Biotech Values

[Rocky3]

p.s. We'll find out on Thursday how much Zepatier MRK sold in 1Q16.

I am expecting a very low number for 1Q16. It still does not have very meaningful sales, 4 weeks into 2Q16. See http://www.investorvillage.com/smbd.asp?mb=2629&mn=7947&pt=msg&mid=15974593

The issue is whether MRK will continue to grow through aggressive pricing and where those sales will come from. We know that commercial ABBV sales have continued to fall, and will for at least a while since NRx have continued down (though not as much as the IMS numbers show, according to BBG).

If ABBV has given up on the VA, it will be dependent on OUS sales (EU and Japan) in 2016 since it will lose most of its US sales (already down close to 50% since the height in early October, which I would clearly call at least a modified cliff). But as many have said, ABBV/ENTA is really about next generation products. It seems to me that ABBV/ENTA have a much better chance for meaningful multi-year sales (>$1B) than either MRK or BMY.

Then you get to the GILD questions - how big will the market be in the out years and how long will the market last? The market for GILD continues to say that there will be little there after 2016/2017. The company disagrees (as does ABBV), but that is what makes a market.

I was wrong (again) that GILD WW HCV sales would be equal in 1Q16 to 4Q15. I am probably wrong the WW HCV sales will be equal or greater in 2016 to 2015. 2015 may have been the height. That is not to say that a real cliff will happen (like prior HCV treatments), just that ~$22B might not be topped. I am holding strong on a large GILD position (though not betting on short term options), and a mid-sized ENTA position. I recognize that the ENTA is pretty large gamble due to the many issues raised by the above and others (though not MRK taking share). GILD still does not seem like a large gamble to me, especially at these prices and with the share purchases that are occurring. As always, JMO.