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Gilead Sciences (NASDAQ:GILD) Makes Headlines With HIV Prevention Pill, Looks to Hepatitis Drugs for Future

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Investors look to early next year when a moment of truth arrives for the biotech's hepatitis C program. Shares are trading at a record level and some analysts see the stock rising much more.

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By early next year, Schoenebaum says, more investors are going to jump on Gilead's shares. He believes growth investors, in particular, will buy the stock. Schoenebaum's advice: Buy the shares now before they explode. While some analysts now see the stock rising to $70 per share in the next year, Schoenebaum predicts Wall Street estimates will set price targets between $80 and $100 per share by early 2013.

"I think you need to buy this stock now," the analyst says. "I think you need to be there for the (late-stage) data. If you're a value manager and you can't handle data risk, stay away, but if you're a growth manager, this is just one you've got to own."

The risk: Failure in the program could send the shares down to around $40 each, he says.

With any clinical program, risks abound. Already, a pair of rival drug makers have been hurt by safety issues. Bristol-Myers Squibb (NYSE:BMY) scrapped its hepatitis drug program due to patient heart issues. A patient in a Bristol-Myers study died of heart failure. The FDA put a hold on two drugs being studied by Idenix Pharmaceuticals (NASDAQ:IDIX) because of concern there may be similar safety problems. (See Idenix Drops After FDA Puts Hold on Another Hepatitis Drug.)

Gilead has tried to reassure Wall Street about drug safety by pointing to a large patient pool of more than 2,000 people receiving GS7977. So far, Gilead hasn't seen the type of cardiac issues seen with Bristol-Myers' drug.

"There's always risk here but, in my mind, we're beginning to enter the point --given the size of the safety database -- we can feel pretty good about the safety" of Gilead's drug, Schoenebaum says.

Twitter: @brettchase

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