Is Gilead Sciences (GILD) in correction mode?
Recently at $104.03, the biotech giant fell 2.7% today, extending a slide that began in late October when the stock hit a 52-week high. Gilead has since fallen 11%.
RBC analyst Michael Yee attributes the recent weakness to media reports about patents for a rival hepatitis C drug and comments about increased scrutiny from insurance companies regarding the use of new Hepatitis C therapies.
Yee writes:
To be clear, these types of comments may cause some headline concern but are not new. For example (1) please see our August 30, 2013 GILD report (“Looking at the ABBV HCV Patents…Seems More Bark Than Bite”). ABBV is claiming a patent for someone else’s drugs. A) GILD already has published and pending patents for this, B) in some instances GILD filed before ABBV (filing first typically can determine precedence); (2) the payor comments aren’t new, these drugs already required prior auth.
Gilead's share price has climbed almost 50% during the past 12 months thanks to fast-growing sales of its hepatitis C medication Sovaldi. Last month, Gilead received FDA approval for another hepatitis C medication known as Harvoni and analysts are closely tracking prescription trends.
In Late Oct., my colleague Teresa Rivas wrote bullishly on Gilead after sales of Sovaldi fell more than expected in the third quarter (see Barron's Take, "Gilead: Buy the Dip," Oct. 29).
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