This morning, Gilead Sciences, Inc. (NASDAQ:GILD) announced it is advancing GS-4997 (selonsertib), an investigational inhibitor of apoptosis signal-regulating kinase 1 (ASK1), in nonalcoholic steatohepatitis (NASH), pulmonary arterial hypertension (PAH) and diabetic kidney disease (DKD), into Phase 3 testing for treatment of NASH.
This comes on the heels of what Piper Jaffray analyst Joshua Schimmer sees as “limited and highly inconclusive P2 results that did not include appropriate scale or placebo control (unless we consider simtuzumab a placebo).” In fact, Schimmer notes with frustration that “investors are losing their patience” and if the firm intends to “stay in NASH, we believe it should try using an SGLT2 inhibitor or pancreatic lipase inhibitor instead.”
Yet, though the analyst does not believe the approach is “worth advancing into P3 at this time, although GILD obviously disagrees,” he ultimately remains positive on the larger context. For Schimmer, the firm’s best asset is arguably its HIV franchise possibilities, a theory bolstered by GILD’s robust top-line data read-outs announced from four Sofosbuvir, Velpatasvir, Voxilaprevir Phase 3 trials in Genotype 1-6 HCV.
Therefore, Schimmer reiterates an Overweight rating on GILD with a price target of $108, which represents a 45% increase from where the shares last closed.
“With high sampling error from liver biopsies and clear evidence of this variability seen in the FLINT study of OCA, we find these results far from compelling and well short of the bar we would like to see to advance into P3. On the other hand, GILD did simultaneously demonstrate its expertise in the field it knows best by announcing strong SOF/VEL/VOX results for patients with HCV who have failed prior direct antiviral agent regimens. Reiterate OW as we find the 6x forward P/E, the HIV franchise (including bictegravir) and potential for M&A compelling,” Schimmer concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, one-star analyst Joshua Schimmer is ranked #3,312 out of 4,180 analysts. Schimmer has a 45% success rate and faces a loss of 0.7% in his yearly returns. When recommending GILD, Schimmer loses 2.9% in average profits on the stock.
TipRanks analytics indicate GILD as a Buy. Based on 17 analysts polled in the last 3 months, 9 rate a Buy on GILD, while 8 maintain a Hold. The consensus price target stands at $101.14, marking a nearly 36% upside from where the stock is currently trading.