Needham’s Q4 Insights: Gilead Sciences, Inc. (GILD), Intercept Pharmaceuticals Inc (ICPT), Cempra Inc (CEMP)


In light of upcoming events in the biotechnology sector slated for the fourth quarter of this year, Needham analyst Alan Carr weighed in on a handful of biotech stocks including Gilead Sciences, Inc. (NASDAQ:GILD), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and Cempra Inc (NASDAQ:CEMP) yesterday. Here are his latest insights and observations:

Gilead Sciences, Inc.

Gilead Sciences became one of the most popular stocks in biotechnology after the huge success of its hepatitis C treatments, Sovaldi and Harvoni. According to Carr, who rates the stock a Buy, both Solvaldi and Harvoni were key drivers of the company’s $8.34 billion in revenue in the second quarter of this year and he expects “the bulk of HCV revenue to be derived from the U.S. in 2015.” The analyst believes “a more prominent ex-U.S. contribution is expected next year going forward with greater penetration in Europe and Japan.”

Gilead also recently released positive results from its Phase 3 trial of sofosbuvir/velpatasvir, which aims to treat all six types of hepatitis C. In the successful trial, 90% of those tested responded to the drug regimen after being treated for 12-weeks. The company is currently testing sofosbuvir/velpatasvir in combination with GS-9857 in an effort to shorten treatment duration and is expected to announce data results in the fourth quarter of this year. Carr believes “this 3-drug regimen is likely to be the core long-term driver of HCV sales for the company.”

Lastly, Gilead recent submitted a New Drug Application for 3 different emtricitabine and TAF (F/TAF) based regimens in HIV. Carr believes the FDA will approve the first of these regimens by November 5 of this year.

Carr has rated Gilead Sciences 16 times total since 2009, earning a 63% success rate recommending the stock and a +44.9% average return per recommendation when measured over a one-year horizon and no benchmark.

Intercept Pharmaceuticals Inc

Back in June, Intercept announced that it had completed a New Drug Application (NDA) for Obeticholic acid (OCA), used to treat patients with the liver disease Primary Biliary Cirrhosis (PBC). The FDA is expected to give an answer on whether they approve or reject the NDA by the end of February 2016. Carr, who rates the stock a Buy, expects the FDA will approve OCA in PCB. Furthermore, the analyst assumes that OCA in PBC will launch “in the U.S. in early 2016, followed by commercialization across Europe over the course of 2017.”

Additionally, the company began its Phase 3 trial of OCA in NASH this month. Carr expects “results from an interim analysis will be available in 2018, which would support label expansion by early 2019.”

Carr has rated Intercept Pharmaceuticals eight times total since 2009, earning a 38% success rate recommending the stock and a +51.6% average return per recommendation when measured over a one-year horizon and no benchmark.

Cempra Inc

This past August, the FDA granted Fast Track Designation to solithromycin intravenous (IV) and capsules, Cempra’s pipeline drug intended to treat community acquired bacterial pneumonia. Solithromycin is currently in Phase 3 testing and Carr expects results from the trial to be announced in the fourth quarter of this year with a favorable outcome. The analyst’s optimism is “based on positive results from the first Phase 3 trial in the same indication.” Rating the stock a Buy, he noted, “We view the stock as attractive ahead of Phase 3 solithromycin results in CABP and believe the drug is well-differentiated in this space.”

Additionally, Cempra is also in the process of recruiting patients to participate in Phase 3 testing of solithromycin in urethritis (gonorrhea or chlamydia).

Carr has rated Cempa seven times total, earning a 43% success rate recommending the stock and a -8.2% average loss per recommendation when measured over a one-year horizon and no benchmark.

Overall, Carr has a 54% success rate recommending stocks and a +24.5% average return per recommendation when measured over a one year horizon and no benchmark.

Don’t be late to the party – Click Here to see what 4500 Wall Street Analysts say about your stocks.