Ta Target t Price ce: US $1 $131 31.04 04 Ra Rating: : Buy - - PowerPoint PPT Presentation

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Ta Target t Price ce: US $1 $131 31.04 04 Ra Rating: : Buy - - PowerPoint PPT Presentation

Nov 24, 2023 293 likes •662 views

Share e Price: ce: US $10 101. 1.73 73 ($107. 107.99) 99) Ta Target t Price ce: US $1 $131 31.04 04 Ra Rating: : Buy (29 29% upside ide) ) (21% % upsi side) e) Virtual al monopoly oly in HCV market 1. 1. 90% market

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SLIDE 1

Share e Price: ce: US $10 101. 1.73 73 ($107.

107.99) 99)

Ta Target t Price ce: US $1 $131 31.04 04 Ra Rating: : Buy (29 29% upside ide) ) – (21%

% upsi side) e)

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SLIDE 2

1. 1.

Virtual al monopoly

  • ly in HCV market
  • 90% market share! AbbVie has ~ 10%

2. 2.

Strong ng produc uct t pipeline nes s

  • Phase 2: 18 drugs
  • Phase 3: 7 drugs
  • Pending FDA Approval: 3 drugs (HIV)

3. 3.

Strong ng balance e sheet fo for acquis isiti ition

  • n
  • 2014: Cash $2.1B  $10B
  • 2015: Estimated $25B Cash
  • $10B Debt Raise
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SLIDE 3

1. 1.

HIV

2. 2.

Live ver r diseas seases: es: HCV and d HBV

3. 3.

Oncolo logy gy and d inflam ammati mation

  • n

4. 4.

Cardio diovascul vascular ar and d resp spirat iratory

  • ry condi

diti tions

  • ns

Sources of Revenue Product Sales Royalty, Contracts and Other Revenue

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SLIDE 4

 Existing

ting Drugs ugs:

  • Sovaldi
  • Harvoni
  • Viread
  • Hepsera

 Majo

jor r Competit etitor

  • r
  • Viekira Pak (AbbVie)

2014: 14: Sovaldi + + Harvoni ni = $ $12.4B 4B 2015E: 15E: Sovaldi + + Harvoni

  • ni = $19.

9.2B 2B

Up by 55 y 55%

90% Marke ket Share re

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SLIDE 5

 Existing

ting Drugs ugs: 3 STR (Single Tablet Regimen)

  • Atripla
  • Complera (US)/Eviplera (EU)
  • Stribild

 Majo

jor r Competit etitor

  • r
  • Trimeq (GSK)

56% Marke ket Share re

3 3 out t of 4 4 STR TR

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SLIDE 6
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SLIDE 7
  • 19.93%

In light of the recent Turing's 5,000% price surge for daraprim, Clinton criticised that “Price gouging like this in the specialty drug market is

  • utrageous,”
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SLIDE 8
  • Global: 185 million
  • U.S.: 2.7 million
  • “Big 5” Europe: 2.6 million
  • Japan: 1.2 million

Japan 350K 350K U.S. 150K 150K

>

Yearly ly New Diagnosis nosis

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SLIDE 9

Mo Most t prevalen valent t HC HCV V Geno noty type: pe: Type pe 1

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SLIDE 10

 Higher than estimated global health care spending

rate CAGR of 5.2 % during that same period

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SLIDE 11

 Signed nonexclusive licensing agreements

with 11 Indian generic manufacturers for HCV drugs  91 devel veloping

  • ping countri

ntries es

 New agreement with Medicines Patent Pool

(MPP) allowing the organisation to sublicense the new TAF-based HIV drugs to generic manufacturers  11 112 d 2 dev eveloping eloping countri ntries es

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SLIDE 12

 Increased focus on HCV in the Emerging

Markets

 Increased global pharmaceutical spending  Increase global access for its drugs

More Re Revenue nue for Gilead ad mov

  • ving

ng forward ward $$ $$$

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SLIDE 13

1. 1.

