New 52 Week Lows For GILD, How Is This Not A Screaming Buy?

I'm waiting for lsutraderman to weigh in.

I don't follow GILD too closely and I really despise the greed in biotech/pharma. It's not ok IMO, when the taxpayers are footing the bill for these ridiculous prices. Yes, I know, we need to reward innovation and all that, but just look at mylan and the epipen.... Anyways, I digress.

Last I read up the following was to blame: increasing competition on their hep-c drug (and/or declining demand/sales) as well as the increasing political pressures on drug pricing.

There is plenty of pain to go around in the biotech world too. GILD isn't the only one.

Also, what do they have in their pipeline? Anything exciting for investors?

I added at 77.89 today blindly, im trying to learn as much as I can ASAP. I like that management is sitting on a huge pile of cash and not rushing out and overpaying. I just read about this medivation deal and how gilead pulled out because it was overpaying $14B for a company worth $5B a few months ago. That sounds prudent. This HCV I get gilead is curing it, is that why it has a low multiple bc you cant consider patients as long term customers because they're being cured vs treated? I just dont get why such a low multiple but then again airlines are trading even cheaper.

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I don't follow GILD too closely and I really despise the greed in biotech/pharma. It's not ok IMO, when the taxpayers are footing the bill for these ridiculous prices. Yes, I know, we need to reward innovation and all that, but just look at mylan and the epipen.... Anyways, I digress.

Last I read up the following was to blame: increasing competition on their hep-c drug (and/or declining demand/sales) as well as the increasing political pressures on drug pricing.

There is plenty of pain to go around in the biotech world too. GILD isn't the only one.

Also, what do they have in their pipeline? Anything exciting for investors?

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The thing is, and obviously I dont have the answer, but are earnings set to decline massively or something? See the thing is its trading at 7x earnings and I mean even if earnings stay flat you're buying at 16% earnings yield, throw in a 2.5% dividend and you're buying a steal. The reason investors in the old days made so much was reinvestment of dividends at low multiples. There literally is no similar opportunity today as even garbage like coca cola is at 23x earnings. Thats why this intrigues me, its likely pricing in a massive drop in earnings coming but from what I understand gild is dominant in hepatitis C along with HIV and seeing that nearly $25B in cash exists, they can likely buy into any other company they so choose. Im not a bio investor myself usually but this seems like too good a buy point to pass up at 77.xx at 52 week lows.

They basically have a 1 pill a day cure for hepatitis C and it cost $84,000 i read and hilary has been blasting them and others with expensive drugs and saying things need to change. So the markets are pricing a hilary win in. Im not really the one to ask but from what I've read there are other hepatitis C treatments but none are as good as what gilead has and I think they may be the only 1 pill/day cure with no side effects but the others are cheaper. Aside from that I dont know the name of the specific drugs but my fiancee said gilead is the #1 player in the HIV field I dont know if that means a specific drug or treatment course or whatever.

but for now theyre making alot of money, their EPS is through the roof and stock is 7x earnings and 25% of the market cap is currently cash. 52 week high was $113.xx its now $77.xx

To be honest I don't know much about the biotech. This is just my only play in the sector to stay balanced. I really liked their financials and extra cash on hand to buy new potential products.

It's likely priced as is simply because of the risk and uncertainty that surrounds it. If there is nothing in the pipeline (there may be, I don't know) then there is little growth potential and a large threat of margins evaporating.

Without getting to much in the weeds, I'd simply reiterate that it is priced due to the increasing risks and uncertainty in biotech.

What happens if the government sets the margins in the future, or if the government only allows a certain amount of cost of development to be recovered before margins are controlled? These are the concerns IMO.

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f there is nothing in the pipeline (there may be, I don't know)

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they have 6 drugs in stage 2 and stage 3 clinical trails

Investors just aren't sure GILD knows what to do in the future. Plus their CEO that brought them to such heights stepped down in January. The stock dumped. There's just a lot of uncertainty over whether GILD knows what to do with the cash they're sitting on. I'm -30% with my GILD right now, and I'm concerned about whether they know how to move forward as well.

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I really despise the greed in biotech/pharma. It's not ok IMO, when the taxpayers are footing the bill for these ridiculous prices. Yes, I know, we need to reward innovation and all that, but just look at mylan and the epipen....

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Not trying to blast you, but I think greed is often used in these cases as an oversimplified (and typically wrong) characterization of the cause of complex problems in business. As a result of doing so, it demonizes others while creating moral superiority for those who don't bother diving into the problem to figure out the real issue so that a real solution can be found. Instead, it turns into "government, regulate these people because they're bad," even if the story doesn't match facts. Is greed responsible for some issues? Yes, of course, but many times it isn't.

A drug, by itself, is usually cheap to make. But the research that went into it, the FDA approval process that can cost hundreds of millions of dollars, the funds necessary for future research and trials, and the costs associated with most projects failing anywhere on the approval chain are all included in drug prices.

So that's why patents on drugs are so vital: to recover all that cost and profit enough to keep inventing. And when the patents end, generics come out, usually from other companies, because they don't bear said costs.

Now if all of that is true, which I can't guarantee, it seems that we can lower drug costs by making R&D and FDA approval cheaper yet just as safe, adjusting drug patent law, and encouraging generics. Correct me if I'm wrong, and please provide comments, thoughts, and feedback.