Gilead (GILD): Sofosbuvir Doomsday Litigation Scenario Off the Table, Says RBC

August 15, 2014 7:34 AM EDT
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Price: $68.86 +2.36%

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On August 14, 2014, an arbitration panel determined that Roche (OTCBB: RHHBY) failed to establish any of their claims and ruled in favor of Gilead (Nasdaq: GILD) regarding license to sofosbuvir. In the view of analyst Michael J. Yee of RBC, the win removes chances of "Doomsday" litigation.

"This is the most important of all the litigation for Sovaldi as this was the one where Roche essentially claimed it had actual rights to the drug. While investors and we assigned a generally low probability of a Doomsday scenario, it was theoretically possible that Roche could get rights to GILD's Sovaldi which would be a huge loss and obviously was a major long-term, legal risk factor for GILD," said Yee.

"Separately and already known, GILD is involved in other litigation with parties such as MRK and ABBV regarding other patents for Sovaldi but these essentially claim some form of infringement or their patents and not rights to the drug, and/or GILD is in good position (eg GILD was recently deemed the "senior party" in the IDIX/MRK patent issue, essentially putting GILD in a winning position too). Thus while a risk factor already known, we believe in those other situations, worst case is GILD might have to pay a minor royalty and our prior NPV analysis suggested this is minor to the overall stock price," he added.

RBC Capital Outperform Gilead Sciences (NASDAQ: GILD) price target of $102.00

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 $96.36 yesterday.

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