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NBIX slides for JPM:
http://jpmorgan.metameetings.com/confbook/healthcare17/company.php?p=22463
ARIA gone - $24/sh cash
https://finance.yahoo.com/news/ariad-enters-definitive-agreement-acquired-130200110.html
HCV world-wide sales for 3Q16 and all of 2016:
--------3Q16---------------2016-------
GILD -3,325 77.9% - 11,605 - 79.6%
BMY - 379 - 8.88% - 1,352 - 9.27%
ABBV - 378 - 8.85% - 1,211 - 8.30%
MRK - 164 - 3.84% - 326 - 2.2%
JNJ - 21 - .49% - 79 - .54%
TOTAL - 4,267 -- 14,573
Since the 2015 total was 22,703, '16 sales will be down at least 17%. And '17 should be down another 10%+ without significant additional discounting.
Since BMY is disappearing in the US (its primary market) and ABBV continues to lose share to MRK in the US (not nearly as important since ABBV already has such a small share), MRK will be the main competition in the US until ABBV comes with its 2nd generation product.
The main issue continues to be how much market there will be in 2018 and beyond. GILD's OUS sales have decreased much more significantly than its US sales. Clearly the Japanese price decrease is a big part of that, but the EU decrease is more of a surprise. ABBV is clearly taking some market share there, but its overall OUS sales are not really growing either. It appears that EU sales industry wide are going to fall going forward also.
The market is pricing GILD (and ENTA) as though the fall will be steep and with stop. The market had underestimated the sales in '14 and '15 and overestimated the sales in '16. Whether it is right now is anyone's guess. FWIW, my guess is that '17 and '18 will be down years in the 20% range (assuming no real price war in generation 2 products), and that the decreases will be smaller thereafter. I still think that GILD will maintain a ~80% market share WW. BMY will not have much share and ABBV will have the rest with its 2G product. But with the much smaller overall market, ABBV sales will not be much (if any) above its sales for '15. Of course further trials could show a problem with side effects that charge the prospects for GILD and/or ABBV greatly.
As always, JMO.
"Their U.S. Viekira Plan has been disastrous. I'm not sure if it's broken out but it seems that Merck's Zepatier could be outpacing it already."
Depends what area you are looking at. In US, Zep is already 2x+ V-Pak - $164 vs $76, but V-Pak has $378 WW. BMY's Dakl is still larger at $379 WW. Both V-Pak and Dakl will be down big in Q4 in the US, as Epcl takes more share. But V-Pak is mostly OUS already, so WW sales will not be hit too badly.
Isn't that for one script, so real cost is 3x?
https://finance.yahoo.com/news/cliffs-natural-resources-inc-announces-200100821.html CLEVELAND, Aug. 9, 2016 /PRNewswire/ -- Cliffs Natural Resources Inc. (CLF) today announced the commencement of an underwritten public offering of $300 million of its common shares ("Common Shares") or up to an aggregate of $345 million of Common Shares if the underwriters exercise their option to purchase additional Common Shares in full (the "Offering").
The Company intends to use the net proceeds received from the Offering for general corporate purposes, including the repayment of debt, in particular its senior notes due January 2018.
Milestone payments will make it even more like a bank. The higher royalty payments will be meaningful if market share goes up. Since expenses are increasing, royalties and sales will have to go up for any real income to fall to bottom line. We "know" US sales of V-Pak will be down significantly in 3rd (and probably 4th) quarters. Probably not a huge deal since they already so low. Only hope until next generation is increased Japanese sales, but didn't do much for this quarter (increase of $1MM of royalties). More than ever, this is a next generation story and, with the overall HCV market going down, ENTA needs to get double or triple the current market share to be meaningfully profitable. Not impossible, but seems unlikely. Hope that I am wrong.
Sold my last '18 bond position yesterday for a little under 102. About a 4.6% YTM. Still think the current stock price looks high for what is really known now. But upon completion of the offering (which was upped to $345MM yesterday), any immediate liquidity risk should be over. Still has a huge about of debt for current sales/income. I doubt that the whole amount can be refinanced without major additional equity sales (I agree with management on that).
This Bloomberg article says that Harvoni is covered at Express Scripts, which would make some sense since the 8 week treatment (will be the primary use in 2017) will be cheaper than current ABBV treatment. http://www.bloomberg.com/news/articles/2016-08-01/gilead-gains-express-scripts-coverage-for-hepatitis-drug-harvoni
More from NYT - this time about Opdivo (thanks DD):
http://www.nytimes.com/2016/08/01/health/immunotherapy-offers-hope-to-a-cancer-patient-but-no-certainty.html
HCV world-wide sales for 2015 and first half of 2016:
--------2015---------------2016-------
GILD -19,140 - 84.3% -- 8,280 - 82.2%
ABBV - 1,639 - 7.2% -- 833 - 8.1%
BMY - 1,603 - 7.1% -- 972 - 9,4%
JNJ - 321 - 1.4% -- 75 - .7%
MRK --------------- 161 - 1.5%
TOTAL - 22,703 -- 10,322
So trend of total is down for 2016. I had expected flat or slightly up. (a) Harvoni 8 week treatment, (b) MRK entry and continued discounting, (c) Japan price decrease, (d) more VA, prisons, and other public payers, and (e) most importantly, fewer people being treated seem to be the most important reasons that revenue is going down.
