3 Things to Watch at Gilead

Hepatitis C is important, but only for two of the thee points.

Feb 24, 2014 at 9:53PM

A large portion of Gilead Sciences' (NASDAQ:GILD) future growth will come from its new hepatitis C drug Sovaldi, and drug cocktails that contain the drug, which are currently under review at the FDA. Here are three topics that investors should keep their eyes on.

Patient breakdown
On the earnings conference call earlier this month, management said that 70% of patients taking Sovaldi were infected with genotype 1 virus. That's in line with the 76% of hepatitis C patients in the U.S. that are infected with genotype 1, but it's a bit surprising because genotype 1 patients have to take Sovaldi with peg interferon, which has to be injected, and produces nasty flu-like side effects. With an all-oral cocktail for genotype 1 patients expected to be approved by year's end, you would expect that most patients with genotype 1 virus would wait.

The simple explanation is that the genotype 1 patients taking Sovaldi now are primarily advanced-stage patients who can't wait months to be rid of their virus. Depending on how large that group of warehoused patients is, we could see a slowing of sales as the bolus winds down before the all-oral cocktail is launched.

A delay of a few months capturing sales isn't that big of deal and is probably ideal, because the cocktail will likely be priced higher than the individual Sovaldi tablets. But AbbVie (NYSE:ABBV) is hot on Gilead's tail with its own all-oral cocktail, so Gilead isn't guaranteed to capture sales from patients who delay taking Sovaldi now.

Capturing the other 3.7 million
Gilead estimates that there are 4.1 million people in the U.S. infected with hepatitis C, but only 385,000 are under the care of a physician. Treating the rest of the patients is the only way Gilead can hit the astronomical sales estimates that investors are expecting and avoid an Incivek-like sales curve. Vertex Pharmaceuticals (NASDAQ:VRTX) made its hepatitis C drug, Incivek, an instant blockbuster; but because patients don't have to stay on the drug after they're cured, sales shot down just as quickly as new patients waited for Sovaldi.

About 1.7 million of the infected Americans actually know they're infected, so getting those patients treated shouldn't be that hard. How much they'll pay is another story. Hepatitis C patients are disproportionately low income, requiring discounted medications.

The more challenging group is the estimated 60% or so of patients who don't even know that they're infected. Having an effective cure available will hopefully encourage doctors to test a wider swath of people for the infection.

More than just hepatitis C
While hepatitis C is the new growth story, Gilead can't lighten up on the rest of its pipeline and marketed drugs. The biotech is the dominant force in HIV; 92% of new patients in the U.S. started on a Gilead HIV product in the third quarter of last year.

Importantly, sales growth is coming from the most ideal products. Sales of its new HIV drug Stribild continue to rise -- up over 400% year over year in the fourth quarter. Gilead owns all the components of Stribild, and doesn't have to share revenue like it does with Atripla, which Bristol-Myers Squibb (NYSE:BMY) helped develop. In the fourth quarter, sales of Atripla were up just 2% year over year.

Beyond HIV, Gilead is developing quite a few other drugs. Furthest along is a heart drug called ranolazine and momelotinib for myelofibrosis in phase 3 development, and idelalisib that's up for approval for two different blood cancers. In the best-case scenario, all three combined probably won't reach the sales that Stribild could produce, but they're worth keeping an eye on nonetheless.

Ultimate growth
They said it couldn't be done. But David Gardner has proved them wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences and Vertex Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information