# Profoundd archive — Epstein Files
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=== SUMMARY ===
J.P. Morgan Gilead Sciences Thoughts on the RSV Space: Sales Could Top $2B Although Gilead's hepatitis C franchise is by far the key focus for investors, the expanding pipeline has a number of major call options in hepatitis B, NASH, IPF, hematology/oncology and now respiratory syncytial virus (RSV). Indeed, at the ATS meeting this week, Gilead revealed phase 2a data for GS- 5806 in RSV. In this report, we review the data, the therapeutic landscape and the opportunity in RSV including feedback w


=== EXTRACTED TEXT ===
J.P. Morgan 
Gilead Sciences 
Thoughts on the RSV Space: Sales Could Top $2B 
Although Gilead's hepatitis C franchise is by far the key focus for investors, 
the expanding pipeline has a number of major call options in hepatitis B, 
NASH, IPF, hematology/oncology and now respiratory syncytial virus (RSV). 
Indeed, at the ATS meeting this week, Gilead revealed phase 2a data for GS-
5806 in RSV. In this report, we review the data, the therapeutic landscape and 
the opportunity in RSV including feedback we've received from several 
pulmonologists. From a timing perspective, Gilead expects to begin a phase 
2/3 trial in RSV in mid 2014, with a potential for a regulatory filing in 2H16 
in adults. Physicians we spoke to viewed the phase 2a data as "very 
promising," but were understandably cautious on extrapolating the results to 
children (the larger opportunity). Of note, no therapies arc approved for active 
RSV; Synagis is approved as a prophylaxis in a narrow segment of infants and 
very few assets are in clinical development. GS-5806 is not included in JPM 
or Street models; confirmation is needed in patients with active infection, but 
we'd peg the WW opportunity at close to $2B. When putting GS-5806 in the 
context of Gilead's growing pipeline, plus a stable base HIV business and 
aggressive growth expected in hep C, we'd argue that GILD shares still have 
meaningful upside. Reiterate Overweight. 
• The basics of RSV: RSV is a single-stranded RNA virus that infects the 
respiratory tract. The virus is fairly common and most healthy people 
recover within a few weeks, however, certain populations are at increased 
risk These include children less than one year of age, those with certain 
pulmonary infections and immuncompromised adult patients where an RSV 
infection could lead to hospitalization and death. Of note, infections 
typically follow a seasonal pattern that differs based on geographically. In 
the US, the RSV season typically begins in November and ends in March. 
• High unmet need: There arc currently no approved treatment options in 
infants or adults with RSV infection. Indeed, in children, RSV treatment 
guidelines issued by the American Academy of Pediatrics only recommends 
Synagis specifically for prophylaxis in an increasingly narrow segment of 
infants. Additionally, the guidelines caution that supportive therapy (inhaled 
bronchodilators and corticostcroids) and ribavirin should not be routinely 
used. Of note, physicians indicate that ribavirin is very difficult to 
administer in inhaled form and efficacy is "questionable". 
Gilead Sciences, Inc. (GILD;GILD US) 
FYE Dec 2013A 2014E 2015E 2016E 
EPS Reported ($) 
O1 (Mar) 0.48 1.48A 
O2 (Jun) 0.50 1.32 
O3 (Sep) 0.52 1.18 
O4 (Dec) 0.55 1.63 
FY 2.05 5.61 6.52 7.54 
Bloomberg EPS FY ($1 2.00 6.05 7.60 8.67 
Source: Company On. Bloomberg. Morgan eabmates. North America Equity Research 
22 May 2014 
Overweight mum 
►aces ua 
GILD, GILD US 
Price: $81.81 
Price Target: $100.00 
US Biotechnology 
AC Geoff Meacham 
Bloomberg JPMA AIEACHAM <GO, 
Michael E Ulz 
AnLipain Rama 
Carter L Gould 
•. Morgan Securities LLC 
Paceesdonnence 
555 - 
75 
5 GS 
N 
as  III I acv Men Il5wO SW MOO 
— Gag sham ecke SUSS hebessrl 
YTD 1m 3m 12m 
Abs I &a% 14.3% 4.9% 44.9% 
Rd I S.7% 13.4% .37% 31.8% 
Company Data 
Price ($) 81.81 
Date Of Price 21 May 14 
52-week Range ($) 84.88-48.70 
Market Cap (S mn) 133,757.20 
Fiscal Year End Dec 
Shares OfS (mn) 1,635 
Price Target ($) 100.00 
Price Target End Date 31-Dec-14 
See page 6 for analyst certification and Important disclosures. 
