Biotech Values

[Rocky3]

From Wells on Friday (I have had trouble pulling the report from the website):

**IMS prescription data for Sovaldi were released today for the week ending 4/4/2014, the 17th week of launch. We note
IMS made downward adjustments to some prior prescription data.
**The week's total Sovaldi prescriptions were 8,006, a change of +7.69% vs. last week's 7,434.
**The week's new Sovaldi prescriptions were 3,897, a change of +0.49% vs. last week's 3,878 .
**Plugging this into our proprietary Sovaldi projector, we believe U.S. Sovaldi sales could reach the following under these
scenarios:
(1) Base case - secondary warehousing - growth in new patient starts slows Q2-Q3 then picks up again Q4 - $9.4B from
$8.4B
(2) Rapidly decaying Sovaldi new patient starts throughout remainder of year (bear case) - $7.6B from $6.8B
(3) Sovaldi new patient starts level off for rest of year -$12.2B from $11B
(4) Week-over-week NRx changes match those seen with Incivek+Victrelis at same point in launch - $11.1B from $11.6B
**We note a caveat is that there is limited data to extrapolate IMS's capture rate with only one quarter of actual historical
sales until Q1 2014 is reported.
**BOTTOM LINE: We expect this increase in new Sovaldi prescriptions to provide assurance that some room for
additional adoption remains. Our base case projection increased this week because we still model new patient starts
declining in Q2 and Q3 as initial ''warehoused'' patients are worked through, though it is looking like that potential decline
may not ultimately be as steep. Scrips trends remain highly encouraging, and while these will not address long-term
concerns about pricing and out-year sustainability, we believe Sovaldi remains off to about as good a start this year - in a
non-optimal regimen, no less -- as one could have imagined. We remain positive on GILD based on the long-term Sovaldi
opportunity, the solid HIV foundation, and the underappreciated pipeline.