Replies to post #175187 on Biotech Values

[biotech jim]

GILD

I also bought some more GILD on the weakness today and the outlook. But the biotechs are volatile!

[GrthzGd]

I did too, and, with positions in both ENTA and GILD now am somewhat 'hedged' in HCV (as I am in NASH, where I had originally bought equal amounts in Genfit and ICPT). It was very accommodating of Mr. Market to make this possible, as he gradually lost confidence even as the Sovaldi scripts came in so strong. Thx for your insights.

What did you mean by "SEPR"?

[DewDiligence]

GILD—Others should voice their opinion.

You seem to be willing to accept the sell-side projections for GILD’s HIV franchise—lock, stock, and barrel; however, if something should go wrong with the TAF program, those numbers won’t hold up.

According to GILD’s presentation at Cowen this week, there will be eight TAF studies to report data during 2014; if all goes well, GILD hopes to submit an NDA/MAA for a TAF-based HIV regimen in 2015.

[Rocky3]

My $GILD estimates:

Spent more time on alternatives:

Rough numbers based on possible sale numbers of Sovaldi:

$8B - $6.00/sh+
$10B - $7.00/sh+
$12B - $8.00/sh+
$15B - $9.50/sh+
$20B - $12.00/sh+

Since I am now looking for $10-12B (which has been moving up every week), I am still looking for $7-8.00 earnings. At a p/e of 20, it would be a price of 140-160.

My worst case is $8B and $6.00/sh with a 12 p/e (no growth, but not a big decline), so a price of $72.

Obviously, there is a better case too, but that seems "too-good-to-be-true." Of course, my base case would have seemed the same 6 weeks ago,

[Rocky3]

$GILD. Closed out the first set of in-the-money options bought in Feb-April. Profits ranged from 10% (the 80s) to 220% (the 62.50s). Total was about 110% return. Exercised half of the 62.50s so that I can hold some for long term tax treatment (maybe). Next set of options (60s) due 01/15 and some more due 01/16 (60s and 70s). May buy some Nov. 80s or 85s if we see a correction back to the 80s. May also buy more 01/16s if there is a bigger correction. Still think that it is a least a $112-120/sh stock. Big issue remains pricing for all-oral from both GILD and ABBV. We will know the GILD within 60 days, but the biggest issue (for both companies) is the ABBV pricing. JMO.

[DewDiligence]

You still think GILD should be trading for $160-180/sh?