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that 
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single 
factor in making their investment decision. 
www.jpmorganmarkets.com 
EFTA00300337
Geoff Meacham 
2 North America Equity Research 
22 May 2014 
J.PMorgan 
• Encouraging efficacy in phase 2a challenge study: In a phase 2a challenge 
study in healthy adults, GS-5806 met the primary endpoint of viral load 
reductions and met the secondary endpoints that included improvement in total 
mucus weight and symptom diary score. Indeed, a significant 99.9% reduction 
in viral load was observed (p<0.001). Additionally, GS-5806 resulted in a 
significant improvement in both mucus weight (6.9g vs. 15.Ig placebo; 
p=0.028) and symptom diary score (-20.2 vs. 204.9 placebo; p1.005). 
• Clean safety profile in phase 2a: No SAEs were observed in the study and all 
AEs for GS-5806 were mild or moderate in severity. These included headache, 
diarrhea, nausea, upper respiratory tract infection and rash, with a Grade I 
decline in pulmonary function the only AE occurring in ≥2 patients. 
• Physicians perspective: Physicians we spoke to characterized the phase 2a 
data as "very promising" In particular, one physician was impressed with the 
study design that he indicated was "elegant" and "as good as it gets" referring to 
the double blind and placebo control. With respect to the primary endpoint, the 
99.9% reduction in viral load was viewed as "unbelievable." That said, in a 
phase 3 adult natural infection study, where patients are likely to have more co-
morbidities, a lower reduction in viral load would be expected, but even a 70% 
reduction would be impressive. Additionally, while physicians were encouraged 
they were cautious on read-through to pediatric patients (which are the larger 
market) given the difference in lung physiology compared to adults. 
• Phase 2/3 expected to begin mid 2014: Gilead is currently finalizing the 
design of a phase 2/3 study expected to begin in mid 2014. While details have 
not been disclosed, further development will focus on both children and adult 
populations. That said, we anticipate an adult study will likely be first as it 
would provide for a faster path to market and help inform the design of a study 
in children. Based on feedback from physicians and prior studies in RSV, we 
anticipate a duration of 3-6 month implying data potential in 11116. With 
respect to a primary endpoint, physicians were mixed (ranging from a mortality 
endpoint in children to length of stay in adults), but generally agreed it could be 
different in an adult and pediatric studies. Given the unmet need in RSV, we 
believe the phase 2/3 study could be used for registration. 
• Other therapies in development: Despite the high unmet need for the 
treatment of RSV, there is a dearth of emerging treatments in the clinic. 
Alnylam and Cubist were collaborating on ALN-RSV, but further development 
has slowed since Cubist opted-out of the collaboration after a mixed result in a 
phase 2 study. Alios (private) has an oral nucleoside analog (AL-8176) 
currently in a proof-of-concept study in adults, which could have data in the 
near term 
• Incidence of RSV. RSV infections lead to complications most commonly in 
infants and immunocompromised adults. Of note, there are —150K RSV-related 
hospitalizations in the US per year in children, weighted heavily towards infants 
<6 mos), leading to death in —5% of patients. Separately, there are another 25-
30K hospitalizations in the adult immunocompromised segment, including (but 
not limited to) elderly patients, —160K solid-organ transplant recipients, and 
—20K recent hematopoctic stem-cell transplant recipients. 
EFTA00300338
North America Equity Research 
22 May 2014 
J.PMorgan 
• Potential Market Opportunity. As noted above, we expect GS•5806 will be 
developed in two segments: infants and adults. Overall, we size the US 
opportunity at —$1.3B. In the pediatric segment, physician feedback indicates 
that —50% of patients resolve with currently available treatments and a short 
period of hospitalization. Assuming 50% share in the remaining patients, and a 
conservative $25K cost per treatment, we size the US pediatric opportunity at 
—$940M; using a 60% share in the adult population (25,000 patient addressable 
market), we size the US adult opportunity at —$375M. Assuming an US/OUS 
market split of 65/35 (relatively in•line with existing Synagis trends; $975M 
WW with $570M in the US), we forecast a WW opportunity at peak of -$2B. 
• Reiterate Overweight rating. 
