Replies to post #190751 on Biotech Values

[Rocky3]

I think your projected P/E ratios are much too high and that a P/E of 10 is reasonable. There’s a large amount of uncertainty a few years out, particularly in the HIV business.

Well, I agree that the market is valuing GILD low. I would say between 8/9 p/e now based on '15 earnings. So the main issue is how the market will value it in the future. I think that an upward adjustment is far more likely than a downward adjustment.

Where we continue to disagree is the why. I maintain (and I think the almost everyone else on the planet agrees- though that does't make it correct) that the reason is because of HCV cliff and pricing issues, not HIV which is now less than 40% of revenue and going lower. And if HCV is right, that is terrible news for ENTA since it is subject to the same issues and doesn't have HIV is fall back on, or the depth of pipeline. The market will eventually say who is right, but it might be a long time from now. We will probably repeat our positions a few dozen times before that.