2 Biotech Stocks Billionaire Investor George Soros Dumped. Should You?

August 29, 2016
By Alex Keown, BioSpace.com Breaking News Staff

CHICAGO – The investment fund managed by billionaire hedge fund manager George Soros recently divested itself of two biotech stocks, Gilead Sciences and Novavax , as well as selling off all holdings in the iShares Nasdaq Biotechnology Fund. But is the Soros move one for investors to follow? Analysts at the Motley Fool think otherwise.

Gilead Sciences

California-based Gilead is well known for its blockbuster hepatitis C treatments, Harvoni and Sovaldi. The drugs provide near cures for the disease, but come with a staggering price tag. Harvoni may have hit the pinnacle of sales and could begin to slide a bit in revenue. Those two drugs helped drive Gilead to a record revenue year in 2015, nearly $32 billion—more than three times what the company generated in 2012. The two drugs alone counted for $20 billion in annual revenue. However, Gilead’s revenue is predicted to be slightly less this year, about $30 billion and even lower in future years as the hepatitis C patient pool is shrinking. But the company still has several drug arrows in its quiver to generate strong revenue streams.

In June, the U.S. Food and Drug Administration approved Epclusa (a combination of sofosbuvir and velpatasvir), the first all-oral, pan-genotypic, single tablet regimen for the treatment of adults with genotype 1-6 chronic hepatitis C virus infection. Also, in January Gilead submitted a New Drug Application to the U.S. Food and Drug Administration for tenofovir alafenamide, an investigational, once-daily treatment for adults with chronic hepatitis B virus infection. The company also has a large war chest that it could use as part of an M&A platform. In February, Gilead’s Chief Executive John Miligan said he was eying some growth opportunities, particularly in the oncology, inflammatory diseases and liver disease fields.

In an interview with Kenra Investors, Norbert Bischofberger, Gilead’s executive vice president of research and development and chief scientific officer, said Gilead is looking at products that will not only complement its HCV and other liver drugs, but would look at other drugs outside that scope. And the company has made M&A moves, recently snapped up the Acetyl-CoA Carboxylase (ACC) inhibitor program Gilead now holds following its $1.2 billion deal to acquire Cambridge, Mass.-based Nimbus Apollo, Inc. The drug program is aimed at treating non-alcoholic steatohepatitis, which complements its hepatitis programs. Shares of Gilead are slightly down this morning at $78.03, but Fool analysts said the price is “too cheap to ignore.”

Novavax

Novavax is expected to provide an update on its RSV (respiratory syncytial virus) F vaccine during the third quarter of this year. The drug has been fast-tracked by the FDA. If the treatment passes regulatory hurdles, the company anticipates the drug could become a blockbuster and generate up to $8 billion in annual revenue—which would also send its stock soaring. Even if the Phase III trial fails, Fool analysts said Novavax maintains “a host of other high-value vaccine candidates” in its pipeline to aid in future stock increases. Shares of Novavax are currently trading at $7.02 as of 10:37 this morning.