Harvoni Approval Solidifies Our View Of Gilead’s Market Leadership In HCV, Says William Blair

In a report sent to investors Tuesday, William Blair analyst John Sonnier reiterated an Outperform rating on Gilead Sciences (NASDAQ:GILD), following last week’s news that the FDA approved the company’s Harvoni (ledipasvir/sofosbuvir) for hepatitis C genotype 1 infection. No price target was provided.

Sonnier noted, “While the event was widely expected by the Street, we believe the approval represents a significant development as Gilead strengthens its market leadership in the hepatitis C virus (HCV) disease space. Our thoughts on the approval follow.” The analyst continued, “We believe Harvoni is priced reasonably, given its improved efficacy, safety, and tolerability profile as well as the cost of alternative treatment options currently on the market. Management announced Harvoni will be priced $63,000 for the eightweek regimen and $94,500 for the 12-week regimen. We emphasize Harvoni is priced at parity (about $94,245) with the current standard-of-care regimen, which consists of Sovaldi, pegylated interferon, and ribavirin for 12 weeks. In addition, an off-label alternative that is an all-oral, interferon- and ribavirin-free combination with Sovaldi and Janssen’s Olysio costs about $150,000 for a 12-week treatment course.”

The analyst added, “We project Gilead’s HCV franchise will grow to $15.1 billion in 2015 from $12.8 billion in 2014. In our view, the strength of Gilead’s HCV franchise will continue to contribute significantly to the year-to-year adjusted EPS expansion. We estimate the 2015 adjusted EPS will be $9.56, which represents a 17% increase from $8.13 in 2014.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst John Sonnier has a total average return of 14.5% and a 53.3% success rate. Sonnier has a 39.5% average return when recommending GILD, and is ranked #590 out of 3343 analysts.

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