Gilead ad has s the best st HC HCV treatment atment

  • 22 Oct: FDA is warning that HCV Viekira Pak and

Technivie can cause serious liver injury  Lesser Competition

2. 2.

56% market ket share are in HI HIV market ket

  • 3 out of 4 STR drugs: Atripla, Complera and

Stribild

  • 3 TAF drugs to be approved by 2Q16
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SLIDE 14

 HCV

  • Sofosbuvir + GS-5816 + GS-9857 to replace Harvoni,

which can treat all genotype – Phase 2 & 3

 HIV

  • TAF (single-tablet HIV regimen) to replace TDF. Safer

for bones and kidneys – pending FDA approval

 HBV

  • TAF – Phase 3
  • GS-4774 – Phase 2
  • GS-9620 – Phase 2
  • Simtuzumab for (NASH) – Phase 2

 Oncology

  • Momelotinib (Pancreatic cancer) – Phase 3
  • GS-5745 (Gastric cancer) – Phase 2
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SLIDE 15

 Past Acquisitions

  • 19

1991 91:Triangle Pharma  Viread  Truvada  Atripla

  • 2011

11: Pharmasset  Sovaldi  Harvoni

  • 2014

14: Phenex Pharmaceuticals’ Farnesoid X Receptor (FXR) program  Px-104 (treatment of liver diseases including NASH)

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SLIDE 16

 War chest

  • Large cash reserves $25B in 2015E
  • Raised $10B Debt

 Possible actions?

  • Shares buyback (Recent $15B buyback)  Could

increase

  • Acquisitions

 Oncology  HBV  NASH

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SLIDE 17

Market Gross Operating Net Debt ROE P/E EV/ EBITDA Cap Margin Margin /Equity Company Name USD b 2014 2014 2014 2014 2014 2015E 2016E 2014 2015E 2016E Gilead Sciences 150,444 85% 61% 15% 88% 13.5 9.2 8.7 9.0 6.6 6.3 Bristol-Meyers Squibb Company 103,052 75% 16%

  • 27%

13% 38.5 35.1 28.9 30.6 26.9 22.5 Merck & Co 142,494 60% 13% 12% 24% 29.1 14.7 13.6 13.5 10.6 10.0 Abbvie 93,639 78% 17% 381% 57% 15.7 13.3 11.2 24.2 11.6 9.8 Biogen 68,907 88% 41%

  • 25%

30% 18.6 17.3 15.5 11.4 11.2 10.1 Amgen 108,817 78% 31% 14% 22% 18.5 15.6 14.2 12.9 10.8 10.0 Celgene 90,027 95% 33%

  • 10%

33% 42.7 24.5 19.8 30.6 20.0 15.3 Average 101,156 79% 25% 57% 30% 27.2 20.1 17.2 20.5 15.2 12.9

Highest hest Op Operating ting Margin gin Highest hest RO ROE Lowest west P/E Lowest west EV EV/EBI EBITD TDA

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SLIDE 18

All t time high h P/E: 45x All t time low P/E: 10.7x 7x 10 10-ye years rs Historical cal Averag age P/E: 19.6x 6x Current rent P/E: 11.22 22

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SLIDE 19

1. 1.

Declining ining HC HCV market ket share are in US

  • New market share in Japan, EU and emerging countries

2. 2.

Declining ining HI HIV market rket share are in US

  • TAF (safer for bones and kidneys) replace TDF drugs

(Trimeq is a TDF drug)

3. 3.

Government vernment Legi gislat slatio ion/P n/Pric rice e Control trol

  • Clinton’s plan will not materialise, according to experts
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SLIDE 20
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SLIDE 21

 Scenarios

ios:

  • Gilead Capture more market share in HCV
  • Gilead makes a good acquisition that boost its profits
  • FDA approvals of its pipeline

 EPS estimates will increase by $1 to my base case

EPS and Gilead will trade at higher multiple of 15x

 15x of our 2015 EPS estimates of $11.06  12-months TP of $178.80 – 76% upside.

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SLIDE 22

 Scenarios

narios:

  • Price Control legislation has been passed
  • Unable to re-capture declining HCV and HIV market

share in U.S.

