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Biotech Behemoth Gilead In Trouble After Flagship Drug Related Death

Gilead is, by far, the largest income producer in the Nasdaq Biotech Index and today's warning from the Biotech behemoth which has dragged the stock down 2.8% this morning, is weighing heavily on the exponentially-expanding index. As Bloomberg reports, GILD said nine patients taking its hepatitis C drugs Harvoni or Sovaldi along with the heart treatment amiodarone developed abnormally slow heartbeats and one died of cardiac arrest. Now, of course, it's "just" 9 patients... so analysts will spin the diversification. The Nasdaq Biotech Index now trades with a P/E of 50x, with over 80% of the entire sector's earnings concentrated in just 5 companies... and the biggest of all just warned on the drugs that make up half its revenues!

 

Gilead is 'it'...

 

So, as Bloomberg reports, when two of its drugs which account for half its revenues face a warning of death... perhaps it's time to reflect on the exponentiality of this lottery ticket index...

Gilead Sciences Inc. said nine patients taking its hepatitis C drugs Harvoni or Sovaldi along with the heart treatment amiodarone developed abnormally slow heartbeats and one died of cardiac arrest. Three required a pacemaker to be inserted.

 

Gilead said in an e-mailed drug warning to health-care providers on Friday that six cases of symptomatic bradycardia occurred within the first 24 hours of treatment and the remaining three within the first two to 12 days. The patients were all taking amiodarone, with three also using Harvoni, five receiving Sovaldi with Bristol-Myers Squibb Co.’s daclatasvir and one on Sovaldi with Johnson & Johnson’s Olysio. Gilead said the combinations aren’t recommended and it will update its product labeling.

 

The warning might limit the use of Sovaldi and Harvoni, which have transformed how the liver infection hepatitis C is treated, with most patients being cured after 12 weeks. The drugs also have drawn criticism for their cost of more than $1,000 a day before discounts, or as much as $94,500 for a full course of treatment.

 

Harvoni generated $2.11 billion in sales in the fourth quarter of last year, and Sovaldi brought in $1.73 billion, together contributing more than half of the Foster City, California-based company’s total revenue of $7.31 billion. The drugs’ hefty profit margins helped boost fourth-quarter net income more than fourfold to $3.49 billion.

 

A competing treatment introduced late last year by AbbVie Inc. has put pressure on Gilead’s prices.

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The machines were not happy so BTFD to fill the gap and save the day...

 

But that didn't last...

 

As The Biotech index accelerates at a faster than exponential rate...

 

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So you decide.. Janet told the world that Biotech valuations were 'stretched' and investors 'ignored' the Fed and went into a buying frenzy... now that Janet "no commented" last week, and GILD warns... perhaps it's time to revoist this chart...

The Nasdaq Biotech Index now trades with a P/E of 50x, with over 80% of the entire sector's earnings concentrated in just 5 companies.