Sell-side analysts are busy updating their spreadsheets and investor notes after Gilead Sciences (GILD +0.7%) announced its government price of $390/vial price for antiviral remdesivir, implying a typical cost per treatment course of $2,340 (six vials). Commercially insured patients will pay a bit more, $520 per vial or $3,120 per course.
Analysts expected a U.S. cost/course in the neighborhood of $5,000 after drug cost watchdog ICER published a cost/benefit analysis that determined a price of $4,500 to be cost-effective.
In his open letter, CEO Dan O’Day stated that earlier hospital discharge would save ~$12K per patient.
SunTrust’s Robyn Karnauskas (HOLD/$73) has trimmed her fair value target on the company by $3 saying it is “unclear” how Gilead will recoup its $1B investment in the near term since cost of goods sold (COGS) is unknown as is the number of patients who will be treated in H2.
RBC’s Brian Abrahams (OUTPERFORM/$88) remains a cheerleader, projecting that remdesivir will generate $2.3B in sales this year which should add $1/share in valuation and ~$1 to 2020 EPS.
SVB Leerink’s Geoffrey Porges (OUTPERFORM/$94) is revisiting his sales forecast although he believes the pricing is “reasonable.”
Piper Sandler’s Tyler Van Buren (OVERWEIGHT/$90) believes the pricing is “in line” with ICER’s assessment based on the mortality benefit.
Jefferies’ Michael Yee (BUY/$97) also regards the pricing as “in line” although the company could certainly charge more considering the $12,000 savings for early discharge. He would not be surprised if the company conservatively guides 2020 sales of ~$1B although investors are most likely expecting sales as high as $2B this year.
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