ABBV actually has higher percentage of market, though it's US sales have fallen significantly, and will continue to fall. BMY has continued to have a significant sales, but should see its US sales fall in the second half. MRK is just starting, but has higher sales than ABBV in the US currently. GILD is losing share, but still has the bulk of the market and will until at least the second generation ABBV drug is approved. And most surprisingly, JNJ actually increased sales from Q1 to Q2, though the number is pretty much an afterthought.
With Q3 starting with US commercial scripts continuing to decrease (most companies down ~10% in total weekly scripts in the last 6 weeks - MRK being the exception), and OUS sales not meeting expectations generally, I am afraid that 2017 does not look good now. This is especially true for GILD since it is losing market share and is most affected by the discounting and the loss of revenue by use of the 8 week treatment option. I will not be surprised if GILD lowers guidance again after Q3. But its stock is so cheap that the price seems to already reflect a significant decrease. And HIV continues to do well so GILD is not quite an one-trick pony, but pretty close. HCV will continue to drive GILD's price until it doesn't, but that is probably a couple years out.
BMY - Opdivo - Growth in sales last 6 quarters in WW sales (not counting where it sold by Ono):
1Q15 - 40
2Q15 - 122
3Q15 - 305
4Q15 - 475
1Q16 - 704
2Q16 - 840
Continued growth and lots more approvals coming. And how high can sales go? I assume that this will be the highest selling oncology drug - at least if you count Ono sales too.
Given that Eliquis is still seeing significant growth too (both drugs should be >$3B+ drugs this year, tho BMY has only 40% of earnings of Eliquis as DD pointed out), BMY still looks like a huge grower, but still is not cheap - 20+x '17 estimates. Plus HCV numbers should start down in the US soon, and those currently are still meaningful numbers (over 10% of US revenue).
"Consequently, I don’t see any reason to be in a hurry to sell at $95 when I’m likely to get a commission-free $100 soon (within 18 months in any event). "
Generally I agree. But once it gets down to 10% YTM or lower, I am more comfortable with other (longer-term) investments that yield an equal amount or more. Everything depends on one's perception of relative risk. I think that CLF is one of the higher risk investments. I invested in '18s because I thought that could get equity-like returns. If it yields fixed-income returns, I'll look to other investments. JMO.
Sold most of the rest for 97.15 this morning. Clearly would have been better to wait until now, but did "well enough." Only have 1/8 left which will wait for 100.
As I said before, 5x is private equity returns over 4-5 months, not 10-12 years. Though most of my results were "only" 2x.
Might take small position in some '20 notes, but sort of doubt it. CLF will probably have to dilute equity more before the many '20 notes/bonds are due. Will probably be able to refinance some but not all of those.
Clearly company would have been better off to have bought more bonds at big discount, and it still may be able to buy some of the '20s at discount, but it does take willing seller too.
Medivir considering split of businesses:
http://www.medivir.se/v5/en/uptodate/pressrelease.cfm
Stockholm, Sweden — Medivir AB (Nasdaq Stockholm: MVIR) today announces that the Board of Directors has tasked the company management with reviewing the possibility of dividing the company’s operations into two independent companies and achieving a separate listing for the commercial pharmaceutical portfolio.
The Board believes that a division of Medivir’s operations into a dedicated research and development company and a commercial pharmaceutical company could be advantageous for the company’s shareholders. The objective is to highlight the value of both the commercial operations and the pharmaceutical projects that make up the R&D portfolio. In addition, the split would enable the existing operations to be conducted by two clearly focused, specialised companies where both companies’ potential can be maximised in line with their different prerequisites and preconditions. The Board has, therefore, tasked the management with investigating these opportunities in further detail.
The bond traded at 90 today ($1MM position) 13.067% ytm, and closed at 88.250. I sold more on Friday at 83, and plan to sell most of the rest soon. Still has a great yield for 19 month paper, but now much more in line with real risks. JMO. Company should have bought more at ~45. Those that held made the right decision.
Thanks.
I decide to "play" this offering (in tax deferred accounts mostly). 15% seems like a pretty cushion, though this stock can move very quickly. I like that the fact that a couple insiders have indicated that they will take ~60% of the offering, if needed. I think they are unlikely to just sell upon closing (I make no such promise).
Today is the last day to buy to participate (I think). I have two brokers involved, so I hope at least one of them will be easy to work with. I have very small positions right now, but may try to buy much larger positions in the offering.
JMO.
BMY - Opdivo - Growth in sales last 5 quarters in WW sales (not counting where it sold by Ono):
1Q15 - 40
2Q15 - 122
3Q15 - 305
4Q15 - 475
1Q16 - 704
Lots more approvals coming. How long can this grow sales? And how high can it go? I assume that this will be the highest selling oncology drug - at least if you count Ono sales too.
