Rocky, This was CS's thought on the HCV lanscape.
Gilead Sciences, Incorporated
Research Analysts
Alethia Young
Eliana Merle
Derek Yuan, Ph.D.
Vamil Divan, MD
Michael V. Morabito Ph.D.
Barbara Kotei
Duaa Mohamed
The next chapter in HCV pricing begins; impact on GILD/ABBV/MRK
¦ Pricing for new AbbVie HCV pan-genotypic regimen (Mavyret) looks optically low at ~$26K for two months, but relative to net Harvoni pricing it may be in range $20-$30K: AbbVie has confirmed pricing of $13,200 per month, or $26,400 for an 8-week regimen. They also do not expect to provide significant discounts beyond this gross pricing range.
When speaking to Gilead management, they noted that the net Harvoni price was $15K per bottle (or $30K for 8 weeks). This $15K is from 2016, but pretty similar in 2017 and includes all payer segments. Gilead also notes that the current Medicaid cost is slightly less than $10K per bottle (under $20K for 8 weeks). They have not disclosed what the percent mix of Medicaid is for their Harvoni US sales. We think that AbbVie priced for the largest part of the market where Harvoni is dominant which is genotype 1 naïve non-cirrhotic.
Currently for Harvoni about 50% is 8 weeks and 50% is 12 weeks. We would expect greater competition for Gilead perhaps in government channels in the near term, and commercial competition likely starting 2018 since 2017 formularies are set. Epclusa sold $1.1B on a WW basis in 2Q17 but we think that there was a bolus of patients. We would expect Mavyret would compete with Epclusa but non-GT1 is a smaller part of the market as well.
¦ We took the opportunity to re-review our HCV annual build on news today. We adjusted Epclusa sales down, but have increased volume as we were modelling too aggressive drops starting 2018. There is no change to our target. Our new WW HCV sales are actually higher as we are modelling too aggressive drops in volume starting annual HCV revenues are $7.6B, $6.6B, and $5.8B vs. $6.2B, $5.3B, and $5.2B. We are lowering our Epclusa numbers as we have lowered share a bit and increased the price. Our new WW Epclusa sales from 2018-2020 are $2.3B, $1.9B, and $1.5B vs. previous estimates of $1.9B, $1.5B, and $1.5B. Our Harvoni WW sales for 2017-2019 are $5.3B, $4.1B, and $3.3B vs. previous $5.3B, $3.1B, and $2.6B.
¦ Expect ABBV and MRK to battle in the government markets. Given the WAC price that ABBV has set for Mavyret, as well as the fact that approval is coming after negotiation around commercial plans for 2018 has essentially finished, we expect most of ABBV’s focus in 2018 to be on gaining traction in government markets where MRK’s Zepatier is performing well. We currently assume MRK’s Zepatier will have US sales of $1.3Bn in 2018 while for ABBV’s Mavyret we have 2018 US sales of only $550MM. We wait to see how the market shares evolve before adjusting our estimates but advise that HCV is not the primary area of focus for investors on either company.
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