Jefferies Says Gilead's 4997 Data Is Impressive, Underappreciated

Jefferies maintained its Buy rating on Gilead Sciences, Inc. GILD saying that Wall Street underappreciated the impressiveness of last week's phase II 4997 data and shares don't reflect HIV stability and potential pipeline upside.

GS-4997 is being studied in nonalcoholic steatohepatitis (NASH), pulmonary arterial hypertension (PAH) and diabetic kidney disease (DKD). In the mid-stage study, GS-4997 showed anti-fibrotic activity in 72 patients with NASH and moderate to severe liver fibrosis, who received treatment with GS-4997 (18 mg or 6 mg orally once daily) alone or in combination with simtuzumab (SIM).

Related Link: Importance Of Phase III Trials

“Our KOL was most impressed with the degree of fibrosis regression, though some key questions outstanding,” analyst Brian Abrahams wrote in a note.

Based on his feedback, the analyst would look for several additional details at AASLD to clarify 4997's potential, and possibly improve confidence in its treatment effect.

“While we acknowledge small pt numbers remain a meaningful limitation, given our feedback we believe it is appropriate to incorporate prob-adjusted out-year revs, which raises our PT by $2 to $95,” Abrahams noted.

The analyst added out-year NASH sales of $2.3 billion into his model, with probability weighting at 35 percent, to reflect the initial promise of the data, balanced by its early stage and intrinsic NASH market unknowns.