JP Morgan Overweight on Gilead Sciences After Pharmasset QUANTUM Trial Announcement
In the report, JP Morgan writes, "Specifically, all treatment arms containing PSI-938 will be discontinued due to liver toxicity. Importantly, liver toxicity was NOT observed with PSI-7977 in QUANTUM or any other studies to date. As a reminder, both these agents are nucs, but PSI-7977 is pyrimidine and PSI-938 is a purine. As such, given the different chemical structures, a different pro-drug and a lack of any safety with 7977 with meaningfully greater patient exposure, we believe the read-through to PSI-7977 is limited. Importantly, under the merger agreement, this announcement does not trigger a “key product event” of the merger agreement. As such, we anticipate the deal will close on schedule in 1Q12. From a fundamental perspective, clearly '7977 was the key value driver ('938 was the 'icing on the cake'), and Gilead / Pharmasset have plenty of compounds to pair up with '7977 beyond RBV, which is currently being studied."
JP Morgan maintains its Overweight rating on Gilead Sciences, which is currently trading down $0.20 from yesterday's $38.49 closing price.
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