Another Disapointing News from Gilead, What Do Analysts Say?

By Carrie Williams

gilead-sciences-had-another-rough-announcement-what-should-now-investors-expectGilead Sciences Inc. (NASDAQ: GILD), the popular biopharmaceutical company which specializes in medicines for liver diseases, released a disappointing phase III data for momelotinib this week. Momelotinib is the name of GILD’s JAK 1/2 inhibitor in myelofibrosis. Following the news, analyst Geoff Porges from Leerink Swann released a note to investors in which he keeps his Hold rating and $89 price target on the stock.

Momelotinib marks the fourth failure in a row for GILD, the earlier three being the disappointing phase 3 trial data for simtuzumab, GS5745 – MMP9, and eleclazine. In SIMPLIFY-1 phase III trial, momelotinib was proved to be non-inferior to Incyte’s (INCY) Jakafi (ruxolitinib) on its primary endpoint. However, despite improvement in anemia endpoints, momelotinib failed on the secondary endpoint of non-inferiority for symptom score. The rate of peripheral neuropathy for Momelotinib patients was found to be double that of Jakafi.

SIMPLIFY-2, the second pivotal trial failed spectacularly in meeting its primary endpoint of superiority to best alternative treatment in patients previously treated with Jakafi. In fact, many patients had to be re-treated with Jakafi, as momelotinib was not superior on the primary and most secondary endpoints as well. Although GILD mentioned that they would discuss these results with regulatory authorities to decide on the next steps, Geoff Porges believes that there is a high possibility that momelotinib would be written off by GILD.

Porges also thinks that the write-off of momelotinib would result in a possible acquisition of a biotech company thanks to the $32 billion cash available for GILD. This would also put INCY’s name on the list of possibilities, as there would no longer be a conflict of interest with respect to overlapping JAK programs. Some other biotech suggestions for acquisitions include the likes of Kite Pharma (KITE), Tesaro (TSRO), and Intercept Pharmaceuticals (ICPT). Porges also clarified that the rating for GILD was maintained as Momelotinib discontinuation had no Impact on their Model and was also immaterial to consensus.

The pipeline for GILD is also promising, with the likes of ASK1 inhibitor selonsertib, the FXR agonist, GS-9674, and an inhibitor of acetyl-coA carboxylase (ACC), GS-0976. The investigational molecule ‘selonsertib’ (GS-4997) is intended for patients suffering from nonalcoholic steatohepatitis (NASH) as well as in patients with moderate-to-severe liver fibrosis.

Among other analysts which issued ratings on GILD in the past months the overall consensus rating is a Moderate Buy, as provided by TipRanks. The price target average on the stock is currently $ 98.79, being a 31.49% upside from its current levels of $75.13 a share.