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Gilead Awaits Committee Outcome – Analyst Blog

Zacks Market Commentaries — Fri, 13 Nov 2009 06:30:09 +0000

Gilead Sciences, Inc (GILD) is awaiting the outcome of the Anti-Infective Drugs Advisory Committee of the US Food and Drug Administration (FDA) scheduled on December 10, 2009. The committee will review Gilead ’s aztreonam for inhalation solution, an investigational product for the treatment of chronic pulmonary infections due to Pseudomonas aeruginosa (P. aeruginosa) in patients with cystic fibrosis (CF). Earlier, in September 2008, the drug was denied approval by the FDA, which then asked Gilead to resubmit the application with more data.

In September 2009, the drug received conditional marketing approval in Canada and Europe under the trade name Cayston (aztreonam lysine 75 mg powder and solvent for nebuliser solution). Gilead plans to make the product available in Germany and the UK in early 2010. Aztreonam formulated with lysine is a proprietary formulation of aztreonam developed specifically for inhalation, which has orphan drug status in the US and Europe . Applications for marketing approval of Cayston are pending in Australia , Switzerland and Turkey .

CF is a chronic, debilitating genetic disease that affects the respiratory and digestive systems of approximately 70,000 people worldwide, including 35,000 people in the European Union. Cayston was granted conditional marketing authorization to address the unmet medical need of the CF patients. A decision regarding full marketing authorization will be based on the completion of the ongoing phase III study examining the efficacy and safety of Cayston compared to Novartis’ (NVS) tobramycin inhalation solution (TOBI) in CF patients with pulmonary P. aeruginosa.

During the third quarter conference call, Gilead stated that it expects to complete enrollment by the year end and make the data available towards the middle of next year. We believe positive data from this study will help it to receive approval from the regulatory authorities in both US and Europe . We have a Neutral recommendation on the stock.
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Gilead Reports Another Solid Quarter – Analyst Blog

Zacks Market Commentaries — Wed, 22 Jul 2009 20:57:36 +0000

Gilead Sciences (<a href="http://(GILD)">GILD) reported financial results for the second quarter of 2009 on July 21, 2009. Total revenues increased 29% year over year to $1,647.2 million, beating our forecast by $35 million.

Revenues were driven by the company’s HIV franchise which posted sales of $1,410 million, up 26% year over year.

HIV franchise sales consisted of Viread at $159 million, Truvada at $608 million and Atripla at $569 million. Sales of Atripla, which is a combination of Truvada and Bristol-Myers Squibb’s (<a href="http://(BMY)">BMY) Sustiva, increased 60% year over year. However, there was some inventory stocking during the reported quarter.

Total product sales for the second quarter were $1,568 million, an increase of 27% year over year. Products like Hepsera ($67 million), AmBisome ($73 million), Letairis ($44 million), and Ranexa ($36 million) also contributed meaningfully to revenues. Royalties and other revenues totaled $78.8 million.

Adjusted net income increased 36% to $648.9 million in the reported quarter. This equated to earnings per share of $0.69, up 41% year over year and 4 cents above our forecast. GAAP net income, which includes stock-based compensation and acquisition-related costs, totaled $571.4 million, or $0.61 per diluted share. Second quarter results included contributions from the recently acquired CV Therapeutics, Inc.

Following the release of second quarter results, Gilead updated its guidance for 2009. Although the company increased net product revenue guidance for the year, Gilead also announced an increase in operating expenses. R&D spend should increase considerably this year as the company works on the development of a new HIV combination drug with Johnson & Johnson (<a href="http://(JNJ)">JNJ). Net product revenues are now expected in the range of $6.1 to $6.2 billion, compared to the earlier guidance of $5.9 to $6 billion.

We maintain our Hold rating on Gilead with a target price of $50. Earnings over the past few quarters have been above expectations specifically on strong sales of the HIV franchise. Going forward, we remain optimistic on the growth prospects of Truvada and Atripla. For 2009, we see EPS at $2.68, up 21%, on sales of $6.6 billion.
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JNJ, Gilead Target HIV Pill – Analyst Blog

Zacks Market Commentaries — Fri, 17 Jul 2009 23:35:35 +0000

On Jul 16, Gilead Sciences Inc. (GILD) entered into a license and collaboration agreement with Tibotec Pharmaceuticals, a unit of Johnson & Johnson (JNJ), for the development of a once-daily antiretroviral HIV pill.

The companies are looking to develop a combination pill that will combine Gilead's Truvada with Tibotec's TMC-278, a non-nucleoside reverse transcriptase inhibitor (NNRTI), for use in treatment-naïve HIV patients. If successfully developed and approved, the combination pill would be the second complete antiretroviral treatment for HIV to be available in a single pill. The use of single pills makes treatment simpler for patients.

