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GILD--Solvadi Prescription Data Continue Strong In Third Week

Leonard Yaffe profile picture
Leonard Yaffe's Blog
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Growth, Healthcare, Biotech

Seeking Alpha Analyst Since 2012

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.

Prescription data for Gilead's (GILD) oral Hepatitis C drug, Solvadi, were released today, and reflect its third week on the market. As this was a holiday shortened week, with December 25 on a Wednesday, it was expected that thee would be a sequential drop. As reported by Symphony Health Solutions, Solvadi prescriptions fell by 5% sequentially. Importantly, prescriptions for the two protease inhibitors, Incivek and Victrelis, fell by 49% and 38%, respectively. Solvadi now commands an estimated 65% of the NS5B Inhibitor + Protease Inhibitor market in the US, versus 58% in the prior week. JNJ's Olysio represents 35% of the PI market, having surpassed Incivek, again reflecting the shift to the newer, more effective medications. Prescription data to be reported next week will reflect the holiday shortened January 1, 2014 period.

I continue to forecast Gilead's sales of Hepatitis C pharmaceuticals to be $8 billion in 2014, versus consensus of $2.8 billion. I expect the number of patients treated in the US to exceed 125,000, given historical trends in the 80,000-120,000 range, the warehousing of patients in 2013 and the greater number of doctors, including infectious disease specialists, prescribing. On a worldwide basis, I believe Gilead's 2015 Hepatitis C revenues will exceed $15 billion, and that the company will earn $7 per share. Beyond 2015, I expect continued growth in Hepatitis C-related revenues as well as contributions from the company's late stage pipeline. This should result in a forward growth rate of 18%. With the stock currently selling at 10.6x my 2015 EPS estimate, I continue to look at the prospect of significant price appreciation, with limited downside risk.

Disclosure: I am long GILD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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