Replies to post #187140 on Biotech Values

[GrthzGd]

Who was the least wrong, those that were the most bearish on GILD?

[dewophile]

thanks for the summary
I think it's pretty easy to estimate the value of the HCV market near term - abbv and certainly gild have given plenty of metrics to use:

250K pts will be treated in the US per GILD (very consistent with the range for GT1 pts ABBV gave)
somewhere "north of 100K" once EU ramps up
we now know how much discounting is in the US (46% for GILD, likely 50% for ABBV). pricing in the EU we don't yet know with good accuracy but one can guesstimate reasonably well. we even know the HCV haul for the 2014 market based on 150K patients getting treated at a lower discount rate (22%) to plug in..

the real unknowns are how screening and awareness programs are going to drive growth of the treatable pt pool and how that will ramp (5% of the undiagnosed initially growing to say 15%? perhaps higher as these pts age and walk into doctor's offices for other reasons?) for the outer years

japan is also a bit more unknown but i do think next year will be a very big market given the high prevalence and advanced stage of disease

as for market share that also is a bit more unknown but has gotten easier with the exclusives, no? abbv with 20% as a floor based on what they have divulged for exclusives - perhaps a tad higher since i think they will get more earlier stage pts from the ESRX contract than the average, and they may ultimately get proportionally more medicaid and govt payers which cover higher prevalence groups (at a more heavily discounted price of course)

this shouldn't be a herculean task to model for the next 2-3 years

[Rocky3]

$GILD analysts reports - Have now reviewed 22 different analyst reports after Q4 earnings. Some (like Credit Suisse) have put out a couple reports. Others (like Wells) put out weekly commentary after script numbers, so I expect there will continue to be changes. I did not give a summary after Q3 since the numbers looked pretty accurate, or maybe even too optimistic (though they turned out to be somewhat too low). The numbers again appear too low to me, though nowhere as low as they were after 1Q14. I'm going to give a quick summary of the numbers, primarily by giving the range, medium, and average of the numbers.

Price target - 20 reports provided price targets. 7 were decreased and 1 increased after earnings - the range was from 84 to 159 - the lows were 84 (Jeffries), 85 (Goldman), and 94 (BOAML) - the highs were 159 (BMO), 143 (Guggenheim) - the medium was 120 and the average was 119.55

Q1 earnings - 18 provided an estimate - the range was 1.82 to 2.98 - the lows were 1.82 (Credit Suisee), and 1.99 (Deut Bank) - the highs were 2.98 (Baird) and 2.50 (Barclays) - the medium was 2.285, as was the average.

'15 earnings - 21 estimates - the range was 8.21 to 10.83 - the lows were 8.21 (JPM), 8.42 (CS), and 8.66 (Needham) - the highs were 10.83 (Baird), 10.18 (Wells), and 10.17 (Guggenheim) - the medium was 9.55 and the average was 9,50

'16 earnings - 19 estimates - the range was 8.19 to 14.07 - the lows were 8.19 (Baird), 8.31 (CS), and 8.53 (BOAML) - highs were 14.07 (Maxim), 11.60 (Cowan), and 11.50 (Barclays) - the medium was 10.50 and the average was 10.20

'17 earnings - 17 estimates - the range was 7.72 to 15.41 - the lows were 7.72 (BOAML), 8.16 (CS), 9.84 (Goldman) - the highs were 15.41 (Maxim), 13.00 (Cowan), and 12.38 (Wells) - the medium is 10.90 and the average is 11.04

skipping '18 and '19

'20 earnings - 7 estimates - the range is 6.05 to 18.82 - the lows were 6.05 (CS) and 11.81 (Piper) - the highs were 18.82 (Maxim) and 15.09 (Morgan Stanley) - the medium was 12.45 and the average 12.90


Baird went from the highest numbers in '15 to the lowest in '16 -a cliff in extreme.

Maxim seemed to be the only one that considered Japan HCV revenue to any extent.

If I have time later, I may add the HCV estimates in the reports (and total revenue).

I still think that the Q1 earnings will be much better than estimates. The idea that people can estimate sales and earnings in '20 is pretty silly. But it is their job I guess.