Gilead’s Hep C Drug Receives Approval In Japan - Analyst Reactions

Gilead Sciences (NASDAQ: GILD) announced on March 26 that Japan’s Ministry of Health, Labour, and Welfare approved Sovaldi as a hepatitis C treatment. The approval comes a year and a half after the biotech company filed the New Drug Application, making Sovaldi the first Gilead drug available in Japan. Sovaldi is an attractive treatment option because it is one pill taken once a day for twelve weeks that directly targets the virus.

Japan offers a large potential market for Sovaldi because the country has one of the highest rates of liver cancer due to hepatitis C of any industrialized country, according to a press release. Gilead Executive Vice President, Norbert Bischofberger, commented, “There is a need in Japan for new HCV treatment options that are more effective and better tolerated and we have been pleased to partner with the medical community here in Japan to demonstrate the efficacy and safety of Sovaldi.”

Although the treatment of hepatitis C has come a long way, Gilead has come under fire for marketing the drugs at a prohibitively expensive price tag.  Sovaldi’s full price tag is $84,000 per treatment course, or $1,000 per pill. Despite the price tag, Gilead reported total Sovaldi sales of $1.732 billion in the fourth quarter. Sovaldi is Gilead’s second highest grossing treatment next to Harvoni, its other hepatitis C treatment which brought in $2.107 billion in sales in the last quarter. Together, Sovaldi and Harvoni make up more than half of Gilead’s sales.

According to SmarterAnalystJason Kolbert of Maxim Group reiterated a Buy rating on Gilead with a price target of $127 on March 31. The analyst notes, “Gilead’s stock has been volatile within an unstable Biotechnology marketplace, but we see good news in the Sovaldi approval in Japan (which is in line with our expectations).” Kolbert continued that Harvoni, as well as Sovaldi, remain the “key drivers” for the biotech company. He commented, “Harvoni has the potential to create real pharmaco-economic value, as regimens get shorter and the price goes down to essentially cure HCV.” According to Kolbert’s model, he is confident that “Gilead can generate significant free cash flow through the end of this decade.”

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Frank J. Williams 6 years ago Member's comment

I expect this stock to go down even further unless some good news can reverse the trend.

Corey Gaber 6 years ago Member's comment

This stock is so confused these days.. it will go down.