Biotech Values

[Rocky3]

From Wells:

**IMS data for Sovaldi were released for week ending 7/25/2014.
**The week's total Sovaldi prescriptions were 7,524, a change of -0.36% vs. last week's 7,551, and the week's
new Sovaldi prescriptions were 3,056, a change of +5.78% vs. last week's 2,889.
**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 Q4 (base case)
-$9.91B from $9.84B
(2) Rapidly decaying Sovaldi new patient starts rest of year (bear case) - $8.80B from $8.75B
(3) Sovaldi new patient starts level off rest of year -$10.05B from $10.19B
(4) Week-over-week NRx changes match those seen with Incivek+Victrelis at same point in launch - $10.17B
from $10.96B
**We updated our base case last week to include a steeper increase in scrips immediately following
sofosobuvir/ledipasvir approval, as well as steeper weekly decline and shallower weekly growth in 3Q and 4Q
new patient starts, respectively, to better reflect likely patterns. For a full chart of our revenue scenarios, see
our IMS scrips summary.
**Q3 2014 sales track at $2.87B (slightly below consensus $2.90B).
**BOTTOM LINE: We are seeing deferral of some patients from Sovaldi treatment, in anticipation of the
upcoming launch of the fixed-dose combo. With the sharp upward revision of sell-side estimates over the past
quarter, FactSet consensus of $11.90B has come close to our base case scenario projection of full-year WW
Sovaldi sales of $11.91B - though the run rate we believe confirms potential robust near- and long-term
opportunity, and provides additional evidence high patient volume, once the all-oral cocktail is available, could
offset any reimbursement restrictions.