J.P. Morgan Weighs In on Two Healthcare Giants: Gilead Sciences, Inc. (GILD), Celgene Corporation (CELG)


J.P. Morgan analyst Cory Kasimov came out with a brief commentary on the pharmaceutical giant Gilead Sciences, Inc. (NASDAQ:GILD) and biotechnology giant Celgene Corporation (NASDAQ:CELG), following recent announcements and events.

Gilead Sciences, Inc.

Shares of Gilead Sciences spiked 5.50% yesterday, after the FDA issued a warning stating that AbbVie’s HCV drug, Viekira Pak, can cause harm to the liver in patients suffering from advanced cirrhosis. The warning could reshape the growing field of high-priced drugs to treat the virus, which also includes Gilead Sciences’ blockbuster medications Sovaldi and Harvoni.

Kasimov commented: “While this is certainly a positive headline for GILD, we would note that that GILD’s market share in 2Q15 (as noted on the 2Q call) was over 90% of all HCV patients (85% for Harvoni) per Rx captured in the standard third-party tracking data. Thus, in the near term we would expect to see a relatively incremental impact from this news on GILD’s market share. That said, we do think this news changes the tone the HCV market. Based on this development, we also suspect that ESRX could potentially rethink their exclusion of GILD’s products from their formulary (though in order for GILD to maintain >90% share, ESRX must have been reimbursing a fair amount of Harvoni).”

Kasimov rates Gilead Sciences an Overweight, with a price target of $133, which implies an upside of 23% from current levels.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Cory Kasimov has a total average return of -3.4% and a 41.9% success rate. Kasimov has a 7.0% average return when recommending GILD, and is ranked #3451 out of 3801 analysts.

Out of the 23 analysts polled by TipRanks in the last 3 months, 19 rate Gilead Sciences stock a Buy, 3 rate the stock a Hold and 1 recommends a Sell. With a return potential of 18%, the stock’s consensus target price stands at $127.70.

Celgene Corporation

Kasimov weighed in today with a few insights on Celgene, after attending Acceleron’s R&D Day during which the company provided incremental updates for the luspatercept and sotatercept programs, both of which are partnered with Celgene.

The analyst wrote, “On beta-thal, the luspatercept Phase 3 (BELIEVE) will be a double-blind, randomized (2:1), placebo-controlled study in 300 regularly transfused adult beta-thal patients (receive 6-20 units of RBCs/24 weeks). There will be a 12-week prospective pre-treatment period to calculate baseline transfusion burden. The primary efficacy endpoint is the proportion of patients with ≥33% reduction in transfusion burden from weeks 13-24 vs. the 12-weeks preceding treatment.”

“On MDS, the luspatercept Phase 3 (MEDALIST) will be a double-blind, randomized (2:1), placebo-controlled study in 210 very low to intermediate risk MDS patients with ring sideroblasts who require RBC transfusion (30-50% of lower risk MDS patients have ring sideroblasts).  The primary efficacy endpoint is the proportion of patients that become RBC transfusion independent (≥8 weeks) during the first 24 weeks,” the analyst continued.

Furthermore, “The sotatercept development strategy is re-focused to pre-dialysis CKD vs. CKD dialysis previously.  The companies believe this change is supported by pre-clinical and clinical activity that showed a decrease in vascular calcification and renal fibrosis, in addition to an effect on bone mineral.  Moreover, this newly targeted patient population is larger and has preferred reimbursement.  Next steps are to meet with regulatory agencies to discuss the path forward with an update expected in 1H16.”

Kasimov rates Celgene shares an Overweight, with a price target of $152, which implies an upside of 27% from current levels. According to TipRanks.com, Kasimov has a 3.8% average return when recommending CELG.

Out of the 9 analysts polled by TipRanks in the last 3 months, 8 rate Celgen stock a Buy, while one rates the stock a Hold. With a return potential of nearly 30%, the stock’s consensus target price stands at $155.75.