RBC Capital Out Negative on Gilead Sciences (GILD), 'see the stock as lacking'

RBC Capital analyst Brian Abrahams reiterated a Sector Perform rating and $78.00 price target on Gilead Sciences (NASDAQ: GILD).

The analyst comments "This morning GILD reported that their EVOKE-01 trial of Trodelvy in 2L NSCLC did not meet its primary OS endpoint, though did show numerically favorable trends vs docataxel across both squamous and non-squamous histologies. Following AZN's dato data and our KOL feedback, as well as the recent ph.II results in 1L for Trodelvy, we had been cautious as to whether the potential longer duration of use of an ADC like Trodelvy would indeed be able to translate to compelling benefits over chemo SoC in the 2L setting. Today's EVOKE-01 miss emphasizes the high bar in 2L that docataxel sets, though we note GILD continues to explore potential subgroups that may have seen a benefit as the company prepares to discuss the result with regulators. We note that GILD's reiteration of the lack of differences in squamous vs non-squamous histologies in this study (as well as EVOKE-02) could possibly be evidence of a better profile vs dato-dxd which could drive greater real-world use, given the latter's benefits appear to be largely limited to non-squameous histologies. Safety was consistent with Trodelvy's known profile, and we would expect limited if any ILD to help continue to differentiate the drug vs AZN's dato. We had modeled a 35% PoS given the risks and challenges vs docataxel, and believe the PoS adjusted fair value of the program was ~$1.50; that said, given evolving SoC, GILD may still capture some of the 2nd line market in the real-world or if regulators are compelled by GILD's ongoing subgroup analysis. We continue to believe there could be an opportunity for Trodelvy in 1L PDL1 high patients given clearer efficacy from EVOKE-02, and we estimate a 60% PoS, though we note the data from EVOKE-03 is likely not until 2025. BOTTOM LINE: We believe the stock had run up into the data (+5% YTD) though we did not view the risk/reward setup into this and other catalysts this year as compelling; we expect the news today to lead shares to give back some of the recent gains. We continue to view shares as not overly expensive given the stable HIV franchise and oncology optionality, though still see the stock as lacking compelling near-term upside catalysts."

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 $87.29 yesterday.

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