Biotech Values

[Rocky3]

From Wells:

**Harvoni/Sovaldi IMS data weekended
1/30/15 was released and show Harvoni volumes accelerating, with Sovaldi
remaining in steady state.
**Harvoni NRx are up to 3,781 from last week's 3,627, an increase of 4.2%. We believe this reflects increasing access and
expect this to continue to rise over the next several weeks as additional insurance formularies come online following price
negotiations.
**Sovaldi Rx remain in steady state (NRx 771, TRx 1,941), continuing to suggest an equilibrium and that with our belief
Sovaldi is now being used almost exclusively for GT2/
3 patients, the product's runrate
in the U.S. is approximately $3B.
**Assuming modest (1.5%) weekoverweek
increases in Harvoni new patient starts for the rest of the quarter then some
modest weekly declines throughout the rest of the year due to competition and the initial bolus being worked through, our
scripsbased
projector suggests 2015 U.S. Harvoni sales of $8.6B. Adding the projected U.S. Sovaldi sales of $3.1B and exU.
S. total HCV sales of $3.2B, fullyear
HCV sales appear to be tracking at around $15Bwe
believe at or above consensus,
and illustrating how the increases in prescription volume can help offset the greaterthanexpected
average discounts.
**BOTTOM LINE: Acceleration of Harvoni prescriptions illustrates how volumes should help GILD offset the greaterthanexpected
gross/net and enable fullyear
HCV sales to meet/beat consensus and guidance, even if the greaterthanexpected
discounting does suggests such volumes will need to be sustained longterm
to enable continued robust sales. With large
pharmas having similar modest (4-6%)
EPS growth rates to GILD (AZN, GSK, JNJ) trading at a mean 16.5x, and minimal
credit given to GILD's pipeline, we believe at a substantially discounted 9.8x multiple GILD looks relatively undervalued even
with the longterm
HCV uncertainties.

My comment - both TRx and NRx numbers for total HCV are new highs, even with better competition. Still amazed Olysio has held up so well (NRx as not really declined for weeks) with new all-orals around. Don't get it.