Biotech Values

[Rocky3]

Updating - from 4/23 reports on GILD from Wells, Goldman, Credit Swisse, RBC, BMO, and Stifel:

Goldman
Sovaldi sales: '14-10.4B; '15-10.9B; '16-10.1B; '17-10.7B
Earnings: '14-$6.25/sh; '15-$6.36/sh; '16-$6.61sh; '17-$7.40/sh

Credit Swisse
HCV franchise sales: '14-9.1B; '15-9.7B; '16-12.6B; '17-13.2B; '18-12.0B; '19-10.65B; '20-9.4B
Earnings: '14-$6.52/sh; '15-$6.56/sh; '16-$7.85/sh; '17-$8.51; '18-$6.80/sh; '19-$6.32; '20-$5.89

Wells Fargo
HCV regimens: '14-9.4B; '15-11.7B; '16-12.6B; '17-12.7B; '18-13.9B
Earnings; '14-$6.55/sh; '15-$7.57/sh; '16-$8.67/sh; '17-$9.78/sh; '18-$9.38

RBC
HCV: '14-9.5B; '15-11.5B; '16-9.9B
Earnings: '14-$6.15/sh; '15-$7.00; '16-$7.18

BMO
HCV: '14-8.075B; '15-8.819B; '16-9.854B; '17-10.662B; '18-11.579B; '19-12.579B; '20-13.702B
Earnings: '14-$5.98/sh; '15-$6.25/sh; '16-$7.00/sh; '17-$7.77; '18-$8.35/sh; '19-$9.08/sh; '20-$9.87/sh

Stifel
HCV: '14-11.865B; '15-14.723B; '16-14.946B; '17-15.418B
Earnings: '14-$6.80/sh; '15-$7.24/sh; '16-$7.98/sh; '17-$9.20/sh




Other comments (summarized by me):

Goldman - (1) I previously posted primary bear case based mostly on sustainability; (2) out year per share increases are due to lower share counts from share repurchases: (3) models cost of all-oral at $95,000; (4) suggests stocking at $400M; (5) target $65

Credit Swisse - (1) likely price of all-oral at $100K for 8 week regimen; (2) suggest a 65% steady state market share for GILD; (3) breaks down HCV '14 sales into $7.6B for Sovaldi and $1.5B for all-oral; (4) target $110

Wells Fargo - (1) Thinks Medicaid share will go up during year, so selling price per RX will go down; (2) expects more warehousing of milder patients until all-oral available; (3) think GILD will price all-oral close to parity with Sovaldi with 12 week price at $90-100K; (4) breaks down '14 sales into $8.6B US, $.7B Europe, and .1B int'l; (5) target $87-$91

RBC - (1) If HVC cut in half from $12 to $6B by '18, still will earn $5-6/sh and a 12-14 p/e gets a value of $60-84; (2) Sees HCV sales $8B+ due to longer tail; (3) estimated inventory build at $400M; (4) If scripts up 50% and inventory flat then US in Q2 at $2.2B and ROW at $.3B for $2.5B total; (5) Base case of $96 is based on 30% of DCF of HIV ($25/sh), HCV ($45/sh), oncology ($7/sh), and synergies ($5/sh) and 70% P/E value of $99; (6) assumes HIV 80% maintenance post '18; (7) has upside and downside scenerios - upside is $110 on higher p/e and higher HCV sales, as well as HBV and other pipelines; (8) downside is $62, based on lower HCV share ($36/sh) and lower sustainability of HIV ($21/sh)

BMO -(1) price target of $123 (20 x $7.00, discounted @ 20%); (2) Q2 Sov sales @ 1,831

Stifel - (1) increases estimate of all-oral pricing to average of $94,000; (2) has cost of 8 week treatment at $90,000 with only 10% of patients needing 12 week treatment at 50% higher cost, (3) target price of $92 determined by taking 1.27 PEG (median of peer group) times 11% growth rate for'14-'17 for 14p/e times '14 earnings of 6.80 (result is a 11 p/e based on the '15 earnings estimate, below pharma norm of 15x); and (4) HCV sales divided between Sov and all-oral and between US and non-US - non-US at '14-1.985B; '15-2.602B; '16-2.563B; '17-2.590B