Biotech Values

[DewDiligence]

Modestly bearish (in the ST) piece on GILD:

http://www.thestreet.com/story/11413796/3/gilead-vertex-and-the-mystery-of-missing-hep-c-patients.html

I fully recognize that Gilead's GS-7977 appears to have advantages over Incivek -- improved efficacy, fewer adverse effects, less frequent dosing and an interferon-free regimen -- that should make the drug very successful and drive Gilead's earnings meaningfully higher over time. But I disagree with those who argue that GS-7977 will be good enough to compel most of the hidden or hard-to-access HCV patients to seek treatment.

…I suspect the shape and amplitude of the GS-7977 sales curve -- which bulls now project to match what had once been forecast for Incivek -- will reveal how difficult it is to get the HCV-infected masses to treatment. In fact, if GS-7977 sales reach the bullish $7-8 billion forecasts globally in the third year post-launch, I will host a dinner for Gilead's top executives. My treat.

…Near-term, I think the risks outweigh the rewards. Traders who have recently piled into the stock will likely sell once the company reports data next month (we may even be seeing that now as momentum players warily eye the exits, and each other). Longer-term, the story is more compelling. Gilead has a great HIV franchise that generates astonishing cash flow, despite ongoing headwinds.

Indeed they do. As noted on this board, Quad and the unnamed regimen I’ve called Quad Prime (#msg-71273907) could be the really big GILD story during the next decade or so.