The I-Shares Biotech ETF remains one of the most popular ways to invest in the biotech industry.
In the third part of a series, I will review the investment case for Gilead Sciences.
An interesting technical set-up may occur as detailed below.
The I-Shares Biotech ETF (NASDAQ:IBB) remains one of the most popular ways to invest in the biotech industry. An investment in the ETF offers broad exposure to the industry without single company risk. In the third part of a series, I will discuss the investment case for Gilead Sciences (NASDAQ:GILD).
The above table illustrates the top ten holdings of the IBB. The focus of this series is the top five holdings as they will account for a significant portion of the move in the IBB. The first part discussed the investment case for Regeneron Pharmaceuticals (NASDAQ:REGN) which can be seen here. The second part of the series discussed the investment merits of Amgen (NASDAQ:AMGN) whichalso can be seen here.
Shares of GILD have morphed into the ultimate battleground stock. The company caught fire in 2014 as the tantalizing prospect of a cure for Hepatitis C (HCV) entered the marketplace. The initial price tag of $1k per month generated a ton of negative publicity as many seized on the list price as an egregious example of price gouging by the biotech industry. Lost in the echo chamber of modern media is the incredible advance in treating infectious disease. The vast majority of remedies brought forth from research only treat an underlying disease state; a cure is often tantalizingly out of reach.
Sales thus far for the HCV franchise is $35 billion and growing, yet the share price is trading on par with levels seen in 2014. A significant portion of the negative price action is attributed to the poor performance in Q1 of the HCV franchise. As discussed in an earlier piece, HCV sales dropped with Harvoni sales posting an unexpected year over year decline.