He stressed the small number of patients tested have a form of the liver disease that is traditionally very hard to treat.
“They may need to use the drug for a longer period of time, longer than three months, maybe use it for six months, and that hasn’t been tried yet,” Schoenenbaum said of Gilead’s trials.
The results may also show that one drug can’t cure the disease alone and might have to be used in combination with other hepatitis C drugs, he added. Gilead has several such drugs in its pipeline, but other companies, including Bristol-Myers Squibb, are further along with their drugs and could benefit from Gilead’s setback.
But Schoenenbaum still believes the longer-term opportunity to own the stock outweighs the risks.
“The downside risk is 10 percent, while the upside opportunity, if they can recover as data is presented, could be as much as 20 percent or more,” he said of Gilead. “For right now, it’s bad news.”
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Neither Mark Schoenebaum nor his company own shares of Gilead.