CS Doctor Survey
Here's a summary. Unfortunately I do not have access to the full report.
HCV Doctor Survey Highlights Meaningful Opportunity for GILD and ABBV, but ABBV's Competitive
Position is Being Underappreciated; Revising Ests & TPs
? Bottom Line: Given intense debate on the competitiveness of the all-oral hepatitis C (HCV) treatment regimens that GILD
and ABBV will launch later this year, we conducted a survey with 40 specialists to better assess the market potential for
each company. While GILD is poised to be the clear market share leader in a market that we feel will be larger than people
realize, our survey results also suggest that the Street is greatly underappreciating ABBV's opportunity. We raise our ABBV
HCV sales estimates ('15/'16 now at ~$1Bn/$2.1Bn) and our '15/'16 EPS estimates are now 8c/26c above Consensus,
respectively. ABBV's HCV partner ENTA is a "derivative" play on the space and as we increase our estimates on the
franchise we increase our ENTA TP to $43 (from $36). We have also increased our GILD HCV franchise sales and our
peak 2018 revenues now stand at $11.6B (vs. $10.4B previously for CS and Consensus). We reiterate our Outperform
ratings on all three stocks. Related to our updated view on HCV we also update our target prices for MRK and BMY.
? Market share allocated to ABBV 1.5-2x greater than Consensus view. Assuming ABBV is priced at a modest 15-20%
discount to GILD, physicians allocated ABBV ~23-29% share in treatment (tx) naïve patients and ~29-42% share in tx
experienced patients. If priced at parity, ABBV shares were 14-17% for tx naïve and a still robust 21-38% in tx experienced.
? Overall HCV opportunity likely greater than Street expects. Physicians are still withholding treatment for ~56-69% of their
HCV patients and this will lead to a surge in 2015/16. We expect longer-term GT1 opportunity to be in the ~$15-16Bn range
owing to higher incidence of HCV in baby boomer population than currently appreciated, execution on new
screening/treatment guidelines and market development activities by major players in this space.
? MRK: Beyond our survey, we also note that recent strides in HCV make MRK a notable mid-long term competitor. We
increase our '20 HCV sales estimates to ~$1Bn and, along with updates to PD-1, BACE (Alzheimer's), and other minor
updates, we increase our TP to $53 (from $49).
? BMY: Now anticipating greater and earlier competitive threat to BMY's HCV presence in Japan (and stronger competition in
the US/EU), we reduce our BMY HCV estimates; 2020 sales estimates now ~$1.2Bn (previously ~$1.7Bn) and bring down
our TP to $62 (from $63)
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