Gilead Sciences has dodged one of the threats to its hepatitis C juggernaut.
True, Gilead shares fell after the biotech company lost a legal challenge from Merck to patents surrounding its hepatitis C drugs Sovaldi and Harvoni last week. A federal jury ordered Gilead to pay Merck $200 million in damages.
But the outcome, which Gilead plans to appeal, could have been far worse: Merck had asked for $2 billion in damages. A separate hearing will take place to decide whether Merck is entitled to a royalty on Gilead’s future sales.
Investors worry the hepatitis C franchise has matured after generating cumulative sales of more than $30 billion. And those drugs accounted for 60% of Gilead’s 2015 sales. As such, Gilead trades at a significantly lower multiple of forward earnings than large biotech peers.
The jury’s manageable award doesn’t eliminate those fears. But Gilead can cross one problem off its list.
True, Gilead shares fell after the biotech company lost a legal challenge from Merck to patents surrounding its hepatitis C drugs Sovaldi and Harvoni last week. A federal jury ordered Gilead to pay Merck $200 million in damages.
But the outcome, which Gilead plans to appeal, could have been far worse: Merck had asked for $2 billion in damages. A separate hearing will take place to decide whether Merck is entitled to a royalty on Gilead’s future sales.
Investors worry the hepatitis C franchise has matured after generating cumulative sales of more than $30 billion. And those drugs accounted for 60% of Gilead’s 2015 sales. As such, Gilead trades at a significantly lower multiple of forward earnings than large biotech peers.
The jury’s manageable award doesn’t eliminate those fears. But Gilead can cross one problem off its list.
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