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On Tuesday, Morgan Stanley (NYSE:MS) analysts reiterated their Overweight rating and maintained a $135 price target for Gilead Sciences (NASDAQ:GILD) stock. The biotechnology giant, with a market capitalization of $135.5 billion and impressive gross profit margins of 78%, has established itself as a prominent player in the industry. According to InvestingPro data, the company has demonstrated strong financial health with consistent dividend growth over the past decade. The analysts highlighted the potential of Gilead’s lenacapavir (LEN), a biannual injectable medication for HIV pre-exposure prophylaxis (PrEP), which could offer less frequent dosing compared to current daily oral and bi-monthly injectable options.
LEN has demonstrated positive outcomes in two Phase 3 HIV PrEP trials conducted in 2024. The analysts expect the U.S. Food and Drug Administration (FDA) to approve LEN for PrEP by June 19, 2025, which could pave the way for a commercial launch in the summer of 2025. The drug is already approved for HIV treatment under the name Sunlenca.
Morgan Stanley analysts predict that LEN’s PrEP launch will positively impact Gilead’s stock, with projected sales of $184 million in 2025 and $760 million in 2026, surpassing current consensus estimates. This growth potential aligns with the company’s robust financial performance, generating $28.7 billion in revenue over the last twelve months. InvestingPro analysis reveals that Gilead operates with a moderate level of debt and maintains strong cash flows to cover interest payments. They identified key factors affecting LEN sales, including pricing, reimbursement coverage, conversion rates, and market expansion.
Gilead’s initial strategy will focus on converting over 400,000 U.S. adults currently using PrEP medications, primarily Descovy and generic Truvada. The company sees opportunities for market expansion by targeting new segments and geographies, with Descovy’s international sales currently at $200 million compared to $1.9 billion in the U.S.
Additionally, Gilead is developing a once-yearly formulation of LEN for PrEP, expected to enter a Phase 3 trial in the second half of 2025. The company is considering multiple study designs to potentially accelerate development timelines, aiming for a regulatory filing in 2028. Based on InvestingPro’s Fair Value analysis, Gilead’s stock is currently trading near its Fair Value, with analysts maintaining positive expectations for future earnings growth. For deeper insights into Gilead’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Gilead Sciences has made significant strides with its drug Trodelvy in the treatment of triple-negative breast cancer (TNBC). Recent results from the ASCENT-04 trial showed that Trodelvy, when used alongside Keytruda, reduced the risk of disease progression or death by 35% in patients with PD-L1-positive metastatic TNBC. The trial also indicated an improvement in median progression-free survival by 3.4 months compared to an alternative treatment, with a higher overall response rate. Additionally, Gilead’s ASCENT-03 trial demonstrated Trodelvy’s efficacy in patients with TNBC not eligible for PD-1/PD-L1 inhibitors, marking a significant advancement for this patient group.
In legal matters, Gilead Sciences agreed to a $202 million settlement to resolve a civil fraud lawsuit related to alleged kickbacks to doctors for prescribing its HIV drugs. The U.S. attorney’s office claimed these actions violated the federal False Claims Act. Meanwhile, at its annual stockholders meeting, Gilead re-elected nine directors and ratified Ernst & Young LLP as the independent accounting firm for 2025. The company also plans to present new liver disease treatment data at the European Association for the Study of the Liver Congress. These developments reflect Gilead’s ongoing efforts in advancing treatments and addressing legal challenges.
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