Biotech Values

[Rocky3]

From Wells:

**IMS prescription data for Sovaldi were released for the week ending 5/2/2014, the 22nd week of launch.

**The week's total Sovaldi prescriptions were 9,054, a change of +5.5% vs. last week's 8,588.

**The week's new Sovaldi prescriptions were 3,891, a change of +5.4% vs. last week's 3,689.

**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) -
$10.6B from $9.6B
(2) Rapidly decaying Sovaldi new patient starts throughout remainder of year (bear case) - $8.9B from $8.0B
(3) Sovaldi new patient starts level off for rest of year -$12.7B, from $11.6B
(4) Week-over-week NRx changes match those seen with Incivek+Victrelis at same point in launch - $10.9B from $10.0B

**We are extrapolating IMS's capture rate with two quarters of actual historical sales.

**BOTTOM LINE: While both IMS reported Sovaldi NRx and TRx are both up week-over-week, our model of new patient
starts calculates an all-time high of 4,609 starts for the prior week, which increases our base case projection this week.
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 prior four weeks, with this week's NRx of 3,891 representing a possible ''break-out'' from that trend (or
at least an indication of stability). We remain bullish 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