Gilead's Atripla is the first once-daily pill to be available in the HIV market. Atripla is a combination of Truvada, itself a fixed-dose combination of two nucleoside reverse transcriptase inhibitors (NRTI): Viread and Emtriva, and Sustiva, an NNRTI manufactured by Bristol-Myers Squibb (BMY).

In addition to the treatment-naïve patient population, we believe the new pill could be used instead of Atripla in patients who are not comfortable with Sustiva. TMC-278 has been studied in comparison with Sustiva and phase IIb results showed that TMC-278 achieved undetectable viral loads in 76% of patients, versus 71% for Sustiva. TMC-278 is currently in two large phase III trials, versus Sustiva with an NDA planned for 2010.

Under the agreement, Gilead will be responsible for the manufacturing, approval, and commercialization of the drug in all territories, excluding the developing world and Japan. Gilead will pay up to €71,450,000 million of Tibotec’s development costs for TMC-278. In return, TMC-278 will be available to Gilead at a discount of up to 30% on its market price. Tibotec will be responsible for the development and approval of TMC-278 as a stand-alone drug.

We view this deal as a major positive for both Gilead and JNJ. TMC-278 is one of the most promising HIV treatments that are currently under development. Although Gilead is a leading player in the HIV market, the launch of the new combination pill should help the company strengthen its presence in the market. Meanwhile, JNJ should benefit from having an established name like Gilead as its partner in the highly-competitive HIV market.

We have a Buy rating on JNJ with a price target of $70 and a Hold rating on Gilead with a price target of $50.

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Gilead Fundamentally Strong – Analyst Blog

Zacks Market Commentaries — Fri, 05 Jun 2009 18:50:27 +0000

Gilead's Strong Fundamentals Should Continue

Business continues to look strong for Gilead Sciences (GILD). The company's tenofovir-based HIV products (Viread, Truvada and Atripla) are number one and widening their lead. The clinical data continues to support the switching of patients from older generation molecules such as abacavir and lamivudine to Gilead's franchise. Also driving impressive trends are revised HIV treatment guidelines from the U.S. Department of Health and Human Services recommending only Truvada (and Atripla) as the backbone of choice in naïve patients.

These new guidelines, put into place in November 2008, downgraded Epzicom to an alternative medication based on cardiovascular risk and high rates of virologic failure. Finally, the new FDA chief, Margaret Hamburg, a former New York City Health Commissioner, has significant experience in combating infectious disease, such as HIV/AIDS, and we believe that this type of focused leadership only further adds to the market potential for Gilead's core products.

Outside of the core-HIV franchise, business is also progressing nicely. In August 2008, the FDA granted marketing approval for Viread as a once-daily treatment for chronic hepatitis B (HBV) infection. In only a few months on the market, management estimates that Viread has 26% new market share (NRx), eclipsing the market share of Glaxo's (GSK) Epivir and Gilead's Hepsera in the HBV category. Going forward, Gilead will focus its HBV efforts solely on Viread.

Letairis sales are also ramping to within our expectations. Two year safety and efficacy data presented at CHEST in October 2008 and ATS in May 2009 should continue to drive strong uptake for the drug. Prescriptions have doubled over the past 12 months.

Gilead's pipeline is also moving forward with the recent positive phase III DAR-311 data, and several programs moving into phase II and phase III for HCV and HIV. The most advanced, elvitegravir, is currently in a phase III trial with data expected later in 2009. Management recently got some good news from the FDA regarding the phase III requirements for elvitegravir and GS-9350 which should help speed along the process.

Add in Ranexa, Lexiscan, and a handful of other early-stage cardiovascular product candidates at CVT, and Gilead's future looks very bright. The only mishap over the past few months came in September 2008 when the FDA rejected the new drug application for aztreonam lysine for cystic fibrosis. Despite the delay, we still see aztreonam lysine as a viable product, evidenced by management's commitment to initiate a phase II trial in non-CF bronchiectasis.

With respect to the CVT acquisition, we applaud the move and think it is a positive strategic step forward for Gilead. CVT's core focus in cardiology with chronic angina drug Ranexa represents an effective forward integration for Gilead, a company with a phase III candidate for resistant hypertension in darusentan. Gilead will maintain CVT's 170 sales reps focused on Ranexa for the next several quarters. CVT just recently received approval expanding the label indication and removing significant cautionary language that was previously inhibiting Ranexa's U.S. ramp.

We think Ranexa, in the U.S., has $500 million potential given the new label and effective promotion. Outside the U.S., Gilead will look to leverage the existing relationship with Menarini by helping to facilitate pricing and reimbursement efforts in Europe with Gilead's infrastructure.

