Replies to post #177113 on Biotech Values

[GrthzGd]

Win or lose, I plan to credit/blame confirmation bias :-)

[DewDiligence]

Additional color on 1Q14 Sovaldi sales from GILD’s 1Q14 CC:

• Of the $2.27B total Sovaldi sales, $2.098B came from the US and $164M came from the EU. (Some EU countries have not yet negotiated reimbursement rates and hence have not seen any commercial sales.)

• The sales number attributable to inventory stocking was not disclosed.

• In the US, 70% of patients had GT1 and 7% had GT3*; among the GT1 patients, about 2/3 used Sovaldi with PegIFN + ribavirin (i.e. according to the FDA label).

• The breakdown of US patients by payer type was as follows: Private insurance 45%; Medicare 45%; Medicaid 7%; Other 3%.

• Patient warehousing (i.e. deferring treatment to await the launch of all-oral GT1 regimens): GILD’s COO, John Milligan thinks KOLs and other major prescribers are warehousing some patients, but “community practice” physicians are generally treating their patients as rapidly as possible.

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*GT3 is important to single out because the labeled treatment duration is 24 weeks rather than 12 weeks; i.e., from a revenue standpoint, each GT3 patient is equivalent to almost two patients of another genotype.

GILD’s 1Q14 PR: http://finance.yahoo.com/news/gilead-sciences-announces-first-quarter-200200834.html

[Rocky3]

0From yesterday's reports on GILD from Wells, Goldman, and Credit Swisse:

Goldman
Sovaldi sales: '14-10.4B; '15-10.9B; '16-10.1B; '17-10.7B
Earnings: '14-$6.25/sh; '15-$6.36/sh; '16-$6.61sh; '17-$7.40/sh

Credit Swisse
HCV franchise sales: '14-9.1B; '15-9.7B; '16-12.6B; '17-13.2B; '18-12.0B; '19-10.65B; '20-9.4B
Earnings: '14-$6.52/sh; '15-$6.56/sh; '16-$7.85/sh; '17-$8.51; '18-$6.80/sh; '19-$6.32; '20-$5.89

Wells Fargo
HCV regimens: '14-9.4B; '15-11.7B; '16-12.6B; '17-12.7B; '18-13.9B
Earnings; '14-$6.55/sh; '15-$7.57/sh; '16-$8.67/sh; '17-$9.78/sh; '18-$9.38

Other comments (summarized by me):

Goldman - (1) I previously posted primary bear case based mostly on sustainability; (2) out year per share increases are due to lower share counts from share repurchases: (3) models cost of all-oral at $95,000; (4) suggests stocking at $400M; (5) target $65

Credit Swisse - (1) likely price of all-oral at $100K for 8 week regimen; (2) suggest a 65% steady state market share for GILD; (3) breaks down HCV '14 sales into $7.6B for Sovaldi and $1.5B for all-oral; (4) target $110

Wells Fargo - (1) Thinks Medicaid share will go up during year, so selling price per RX will go down; (2) expects more warehousing of milder patients until all-oral available; (3) think GILD will price all-oral close to parity with Sovaldi with 12 week price at $90-100K; (4) breaks down '14 sales into $8.6B US, $.7B Europe, and .1B int'l; (5) target $87-$91

Will give my own comments later after thinking about it more - probably tomorrow with one more small data point