Signs that Gilead and Roche are Reading our Merger Articles

Disclaimer: This post does not constitute financial advice. Author has a long position in Gilead. Do your own due diligence before making an investment.

(This is Part 3 of our investigation into a potential merger between Gilead and Roche. Click here for all the articles.)

After publishing the first two articles on the Gilead merger, I took a few days off to let them simmer. To see what people thought. To see if anyone could poke holes in it.

Other than a few ad hominem attacks, nobody has thus far been able to refute the theory that Gilead is angling to merge with someone, probably Roche.

We waited for one of the prominent biotech people to explain exactly why Gilead would not, or could not, be bought out or merged with. We waited for a resounding list of reasons why it was impossible.

This didn’t happen.

Our Gilead articles have been viewed thousands of times. Most comments congratulate us for providing great evidence.

But like an old gold miner determined to strike it rich, I had to keep digging.

The other night I was taking a shower when I was struck by a thought: If this merger theory has merit, then Gilead and Roche executives would have read our articles. And if Gilead and Roche executives had read our articles, we would be able to see this in our website stats.

So, I took a look at the data. It was so fascinating that I had to get in touch with a friend of mine that took stats in college.

I showed him the data and said, “To me this looks like pretty strong evidence that Gilead and Roche employees have been looking at our articles.”

“David,” my friend said, “it’s not ‘pretty strong’. It’s 100%.”

Stats are a tricky beast.

He reminded me of a classic stats problem. The roulette wheel. Let’s say it’s just red or black squares. The odds of you landing on either red or black is 50%.

If you land on red three times in a row, the chance that the next toss will land on red is still 50%.

But this assumes that it’s a fair wheel.

There comes a point, say after 40 tosses, that if it always lands on red, then the next toss doesn’t have a 50% chance of landing on red, it’s probably closer to 100%. This isn’t because the wheel is on a hot streak, it’s because after 40 tosses in a row of landing on red, it’s more likely the wheel is rigged.

Landing on red 40 times in a row is about 1 in 1.1 trillion.

It quickly spirals out of control. Landing on red 50 times in a row is 1 in 1.125 quadrillion.

Once the data starts to lean too far in one direction, you can start to make reasonable assumptions that have nothing to do with chance.

Before I first looked at the website data, my theory was this: If Gilead was going to merge with Roche, then these articles would have been looked at by executives, and also the investment bank in New York that is facilitating this merger.

Here’s our website stats from Dec 20 to Dec 23, 2020.

At first glance, it appears normal. The articles are written in English, so it makes sense that most of the viewers come from English-speaking countries.

Here is the US:

The headquarters of Gilead is located in Foster City, California.

The investment bank that is helping with this merger (Which is probably either Morgan Stanley or Goldman Sachs) is located in New York.

Let’s check out California.

22 users from Foster City spent an average of 3 minutes and 13 seconds on our website. (50% above average time.)

Let’s compare population sizes for the top 10 cities for our traffic in California. (Source: Wikipedia, estimated populations for 2019)

72 users - San Francisco: 881,549

49 users - Los Angeles: 3,979,576

30 users - San Diego: 1,423,851

23 users - San Jose: 1,021,795

22 users - Foster City: 33,901 (Gilead HQ)

19 users - San Ramon: 75,995

14 users - Fremont: 241,110

14 users - San Mateo: 104,430

12 users - Redwood City: 85,925

11 users - Oakland: 429,082

Los Angeles is a big city. There’s almost 4 million people living there. It’s 117 times larger than Foster City.

But there were only 49 visitors to our site from Los Angeles.

There were 22 users from Foster City.

Per capita, that means our website is about 52 times more popular in Foster City than in Los Angeles.

Gilead headquarters is located in Foster City, so we knew we were on to something.

Gilead has three other locations in California: La Verne, Oceanside, and San Dimas. None of those locations had abnormally high amounts of traffic to our articles, but that makes sense because they’re all manufacturing plants. The executives that would know/care about the merger don’t work there.

They work in Foster City.

But it’s a big planet, so let’s keep exploring.

Next up: New York.

If the merger is the real deal, then our site would be getting a lot of traffic from New York City. Since that’s where Wall Street is, and probably the investment bank that’s involved in this transaction.

Most of the users that looked at our site came from New York City. It has a population of 8.3 million, so that isn’t a huge surprise.

Number three on the American list of high-traffic states was Florida.

At first, this surprised me. Why were Floridians, especially ones that live in Miami, so interested in a merger between Gilead and Roche?

Then I took a look a closer look at Gilead’s website.

Gilead’s main research office for respiratory and clinical development activities is in Miami.

I realized I would need to cross reference abnormal website traffic from every city with a Gilead and Roche office.

So that’s what I did. And the results were astounding.

Pretty much every city that has a either a Gilead or Roche office (that isn’t manufacturing) saw above average website traffic.

Here’s Canada:

Roche has offices near Toronto, and Montreal. (Mississauga and Laval. Both of these are essentially suburbs of their larger cities.)

Gilead has an office in Edmonton.

Here is the Netherlands:

Utrecht and Amsterdam have…you guessed it. Gilead and Roche offices.

Next: Japan

Gilead and Roche both have offices in Tokyo.

After that it’s Belgium, Germany, Italy, United Kingdom, Russia, Spain, and Singapore.

Each of these countries have Roche and Gilead offices.

Each of these countries have higher web traffic to our merger articles from cities with Roche and Gilead offices.

And finally, here’s Switzerland.

Three visitors from Basel City, headquarters of Roche.

Yes, we did see less traffic from Roche-related cities. But don’t forget, Roche is headquartered in Switzerland. The four official languages are German, French, Italian and Romansh.

Most of the Roche employees there probably don’t speak English, so they’d be less likely to be forwarded the articles. We expected to see less Roche traffic than Gilead traffic.

When you look at this data you need to think about population sizes and relative traffic.

Foster City is one of the smallest cities in the United States…

…yet somehow, Foster City in our top 10 for visitors from the US. What is the chance that these are just random users, and not Gilead employees/executives? After talking to my stats friend, we came to the conclusion that the number is so infinitesimally small that for all intents and purposes, it’s zero.

Zero percent.

Zero percent chance that those Foster City hits were random users.

It can probably be expressed as a number that isn’t zero, but it would look a lot like the roulette wheel hitting red 50+ times in a row. 1 in X quadrillion.

There are more than 1,500 cities in the US with a population over 10,000. [Source]

It would be a Christmas miracle if, through random chance, Foster City made it into the top 10 by accident. (And really, it’s the top 9 if you remove the “not set” people.)

THAT BEING SAID:

None of this proves that a buyout is going to happen next week, or even next month. But it does provide extremely compelling evidence that both Gilead and probably Roche have taken an interest in our merger articles.

When you’re betting big on stock options, that’s the kind of data you like to see.

If there’s no buyout before January 15th, 2021, I’ll be loading up on calls for the next month, because Gilead can’t stay at 52-week-lows much longer. Not with growing revenues and a fantastic pipeline.

Good luck, and happy holidays, especially to our readers in Foster City.