Gilead will also look to monetize the Ex-U.S. rights for Lexiscan, and reiterated CVT's previous guidance to file for Lexiscan approval in Europe shortly. Once approved, perhaps in 2012, Gilead will utilize the CVT sales force to promote darusentan. In the meantime, Gilead expects to leverage CVT's knowledge in developing and commercializing cardiovascular drugs to enhance the darusentan filing.

We view the acquisition of CVT by Gilead as a great, cost effective, opportunity for Gilead management to gain the knowledge and put the necessary infrastructure in place to diversify into the cardiovascular business, all while increasing revenues and eventually profitability immediately with Ranexa.

Gilead remains one of our favorite stories in biotech, and we recommend opportunistic buying at this level given the pull-back in the overall market. Upside to the story could come from the successful development of elvitegravir or darusentan, or ramping Ranexa above the current Street consensus. We would be aggressive buyers if the stock dropped below $40. Our target is $50.
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Gilead to Buy CV Therapeutics – Analyst Blog

Zacks Market Commentaries — Thu, 12 Mar 2009 15:02:46 +0000

Gilead to Acquire CV Therapeutics for $1.4 Billion

In a surprise move this morning, Gilead Sciences (GILD) announced it has signed a definitive agreement to acquire CV Therapeutics, often referred to as "CVT" (CVTX) for $1.4 billion, or $20 per share. The news comes a month after CVT rejected an unsolicited bid from Astellas Pharmaceuticals for $1.0 billion, or $16 per share. Once the deal closes, CV Therapeutics will become a wholly-owned subsidiary of Gilead.

We are surprised by the announcement this morning considering the move is outside Gilead's core focus of infectious diseases such as HIV and Hepatitis C. CV Therapeutics' leading product, Ranexa, is indicated for the treatment of chronic angina.

The HIV/AIDS franchise drugs -- Viread, Truvada and Atripla -- accounted for 81% of Gilead's $5.3 billion in revenues in 2008. Gilead management is making a bold move to diversify its revenue stream with the acquisition of CVT. Gilead made a similar bold move in 2006 with its $2.5 billion acquisition of Myogen and with it, leading product Letairis for pulmonary arterial hypertension.

CV Therapeutics' Ranexa posted sales of $109 million in 2008. CVT's revenues also include royalties on Lexiscan, a recently approved pharmacologic stress agent sold by Astellas. In total, CVT delivered total revenues of $154.5 million in 2008.

Our financial model forecasts this number to increase by a 40% compound annual rate (CAGR) through 2013 to $467 million thanks to strong sales of Ranexa in both the U.S. and rest of world. CVT posted a net loss of $94 million in 2008. Our financial model forecasts profitability for CVT on a standalone basis starting in 2011.

Gilead will finance the transaction through available cash on hand. At the end of 2008, Gilead had approximately $3.2 billion in cash and equivalents. CV Therapeutics exited 2008 with approximately $263 million in cash and equivalents and $292 million in convertible debt. Gilead expects the transaction to be dilutive to earnings in 2009, neutral to accretive in 2010, and accretive thereafter starting in 2011.

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Gilead Offers Opportunities – Analyst Blog

Zacks Market Commentaries — Mon, 20 Oct 2008 10:01:01 +0000

Foster City, CA, based Gilead Sciences, Inc. (GILD) is perhaps the world's premier play on HIV/AIDS therapy.Â Gilead's third quarter financial results were solid -- nothing new -- for the company, as management has posted upside surprise after upside surprise throughout the past several years. EPS of $0.55 in the quarter was $0.02 above our forecasts based on strong product sales and lower-than-expected SG&A [selling, general and administrative] costs.

Sales of key products, Truvada and Atripla, both exceeded expectations in the third quarter.Â The Atripla uptake is going very well, and with the recent approval for Viread in HBV, Gilead remains well positioned to continue the strong top-line growth demonstrated over the past few years.Â
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The pipeline is also progressing nicely.Â Letairis should become the best-in-class ETRA for PAH, and given the lack of drug-drug interactions seen in the phase III trials, it should be used first-line with Pfizer's (PFE) Revatio. We are pleased with the Letairis launch so far and expect a meaningful ramp in sales over the next few quarters.Â
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Besides Letairis, drug such as elvitegravir and GS-9350 look like potential winners.Â Also, phase III candidate darusentan offers a high risk / high reward upside option to our beyond 2011 forecasts.Â The only mishap over the past few months was the FDA's complete response letter on aztreonam lysine in September 2008.Â Â
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The stock is currently $44. Our target is $52 based on 21x our 2009 EPS forecast of $2.46 per share. This is in-line with the broader biotechnology peer-group average. At this level we would be opportunistic buyers of Gilead's stock.
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Caxton Associates Hedge Fund | Exclusive 13F Holdings Analysis

Richard C. Wilson — Fri, 26 Sep 2008 04:33:43 +0000

Caxton Associatese

Caxton Associates Hedge Fund Holdings

This post is being written as part of HedgeFundBlogger.com's Investment Securities Tool which analyzes the holdings of hedge fund managers.

