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GILD--Stock Down On ESRX Comments

|Includes: ABBV, ESRX, Gilead Sciences, Inc. (GILD), JNJ

GILD's stock is down sharply on a comment by ESRX in regard to seeking lower pricing for the newer drugs to treat Hep C. I DO NOT view this as a significant threat to GILD's earnings stream. I have been assuming $60-70k per course of therapy. Pharmacoeconomic data exists that supports the cost-effectiveness of treating Hep C. Current Hep C drug therapy (less effective, more side effects) is $70k if one includes a PI. For 2014, the available drugs will include JNJ's simeprevir and GILD's sofosbuvir, and these may be recommended by the AASLD-IDSA joint panel to be used off label in Genotype 1 patients. Furthermore, the ABBV regimen discussed today, while all-oral, still includes ribavirin, which has side effects including anemia. I believe that the comments made by ESRX reflect the very large number of patients that they expect to be treated in the coming years. Len

Disclosure: I am long GILD, JNJ, ABBV, ESRX.