 Growth rates of all drugs will be negative for

the next 5 years except for Sovaldi and Harvoni sales in 2015

 8x of our 2015 EPS estimates of $10.41  12-months TP of $83.28 – 18% downside.

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SLIDE 23

Scenarios Bull Base Bear EPS 11.92 10.92 10.46 P/E 15 12 8 Valuation 178.8 131.04 83.28 Upside/Downside 76% 29%

  • 18%
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SLIDE 24

 12x of our 2015 EPS estimates of $10.92  12-months TP of $131.04 – 29% upside.  We recommend a BU

BUY

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SLIDE 25

 12x of our 2015 EPS estimates of $10.92  12-months TP of $131.04 – 29% upside.  We recommend a BU

BUY

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SLIDE 26
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SLIDE 27

 TDF (Tenofovir Disoproxil Fumarate)

  • Used to treat HIV and HBV
  • Side effects: Severe liver problems

 TAF (Tenofovir Alafenamide Fumarate)

  • Used to treat HIV and HBV
  • Safer for Bones and Kidneys

 Sofosbuvir

  • Used to treat HCV
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SLIDE 28
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SLIDE 29
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SLIDE 30

Brand Name Generic Name Manufacturer Name Genotype Weeks Cure Rates Remarks Pills Harvoni Ledipasvir, Sofosbuvir Gilead 1 12 97-99% No Ribavirin 1 Viekira Pak

  • mbitasvir, paritaprevir, ritonavir and dasabuvir

Abbvie 1 12 91-100% Take with Ribavirin 3 Olysio simeprevir Janssen 1 12,24 90-100% Take with sofosbuvir (Sovaldi) 2 Daklinza/Sunvepra BMS 1 24 91% Daklinza daclatasvir BMS 3 12 97% Take with sofosbuvir (Sovaldi) 2 Technivie

  • mbitasvir, paritaprevir, ritonavir

Abbvie 4 12 Take with Ribavirin 2 Sovaldi sofosbuvir Gilead 1,2,3,4 80%

22 Oct: FDA is warning that HCV Viekira Pak and Technivie can cause serious liver injury

  • Studies have shown that Viekira Pak has more side effects than

Harvoni/Sovaldi, which makes Harvoni

  • ni/Sol
  • lva

valdi a sa safer r choice ce.

  • Viekira Pak is only approved for patients with mild hepatic

impairment and not recommended for those with severe hepatic impairment;

  • Harvoni/Solvadi is approved for that both mild and severe

hepatic impairment.

  • Clearly, Gilead’s Harvoni /Sovaldi are more superior to Abbvie’s

drugs.

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SLIDE 31

 Bristol’s Daklinza/Sunvepra is a 24 weeks

treatment for HCV Genotype 1 with cure rate of up to 91%. No doubt they entered Japan before Gilead did, but the drugs from Gilead are more superior to those from Bristol. Solvadi and Harvoni have cure rate of up to 99% with just 12 weeks of treatment.

 Recent studies show that Daklinza/Sovaldi

combos has cure rate of up to 100% and it has

  • utperformed the Daklinza/Sunvepra combos.

Harvoni is the first once-daily pill that doesn’t require interferon or ribavirin that is approved for the treatment of HCV Genotype.

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SLIDE 32

Products U.S. E.U. Hepsera 2014 2016 AmBisome 2016 2008 Macugen 2017 2017 Tamiflu 2017 2016 Letairis 2018 2020 Viread 2018* 2018 Ranexa 2019** 2023 Atripla 2021 2018 Cayston 2021 2021 Emtriva 2021 2016 Truvada 2021 2018 Lexiscan 2022 2025 Complera/Eviplera 2023 2022 Vitekta 2023 2023 Zydelig 2025 2025 Sovaldi 2029 2028 Stribild 2029 2027 Tybost 2029 2027 Harvoni 2030 2030*** Patent Expiration

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SLIDE 33

Source: OpenSecret.org

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SLIDE 34

Source: OpenSecret.org

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SLIDE 35
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SLIDE 36