Biotech Values

[DewDiligence]

I’m not long GILD because I don’t think the current valuation fully discounts the risk to the HIV franchise when Viread goes off-patent in 2017. Some investors think GILD’s HIV lifecycle management with TAF substituting for Viread is a fait accompli, but the TAF program could yet fail in the clinic. Moreover, insofar as generic HIV cocktails are likely to be competing for market share beginning in 2017, GILD’s TAF-based product(s) might be stifled by an even stronger third-party-payer pushback than what we’re now seeing with Sovaldi.

I do think Sovaldi + Ledipasvir will rack up huge sales, as is consistent with my ENTA valuation model in #msg-94993406. (See #msg-96288478, #msg-95971165, #msg-100312808, and #msg-98045614 for related discussion.)

Bottom line: I would be a buyer of GILD at a valuation that more fully discounts the risk to the HIV franchise.