Gilead Safety Warning? No Problem, Says Wall Street
Gilead Sciences, Inc. (NASDAQ: GILD) issued a new warning about its hepatitis C drugs after discovering a dangerous interaction with amiodarone, a drug that monitors heart rhythm. Consequently, Gilead shares slipped more than 3 percent on the morning of March 23.
On March 20, Gilead sent an alert to healthcare providers after learning about a dangerous interaction between Sovadli and Harvoni, its hepatitis C drugs, and amiodarone. Gilead reported 9 cases of slowed heart rates in patients taking both drugs. The reaction resulted in 1 fatality due to cardiac arrest and 3 patients required pacemakers.
The reaction appeared immediately in 6 of the patients. Gilead noted that 7 of the 9 patients were also prescribed beta blockers which also slow the heart rate.
Harvoni and Sovaldi are Gilead's two highest grossing drugs. Together, the two accounted for more than $3.8 billion in sales in the latest quarter, accounting for a significant amount of the $7.2 billion in total sales.
Most investors do not seem too flustered by the reaction. Amiodarone is not used widely; it is estimated to be taken by approximately 250,000 to 300,000 patients in the United States at any given time. Gilead does not recommend mixing amiodarone with Harvoni/Sovaldi, but if this is the only option the patient must be closely monitored for cardiac abnormalities.
Competing hepatitis C drugs, such as AbbVie's Viekira Pak, already carry this warning.
According to SmarterAnalyst, John Sonnier of William Blair reiterated an Outperform rating on Gilead on March 23. In response to the new health warnings, Sonnier reassured investors that Gilead has extensively evaluated the safety of its hepatitis C drugs and there is "no evidence to suggest there is a safety issue associated with these agents or that Sovaldi/Harvoni requires cardiac monitoring outside co-administration of amiodarone."
The analyst does not think the warning is a dire blow to Gilead because of the "low frequency… utilization of amiodarone" in the U.S., as less than 0.5 percent of patients use the drug.
Furthermore, Sonnier reiterates that competing hepatitis C drugs already have this warning on their labels.
John Sonnier has rated Gilead 4 times since October 2013, earning a 100 percent success rate recommending the stock and a +22.7 percent average return per Gilead recommendation. Overall, Sonnier has a 67 percent success rate recommending stocks with a +23.4 percent average return per recommendation.
Separately on March 23, analyst Brian Skorney of Baird reiterated an Outperform rating on the stock with a price target of $126. Skorney does not consider the labeling changes "a major safety event" and he maintains his bullish view. The analyst believes the incident will have "a negligible commercial impact" on Gilead shares and encourages investors to use "any near-term stock weakness as a buying opportunity."
Brian Skorney has rated Gilead 9 times since August 2012, earning a 71 percent rate recommending the pharmaceutical company with a +28.7 percent average return per Gilead rating. Overall, Skorney has a 62 percent average return recommending stocks with a +18.6 percent average return per recommendation.
On average, the top analyst consensus for Gilead Sciences on TipRanks is Strong Buy.
Latest Ratings for GILD
|Nov 2016||Stifel Nicolaus||Initiates Coverage On||Buy|
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