Shares of
Gilead Sciences, Inc.
GILD
are down in after-market hours after it reported mixed results for the first quarter of 2021 due to a decline in legacy HIV sales.
The company reported earnings of $2.08 per share in the quarter under review, which beat the Zacks Consensus Estimate of $2.06 and jumped from $1.68 in the year-ago quarter.
Total revenues of $6.4 billion missed the Zacks Consensus Estimate of $6.8 billion but increased 16% from the year-ago quarter mainly owing to incremental sales of Veklury (remdesivir) for the treatment of COVID-19.
Gilead Sciences, Inc. Price, Consensus and EPS Surprise
Gilead Sciences, Inc. price-consensus-eps-surprise-chart
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Gilead Sciences, Inc. Quote
Quarter in Detail
Total product sales increased 16% to $6.3 billion for the quarter under review. Excluding Veklury, product sales decreased 11% year over year to $4.9 billion as contributions from new product launches such as Tecartus and Trodelvy were offset by the expected decline from the loss of exclusivity of Truvada and Atripla in the United States and COVID-related impacts on both HIV and hepatitis C virus (“HCV”).
HIV product sales decreased 12% to $3.7 billion due to the loss of exclusivity of Truvada and Atripla. While Biktarvy sales increased 8% year over year to $1.8 billion, it fell short of expectations. Descovy sales decreased 22% year over year to $359 million in the reported quarter due to lower average net selling price and channel inventory dynamics along with the ongoing COVID-related effects on the pre-exposure prophylaxis (PrEP) market. Truvada and Atripla sales decreased 67% year over year to $135 million and $31 million, respectively, in the first quarter, following loss of exclusivity in the United States in October 2020.
HCV product sales decreased 30% to $510 million due to lower patient starts in the United States and Europe associated with the pandemic.
HBV and hepatitis delta virus (“HDV”) product sales increased 18% to $220 million. Vemlidy sales increased 33% to $181 million. Hepcludex (bulevirtide) contributed $6 million to the top line subsequent to Gilead’s acquisition of MYR GmbH (“MYR”), representing a partial quarter of sales.
Cell Therapy product sales increased 36% to $191 million. Yescarta sales increased to $160 million driven by increased uptake and geographic expansion in Europe. Tecartus sales totaled $31 million as launch activities continued to ramp up in the United States.
Breast cancer drug Trodelvy generated $72 million of sales, representing the first full quarter of sales for Gilead following the acquisition of Immunomedics in October 2020.
Veklury sales were $1.5 billion for the first quarter. The FDA granted full approval to Veklury for the treatment of patients with COVID-19 and the European Commission (EC) granted conditional Marketing Authorization to the same. It was earlier granted an Emergency Use Authorization (“EUA”) by the FDA.
Adjusted product gross margin was 86.5% compared with 87.1% in the year-ago period. Research & development (R&D) expenses came in at $1.05 billion, up from $1 billion in the year-ago quarter.
2021 Guidance
Product sales are projected at around $23.7-$25.1 billion. Veklury sales are expected to be in the range of $2-$3 billion. Earnings per share are expected in the range of $6.75-$7.45. The Zacks Consensus Estimate for sales and earnings per share is pegged at $24.94 billion and $7.22, respectively.
Other Updates
Gilead has collaborated with a subsidiary of
Merck
MRK
to develop and commercialize long-acting, investigational treatment combinations of Gilead’s lenacapavir and Merck’s islatravir in HIV. The first clinical studies of the oral combination are expected to begin in the second half of 2021.
The FDA granted accelerated approval to Trodelvy for adult patients with locally advanced or metastatic urothelial cancer who have previously received a platinum-containing chemotherapy and either a programmed death receptor-1 or programmed death-ligand 1 inhibitor. The FDA granted full approval to Trodelvy for adult patients with unresectable locally advanced or metastatic triple-negative breast cancer.
Gilead also expanded its collaboration with
Novo Nordisk
NVO
in non-alcoholic steatohepatitis (“NASH”) with plans to launch a new phase IIb for a triple combination regimen in NASH patients with cirrhosis.
Our Take
Gilead’s first-quarter results were disappointing as the HIV business was adversely impacted by the ongoing pandemic. Competition is stiff as well from the likes of
GlaxoSmithKline
GSK
.
Gilead’s stock has gained 9.6% this year compared with the
industry
‘s decline of 2%.
The COVID-19 pandemic is expected to adversely impact HCV treatment initiations and HIV new starts and switches. Gilead expects a more gradual recovery in the COVID-related dynamics starting in the second quarter of 2021.
Gilead currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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