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Bristol-Myers Missing Hep C Data Raises Red Flags, May Boost Gilead, Idenix

Nonetheless, failure of a high-profile program like BMS-094 would certainly knock the shine off Bristol-Myers' 17-times-earnings multiple, which exceeds most of the company's peer group. I think it's worth considering Bristol-Myers as a short, but I wouldn't make it a big position.

Failure or problems with Bristol-Myers' nuc would likely have a more significant impact on Gilead and, potentially, Idenix. Both companies stand to benefit should BMS-094 stumble. Idenix would have a more attractive asset in IDX-184. I think it's worth taking a small long position in Idenix at current prices.

I think Gilead has more to gain from possible Bristol-Myers problems. Gilead would expand its lead in the race to develop an all oral regimen for HCV, and would gain significant negotiating leverage in any development partnership discussions. Given the potential for multiple positive catalysts over the next year -- including likely FDA approval of the Quad HIV pill this summer -- I am inclined to be long Gilead. I would not be an aggressive buyer of the stock until or unless it dips meaningfully below $50 per share.

Disclosure: Sadeghi has no positions in any of the stocks mentioned in this article.

Follow Nathan Sadeghi-Nejad on Twitter.
Nathan Sadeghi-Nejad has 15 years experience as a professional health-care investor, most recently as a sector head for Highside Capital. He has worked on the sell side (with independent research boutiques Sturza's Medical Research and Avalon Research) and the buyside (at Kilkenny Capital prior to Highside). Sadeghi-Nejad is a graduate of Columbia University and lives in New York. You can follow him on Twitter @natesadeghi.
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