Up next in the macro hedge fund tracking series we have Caxton Associates, ran by Bruce Kovner. Taken from Wikipedia, Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of hedge fund risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." Year-to-date, Caxton Associates was up 5% as of a few weeks ago.

So, now that we've got a background on Kovner and Caxton Associates, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Caxton's top holdings. Due to the time sensitive nature of the 13F material, I wanted to get this information posted before the next set of filings come out in November.

Top 20 Holdings by % of portfolio
1. Compania Cervecerias Unidas (CCU) - Increased position by 72934%, from 25,000 shares to 18,233,668 shares
2. Electronic Data Systems (EDS) - New Position
3. Activision (ATVI) - New Position
4. Monsanto (MON) - Increased position by 41 %
5. Rockwood Holdings (ROC) - Increased position by 68.8%
6. W-H Energy Services (WHQ) - Increased stake by 195%
7. Occidental (OXY) - Increased stake by 65%
8. ChoicePoint (CPS) - Decreased position by
9. DirecTV (DTV) - Decreased stake by 25%
10. W.R. Grace (GRA) - Boosted stake by 8%
11. Qualcomm (QCOM) - Boosted stake by 44.6%
12. Coca Cola (KO) - Decreased position by 12.5%
13. Rural Cellular (RCCC) - Increased stake by 12.4%
14. Research in Motion (RIMM) - Boosted stake by 8.7%
15. Service Corporation (SCI) - Increased position by 32%
16. Nucor (NUE) - Boosted position by 37%
17. (ANST) - New position
18. XTO (XTO) - Boosted stake by 150%
19. Stewart Enterprises (STEI) - Increased position by 12%
20. Gilead (GILD) - Decreased position by 26.7%

Kovner's Caxton Associates definitely disassociate themselves from the rest of the macro pack when it comes to the equity side of their portfolio. While their portfolio does hold typical energy and technology names often seen in other hedge fund portfolios, they also hold seemingly obscure names that I have yet to see pop up in any other funds I track. So, Kovner and his team may have discovered some diamonds in the rough here. In particular, I want to focus on his top holding: Compania Cervecerias Unidas (CCU). In the quarter prior to the filing, he held just 25,000 shares of this name. Then, over this past quarter, he ratcheted up his holdings in the name big time. He increased his position by 72,934%, bringing it all the way up to his firm's top holding, with a market value of over $642 million at the time of the filing. Needless to say, they bought this name with conviction. And, although I've seen numerous other funds buying up shares of Latin & South American beverage companies, this is the first fund I've seen pick up this name. So, definitely keep an eye on it.

Additionally, I want to point out his holdings in Rocwood Holdings (ROC), W-H Energy Services (WHQ), and Service Corporation (SCI). These are three other names I am seeing for the first time amongst the hedge funds I track. And, he was adding across the board to all three names. Caxton added to WHQ the most, increasing their position by 195%.

Now, turning to the 'hedge fund favorite' names that tend to pop up in numerous hedge fund portfolios that I track, we see Caxton holds positions in Qualcomm (QCOM), Research in Motion (RIMM), XTO Energy (XTO), Occidental (OXY), and Gilead (GILD). Caxton was out adding pretty moderately to all these names. OXY and XTO are easily two of the favorite equity energy plays amongst various hedge funds. And, you have to wonder how they affected their portfolio, given the volatile ride energy stocks have seen as of late. Turning to tech, we see that Caxton, like so many other funds, enjoy large positions in both QCOM and RIMM. As I've noted before, QCOM is easily a top five most common equity holding among the hedge funds I track. And, just like energy, technology stocks have been whipsawed around a lot recently. So, although Caxton was out adding this past quarter, we'll have to see if they were still adding to these names come the next 13F filing.

We already knew hedge funds (and macro funds in particular) had a rough July. And, it's easy to see why, with the heavy commodity exposure many of them had. What we don't yet know is how they've rebounded (if at all). Lastly, I just want to re-emphasize that since Caxton is a macro fund, they obviously have the majority of their positions in the commodity, currency, futures, or other markets. But, at the same time, they still have a sizable chunk of money in the equity markets.

Caxton Associates' full 13F filing listing every position can be found at the SEC.

Guest post by Market Folly

Please check here next week for some further analysis on specific holdings of leading hedge funds.

Analysis #1: Tontine Capital Partners - 13F Hedge Fund Holdings
Analysis #2: Lone Pine Capital - 13F Hedge Fund Holdings
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Analysis #6: Blue Ridge Capital 13F Holdings Analysis
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