Gilead Sciences Settlement to Meaningfully Extend Exclusivity of HIV Agents

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By Sam Boughedda

Gilead Sciences (NASDAQ:GILD) announced Monday that it has entered into agreements with Lupin, Apotex, Macleods Pharma, Hetero Labs, and Cipla to resolve the litigation and patent challenges associated with Descovy, Vemlidy, and Odefsey.

The agreements give the manufacturers a non-exclusive license in the United States to Gilead's patents on tenofovir alafenamide relating to Descovy and Vemlidy beginning on October 31, 2031, and to Odefsey beginning on January 31, 2032.

Following the news, an RBC Capital Markets analyst reacted in a note, stating that last week they highlighted the progression of the litigation and their "sense has been the Street had not given any credit at all to GILD potentially extending the TAF patent, despite mgmt further highlighting the upside optionality."

"We believe this settlement will meaningfully extend the exclusivity of several key HIV agents including Descovy, Vemlidy, and Odefsey to 2031 and 2032 (for Odefsey)," continued the analyst, who has an Outperform rating and $79 price target on Gilead. "We view this as a key positive for the HIV franchise longevity potential $3B in sales these products generate, and see potential for stock upside on today's news."

Gilead shares are up over 4% during today's session.

Elsewhere, a Mizuho Securities analyst, who has a Buy rating and a $75 price target on the stock, told investors in a note that while the resolution does not cover any challenges from other generic manufacturers, "reaching a resolution with nine generic companies and pushing out the LOE ~6-7 years bodes well for any future challenges."

"Again, the litigation today doesn't preclude litigation from others, so investors may not ascribe full value to the LOE extension, but toward the direction (so, even if we assume the midpoint of 2028'ish would imply a ~$3-4 increase in the consensus DCF)," the analyst concluded.