Good read, https://seekingalpha.com/article/428
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Posted On: 08/18/2019 4:43:28 PM
Good read,
https://seekingalpha.com/article/4286468-good...iv-citadel
Goodbye To Gilead As ViiV, Merck Besiege Its HIV Citadel
End of article:
Conclusions
At this point, GILD is largely a one-product line company, namely TAF-based combination products (plus TAF itself: Vemlidy for hepatitis
. Presumably filgotinib will come to market in the US next year, but its profit potential is uncertain given that Galapagos (GLPG) will receive a significant share of the profits and that it will be the fourth marketed member of its class. The prospects for CAR-T drugs is also iffy, maybe very large long term, but there is the possibility of it losing money given the high R&D and other expenditures needed to advance the technology and fend off the competition.
The new CEO, Daniel O'Day, is creating a new management team at GILD. This creates additional uncertainty. GILD may have under-invested in HIV research aside from developing its TAF-based line of products. Biogen (BIIB), another company with what is sometimes delicately called a "high-risk" pipeline, trades at 8.6X TTM GAAP EPS.
In the 2015-7 and even 2018 time frame, I projected GILD as the unchallenged winner in HIV for many years to come.
ViiV may gain market share and cause deflation in selling prices in ways similar to the methods that ABBV and MRK used in HCV against GILD.
GILD may again be a value trap. Q2 results showed non-GAAP EPS of $1.82, which includes $0.10 of one-time EU rebates. They also include $223 MM of Letairis/Ranexa sales, which are going to largely disappear very soon and which may account for another about $0.10 of EPS. However, GAAP EPS is relevant; thus I consider GILD not to be a cheap stock on a P/E basis as BIIB is.
A separate source of worry is the potential for reimbursement cuts in the US (and elsewhere) for HIV drugs separate from pressure from ViiV.
With HIV competition mounting, and with stronger growth and/or pipelines at other names I mentioned in last week's review of several biotech stocks (IBB), I now have no idea how to value GILD, and sold my toehold recently in the mid-high $60s.
I continue to like the traditional valuation, and pipeline potential at Roche (OTCQX:RHHBY) and at Novo Nordisk (NVO); and the PEG ratio and pipeline at Vertex (VRTX). This year, the amazing dynamism of Keytruda as well as certain other positives brought me into MRK in the $78-79 range. I think that those names, plus smaller positions in Alexion (ALXN) and Regeneron (REGN), comprise plenty of exposure for this retiree, especially given the many worries the Street has about the drug sector as we enter another election season.
Good luck to all GILD longs.
https://seekingalpha.com/article/4286468-good...iv-citadel
Goodbye To Gilead As ViiV, Merck Besiege Its HIV Citadel
End of article:
Conclusions
At this point, GILD is largely a one-product line company, namely TAF-based combination products (plus TAF itself: Vemlidy for hepatitis
. Presumably filgotinib will come to market in the US next year, but its profit potential is uncertain given that Galapagos (GLPG) will receive a significant share of the profits and that it will be the fourth marketed member of its class. The prospects for CAR-T drugs is also iffy, maybe very large long term, but there is the possibility of it losing money given the high R&D and other expenditures needed to advance the technology and fend off the competition. The new CEO, Daniel O'Day, is creating a new management team at GILD. This creates additional uncertainty. GILD may have under-invested in HIV research aside from developing its TAF-based line of products. Biogen (BIIB), another company with what is sometimes delicately called a "high-risk" pipeline, trades at 8.6X TTM GAAP EPS.
In the 2015-7 and even 2018 time frame, I projected GILD as the unchallenged winner in HIV for many years to come.
ViiV may gain market share and cause deflation in selling prices in ways similar to the methods that ABBV and MRK used in HCV against GILD.
GILD may again be a value trap. Q2 results showed non-GAAP EPS of $1.82, which includes $0.10 of one-time EU rebates. They also include $223 MM of Letairis/Ranexa sales, which are going to largely disappear very soon and which may account for another about $0.10 of EPS. However, GAAP EPS is relevant; thus I consider GILD not to be a cheap stock on a P/E basis as BIIB is.
A separate source of worry is the potential for reimbursement cuts in the US (and elsewhere) for HIV drugs separate from pressure from ViiV.
With HIV competition mounting, and with stronger growth and/or pipelines at other names I mentioned in last week's review of several biotech stocks (IBB), I now have no idea how to value GILD, and sold my toehold recently in the mid-high $60s.
I continue to like the traditional valuation, and pipeline potential at Roche (OTCQX:RHHBY) and at Novo Nordisk (NVO); and the PEG ratio and pipeline at Vertex (VRTX). This year, the amazing dynamism of Keytruda as well as certain other positives brought me into MRK in the $78-79 range. I think that those names, plus smaller positions in Alexion (ALXN) and Regeneron (REGN), comprise plenty of exposure for this retiree, especially given the many worries the Street has about the drug sector as we enter another election season.
Good luck to all GILD longs.
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