3 
EFTA00300339
Geoff Meacham 
4 North America Equity Research 
22 May 2014 J.PMorgan 
Investment Thesis, Valuation and Risks 
Gilead Sciences (Overweight: Price Target: $100.00) 
Investment Thesis 
We rate GILD shares Overweight on the basis of solid fundamentals in HIV, very 
significant momentum in hep C, and an oncology pipeline coming into focus. We 
expect a continued robust launch of Solvadi in hep C given meaningful 
improvements relative to currently available therapies. We expect the fixed dose 
combination (FDC) of sofosbuvir + ledipasvir to raise the bar particularly high in 
GTI with a once-a-day pill. We anticipate data from the ION studies will support 
approval in 4Q14. We conservatively estimate peak WW sales of 812B+ for the hep 
C business. We also expect solid growth for the HIV franchise supported by the 
continued launch of Stribild and Complera, both once-daily, single-tablet regimens. 
Additionally, we expect oncology to begin to contribute to revenue growth with 
approval of idelalisib in mid 2014 in iNHL and CLL. 
Valuation 
Our December 2014 price target of $100 is based on a PIE multiple of —18x our 2014 
non-GAAP EPS estimate of $5.61. We believe growth and margin expansion from 
the HIV business (Stribild, in particular) are underappreciated in Street models. 
Gilead is also well on its way to repeating this story in hep C with the addition of 
Sovaldi. As such, we believe a PIE multiple inline to above that of the large-cap 
group is justified given the growth outlook and where GILD is currently trading (PIE 
of -18x 2014E, in line with large-cap group at 19x). We believe our valuation 
multiple is warranted as Gilead's 2013.16E revenue and EPS CAGRs are 29% and 
54%, respectively, well above the peer group average. 
Risks to Rating and Price Target 
Key downside risks include I) commercial risk to the HIV franchise, 2) failure of 
Sovaldi to meet Street expectations, and 3) clinical and regulatory risk for the FDC 
or for idelalisib. 
EFTA00300340
Geoff Meacham North America Equity Research 
22 May 2014 
Gilead Sciences: Summary of Financials J.IIMorgan 
Income Statement - Annual FY13A FY14E FYNE FYVIE Income Statement • Quarterly 1014A 2014E 3014E 4014E 
Revenues 11232 20,219 22121 23,881 Revenues 4,999A 4,726 4,516 5,978 
Cost of products sold (2,708) (3,319) (3,327) (3,335) Cost of products sold (611)A (662) (788) (1,258) 
Gross profit Gross profit 
SG&A (1,557) (2,173) (2,632) (2,604) SG&A (500)4 (525) (551) (598) 
R&D (1,948) (2,302) (2478) (2,437) R&D (558)4 (572) (580) (592) 
Operating income 4,988 12,424 13.684 15,515 Operating income 3,330A 2,968 2,596 3,531 
EBITDA 4,988 12,424 13.684 15,515 EBITDA 3,330A 2,968 2,596 3,531 
Net interest (income)! expense (318) (183) 0 100 Net interest (income)! expense (96)A (43) (28) (16) 
Other income / (expense) Other income / (expense) 
Income taxes (1,240) (3,008) (3.153) (3A41) Income taxes (751)A (732) (643) (880) 
Net income - GAAP 3,449 9,255 10.554 12,200 Net income - GMP 2.488A 2,197 1,930 2,640 
Net income - rearing 3,449 9,255 10.554 12,200 Net income - rearing 2,488A 2,197 1,930 2,640 
Chluted shares outstandng 1,685 1,649 1,619 1,619 Diluted shares cutstanting 1,679A 1,659 1,639 1,619 
EPS - excluding non-retuning 2.05 5.61 8.52 7.54 EPS - excluding non-recurring 1.48A 1.32 1.18 1.63 
EPS - reaming 2.05 5.61 8.52 7.54 EPS-rearing 1.48A 1.32 1.18 1.63 
Balance Sheet and Cash Flow Data FY13A FY14E FYNE FY16E Ratio Analysis FY13A FY14E FY15E FY16E 
Cash and cash equivalents 2,113 7,607 17.646 29,404 Sales growth 15.5% 80.5% 9.4% 8.0% 
Accounts receivable 2,100 4,869 5,327 5,753 EBIT growth 8.9% 149.1% 10.1% 13.4% 
Inventories 2,056 2,213 2,218 2,223 EPS growth -rearing 4.9% 174.3% 16.2% 15.6% 
Other current assets 986 1,275 1,375 1,434 
Current assets 7,274 15,983 26.585 38,833 Gross margn 
PP&E 1,168 1,139 1,1061,073 EBIT margin 44.5% 81.4% 61.9% 64.9% 
