Analyst Terrence Flynn also lowered his price target to $60 from $70 for the Foster City, California-based company. Flynn wrote that near-term he expected the company's top-line growth to decelerate as loss of exclusivity for its HIV treatments Truvada and Atripla represents a $3 billion headwind for the company.
Longer term, Flynn projected that Gilead Sciences' treatment Biktarvy can only protect about half of the company's $16 billion HIV franchise from generic competition.
Flynn said that while Gilead Sciences' competitors Bristol-Myers Squibb (BMY) - Get Report and AbbVie (ABBV) - Get Report also have current or upcoming loss of exclusivity exposure, the two companies "have new product cycles and/or pipelines that offer more optionality in our view."
In contrast, Flynn wrote, Gilead will only have one year to launch and market its Descovy combination pill for pre-exposure prophylaxis (PrEP) ahead of the entry of Truvada generic in Sept 2020. The company also has a very limited mid-to-late stage pipeline, Flynn wrote, "and we are lowering our estimates on immunology drug Filgotinib given emerging competition and recent data."
"We expect rebuilding the pipeline be to a key focus of (Gilead's) new CEO given his commentary on the 1Q19 call," Flynn wrote, "and while the company has a strong balance sheet this can take time to accomplish."