According to a report published by Reuters, biopharmaceutical company Gilead Sciences, Inc. (NASDAQ: GILD) will pay $1.25 billion to U.K.-based healthcare firm GlaxoSmithKline PLC (NYSE: GSK) to settle an HIV drug patent infringement lawsuit.
The lawsuit was related to Biktarvy, an antiretroviral drug that Gilead developed to check the virus that causes AIDS. In 2018, Glaxo said that Biktarvy infringed the patent of dolutegravir and other similar compounds manufactured by its unit ViiV Healthcare.
Gilead is expected to make the payment in the first quarter of 2022. Additionally, it will pay a royalty of 3% to GSK until 2027 on the sales of Biktarvy. Gilead will also pay a royalty on the U.S. sales of any product that contains Biktarvy’s main component.
The settlement impacted Gilead’s fourth-quarter results that the company reported on Monday.
A Jefferies analyst expects U.S. sales of Biktarvy to total around $50 billion until 2027, which could result in Gilead paying royalties of nearly $2 billion to ViiV.
California-based Gilead is focused on the research, development, and sale of antiviral drugs to treat diseases like HIV, hepatitis B, hepatitis C, and influenza. Its drug portfolio includes Harvoni, Genvoya, Epclusa, Truvada, Atripla, Descovy, Stribild, Viread, Odefsey, Complera/Eviplera, Sovaldi, and Vosevi.
GILD stock closed nearly 4% down on Wednesday. It lost another 0.3% in the extended trading session to end the day at $65.60.
Wall Street’s Take
Following the earnings release, Joseph Stringer from Needham maintained a Hold rating on Gilead but did not provide a price target.
Additionally, RBC Capital analyst Brian Abrahams reiterated a Buy rating on the stock and lowered the price target to $85 from $87 (29.1% upside potential).
Overall, the stock has a Moderate Buy consensus rating based on 9 Buys and 7 Holds. The average Gilead Sciences price target of $74.46 implies 13.1% upside potential. Shares have gained 14.2% over the past year.
Hedge Fund Trading Activity
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Gilead is currently Very Positive, as the cumulative change in holdings across all 16 hedge funds that were active in the last quarter was an increase of 8.2 million shares.
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