Gilead Says Spinoff Of HCV Business Is “Not High On List Of Priorities”

RBC Capital suggested the drugmaker would be better off cutting its businesses right down the middle, saying that shares could jump by as much as 40% if management makes the cut.

…

The analysts said there is “trapped value” in Gilead’s current combination of hepatitis C virus (HCV) and human immunodeficiency virus (HIV) treatments, noting the HCV businesses are less transparent while dealing with mounting competition. The treatments are facing an environment of price erosion and eurozone uncertainties, added the analysts, led by Michael Yee.

But if Gilead divides itself — and the HIV treatment businesses are set loose, RBC Capital says, a separate HCV treatment business would likely begin trading at roughly $40 to $50 a share, while the HIV treatment businesses would hit the market at $50 to $60 per share.

And so most of the debate I hear from investors is about what you should do to reaccelerate growth. And I know some of my colleagues have thrown out ideas that you should split the company. There is a lot of debate about what kind of deals you should do. I guess the first question is what is your view on those ideas, like, on either splitting the company up or what kind of deals you should do?

Yes, we have discussed this internally actually much before this whole idea came up in the financial press, and came to the conclusion that it’s something that we considered but it’s not high on our list of priorities, and the reason is simply that our hepatitis C franchise is very intertwined with the rest of our liver disease. For instance, we moved — we stopped research in hepatitis C about two years ago. Many of those people now work on hepatitis B cure [ph]. Our clinical group is very involved in liver disease, NASH in particular. And so, it would be not trivial to untangle the two organizations and to make it into hep C and non-hep C.