market size, and next-wave HCV products
Following the NIAID data out last night, the updated HCV population data from the CDC published this morning, and the shelf filed this morning, we spoke to Gilead. Key points on HCV:  the NIAID data last night (95-100% SVR12 with a Gilead triple combo treated for 6 weeks) support its plans to advance a short-duration of therapy triple combo into ph3. It plans to advance Sovaldi + GS-5816 (not ledipasvir) + either GS-9451 (PI) or GS-9669 (non-nuc) into ph3. It said that our estimates that ~1,000 patients have been treated with '9451 and ~300 with '9669 (based on clinicaltrials.gov) is a "good guess" implying the safety databases are sufficient for advancement. Timing and protocols are unavailable, but we guess a 6-week combo will be in ph3 this year.  The NHANES data not only miss key populations (as we've previously written), but also only reflect data through 2010, and importantly, exclude the recent increase in new infections due to increased prevalence of IV drug use. It estimates there may be ~50k new infections in the US per year.  The ~385k patients in the US "under treater care" should be considered a fluid number, and can readily change with a single office visit for a patient who is diagnosed but not previously assigned to the "in care" bucket.
The new shelf is for share repurchases vs. converts and warrants
Gilead filed a shelf this morning to raise debt. This is for general corporate purposes and is not signalling a deal. HCV sales will push a higher proportion of cash flow offshore, so this raise will keep plenty of onshore cash to offset dilution from the 2014 converts (+warrants) and early conversion of the 2016 convert (+warrants). The intent is to reinstate the repurchases to offset dilution (at least).
GILD a high-quality name
Our Buy thesis on GILD shares is unchanged. We see significant upside to consensus (indeed a near-doubling of EPS in 2014, and near tripling vs. 2013 in 2015), and expect higher EPS and increasing pipeline visibility to drive shares this year.
Valuation: Buy with $102 PT based on 17x our 2015E EPS
We expect Sovaldi will drive an EPS inflection 2014-2017. GILD is cheap vs peers on P/E.
No, not looking for data from the company; I understand their position .... no, a euro version of the TRx data we seem to get every Friday? Or a sense of how euro tracks the third-party US data?
mentioned they're selling in the UK (priced $57,000 v. $84,000 here), France, Germany ($66,000 v. $84,000), Austria, Sweden, Finland, Norway ... that's a combined population of some 200MM+ ... anybody got access to the TRx and NRx data coming from Europe? ... or any sense of what those numbers should look like at this stage?
We hosted two HepB/HepC Key Opinion Leaders (treat 500+ patients combined) to discuss: 1) ongoing and planned utilization of GILD Sovaldi; 2) competitive dynamics in HCV (GILD, ABBV, MRK); and 3) thoughts on emerging Hep B programs (GILD, ARWR, TKMR).
1.GILD launch going well, consistent with our thesis. Docs are treating GT2/3 and GT1, and when "all oral" comes out by year-end they'll treat "all their patients" over many years, yet importantly the market will be growing because they said they are seeing some new patients already coming in as "diagnosis" is starting to opening up; hence we feel confident about our GILD estimates and believe the launch will beat consensus and the stock is attractive.
2.Currently treated HCV patients are the sicker, cirrhotic GT1 or GT2/3; they're still warehousing less sick GT1 for all-oral combo. Experts said they are using Sovaldi+Simeprevir combo whenever insurance feasible, Sovaldi + IFN less frequently due to high deterrence from patients, and Sovaldi + RBV (24 wks for IFN intolerant) infrequently. This is because they are warehousing the less sick (F2 or below) GT1 for all-oral combo coming in H2:14. For GT2/3, they are treating all patients with some preference for the sicker, but this is due to capacity. Both experts note there is no reason to not treat GT2/3, and when all-oral comes "all GT1 patients should get treated." One expert went on to say it is simply "unethical" to not treat patients with Sovaldi-backbone regimen today.
3.Experts note some insurance pushback on GT1 Sovaldi + Simeprevir combo but they are working through it and it won't be an issue once FDA-approved GILD regimen is available later. One expert noted that 75% of scripts are approved automatically, with almost all scripts approved for GT2/3. They said hospitals are motivated to treat HCV patients to avoid transplantation costs down the road (economic loss) and physicians view increased volume (simplicity of treatment) as freeing up resources for them to treat other patients (HepB and other liver diseases); however, they do think "payor pressure" could increase theoretically (docs thought lower pricing over time likely).
4.GILD preferred over ABBV to circumvent risks of "resistance" as primary key issue (positive), but the ABBV pill burden and ribavirin issues are not too much of a concern (negative for bulls). One expert noted that GILD is his preferred regimen because ABBV's current regimen uses a weaker protease inhibitor and could result in development of fit mutants in patients who might already have baseline Ns5a mutations. These breakthrough patients could then become very hard to treat even with GILD's all-oral. Separately, both experts noted they are inclined to use GILD all-oral for 12 weeks vs. 8 weeks in order to maximize cure rates/cirumvent relapses (that's higher revenues for GILD on 12 wks). On MRK, while docs believe the regimen has a role, GILD has first-mover advantage and likely entrenched standard of care very soon.
'it's like a computer is holding it at 7.25' ... IT IS A MANAGED STOCK, with the short constantly expending short shares in order to give the impression that nothing has changed, no reason to own it, give me shares here so I can cover and protect my compensation and get me out of this 13,500,000 hole.
Good points ... but they have been taking compensation based on the decline since then. A reversal would mean MM drags compensation down, and that's very real.
Amazon and Apple find Madison Ave. a tough sell - Ad Age. Amazon (AMZN) and Apple (AAPL) are experiencing growing pains as they try to increase their advertising operations, Ad Age reports. Amazon's approach has not been helping. "It's almost like going into a room and them putting a gun to your head and showing you your future," says an executive at ad giant GroupM about Amazon's sales methods.
MM, OTOH, has cozy relations with the agencies.
the approximate 13,500,000 short shares, already shorted, in place and costing shorts monthly maintenance fees. Next ... an exploding mobile market ... an advertising solution set that resulted in the Q4 guidance beat ... and a new CEO who hopefully doesn't take prisoners. Marginal shorting in the days ahead may cause some short-term discomfort, but these shares are getting scarcer and more expensive to maintain in place, and, in the end, dig the shorts' hole that much deeper.
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maybe 10,000 shares, but we got a good 13,500,000 short. How much you pay per month for your short shares? The Chuckster tells me, right now, one can only short a minimum of $50,000 worth of MM stock, and then there's a fee to maintain it.