Why Gilead’s Stock Is A Buy?

Gilead HIV drugs,

The biotech giant has a potential to perform outclass despite its slowing HIV drugs sales

Gilead Sciences has been pushed away by a lot of investors after its blockbuster drugs –Harvoni and Sovaldi –couldn’t generate as high revenue as it had made at time of its launch. However, it wouldn’t be prudent decision to completely shun the stock. The biotech giant is still the leading company in the health care and retaining its stock is a good decision.

The biotech giant is famous for its huge investments in Research and Development and Mergers and Acquisition which has been the ladder of success for the company. These investments had enabled the company to advance the health care so much so that the long untreatable diseases are now getting their due share of a treatment.

Several analysts have shown their concerns that the growing competition in HIV by Merck & Co and GlaxoSmithKline might shake Gilead’s firm grounds. This is however not entirely true. Although the biotech giant’s flagship drugs are witnessing a slight decline in its sales however this is not permanent.

Just last year, the biotech giant reformulated its drug Viread –a HIV drug which has less threat to liver. This latest formulation –TAF –is part of new drugs such as Discovy, Genvoya, and Odefsey. Due to the current reformulation, company’s HIV product lineup got a boost and in comparison to last year’s sales of $2.8 billion the company’s sale went up by 18%.

In the similar fashion, more innovation and tweaking is coming in for its hepatitis C line-up. A new pan-genotype therapy is in queue for attaining FDA –which might be received most likely on June 28. If the drug gets approval then it will be the first ever genotype-agnostic drug in the market and will likely send firm’s stock soaring high.

Assuming on the basis of how well its Hepatitis C drugs performed in the market, a successful research in nonalcoholic steteohepatitis and autoimmune disease will also guarantee solid sales for the company.

Last year in December, Gilead obtained licensing rights to filgotinib –a rheumatoid arthritis drug of Galapagos NV –and the same is in phase three of its research. Once the trial works out then the said drug will contest in billion-dollar drugs market. Likewise, another opportunity for the company lies in its treatment of NASH –a form of liver disease. The disease has becoming a reason for the liver transplant therefore a drug with modest cure rate will do wonders in the market.

The key advantage which the biotech giant has is its stable balance sheet. There is nothing that attracts the investors more than a strong financial statement. Thanks to the strong revenue which the company has reported over the years, the firm is in a very strong position, financially.

By the end of March, the US biotech leviathan disclosed cash worth $21 billion in company’s statement. Such financial position has sent the company on top of other biotechnology companies.

Summing up abovementioned factors, it can be assumed on plausible grounds that Gilead has potential of performing at par. At the market which closed on Friday, Gilead Sciences Inc. stock stood at a price of $82.65. The 52 week range of the stock is $81 to $123.

Gilead Released From Penalty Payment

Gilead drugs, sofosbuvir, Merck patent

The biotech giant is no longer accountable to pay Merck a sum of around $200 million

Gilead Sciences Inc. can now take a breath of relief as it is no longer under the obligation to pay $200 million to Merck &Co. A federal judge has reversed the earlier decision binding the biotech giant for the penalty payment in a drug-patent dispute. The decision was so reversed when the judge concluded that Merck showed misconduct during its patent acquisition.

The case in discussion was initially filed by the Foster City, Calif. firm in 2013 claiming the invalidity of Merck’s patent. The patent in question relates to an active component of Gilead’s blockbuster drugs –Harvoni and Sovaldi –dubbed as sofosbuvir. The drugs had had ground breaking sales and single-handedly gathered $19.1 billion for Gilead in the year 2015. During the primitive federal hearing in March, Gilead was subpoenaed to pay Merck an amount of $200 million as the two patents held by Merck and partner Ionis Pharmaceuticals Inc. were rendered valid. However, in the bench trial, presided by US District Judge Beth Labson Freeman, the biotech giant argued that the patent was received through misrepresentation.

The $116 billion company argued that back in 2004 Merck’s then patent attorney Philippe Durette came to know about Pharmasset Inc.’s in-progress development of an experimental hepatitis C drug code-named PSI -6130 through lies and misconduct. Mr. Durette had had a conference call with Pharmasset’s employees to learn about the ongoing research. He lied to the employees while gaining the information and posed as if he wasn’t the part of internal hepatitis C research of Merck.

Gilead claimed that the attorney used the knowledge received from the Pharmasset’s –which the company has now acquired for a sum of $1 billion –during the patent claim and hence wrongfully covering company’s technology in their patents.

In a 65 page order forwarded to Merck, Judge Freeman criticized the company for their misconduct and wrote that the former patent attorney involved in the acquisition was “dishonest and duplicitous.” She further wrote “Merck is guilty of unclean hands and forfeits its right to prosecute this action against Gilead.”

Mr. Durette’s comment, on the news, couldn’t be obtained.

Merck’s spokeswoman opined that judge’s ruling has ignored case’s facts and the company will appeal. She also added that the patent attorney –Mr. Durette –no longer works with the company. Whereas, Gilead’s spokeswoman expressed that the biotech titan has had a view that Merck’s patent claim is invalid and is very pleased by a favorable ruling.

