[Ed. Note: Dr. KSS writes about medicine and biotech stocks for the Irregulars. He has agreed to our trading restrictions, choses his own topics, and his words and opinions are his own. You can see his past columns and most recent comments on his Stock Gumshoe page.]
We first presented Gilead ($GILD) as a long idea in twinned columns (Mary Kate and Ashley) during the summer of 2014. Sofosbuvir (Sovaldi), an inhibitor of the HCV gene product NS5B, which is a nucleotide polymerase made by HCV specifically to assemble new HCV RNA strands, had fetched early FDA approval. Sovaldi remains the only marketed NS5B inhibitor, although GlaxoSmithKline ($GSK) has an NS5Bi in phase 2. We profiled sofosbuvir inventor Michael Sofia, PhD, in our 2015 Gumshoe Biotech Awards show. Other companies, all too aware of the compelling pharmacologic superiority of sofosbuvir, Gilead’s frightwig, have stayed away and devised NS5a inhibitors and HCV proteinase inhibitors instead.
At our initial depiction, Gilead’s market capitalization was around $150B; if every dollar were a mile, that’s enough to go to the sun and back over 800 times. While goldfish grow ever larger in proportion to their environment, no such notion applies in biotech. Certain wise members of the Gummune stayed away from Gilead based on a sense that its market cap was cruising at its asymptote. People who remain in Gilead shares are probably under water, though able to breathe with a snorkel. AbbVie ($ABBV) was first to market with an HCV-curing cocktail of pills (Viekira Pak), but we advised that Gilead’s combo of NS5ai ledipasvir with sofosbuvir (Harvoni), approved soon enough, would be the hands-down favorite among liver specialists. Few would go near Viekira Pak. That was true, but the implied follow-through notion, the syllogism, that this would place Gilead share price in juggernaut mode, never came through. Biotech has, right now, a quirky aura about it (it’s not sure what happened last night), and looks for reasons to discount shares no matter how tortured the logic. Harvoni dominated HCV prescriptions, yet shares slid. The reasoning was that despite the cost (lucre for Gilead), therapy was curative, was “one time” in the sense you only need it for a circumscribed interval, and therefore not certifiable as a machine of profits. As if the quarterly billions $GILD is amassing aren’t green. We find that to be the sort of thinking one has after not sleeping for ...
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