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US Equities
Gilead drops after hepatitis drug setback
From the Financial Times of Mon, 22 Dec 2014 18:35:27 GMT
FILE - This undated file handout photo provided by Gilead Sciences shows the hepatitis C medication Sovaldi. Facing ballooning costs for the $1,000 pill to treat hepatitis C, Illinois’ Medicaid program is putting tight restrictions into place. Patients must now meet 25 criteria before the government health care program will pay for the new drug that holds promise for a cure but at a budget-straining expense. (AP Photo/Courtesy of Gilead Sciences, File)©AP

Gilead Sciences' hepatitis medication Sovaldi

Gilead Sciences shares backtracked from their giddy ascent of the past three years, falling more than 10 per cent after the company’s flagship hepatitis C treatment fell out of favour with the largest pharmacy benefits manager in the US.

The company, which has made its name with a hepatitis C treatment whose cost has drawn political criticism, fell after a rival medicine for the disease was awarded exclusive status by Express Scripts, which helps organise treatments for 25m Americans.

Express Scripts, which helps manage the cost of healthcare plans offered by companies as well as some government programmes, said it had chosen Viekira Pak, a medicine developed by drugmaker AbbVie, as the “exclusive option” for patients.

Viekira Pak won approval from US regulators on Friday and 12 weeks of treatment will cost just over $83,000.

Steve Miller, the chief medical officer of Express Scripts, said the decision “marks a fundamental change in how sustainable access and affordability will be delivered to hepatitis C patients”.

Gilead charges $84,000 for a 12-week course of its Sovaldi pill and is levying more for a successor, Harvoni.

The company, which has a market value of $145bn, has defended the price on the grounds it is expensive to develop and has a high success rate.

Gilead shares fell 14 per cent to $92.90 by close in New York. The market value had more than quadrupled since the start of 2012.

AbbVie shares were nonetheless slightly weaker, down 1 per cent to $66.97, after rising from a low of $52.90 in mid-October.

Shares in Enanta Pharma, which helped develop the AbbVie drug, rose 10 per cent to $51.31.

Achillion Pharmaceuticals, which said it would test a combination of two of its experimental hepatitis C drugs, also benefited from the Express Scripts shift with a 9 per cent rise to $15.49. Express Scripts shares were 2 per cent higher at $82.33.

Latest data showing earlier than usual winter weakness in the US housing market weighed on the sector.

Sales of previously owned homes fell more than 6 per cent to an annual pace of 5.25m in November, the National Association of Realtors said on Monday. That was a far steeper drop than the 1.5 per cent forecast by analysts.

Although housing sales have recovered after being hobbled by a brutal US winter at the start of the year, few economists expect them to accelerate significantly in 2015.

Almost three years of rising house prices and more cautious lending by banks have been constant headwinds for the market in 2014. The pace of sales in November was at its weakest since May.

The PHLX housing sector index, which tracks about 20 companies exposed to the construction market, including building and prefabrication of homes, mortgage insurers and suppliers of building material, shrunk 0.5 per cent before recovering losses by close.

Shares in Taser International continued to rally after a surge over the past two months as a result of a spotlight on policing following a decision by a grand jury in Ferguson, Missouri, not to bring charges against a police officer involved in the shooting of an unarmed black teenager.

The Arizona-based stun gun and wearable camera maker has announced a number of orders for its police-worn cameras in recent months, from cities including most recently Los Angeles, as well as Miami, Dallas and Winston-Salem.

Its latest announcement that it had received orders for 1,879 weapons from the Ontario provincial police spurred the stock up another 9 per cent on Monday to $26.06. The company was trading at about $16 at the start of the year.

Overall, the benchmark S&P 500 index rose 0.4 per cent after its recent record-breaking run, closing at a new peak of 2,078.54. The Nasdaq Composite similarity rose 0.3 per cent to 4,781.42 on low holiday season volumes. The Dow Jones Industrial Average gained 0.9 per cent at 17,959.44.

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