Toyota Motors Affected By Force Majeure

Toyota stock, explosion, Aisin Advics

The automaker giant has to suspend its production due to an explosion in the factory of a supplier

Toyota Motors announced last Tuesday about the suspension of production at few factories in Japan and indicated that several more factories would face the suspension of production the next day as well. The decision followed the explosion at a factory which was under the ownership of one of the automaker’s suppliers which halted the components’ supply for the Japanese giant.

On Monday, an explosion was reported at Aisin Advics’ –an auto industry supplier –factory. Apart from stopping the production of brake parts for the automaker giant, the explosion critically injured four people.

Following the incident, the automaker giant announced that it had abandoned shifts on few lines at its assembly plant in Takaoka, in addition to some of its support factories. Also, on Wednesday, production at Japanese automaker giant’s Motomachi assembly plant was also cancelled. It is still unknown which products will be affected by the sudden stoppage of the components. In the Takaoka factory, automaker’s RAV4 SUV and compact Corolla are built. The factory also supports the production of new-for-2016 among other vehicles. The factory at Motomachi produces prestigious and popular vehicles such as Japanese market Crown sedan, hydrogen fuel cell Mirai, and the Lexus GS sedan. Also, a specified limit of the suspension has not been decided by the company however the automaker titan’s spokesperson had reported to Reuters that the factory will be back in operation within few days.

For the third time in the current year the top automaker had faced the stoppage in its production due to force majeure. Back in January, an explosion in Aichi Steel, the company’s plant has to suffer from the shortage of steel. Consequently, the assembling plants of Toyota –where finished vehicles are built –have had shortage of parts. Later in February, the automaker’s entire assembly plants in Japan were shot down for six days to buy the time for parts-making plants to catch up. Financially, Toyota has to comprise over the production of 81,000 units. The company filled in the gap later by having extra shifts.

A short time later, in April, the massive earthquake sent almost all of the company’s factories in Japan to the idle state as the catastrophe damaged Aisin Seiki factory which created a parts stoppage. Although the factories were reopened by the end of April however it dropped the month’s production by 16.6% in comparison with same month last year.

What’s concerning for the investors however is not the production delay of the company but the excessive cost it has to bear. There is no doubt in the automaker’s capability of making up the production shortage by conducting overtime shifts however, simultaneously, Toyota’s costs of overtime payment and extra costs of logistic charges and the like will slightly take away some chunk out of company’s margins.

The company’s margins are already under pressure as the Japanese yen couldn’t have decent gain in value against the strong US dollar. Just a year ago, a US dollar earned in the US was worth 125 yen however as of now a dollar is equivalent to 110 yen. For Toyota and the like companies whose foreign income is disclosed in the home currency, strong dollar will not have favorable impact. For the current fiscal year, the company has been prepared to see a blow on its results. Likewise, such production disruption will add more pain to the company’s current state.

At such times, Toyota should come up with competitive strategies to prevent the bottom line from having adverse effects.

As of now, at the market which closed on Wednesday, Toyota Motors Corp.’s stock stood at a price of $103.35.

 

Amazon launches new shows for Prime in Japan

Amazon Asia, Amazon show

The American online retailer has introduced news shows to increase the Prime user base in the country

 

Amazon launched a 12 original shows for its Video service Prime in Japan, trying to lure more buyers to its yearly shopping-and-entertainment membership. The American E-commerce company continues to embrace the same strategy, which it employed in the Unite States with “Transparent” and “Mozart in the Jungle,” by developing content, which can just be viewed by Prime members.

The newly introduced shows for the Japanese region include “Ultraman Orb,” an offshoot regarding the famous Japanese superhero, a documentary discovering the city  “Invisible Tokyo,” as well as a comedy regarding a group of misfits as well as businessmen warring with aliens. The newly released shows are also the online retailer’s response to Netflix’s rising ambitions in the country of Japan.

In September, both organizations started to offer online-video facilities in Japan. Two years ago, the Seattle based company invested a sum of $1.3 billion but has not revealed its expenditure since then, or any precise viewer figures. Whereas in Japan the subscription video- on-demand marketplace is expected to be around a tenth of the American streaming marketplace, the nation is a significant driver of the organization’s global sales, which contributed to one-third of the cumulative revenue in 2015

Whereas a small number of shows are currently being streaming on the internet and through the company’s Fire TV products, the remaining will start in the upcoming months and in 2017. In total, the organization aims to release 20 original shows in the country.  As per reports by Telecompaper, Prime works on iOS and Android tablets and smartphones. It is also provided through smart TVs as well as game consoles.

In other news, Economic Times has reported that Amazon India has raised the commission it charges merchants on its market by 9% even as online trading organizations in the state are aiming to make profits and cut down losses. The web retailer added to the commission or referral rates on different product categories, on almost any good in April 2016.

Whereas commission charged on cellular phone accessories like screen cases and guards was increased to 9%, that on shoes, pet accessories as well as luggage saw the minimum growth by 2%. The company also revised its charges for the logistical support it offers to merchants. Most merchants on the US marketplace accused that Cloudtail India, the biggest supplier on the market, is charged lower.

Many merchants have transferred the hike to customers, which some of them stated has led to a decline in orders on the webpage. In some of the cases the sales decline has been much as 60%, they argued. By 2019-2020, the Indian E-commerce market will probably increase to $103 billion from a sum of  $26 billion, revealed a report released by Goldman Sachs.