Jefferies Dive In on Two Healthcare Stocks: Gilead Sciences, Inc. (GILD) and Celgene Corporation (CELG)


Analyst Brian Abrahams from Jefferies provides his insight on the different drug developments concerning Gilead Sciences, Inc. (NASDAQ:GILD) and Celgene Corporation (NASDAQ:CELG). Below, the analyst discusses the effect a certain competitor’s drug will have on Gilead and new study that Celgene has been working on. Let’s take a closer look.

Gilead Sciences, Inc.

Abrahams discusses the impact Regulus Therapeutic’s RG-101, a competitor’s pipeline drug, being put on clinical hold after a case of jaundice has on Gilead Sciences. If Regulus is successful in developing RG-101 it has a chance to have long term effects on Gilead by “reducing the duration of Harvoni [Gilead’s Hepatitis C drug,] to 4 weeks” which would in turn halve revenues per patient to Gilead. Additionally, it may enable competitors with “alternative oral DAA regimens to reduce duration to 4 weeks and potentially gain market share from Gilead.”

The analyst feels that he needs to learn more details about RG101 before determining if it is a legitimate threat to Gilead. Regardless, Abrahams believes that the “safety track record and oral administration of Harvoni and other marketed Gilead HCV products set a high bar.”

Abrahams also explains that even if RG-101 is developed successfully it may not be as competitive to Gilead as people might think due to the “need for injection, alk phos biomarker changers, and the extensive patient experience with oral DAAs” that Gilead provides.

The analyst maintained his Hold rating on Gilead with a price target of $96, marking a 17% increase from current levels.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Abrahams has a yearly average return of -0.5% and a 34% success rate. Abrahams has a 21.5% average return when recommending GILD, and is ranked #2574 out of 3980 analysts.

Out of the 14 analysts who have rated the company in the past 3 months, 57% gave a Buy rating and 43% gave a Hold rating. The average 12-month price target for the stock is $113.64, marking a 38.06% upside from current levels.Screen Shot 2016-06-29 at 2.41.32 PM

Celgene Corporation

Celgene became known for its drug Revlimid, a therapeutic drug for multiple myeloma. Demand continues to grow for Revlimid giving Celgene billions of dollars in free cash flow to invest in new drugs.

Abrahams suggests that REMARC, the company’s phase III study of lenalidomide maintenance “versus a placebo following initial response to R-CHOP in older DLBCL pts.”, has a good chance of being successful based on Celgene’s recent comments on the study.

The analyst sees many reasons as to why REMARC could be successful including Revlimid’s activity in suppressing DLBCL, diffuse large B-cell lymphoma. To this point there were phase II tests recently presented at a conference that supported Revlimid’s benefits in DLBCL.

Celgene has been testing the effect Revlimid has on other diseases, like lymphoma, but it has yet to be tested directly in REMARC’s setting. Certain variables “such as a lower relapse rate in front-line pt” could take away from seeing benefit in the testing. Additionally, “inclusion of GCB-type pts” could also decrease Revlimid’s treatment effect.

Abrahams predicts a 65% probability of success with a modest upside/downside. He feels that even if REMARC misses, Revlimid could “likely be active in other settings.”

The analyst maintained his Buy rating with a price target of $140, marking a 44% increase from current levels.

According to TipRanks, out of the 17 analysts who have rated the company in the past 3 months, 82% gave a Buy rating and 18% gave a Hold rating. The average 12-month price target for the stock is $144.36, marking a 48.40% upside from current levels.Screen Shot 2016-06-29 at 2.40.31 PM