Jefferies’ healthcare analysts chimed in on pharmaceutical giant Gilead Sciences, Inc. (NASDAQ:GILD) and rival DMD drug maker Sarepta Therapeutics Inc (NASDAQ:SRPT). While Gilead is trying to fend off a demand by Merck for more than $3 billion in a patent dispute over a liver disease treatment, 36 doctors issued a 3 page letter to the FDA urging the approval of Sarepta’s eteplirsen, an experimental drug designed to treat aspects of Duchenne muscular dystrophy. Let’s take a closer look.
Gilead Sciences, Inc.
In a research report issued yesterday, Jefferies analyst Brian Abrahams reiterated a Hold rating on shares of Gilead Sciences, with a price target of $97, following the news that a jury determined all claims of MRK’s HCV nuc patents to be valid.
Abrahams observed, “The jury will now decide reasonable damages that should be awarded if the patents remain valid in the upcoming bench trial; a worst-case 10% royalty impacts GILD’s DCF by ~$3.50 (3-4%), in our calculation. GILD and MRK will present their views on what reasonable monetary damages are, upon which the jury will decide the amount that should be awarded to MRK for GILD’s past U.S. Sovaldi/Harvoni sales, pending the outcome of the bench trial. GILD’s damages theory will likely be on the magnitude of a small 1-3% royalty. A worst-case scenario is that GILD pays the 10% royalty MRK requests on future U.S. sales of Harvoni/Sovaldi until the patents 2027 + $2.3 billion upfront payment for past infringement, which would impact our DCF valuation by $3.50.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Abrahams has a total average return of 12% and a 48.5% success rate. Abrahams has a 21.5% average return when recommending GILD, and is ranked #327 out of 3757 analysts.
Out of the 24 analysts polled by TipRanks, 20 rate Gilead Sciences stock a Buy, while 4 rate the stock a Hold. With a return potential of 35%, the stock’s consensus target price stands at $121.55.
Sarepta Therapeutics Inc
In addition, Jefferies’ Gena Wang reiterated a Hold rating on shares of Sarepta, with a price target of $14, following an open letter by 36 Duchenne muscular dystrophy experts, urging the FDA to approve SRPT’s eteplirsen in DMD.
Wang noted, “While the open letter raised some valid points, most arguments were not new and the FDA’s decision likely continues to focus on the fundamental data based on prior experience. As BMRN’s drisapersen received a completed response letter and PTCT’s ataluren received a refuse-to-file letter, we see marginal influence from DMD advocacy group.”
“We continue to see weak biomarker data since the experts’ alternative analysis does not change the data outcome. The expert group viewed that dystrophin expression should be 5-12% of normal level in the 16% “dystrophin-positive” fibers vs. 0.9% in total cells. Additional, the experts posed questions on the 0.3% of normal in untreated DMD pts quoted by the FDA, and cited 0.08% reported by SRPT. However, the patchy pattern of dystrophin expression could complicate the measurement in selected cell population while the Western blot measurement of total cells (no selection of positive/negative fibers) still represents the best approach for protein level quantification,” the analyst continued.
According to TipRanks.com, analyst Gena Wang has a total average return of -29% and a 14% success rate. Wang is ranked #3627 out of 3757 analysts.
Out of the 8 analysts polled by TipRanks (in the past 3 months), 3 rate Sarepta Therapeutics stock a Buy, while 5 rate the stock a Hold. With a return potential of 52%, the stock’s consensus target price stands at $29.20.