strategic collaboration to develop and commercialize CMX157, a potent analog of the antiviral drug tenofovir DF (Gilead Sciences' (GILD +2.4%) Viread).
- Under the terms of the agreement, Chimerix licenses CMX157 to ContraVir in exchange for an upfront payment of 120K shares of ContraVir preferred stock with a stated value of $1.2M and up to ~$20M in clinical, regulatory and initial commercial milestones for the U.S. and Europe. Chimerix will also receive royalties on commercial sales as well as additional milestones in these territories.
- CMX157 is a novel lipid acyclic nucleoside phosphonate that delivers high intracellular concentrations of the antiviral agent tenofovir diphosphate. In in vitro studies, CMX157 was 200-fold more potent than tenofovir against all major HIV subtypes resistant to current therapies. The structure of CMX157 results in lower circulating levels of tenofovir which lowers its systemic exposure and reduces the potential for renal side effects.
- The next step in the development of CMX157 is a Phase 2 trial.
Fri, Dec. 12, 11:51 AM
- According to Ben Levisohn, weekly prescriptions for Harvoni (ledipasvir/sofosbuvir) and Sovaldi (sofosbuvir) have to average ~6,500 per week for the remainder of December in order for Gilead Sciences (GILD +1.6%) to hit the consensus U.S. revenue estimate of $2.75B. The average to date is 6,597. Total Q4 prescriptions need to come in at ~85K in order to hit the revenue number.
- Harvoni prescriptions last week were 5,642, up almost 45% from the previous week and 29% from two weeks ago.
- Sovaldi prescriptions were 3,553, up almost 32% from the week before and up 3% from two weeks ago.
- Overall consensus view for Q4 is EPS of $2.23 on revenues of $6.7B.
Wed, Dec. 10, 4:10 PM
- The Southeastern Pennsylvania Transportation Authority (Septa) files a suit in the U.S. District Court for the Eastern District of Pennsylvania against Gilead Sciences (NASDAQ:GILD). The suit, which accuses Gilead of price gouging with its $84,000 full regimen list price for Sovaldi, seeks class action status. The plaintiff(s) seek monetary damages.
- Septa has spent $2.4M on Sovaldi this year for members of its health plans it funds for employees and retirees. It does not specify how many people have been treated with the HCV medication, but it is clearly feeling budgetary pain.
- Sovaldi, which the company began selling in December, is the most successful drug launch in history, generating over $8.6B in revenue in nine months.
- Although the average discount for Sovaldi in the U.S. is 20% or more, the company will still have to defend its pricing considering that it sells it in Egypt for $900 for a full regimen.
Thu, Dec. 4, 8:43 AM
- It appears that the Veterans Administration and Gilead Sciences (NASDAQ:GILD) have agreed on a price of $594 per dose for its HCV drug Sovaldi (sofosbuvir). This represents a discount of almost 41% from the $1,000 per pill list price.
- Earlier this year, the company established a 23% discount to U.S. Government health plans but agreed to extend more substantial discounts to the VA and Department of Defense after facing intense criticism from the medical community and government representatives.
- The looming competition from AbbVie (NYSE:ABBV) may have influenced the situation as well.
Wed, Dec. 3, 3:36 PM
- Actelion Ltd (OTCPK:ALIOF) (OTC:ALIOY) submits a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for Uptravi (selexipag) for the treatment of patients with pulmonary arterial hypertension (PAH).
- Selexipag is selective IP prostacyclin receptor agonist. Prostacyclin activates the IP receptor inducing vasodilation and inhibiting proliferation of vascular smooth muscle cells. If approved, it will be the first such drug cleared for use in PAH.
- In April 2008, the company signed a license agreement with Nippon Shinyaku under which Actelion has global development and commercialization rights to selexipag outside of Japan. The firms will be partners in Japan.
- Actelion plans to submit an NDA to the FDA shortly.
- PAH-related tickers: (GSK -0.8%)(GILD -1.9%)(MSTX -1.5%)(ARNA +1.7%)(OTCPK:BAYRY -1.8%)(UTHR -1.2%)
Mon, Dec. 1, 10:52 AM
- Gilead Sciences (GILD +1%) will allow Mylan (MYL -0.8%) subsidiary Mylan Laboratories Limited to manufacture and distribute its HIV drug tenofovir alafenamide (TAF) as either a single agent or in an approved combination. The license covers 112 countries and 30M HIV sufferers.
- TAF is currently in Phase 3 development. Gilead currently manufactures drugs containing tenofovir under the brand names Viread and Truvada.
Fri, Nov. 28, 12:12 PM
- According to UBS analyst Matthew Roden, total prescriptions for Gilead Sciences' (GILD +0.3%) Harvoni for the week ending November 21 was 4,366 (+21%). Scripts for Harvoni and Sovaldi were 7,813 (+5%). Bloomberg consensus view for Q4 Harvoni sales is $1.8B.
- RBC's Michael Yee cites a Q4 consensus for Harvoni + Sovaldi of ~$3.6B and, if current momentum continues, a 2015 consensus of ~$12B.
Wed, Nov. 26, 9:22 AM
- The Drugs for Neglected Diseases initiative ((DNDi))and Medecins Sans Frontieres take exception to the $125M that Gilead Sciences (NASDAQ:GILD) paid to Knight Therapeutics (OTC:KHTRF) for its priority review voucher (PRV) that it received from the FDA in connection to its approval of Impavido (miltefosine) for leishmaniasis. The humanitarian groups cry foul over Knight's windfall because the R&D for miltefosine was largely conducted by a division of the World Health Organization (WHO/TDR - Special Programme for Research and Training in Tropical Diseases) in the mid-1990s using private and public funding. Since then, DNDi and partners have invested money in clinical studies of the drug.
- The groups are asking Knight and commercialization partner Endo Health Solutions to disclose the drug's manufacturing cost and to price it accordingly with minimal profit margin in order to make it affordable for the countries that need it. They argue that "the PRV mechanism, which aims to stimulate or at least reward drug development for neglected diseases, currently contains no access provisions and fails to ensure that only entities that invested in R&D are awarded the vouchers."
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