Given that Eliquis is seeing significant growth too (both drugs should be >$3B drugs this year), BMY may be undervalued here, even though it is hitting new highs. Opposing views please!
Corrected post - thanks DD.
So in early Feb, the stock was at 1.50 and the '18 bond was at 20. Now the stock is at 4.32 and the '18 bond is at 58 (still ~43% YTM for >21 months now). The increase has been very close, with the bond very slightly ahead. But the issue remains what will future results be. I am happy to stay on the bond side. Upside limited to 43% makes up for some (though not much) protection on the downside.
Anyone going to the Annual Meeting should report. Most annual meetings are not very informative. Anything about lowering the debt load would be interesting (at least to me).
CXRX - up ~33% (including AH) on strategic committee formation.
Big Pharma earnings:
Earnings/sales estimates according to Yahoo:
Company - sales est - earnings est/sh (prior Year)
PFE - 11.99B - .55 (.51)
MRK - 9.45B - .85 (.85)
GILD - 8.08B - 3.13 (2.94)
ABBV -6.02B - 1.14 (.94)
AMGN - 5.32B - 2.60 (2.48)
BMY - 4.22B - .64 (.71)
BIIB - 2.80B - 4.60 (4.22)
CELG - 2.58B - 1.28 (1.07)
RGEN - 1.18B - 2.65 (2.88)
Which companies will beat? And which of those will beat by the most?
My bets are on GILD, ABBV, and BMY beating, with BMY doing the best. Other thoughts?
I think over half the companies report on 4/28. That will be an interesting day.
Updating HCV scripts from BBG:
GILD ABBV BMY MRK
Oct 9675 1140 574
9847 1102 623
9942 976 662
9686 1080 686
Nov 9193 1069 746
8967 993 764
9219 962 857
7924 810 690
Dec 9783 1053 935
9463 983 958
9307 1006 918
7243 824 778
7859 823 898
Jan 9205 927 898
8463 845 845
8439 806 992
9047 876 1023
Feb 8480 807 865
8350 804 906
8370 680 937
8710 706 1060
Mar 9050 714 914 82
9350 691 994 102
9550 683 1030 91
9450 673 1100 158
So market has come back some since Jan and Feb (no modified cliff evident now). ABBV scripts have continued down and MRK has started to at least register (and will do better as NRx convert to TRx). BMY has continued strong, which has helped GILD recover some of lost volume. As always, OUS sales will determine sales growth for both 1Q16 and Yr16 for GILD and ABBV. With VA coming back on board in 1Q15, US sales are also harder to predict. No real news on actual Japanese sales since year end. Again it will be interesting to see how wrong the analysts will be on GILD HCV sales.
GILD price reductions in Japan were NOT part of biennial reductions. This was a "big seller" reduction that applied to only 4 drugs. The biennial reduction is scheduled for 2017. All the articles that I have seen have referred to the reductions as discounts, but your point that they are imposed by the government is true. The transcript from today's conference is interesting as it relates to the unexpectedly high sales of its HCV drugs in 4Q15.
From 2/9:
HCV Scripts from BBG since October - for those of you interested:
GILD ABBV BMY
Oct 9675 1140 574
9847 1102 623
9942 976 662
9686 1080 686
Nov 9193 1069 746
8967 993 764
9219 962 857
7924 810 690
Dec 9783 1053 935
9463 983 958
9307 1006 918
7243 824 778
7859 823 898
Jan 9205 927 898
8463 845 845
8439 806 992
9047 876 1023
Feb 8480 807 865
8350 804 906
8370 680 937
General comments - Harvoni (numbers above include both Harvoni and Sovaldi) and V-Pak continue to decline, but V-Pak more. Sovaldi has been down about the same as Harvoni (but had held up better in 4Q15) and Dak has remained level. The Harvoni decrease since 12/04/15 has been 14.4% and the V-Pak decline has been 35.4%. The V-Pak "share" of the two scripts have fallen to 9.7% from 12.4%. V-Pak has 8.1% of the market if you include just the GILD HCV drugs and 6.9% if you include BMY too.
So ABBV/ENTA income is decreasing pretty significantly in U.S. Investment argument is based on next generation and Japan/EU. I think that is still decent argument (at least at these price levels for both companies), but much less visibility there.
GILD will also see very significant declines in U.S. HCV story is from Japan and rest of world. MRK drug is not much of a risk (IMO) and primary risk is ABBV/ENTA next generation. Major risk still is cliff or modified cliff in U.S., which companies are still denying, but seems to be happening in marketplace.
EYES up ~50% in two days on HBO news and comments at RBC and afterward:
https://finance.yahoo.com/news/second-sight-pops-15-hbos-161940100.html
and
https://finance.yahoo.com/news/exclusive-second-sight-chairman-dishes-163748130.html
It has registered a rights offering at a maximum price of $4.25 - >33% discount at today's price. Might be amended or withdrawn if price stays up. Rights offering is interesting since a couple board members have guaranteed significant purchases. Al Mann is a big holder, but I think he is in very poor health.