Gilead Sciences: A Hidden Asset? -- Barron's Blog
BY Dow Jones & Company, Inc.
— 10:32 AM ET 09/22/2016
Much attention is being paid to Gilead Sciences ( GILD ) and its non-alcoholic steatohepatitis, or NASH, program following Allergan's (AGN) purchases of small biotech companies operating in the space. Gabelli's Jing He calls Gilead's NASH program a "hidden asset." She explains:
On September 20, 2016, Allergan announced the acquisition of Tobira Therapeutics (TBRA) that owns a Phase II drug to treat NASH for $615 million upfront and $1.1 billion CVR, 500% premium to previous closing price. Gilead is expecting multiple readout from its NASH portfolio 2H'16.
Non-alcoholic steatohepatitis (NASH) is a fatty liver disease that affects 25 million Americans. It is the second- largest cause of liver transplant after Hep C and is expected to be a $20 billion market by 2025. Currently there is no effective treatment for NASH while most drugs are in clinical development. Due to the difficulties in treating NASH, we expect combination of drugs to be the best strategy for treatment. With four NASH candidates, Gilead has the most comprehensive NASH portfolio. Intercept Pharmaceuticals (ICPT), Tobira and Genfit have the most advanced NASH candidates.
Gilead is expecting two Phase II readouts from simtuzumab and GS-4997 (ASK-1 inhibitor) in 2H'16. When comparing competitors' Phase II data, we found that Intercept has the best data so far: 16% (adjusted) of patients with fibrosis improvement and the lowest p-value, compared to Tobira's 10%. Genfit used NASH resolution with no worsening of fibrosis as its endpoint and achieved 7%. Gilead is also testing the combination of simtuzumab and GS-4997 (ASK-1 inhibitor) in Phase II. With increasing value of NASH in previous transactions, we believe Gilead's NASH pipeline is very attractive.
We are reiterating our Buy recommendation on Gilead. Its NASH portfolio is a hidden asset behind legacy EBITDA of $8.3 billion and 3.5x
Sentiment: Strong Buy
On September 20, 2016, Allergan announced the planned acquisition of Tobira Therapeutics for $28.35 per share upfront ($615M) and $49.85 per share in potential CVR payouts ($1.1B). Tobira’s lead drug, ceniciviroc, is a first-in-class treatment for NASH that completed Phase II studies with mixed results. The company also has an oral DPP-4 inhibitor in Phase I for NASH. Like most, we were surprised at the price (upfront price was 500% premium to prior day’s $4.74 closing price) and the strategic fit (while Allergan classified this as a GI deal, the company had not previously emphasized NASH or liver disease). Yesterday’s sell-off (-$6.62, or -2.7%) matches our initial confusion and disappointment with the deal, but what if Brent Saunders is playing chess while the market is playing checkers? If we look a few moves ahead (beyond the after-market acquisition of early-stage NASH company Akarna Therapeutics for $50M upfront), could Allergan be preparing a bid for Gilead?
Why Gilead? Despite his comments to the contrary, we know that Brent Saunders likes big deals. However, the list of potential targets for Allergan has shortened. Biogen (BIIB) would fit strategically, but Allergan has talked down that speculation. The company has also avoided oncology and orphan drugs. But what about Gilead Sciences? Before Tobira, it wouldn’t have seemed to make sense. However, Allergan has now made a very loud statement about its commitment to NASH and liver disease. Gilead is the leading company in liver disease with its blockbuster hepatitis C franchises and a deep pipeline of NASH drugs led by simtuzumab (Phase II). At 7.4x 2017 EPS, it is also one of the cheapest companies in pharma/biotech.
The shares were last up over 1.1% to $77.80 in the pre-market. At that price next major resistance is at the $80 area. A move above $80 would resolve the current trading range bullishly. Support is at the prior session closing price of $76.89. Jefferies earlier upgraded the shares to Buy and maintained its $91 price target.
No not necessarily. What I purchased GILD stock for has nothing to do with how it's trading. As I originally stated with a low P/E, nice dividend, stock purchase plan buyback program and a huge cash balance a bounce-back is evident. I also noted that some of the message posters are short sellers (I have no problem with that) but they run their mouths all day long; take that with a grain of salt. Time will tell.
Expect a bounce as we noticed going into the close. I did trim some but still overall a hold.
Be careful some giving advice here are heavy short players...sheep in wolves clothing.
The stock is down over 2% to $78.05. At that price next support is at $76.63, which is below the current 52-week low at $77.92. Resistance is at $79.70.
Just stating the obvious; no spin. Projecting critical levels sell, buy or hold as you please.
BTW who asked for your opinion!
The shares have broken an important round number support at the $80 area. This level has held with some exceptions as support since May 2014 on a closing price basis. At the current price of $79.49, next support is at $77.71 and then at $75.88. Resistance is at $80 and then the high of the day at $80.84.
Market Chatter: Medivation Said Subject to Interest From Sanofi, Pfizer, Gilead, Celgen
BY Midnight Trader
— 10:38 AM ET 07/29/2016
10:38 AM EDT, 07/29/2016 (MT Newswires) -- Medivation ( MDVN ) shares were higher nearly 2% in recent pre-market trade after CNCB cited unnamed people with knowledge of the matter as saying the firm is being eyed by Sanofi ( SNY , Pfizer (PFE), Gilead (GILD) and Celgene ( CELG ).
Ok so good reason for you to sell PM to avoid currency issue over the next few quarters.
Wrong..PM is hedged as to strong dollar vs. weak euro.
Do you have any other gems for us?