Gilead Sciences (GILD): Analyst Comments on Increased Merck (MRK) Competition (ABBV)

Analyst Robyn Karnauskas of Deutsche Bank commented on impact to Gilead Sciences (NASDAQ: GILD) from potential competition from Merck (NYSE: MRK). Earlier Merck announced it plans to acquire Idenix (Nasdaq: IDIX).

"We have already modeled in competition to the Gilead franchise with Merck initially entering the market in late ‘15/’16. We also expected Merck to come in with a more competitive regimen in ‘17/’18. News today could make the Merck regiment pan-genotypic and potentially more Gilead-like. We still see Gilead keeping their 55% market share beyond 2017. Again, we already have accounted for competition in our model," said Karnauskas.

"Here are the details," she added.

• "Merck announced that they will be acquiring Idenix for $24.50/share which is about $3.85B.
• This will give Merck access to Idenix nuke portfolio which includes IDX-437 and IDX-459 (just starting to enroll)
• IDX-437 is a uridine nuke and has showed activity in 7 day proof of concept presented in the 1Q14
• "IDX-437 showed slightly over 4 log in genotype 1-3. This study was done in Europe, and has not gone before the FDA yet to file an IND.
• After conversations with both managements at EASL in April, we do not view this as surprising since we believe that Merck needed a nuke to be competitive with Gilead.
• This may give Merck a slightly long-term competitive edge over Abbvie (NYSE: ABBV) in the long-term (which to our knowledge does not have a nuke)."

Deutsche Bank has a Buy rating on Gilead Sciences with a price target of $142.00

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 $82.39 yesterday.

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