Gilead Still A 'Buy' After Harvoni Approval In Japan, Maxim Proclaims

In a report published Monday, Maxim analyst Jason Kolbert maintained a Buy rating and $127 price target on Gilead Sciences, Inc. (NASDAQ: GILD), while mentioning that Harvoni had received approval in Japan.

A majority of the population in Japan is genotype 1, a group for which Harvoni has demonstrated 100 percent efficacy. "The launch is underway in Europe and is kicking into high gear (just under a billion between Harvoni and Sovaldi)," Kolbert reported.

The analyst believes that given the shortened treatment duration of eight weeks for both "treatment-naïve" and "non-cirrhotic patients," as well as the absence of the need for interferon or ribavirin, creates a real economic advantage.

According to the Maxim report, "Gilead continues to be a cash-flow generating machine, driven by Harvoni and Sovaldi as a best-in-class regimen… We would use any weakness over the quarter to build positions."

The analyst believes that the company would need to focus on how the dynamics of both Harvoni and Sovaldi "play out."

"Understanding how this dynamic will impact global HCV patients and payers will be critical to modeling Gilead's future revenues," Kolbert added.

It will take time for Gilead Sciences, as well as prescribing doctors and patients to understand the right pricing for HCV therapy in 2015, 2016 and beyond. On the other hand, the company's HIV franchise continues to be strong, as are the product revenues from HIV to cardiology.