MorningStar Updates Forecasts and Estimates on Gilead Sciences, Inc.(NASDAQ:GILD) Here is Why

Equity Analysts Karen Andersen, CFA and Damien Conover, CFA of Investment Research Firm MorningStar issued a research report and updated Forecasts and Estimates on Gilead Sciences, Inc.(NASDAQ:GILD) On October 2.

According to the report ”Gilead’s focus on infectious disease has paid off in spades. With a small salesforce, inexpensive manufacturing, and selective research and development, it generates stellar profit margins, and the firm’s pipeline is extending its reach into other high-margin markets like hepatitis C and hematological oncology. With the approval of hepatitis C drug Sovaldi in late 2013, we think Gilead’s competitive advantages have strengthened, moving it into wide-moat territory.

Gilead Sciences, Inc.(NASDAQ:GILD) is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company’s mission is to advance the care of patients suffering from life-threatening diseases. Gilead has operations in more than 30 countries worldwide, with headquarters in Foster City, California.

the report continues ”Gilead’s tenofovir molecule–in Viread, Truvada, and all single-tablet regimens–forms the heart of the firm’s $10 billion HIV franchise. Its newest single-tablet regimens, Complera and Stribild, are seeing rapid uptake and strong reimbursement. Such regimens offer patients convenience and affordability, as they are less likely to miss doses and develop drug resistance, and they only need to make one copayment. Gilead will see new competitive threats in HIV; Glaxo could introduce a Truvada/Tivicay single-tablet regimen once Truvada patents begin to expire in 2018, and generic versions of Atripla should be available beyond 2021.

However, we think Complera and Stribild will have a strong grasp on the market by this time, resetting the firm’s HIV patent cliff into the 2020s. Gilead’s pipeline drug TAF appears to have bone and renal safety advantages over tenofovir, and the first TAF combination regimen is poised to reach the market by the end of 2015.

On September 21 GILD announced topline results from four international Phase 3 clinical studies (ASTRAL-1, ASTRAL-2, ASTRAL-3 and ASTRAL-4) evaluating a once-daily, fixed-dose combination of the nucleotide analog polymerase inhibitor sofosbuvir (SOF) with velpatasvir (VEL), an investigational pangenotypic NS5Ainhibitor, for the treatment of genotype 1-6 chronic hepatitis C virus (HCV) infection.

In the ASTRAL-1, ASTRAL-2, and ASTRAL-3 studies, 1,035 patients with genotype 1-6 HCV infection received 12 weeks of SOF/VEL. Among these patients, 21 percent had compensated cirrhosis and 28 percent had failed prior treatments. The ASTRAL-4 study randomized 267 patients with decompensated cirrhosis (Child-Pugh class B) to receive 12 weeks of SOF/VEL with or without ribavirin (RBV), or 24 weeks of SOF/VEL. The primary endpoint for all studies was SVR12.

The intent-to-treat SVR12 rates observed in the ASTRAL studies are summarized in the table below. Complete results from all four studies will be presented at future scientific conferences.

Equity Analysts Karen Andersen, CFA and Damien Conover, CFA finished with ”Despite a flattening U.S. HCV market, we see growth prospects beyond 2015 in Europe and Japan. The big five European markets and Japan together have similar numbers of diagnosed hepatitis C patients as the U.S., with Japan standing out as the largest single market opportunity outside the U.S. We expect European growth to accelerate in 2015 as reimbursement discussions proceed, but competition also looks strong in this market, given the higher proportion of patients with Genotype 1b (where efficacy is generally strong across treatment options). However, the higher prevalence of Genotype 2 in Japan gives Gilead an edge in this market.


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