Biotech Values

[Rocky3]

From Wells:

**Harvoni/Sovaldi IMS data for the weekended
11/7/14 are now available.
**Harvoni NRx were up again meaningfully weekoverweek,
to 2,768 from 1,973, +40%. We believe NRx are the key
measure to watch, as this reflects new patient starts and is a leading indicator of demand growth. We note this is fast
approaching the high runrate
for Sovaldi in its peak quarter, Q2 2014, where Sovaldi NRx averaged 3,253/week and the drug
sold $3.0B, suggesting we could reach this sales runrate
into next year.
**Importantly, though Sovaldi scripts declined a bit, the decline was substantially more
than 4 fold
less
than the
corresponding increase in Harvoni (Sovaldi NRx 1,170, vs. 1,353 last week). This suggests there could be a strong base of
Sovaldi use in GT2/
3 which would not be cannibalized by Harvoni and which would provide a meaningful additional
revenue foundation. Total prescriptions for GILD's HCV franchise were up 9% week over week (6,939 from 6,286),
important as this influences Q4 numbers and provides reassurance Harvoni is helping GILD grow overall HCV therapy use,
and particularly impressive as this growth is likely compressed by the slowing Sovaldi new start rate prior to Harvoni's
approval, which manifests now in declining Sovaldi refills.
**BOTTOM LINE: A significant pickup in Harvoni NRx for the second straight week and a continued growth trajectory for
the overall HCV franchise, both positive signs for Harvoni's adoption going into 2015. We believe this should help reduce
concerns regarding insurance pushback as well. We remain positive on GILD's fundamentals and believe recent weakness,
perhaps related to profittaking
after a strong year and additionally influenced by technicals, provides a good buying
opportunity into 2015 given the stock's low multiple.