Gilead?s Hep C Results Send Shares Sharply Higher

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Gilead Sciences’ (GILD) $11 billion deal last month to acquire Pharmasset for its experimental hepatitis C treatments is starting to pay dividends. Early clinical trial results from an exciting new drug acquired in the deal wowed investors last night and overshadowed disappointing fourth-quarter earnings results and weaker-than-expected guidance for the coming year.

Gilead rose 8.8% to $53.66 in late morning market action, after climbing to $54.77 in the biggest intraday gain in more than three years.

On Gilead’s quarterly conference call, the company disclosed that all genotype 1 hepatitis C patients treated with the experimental pill GS-7977 (formerly PSI-7977) plus ribavirin had no detectable signs of the virus after four weeks of treatment. The data suggests that a two-drug combination of pills may be potent enough to cure patients with genotype 1 hepatitis C, the most common form of the disease in the United States. More data will be released at a medical meeting in March. Still, yesterday’s study results were sufficient to shift focus away from Gilead’s fourth-quarter financial results.

The biotech giant, best known for its HIV drugs, reported earnings of 97 cents a share, below the $1.05 a share expected by the Street, on revenue of $2.2 billion. Gilead forecast total product sales in the range of $8.6 billion to $8.8 billion versus consensus of $8.85 billion.

In a note published today, Leerink Swann analysts Steve Yoo and Josh Schimmer wrote, “Investors will focus more on the prospects of the HCV pipeline in the near term, which Gilead seems to be taking advantage of by resetting EPS expectations, which we see as strategic. We maintain our Outperform and raise our valuation to mid-high $50s.”



Original Article Source by Barrons.com