Merrill Lynch Remains Cautious on Gilead Sciences, Inc. (GILD); Here’s Why

Gilead Sciences, Inc. (NASDAQ:GILD) announced yesterday that the firm will be terminating its Phase 2/3 clinical study evaluating its pipeline drug GS-5745, an anti-MMP9 antibody, designed to treat moderate to severe active ulcerative colitis (UC). The Data Monitoring Committee (DMC) advised the decision after an interim analysis of MMP9 indicated futility.

As such, Merrill Lynch analyst Ying Huang reiterates a Neutral rating on GILD with a price target of $100, which represents a nearly 23% increase from where the shares last closed.

The analysis had been pre-planned to investigate unblended efficacy as well as safety data following treatment of the first 150 patients in an eight-week induction duration. Huang notes, “Due to lack of efficacy seen with both doses of GS-5745, we are not surprised that GILD decided to stop the trial. On the other hand, there is no safety signal flagged during this interim analysis, allowing other studies to proceed as planned.”

The analyst also points to a Phase 3 study for gastric cancer, a Phase 2 study for gastric cancer in combination with Opdivo as well as additional Phase 2 studies in moderate to severe Crohn’s disease, rheumatoid arthritis and cystic fibrosis, where the biotech giant is evaluating GS-5745 for other possible treatments.

Yet, Huang warns, “Although these studies are not affected, we would be cautious on the potential clinical benefit of GS-5745 based on lack of efficacy in the UC trial.”

“With this setback in clinical development, we believe there is more urgency for GILD to pursue promising assets through acquisitions. We maintain our Neutral Rating on concerns around long-term sustainability of HCV franchise,” Huang concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Ying Huang is ranked #145 out of 4,189 analysts. Huang has a 72% success rate and realizes 19.3% in his yearly returns. However, when recommending GILD, Huang loses 4.2% in average profits on the stock.

TipRanks analytics demonstrate GILD as a Buy. Based on 17 analysts polled in the last 3 months, 10 rate a Buy on GILD, while 7 maintain a Hold. The consensus price target stands at $104.96, marking a nearly 29% upside from where the stock is currently trading.

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