Biotech Values

[Rocky3]

From Wells:

**IMS prescription data for Sovaldi were released for the week ending 4/25/2014, the 20th week of launch.

**The week's total Sovaldi prescriptions were 8,102, a change of +1.9% vs. last week's 7,949.

**The week's new Sovaldi prescriptions were 3,555, a change of -2.6% vs. last week's 3,649.

**Plugging this into our proprietary Sovaldi projector (available upon request), 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 (base case) -
$9.1B from $9.0B
(2) Rapidly decaying Sovaldi new patient starts throughout remainder of year (bear case) - $7.6B from $7.4B
(3) Sovaldi new patient starts level off for rest of year -$11.1B, unchanged from $11.1B
(4) Week-over-week NRx changes match those seen with Incivek+Victrelis at same point in launch - $9.66B from $9.9B

**We are extrapolating IMS's capture rate with two quarters of actual historical sales.
**Our projections this week exclude our prior adjustment for the Easter holiday as the scrips data suggest prescription fill
rates were not significantly affected by the holiday. This adjustment was made last week, and slightly downward scaled
our calculation of new patient starts, to account for the difficulty of access to pharmacy services for patients during
holidays.

**BOTTOM LINE: We are not surprised at some point we would see a stabilization of new prescriptions; we have seen
new prescriptions fluctuating from 3,800-3,900 scripts/week from weeks 12-17, and falling to 3,500-3,600 scripts/week in
the last three weeks. Our base case projection is modestly increased this week because TRx and NRx demonstrated a
mild uptick or flatness vs. our expectation for them to begin to decline as initial ''warehoused'' patients are worked
through. We remain positive on GILD and believe that each week going by in which Sovaldi sales do not show meaningful erosion provides evidence of the large, untapped patient pool likely to provide good long-term revenue
sustainability