Total assets 22,497 30,980 41.549 53,784 EBITDA margn 44.5% 81.4% 61.9% 64.9% 
Tax rate 28.4% 24.5% 23.0% 22.0% 
Total debt 6,878 5,720 5,220 4,720 Net margin 30.8% 45.8% 471% 51.1% 
Total liablibes 10,698 9,448 8,954 8,460 
Shareholder/ equity 11,745 21,532 32595 45,305 Net Debt! EBITDA 95.5% (15.2%) (90.8%) (159.1%) 
Net Debt/ Capital (book) 28.9% (9.6%) (61.8%) (119.7%) 
Net income includng charges) 3,057 9,255 10.554 12.200 
D&A 345 345 345 345 Return on assets (ROA) 15.8% 34.6% 29.1% 25.6% 
Change in working capital (563) (3,141) (557) (485) Return on equity (ROE) 32.8% 55.6% 39.0% 31.3% 
Other 266 112 112 112 
Cash lbw from operations 3,105 6,570 10.454 12.172 Enterprise value sales 9.1 4.7 3.8 3.0 
Enterprise value! EBITDA 20.4 7.7 6.2 4.7 
Capex (191) (75) (70) (70) Free cash flow yield 2.3% 4.9% 7.8% 9.1% 
Free cash flow 3,148 6,633 10.384 12,024 
Cash tow from investing activities (254) (75) (20) (20) 
Cash tow from financing activities (2,544) (962) (307) (307) 
Dividends 
Dividend yield 
Source: Company reports and J.P. Morgan estimates. 
Note: Sin millions (except per-share data).Ftscal year ends Dec 
5 
EFTA00300341
Geoff Meacham North America Equity Research 
22 May 2014 J.IIMorgan 
Analyst Certification: The research analyst(s) denoted by an "AC" on the cover of this report certifies (or, where multiple research 
analysts are primarily responsible for this report, the research analyst denoted by an "AC" on the cover or within the document 
individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (I ) all of the views 
expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of 
any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views 
expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover. they also certify, as per 
KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or 
intervention. 
Important Disclosures 
• Market Maker: JPMS makes a market in the stock of Gilead Sciences. 
• Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Gilead 
Sciences within the past 12 months. 
• Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Gilead Sciences. 
• Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment 
banking clients: Gilead Sciences. 
• Client/Non-Investment Banking, Securities -Related: J.P. Morgan currently has, or had within the past 12 months, the following 
company(ies) as clients, and the services provided were non-investment-banking, securities-related: Gilead Sciences. 
• Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, 
and the services provided were non-securities -related: Gilead Sciences. 
• Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Gilead 
Sciences. 
• Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking 
services in the next three months from Gilead Sciences. 
• Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services 
other than investment banking from Gilead Sciences. 
Company -Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan-
covered companies by visiting hiqn://jmitm.comIr earch/disclosures  calling I-800-477-0406, or e-mailing 
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research.disclosure.inouiriesai intnorean.com. 
Gilead Sciences (GILD. GILD US) Pike Chart 
130 
100 
Priceal n
52 
26 
0 
Jul 
11 Apr 
12 Jan 
13 Oct 
13 0 Jan Oct 
10 
Source. Werdutto and Morgan: prIcedsla 0:00iled for slack splits and clIv.dencIs 
coverage Jul 21. 20I0 
6 Date Rating Share PrIC0 Price Target 
sl IS/ 
21-Jul-I0 OW ICAO 22.50 
13-0N-10 OW 18.34 45.00 
27-Jul-11 OW 21.48 25.00 
22-Nov-11 OW 19.38 27.50 
03-Feb-12 OW 27.35 32.50 
27-Jul-12 OW 27.75 35.00 
17-Sep-12 OW 31.01 37.50 
24-Oct-12 OW 32.46 40.00 
05-Feb-13 OW 39.59 45.00 
12-Feb-13 OW 40.40 50.00 
19-Apr-13 OW 50.86 75.00 
17-Mey-13 OW 51.96 80.00 
30-Oct-13 OW 72.67 85.00 
18-0ec-13 OW 73.59 100.00 
EFTA00300342
Coon Ktorerom North America Equity Research 
22 May 2014 J.RMorgan 
The chart(s) show M. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire 
period. 
