Gilead Defended By Analyst As Competitors Gain Momentum (GILD, BMY, VRTX, ACHN)

Gilead Sciences, Inc. (NASDAQ: GILD) has recovered from its pre-market lows on the devastating news that its Hepatitis C drug experienced close to a total failure in an arm of a late-stage test group.  IS Group is out defending the stock noting that the company may extend the testing to see if that helps or that this could still be used in a cocktail Hep-C treatment.

Bristol-Myers Squibb Company Co. (NYSE: BMY) is already close to being a pharma giant with a $55 billion market capitalization, and it has more advanced Hep-C treatments.  Shares are up 2.2% at $32.75 on the news and that comes to about $1 billion in value added versus a multi-billion loss in value for Gilead in market capitalization today.

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is up 6.2% at $39.80 this morning ad that is about $500 million to its market cap now valued at $8.3 billion.

Idenix Pharmaceuticals, Inc. (NASDAQ: IDIX) is up 5.3% at $12.06, but that is “only” just over a $50 million value addition to its market cap which now stands at about $1.16 billion.

Gilead shares were down almost 20% this morning when we first covered this and the value destruction was close to $8 billion in its market capitalization.  Shares are now down about 14.8% at $46.66 and we have already more than tripled an average day’s trading volume now that over 37 million shares have traded in less than an hour of the market officially being open.

If you tally up the value destroyed versus the value added to competitors in a zero-sum game, the reality is that this news has destroyed much more value than it created. 

JON C. OGG