Download Gilead Sciences, Inc.

Gilead Sciences, Inc.
NASDAQ: GILD
Vivek Vinayak
Patrick Leake
Company Background
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Research-based pharmaceutical company
Primary focus in HIV/AIDS, liver diseases, respiratory
and cardiovascular, and cancer
16 products (6 HIV, 2 Liver, 3 Cardiovascular, 2
Respiratory, 3 Other)
Company Background
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$9.7bn revenue, ⅔ from HIV products
$4.2bn EBITDA, 43% margin
17% revenue growth over past year
Street estimates ~40% revenue growth 2014 due to
release of products for HCV oral treatment
Investment Thesis
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Strong track record
Several recent acquisitions will come into fruition
o Pharmasset acquired in 2011 for $11bn
Current leader in Hepatitis C drugs
o Forefront of innovation
Strong product pipeline focusing on HCV, HIV,
cardiovascular and respiratory disorders
Catalysts
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U.S. launch of Sovaldi drug was a success
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Approved on December 6, 2013
December sales totaled $136mi
Sales estimated to top $2.4bn
Filing for approval in Europe before the end of the quarter
Recently filed for approval of their once-daily fixed-dose
drug for HCV treatment
o Combination of ledipasvir (LDV) and sofosbuvir (SOF)
o FDA has assigned LDV/SOF a “Breakthrough Therapy” designation
o Sales expected to exceed $7bn/yr
Intrinsic Valuation - DCF
WACC
Sensitivity
Relative Valuation
Relative Valuation - Implied Price/Share
Investment Risks
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Primary competition from AbbVie (NYSE: ABBV)
o Also working on fixed dose combination drug
Approximately 45% of product sales occur outside the
U.S.
o Earnings can be negatively affected by currency fluctuations
Healthcare reform (340B Drug Pricing Program)
o Rebate amount owed to Medicaid increased by 8%
o Required to provide a 50% discount on products sold to patients
enrolled in Medicare Part D
Obligatory Bloomberg Plug
For Thomas