Shares in biopharmaceutical group Gilead Sciences (GILD) dropped 1% today after pharmacy firm CVS Health (CVS) gave the thumbs down to its new HIV medication.
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Clinical Factors
According to a report on Reuters, CVS, which operates the largest U.S. pharmacy benefit manager said it will not add Gilead’s new HIV prevention drug, Yeztugo, to its commercial plans at this time.
According to the article, CVS based its decision on “clinical, financial, and regulatory factors.” The company also will not cover Yeztugo under its Affordable Care Act formularies, as its ACA preventive program follows recommendations from the U.S. Department of Health and Human Services.
This comes despite Gilead, back in June, hailing the U.S. Food and Drug Administration (FDA) approval of Yeztugo. Its share price has been on the rise since that decision.
Yeztugo is an injectable treatment aimed reducing the risk of acquiring HIV through sex. It is aimed at adults and adolescents weighing at least 35kg and is the only twice-yearly option available in the U.S.
Data showed that 99.9% of people who received it in a trial remained HIV negative.
Hope Remains
Gildead called it a “historic day in the decades-long fight against HIV.” The company has also said that it is “well on our way to achieving 75% access for Yeztugo within six months and 90% within 12 months.”
BMO Capital analyst Evan David Seigerman called the CVS development “an incremental negative to GILD” but noted that “CVS coverage delays are not yet concerning for Yeztugo broad coverage goals.”
He said that conversations with CVS are ongoing, and that the U.S. Preventative Services Task Force (USPSTF) has yet to make a determination on adding Yeztugo as a covered drug.
Salim Syed of Mizuho suggested that upcoming coverage decisions from UnitedHealth (UNH) and Cigna (CI) could now be more significant catalysts than previously thought. They noted that CVS appears to be “pushing back on price for the injection(s) either straight up or when compared to daily pills.”
Is GILD a Good Stock to Buy Now?
On TipRanks, GILD has a Strong Buy consensus based on 19 Buy and 5 Hold ratings. Its highest price target is $143. GILD stock’s consensus price target is $125.05, implying a 6.87% upside.
