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Gilead Sciences Inc. Message Board

  • bearofbleecker bearofbleecker Jun 19, 2014 4:18 PM Flag

    Courageous Senator Waxman reiterates call for Gilead to explain Sovaldi pricing!

    Apparently not satisfied with the press coverage he garnered by his earlier demand that Gilead explain Sovaldi's pricing, Senator Waxman has pronounced himself not satisfied with their explanation. When he sent his first letter back in March, Waxman was joined by only two of his fellow Democratic committee members, one of whom, Pallone of N.J., was his expected successor as ranking member. Pallone, who comes from a state which is home to JNJ, Merck, and several other major pharmas, has apparently rethought his position and not signed this new letter. What foolhardy courage motivates Waxman to press on with the fight? Perhaps the fact that he has announced his retirement is a factor. I suspect that when we next hear from him, he will be a highly paid lobbyist for the healthcare industry, a position for which he is now honing his cv. (We can worry about federal price controls on drugs when more than one of Waxman's fellow Democratic committee members - or a single one of the Republican members - joins him.) Incidentally, Waxman surely; knows the reason behind high prices for exotic drugs: The Orphan Drug Act, of which he was the principal author. By establishing extended patent rights and offering federal funding and big R&D tax breaks, and most of all, by essentially guaranteeing that successful drugs would be very profitable, the ODA underpinned this entire industry. The fault, dear Henry, is not in the stars, but in ourselves that we are underlings. To anyone with a few million bucks in campaign contributions. This is not intended as a partisan post, but merely an observation on the pusillanimity of all politicians.

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    • Correction: Waxman is not a lame duck Senator, but a lame duck Representative, which makes his protestations even less important.

    • Any thoughts on consequences to stock, particularly tomorrow (triple witching), would be welcomed!

      Sentiment: Hold

      • 2 Replies to big510eb
      • gsnid1099 Jun 19, 2014 5:46 PM Flag

        thoughts... guess really. I'm sort of expecting a little more volume. I would hope that if the price moves down, it doesn't go down very much. i.e. less than .75 or $1. I really believe that after tomorrow we are going to begin to see some strength with it building on up into the earnings release that will only be four weeks away as of next Tuesday. If we don't see much appreciation next week then it will surely begin after July 4th. I think earnings will be very strong, the sales are underestimated for Sovaldi I do believe. It is possible that the revenue is not going to be what I expect if discounting is more that we think, but most likely, it's going to be a very, very good quarter. I look for bottom line over $1.75, and I won't be surprised if it's $2.00. On the other hand, perhaps the bear case is that GILD will accelerate expenses to reduce the "obscene" profit GILD is going to otherwise report. Discounted may be more than expected as stated. One comment here also mentioned that we don't know what inventory is going to do and that could also be an area that may mute the sales number somewhat. In any case, I still think the bottom line should be better than last quarter and by a pretty wide margin. Sovaldi sales if it just meets expectation in the range of $3 - $3.5 BILLION. Big number. It appeared to me that about 80% of that Sovaldi sales number dropped to bottom line in the last quarter. If that happens this time, you're looking at a per share earnings easily over $2.00. If you project that forward with just a modest 5% growth per quarter the
        you're looking at forward earning of about $9.00. Even with a trailing PE of 13 you're looking at $120 or so by this time next year. I guess the issue is can they maintain the pricing? The big question for investors.

        Sentiment: Strong Buy

      • Yeah, my June 80 calls will expire at a loss... but rolled $$$ into the Jul 80 calls, as I think this thing will regain momentum into the earnings announcement...

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