Cowen Analyst: Gilead Sciences, Inc. (GILD) Is Undervalued As GS-4997 Moves to Phase III in NASH

Gilead Sciences, Inc. (NASDAQ:GILD) just released top-line data from the Phase III POLARIS trials of Sofosbuvir, Velpatasvir, and Voxilaprevir in hepatitis C virus (HCV) infection, as well as the two Phase II trials of GS-4997, the firm’s ASK-1 inhibitor in nonalcoholic steatohepatitis (NASH), pulmonary arterial hypertension (PAH), and diabetic kidney disease (DKD).

On back of the biotech firm’s clinical updates and progress, Cowen analyst Phil Nadeau reiterates an Outperform rating on GILD with a price target of $120, which represents a 61% increase from where the shares last closed.

However, though the analyst contends “Sof/Vel/Vox appears to be a potent salvage regimen,” ultimately, he deems it “unlikely to secure a label for 8 week dosing in treatment-naïve patients of all genotypes.”

“We are making no changes to our HCV estimates based on today’s data. While shareloss is certainly a risk, we continue to expect Gilead will remain the market-leader in HCV for the foreseeable future. In our opinion the bigger risks to our estimates are declining HCV patient volumes, and a continued contraction in price,” Nadeau asserts.

The analyst anticipates the firm has a “viable candidate in a large market” and “lucrative” opportunities with GS-4997. Yet, he also determines that the data indicates the firm’s prospective “pivotal” Phase II trial for pipeline drug Simtuzumab, designed to treat advanced liver fibrosis in HIV and HCV-infected adults, in NASH is “unlikely to succeed.” Time will tell, as the data read-out is expected this quarter.

Overall, Nadeau believes, “Sof/Vel/Vox appears promising in DAA-experienced patients, though its 8 wk regimen failed to achieve noninferiority vs 12wk Sof/Vel in TX-naïve patients. ‘4997 will move forward to Ph. III in NASH, but the results suggest simtuzumab’s Ph. II in NASH is unlikely to succeed. We continue to think GILD is undervalued.”

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Phil Nadeau is ranked #577 out of 4,180 analysts. Nadeau has a 51% success rate and gains 6.1% in his yearly returns.However, when recommending GILD, Nadeau loses 7.2% in average profits on the stock.

TipRanks analytics exhibit 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 36% upside from where the stock is currently trading.

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