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Gilead (GILD) Tanks; Analyst Comments on Express Scripts (ESRX) Viekira Pak Announcement (ABBV)

December 22, 2014 7:38 AM EST
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Price: $73.26 -0.58%

Rating Summary:
    24 Buy, 16 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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Shares of Gilead Sciences (NASDAQ: GILD) declined premarket Monday after Express Scripts (NASDAQ: ESRX) said AbbVie's (NYSE: ABBV) Viekira Pak will be the exclusive option for genotype 1 Hepatitis C patients covered by the express scripts national preferred formulary.

Commenting on developments, RBC Capital analyst Michael J. Yee said, "GILD is likely to be weak today based on multiple national media outlets reporting that Express Scripts (ESRX) has excluded GILD Harvoni from the national formulary and chosen ABBV Viekira Pak to provide broad access to their GT1 patients. This is not a completely surprising announcement and had been discussed as a possibility by investors since ABBV regimen was inferior and would have difficulty getting share."

"We believe the estimates for potential financial impact will vary depending on assumptions but if we estimate that ESRX may broadly cover 20-40% of private pay covered USA lives, then multiply times 70% for GT1, this might theoretically impact up to 15-25% of the GILD Harvoni market, or up to $1-2B+ in share," continued the analyst.

"It remains to be seen how this may impact other managed care payors as well or if GILD may find other ways to provide access to these ESRX pts (written doctor letter, intolerance or non-compliance with 5 pills, etc etc)," he added.

RBC Capital has an Outperform rating on Gilead Sciences.

For an analyst ratings summary and ratings history on Gilead Sciences click here. For more ratings news on Gilead Sciences click here.

Shares of Gilead Sciences closed at $108.45 yesterday.



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