Gilead posts higher Q1 profit, revenue on increased HIV product sales

Headline results for the first quarter:

Product sales

$5.2 billion

Versus $5 billion

Revenue

$5.3 billion (in line with forecasts)

Versus $5.1 billion

Profit

$2 billion

Versus $1.5 billion

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

Gilead Sciences noted that its HIV sales in the first quarter were primarily due to higher sales volume as a result of the continued uptake of Biktarvy. Meanwhile, hepatitis C revenue was depressed by lower patient starts and competitive dynamics, including a decline in price in US Medicare, in 2019.

The report comes after Gilead announced the departure of chief financial officer Robin Washington by March 1, 2020. Additionally, former executive vice president of Gilead's oncology therapeutics unit Alessandro Riva resigned last month after being named CEO of Glenmark Pharmaceuticals' new US-based innovation unit.

Other results:

  • US product sales: $3.8 billion, up from $3.5 billion in the prior year
  • European product sales: $882 million, down from $1 billion in the prior year
  • Total HIV sales: $3.6 billion, up from $3.2 billion in the prior year, mainly due to higher volume for Biktarvy
    • Genvoya: $1 billion, down from $1.1 billion in the prior year
    • Biktarvy: $793 million, up from $35 million in the prior year
    • Truvada: $606 million, down from $652 million in the prior year
    • Odefsey: $397 million, up from $342 million in the prior year
    • Descovy: $342 million, down from $361 million in the prior year
  • Total hepatitis C sales: $790 million, down from $1 billion in the prior year, hit by lower patient starts and competitive dynamics, including a decline in US Medicare prices
    • Epclusa: $491 million, down from $536 million in the prior year
    • Harvoni: $225 million, down from $348 million in the prior year
  • Yescarta: $96 million, up from $40 million in the prior year

Looking ahead:

Gilead affirmed its prior guidance of full-year revenue in the range of $21.3 billion to $21.8 billion, versus analyst forecasts of about $22 billion. 

The company also indicated that its Kite Pharma unit, which it acquired in 2017 for $11.9 billion, gaining the cancer CAR-T cell therapy Yescarta, will become a separate business unit. Gilead CEO Daniel O'Day said that a search for a new chief executive of Kite has been initiated, adding "in cell therapy oncology is in an ultracompetitive area. We have a leadership position, but I think we need to maintain that."

What analysts said:

Mizuho analyst Salim Syed commented "overall, the quarter looks fine," noting that investors underestimated the strength of Gilead's HIV portfolio. The analyst stated that the performance of Biktarvy in the quarter, which is patent-protected until 2033, "plays into the Gilead thesis in the marketplace that HIV may be a longer-term franchise than some think."

Meanwhile, RBC Capital Markets analyst Brian Abrahams said that the higher than expected sales of Biktarvy helped offset weaknesses for other HIV treatments. "We believe this remains a favourable dynamic, as the market moves to a regimen with a longer exclusivity period and the most competitive advantages," Abrahams added.

The analyst further remarked "hepatitis C products come in better than expected, indicating the franchise remains a solid, albeit less meaningful, cash flow generator."

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