Good Week for Gilead’s Hepatitis-C Treatments, UBS Says

UBS strategist Matthew Roden and team note that it was another good week Gilead Sciences’ (GILD) hepatitis-C treatments:

AP

Scripts for Gilead’s Harvoni during the week ending November 14 were released today with total scripts of 3,606, up +37% w/w. These data are strong in the context of feedback at AASLD that Harvoni Rx are being denied. This implies a total franchise new Rx (i.e. Sovaldi + Harvoni) of 7,424, up 13.4% w/w. For comparison, in its third full week (week ending Jan. 10th), Sovaldi scripts totalled 1,764, and mid-January scripts were 2,500-2,900. Current Bloomberg consensus for 4Q Harvoni sales is $1.8bn…

Scripts for Sovaldi totalled 3,818, down -2% from last week. New Rx were 1,079, down -3% w/w. As expected, the trend continues to reflect a shift to Harvoni for new patient starts following the launch on Oct 13. A total of 28,231 scripts and 9,090 new scripts have been recorded in 4Q. We are tracking to $1.04bn for 4Q Sovaldi sales based on script data (current Bloomberg consensus for 4Q WW sales is $3.2bn, post-earnings FOA consensus for US sales is $1.5bn, and we model $3.1bn HCV sales in the US). We assume 95% complete therapy (97.5% refill in months 2 and 3 each), a 12% gross-to-net pricing (more conservative than Gilead comments imply), a correction factor suggested by scripts vs. reported sales, and 10% of NRx are actually refills.

RBC’s Michael Yee thinks Gilead’s on track to meet Harvoni sales estimates:

Harvoni’s week 5 NRx is tracking in line with our estimates in our Harvoni-APP and towards Q4 consensus of $3B USA. Note, the NRx this week, even though in line with our projection, may have been impacted by the AASLD Liver meeting that ended last Tues as many prescribers (hepatologists, gastroenterologists) were away at the conference.

We believe total Harvoni+Sovaldi franchise TRx needs to maintain current momentum towards Q2:14 totals to reach Q4:14 WW cons of ~$3.7B and 2015E US consensus of $12B.

We are looking for combined TRx to rise towards 8000+ through Thanksgiving and further towards 9000+ TRx in December in order to get to a comfortable run-rate during Q1:15.

Shares of Gilead Sciences have ticked up 0.2% to $100.76 at 1:05 p.m. today.

How to Improve TDFs and Regain Market Share: Hearts & Wallets

Investment product manufacturers could regain some of the market share they lost to other distribution channels by offering product innovations that appeal to more sophisticated investors, according to a report by Hearts & Wallets.

For example, the report noted that in the last 15 years, consumers have accessed target-date funds through their retirement plans or broker-dealers instead of going straight to the provider. Manufacturers could offer improved products by de-emphasizing the date in target-date funds, Hearts & Wallets said.

The firm found a “sizable share of the population” doesn’t have a retirement date in mind either because they don’t feel comfortable with the variables that could affect their retirement savings like the increasing health care costs, inflation and longevity, or simply because they like working.

“Many investors, aside from pensioners, have no idea at what age they’ll stop working altogether, if ever,” Chris Brown, Hearts & Wallets principal, said in a statement. “They are very clear about wanting control of their work/life balance as they grow older.”

The problem for product providers is that target-date funds are “not nearly as attractive outside of a qualified plan as they are inside one,” Brown said. “In the future, compelling product innovation will feature different approaches to asset allocation, as well as addressing the ways in which people actually take income once they have stopped full-time work. Determining how to do this is the area of product development that is most exciting and potentially highly differentiating.”

One way providers could enhance TDFs to make them more appealing to more sophisticated consumers, according to Hearts & Wallets, is to base on the investor’s needs instead of age. “Many investors prefer to customize risk exposure instead of having a product that automatically reduces market exposure,” according to the report.

Simplifying the transition from accumulation to distribution is another differentiator, Hearts & Wallets found.

“Consumers will pay more for added value, such as making the transition from accumulation to income easier,” Laura Varas, Hearts & Wallets LLC principal, said in a statement. “Our research shows that by adding value to investment products manufacturers can improve sales and charge a premium for products that meet a need. That is critical given today’s intense focus on fund expenses.”

The report concluded that providers must also be able to offer multiple products, as respondents aren’t considering single income solution products. “Even if the right product is created,” according to the report, “it’s likely to only attract a portion of one's portfolio. Few […] are interested in putting all of their eggs in one basket.”

Hearts & Wallets surveyed people ages 40 to 64 in March, excluding respondents who were within five years of retirement. Respondents had at least $250,000 in investable assets and were employed full-time.

---

Check out $640 Billion in 401(k) Assets Ripe for a Rollover: Judy Diamond on ThinkAdvisor.