J.P. Morgan ratings or designations: OW - Overweight, N— Neutral, UW - Underweight, NR - Not Rated 
Explanation of Equity Research Ratings, Designations and Analysts) Coverage Universe: 
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the 
average total return of the stocks in the analyst's (or the analyst's teams) coverage universe.] Neutral [Over the next six to twelve 
months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) 
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of 
the stocks in the analyst's (or the analyst's team's) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if 
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy 
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a 
recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock's expected total return is 
compared to the expected total return of a benchmark country market index, not to those analysts' coverage universe. If it does not appear 
in the Important Disclosures section of this report, the certifying analyst's coverage universe can be found on J.P. Morgan's research 
website, www.jpmorganmaricets.com. 
Coverage Universe: Meacham, Geoffrey: AMAG Pharmaceuticals (AMAG), Acorda Therapeutics Inc. (ACOR), Agios 
Pharmaceuticals (AGIO), Alexion Pharmaceuticals (ALXN), Alnylam Pharmaceuticals (ALNY), Amgen Inc (AMGN), Biogen Idec 
(BIIB), Celgene (CELG), ChemoCentryx, Inc. (CCXI), Dynavax (DVAX), Enanta Pharmaceuticals (ENTA), Gilead Sciences (GILD), 
Idenix Pharmaceuticals (IDIX), InterMune (ITMN), Ironwood Pharmaceuticals (IRWD), Medivation (MDVN), Merrimack 
Pharmaceuticals (MACK), NPS Pharmaceuticals (NPSP), Ophthotech (OPHT), PTC Therapeutics (PTCT), Regeneron Pharmaceuticals 
(REGN), Synageva 13ioPluuma (GEVA), United Therapeutics (UTIIR), Vertex Pharmaceuticals (VRTX) 
J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014 
Overnight Neutral 
(buy) (hold) Underweight 
(sell) 
J.P. Morgan Global Equity Research Coverage 44% 44% 11% 
H3 clients• 38% 49% 40% 
JPMS Equity Research Coverage 45% 48% 7% 
H3 clients• 78% 67% 60% 
•Percentage of investment banking clients in each rating category. 
For purposes only of FINRAJNYSE ratings distribution rules. OW Overweight rating falls into a buy rating category: our Neutral rating falls into a hold 
rating category: and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table 
above. 
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7 
EFTA00300343
Geoff Meacham North America Equity Research 
22 May 2014 J.P.Morgan 
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8 
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Geoff Meacham North America Equity Research 
22 May 2014 J.F!Morgan 
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"Other Disclosures" last revised April 5. 2014. 
Copyright 2014 JPNIorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or 
redistributed without the written consent of J.P. Morgan. 
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=== IMAGE DESCRIPTIONS ===
[Image 1] The image shows a document, which appears to be a page from a report or a publication. The document is titled "GILEAD SCIENCES" and includes a subtitle "JPMORGAN" at the top. The main body of the text discusses the company's performance in relation to the NASDAQ Biotechnology Index. There are several paragraphs of text, and there are charts and graphs included in the document, which are likely to 

[Image 2] The image shows a document with text, which appears to be a letter or a report. The text is in English and discusses various topics, including a summary of a meeting, a list of action items, and a section titled "Next Steps." The document is structured with headings and subheadings, and there are bullet points indicating different points or tasks. The text is dense and seems to be related to a pro

[Image 3] The image shows a page from a document, which appears to be a scientific or medical paper. The text is in English and is organized into numbered points, suggesting a structured discussion or analysis. The document is titled "Effects of a placebo on healthy individuals and on individuals with a psychiatric disorder." The visible text includes references to studies and their findings, discussing the

[Image 4] The image shows a document with text, which appears to be a page from a report or a publication. The text is too small to read clearly, but it seems to be a formal document with headings, subheadings, and possibly tables or lists. There are no visible names, dates, places, or logos that can be discerned from this image. The document is presented in portrait orientation and is likely a digital scan

[Image 5] The image shows a document with text and a graph. The text appears to be a report or article discussing financial data, specifically related to the stock market. The graph is a line chart with multiple lines, each representing different data points over time. The document is a scanned image, and the text is too small to read in detail. The visible elements include a header with a logo, which seems

[Image 6] The image shows a document with a title that reads "Investment Thesis Valuation and Risks." The document appears to be a professional or academic paper, possibly related to finance or investment. It contains text that discusses various topics such as "Investment Thesis," "Valuation," and "Risks." There are also sections titled "Investment Thesis," "Valuation," and "Risks," each with sub-points tha