RBC Sees Weak Merck Data As Positive For Gilead

In a note from RBC Capital analyst Michael Yee, Merck & Co., Inc.'s MRK weaker-than-expected data for hepatitis C is a net positive for Gilead Sciences, Inc. GILD.

Merck had looked to shorten hepatitis C treatment by adding Gilead's Sovaldi to its own oral two-drug combination, but the effectiveness came up short, with a high rate of relapses, according to interim data from the study.

In the study, 38.7 percent were cured in four weeks and 86.7 percent were cured in six weeks, according to data presented Monday at the American Association for the Study of Liver Diseases conference in Boston. Those numbers are well below current cure rates exceeding 90 percent, and far below the cure rates approaching 99 percent from Gilead's Sovaldi and Harvoni combination, which should provide a boost for Gilead.

Shares of Merck were lower by 2.2 percent in pre-market trading at $57.83, while Gilead was higher by 2.7 percent at $109.30.