Raymond James: Gilead In NASH For The Long Haul

Gilead Sciences, Inc. GILD announced a strategic collaboration Wednesday with Scholar Rock Holding Corp SRRK. Although not strictly a nonalcoholic steatohepatitis, or NASH, deal, the initiative could be a sign that “Gilead is in NASH for the long haul,” according to Raymond James.

The Analyst

Analyst Steve Seedhouse maintains a Strong Buy rating on Gilead with an unchanged $94 price target.

The Thesis

Given the limited scope of Gilead’s in-house NASH assets, the company will need to enter into more NASH deals over the next 12-18 months, Seedhouse said in a note. 

A significant possibility exists of Gilead’s ongoing Phase 3 STELLAR3 and STELLAR4 trials failing, which would lead the company to consider more deals to grow within the NASH market, the analyst said. 

Gilead could purchase a commercial-ready NASH asset, Seedhouse said, which points to two options: Intercept Pharmaceuticals Inc ICPT and Genfit SA.

There’s a higher probability of Gilead buying Intercept, given the better prospects of Ocaliva versus elafibranor, as well as the likelihood of success of the Phase 3 REGENERATE trial,he said. 

Data from the trial is expected in the first half of 2019, and there’s a 90-percent probability of at least one approvable endpoint being met, Seedhouse said. 

Another strategic option that Gilead may take is to acquire or develop a good cardiometabolic asset, according to Raymond James. 

Price Action

Gilead shares were trading near-flat at $64.22 at the time of publication Thursday. 

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