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Gilead (GILD) Q3 Earnings Beat on Increased Veklury Sales

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Gilead Sciences, Inc. GILD beat sales and earnings estimates in the third quarter of 2021 driven by increased contribution from COVID-19 treatment, Veklury (remdesivir). However, sales of other drugs were disappointing as the base business continues to be affected by the pandemic.

Hence, shares were down in after-hours trading. Gilead’s stock has gained 15.6% so far this year against the industry's decline of 11.3%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The company reported earnings of $2.65 per share in the quarter, which beat the Zacks Consensus Estimate of $1.72 and jumped from $2.11 in the year-ago quarter.

Total revenues of $7.4 billion beat the Zacks Consensus Estimate of $6.2 billion and increased 13% from the year-ago quarter, mainly owing to incremental sales of Veklury for the treatment of COVID-19.

Quarter in Detail

Total product sales increased 13% to $7.4 billion in the quarter under review. However, excluding Veklury, product sales decreased 3% year over year to $5.4 billion as the loss of exclusivity of Truvada and Atripla in the United States offset the increased demand for flagship HIV therapy Biktarvy (bictegravir 50 mg/FTC 200 mg/tenofovir alafenamide 25 mg (TAF) and breast cancer drug Trodelvy (sacituzumab govitecan-hziy).

HIV product sales decreased 8% to $4.2 billion due to the loss of exclusivity of Truvada and Atripla in the United States, partially offset by higher Biktarvy demand and improved trends in the treatment market. Biktarvy sales increased 20% year over year to $2.3 billion on higher treatment demand and net price. However, Descovy (FTC 200 mg/TAF 25 mg) sales were down 15% due to lower net price. Truvada and Atripla sales decreased 87% and 76% year over year, respectively, due to the loss of exclusivity in the United States in late 2020.

HCV product sales decreased 8% to $429 million due to fewer patient starts outside the United States.

Hepatitis B virus (HBV) and hepatitis delta virus (HDV) product sales were up 17% to $247 million. Vemlidy sales grew 18%, driven primarily by uptake in regions outside the United States. Hepcludex (bulevirtide) contributed $12 million to sales as launch activities continued across Europe.

Cell Therapy product sales increased 51% to $222 million. Yescarta sales increased to $175 million, driven by continued demand in relapsed or refractory large B-cell lymphoma (LBCL) and strong uptake in relapsed or refractory indolent follicular lymphoma in the United States and Europe. Tecartus sales totaled $47 million, driven by increased adoption in mantle cell lymphoma in the United States and Europe.

Breast cancer drug, Trodelvy, generated $101 million of sales fueled by increased use of the second-line treatment of metastatic triple-negative breast cancer (TNBC) and metastatic urothelial cancer in the United States.

Veklury sales came in at $1.9 billion driven by the recent surge in COVID cases, including the Delta variant.

Adjusted product gross margin was 90% compared with 86.5% in the year-ago period. Research & development expenses were $1.1 billion, down from $1.2 billion in the year-ago quarter.

2021 Guidance Updated

Product sales are now projected to be $26-$26.3 billion (earlier estimated range: $24.4-$25 billion) primarily due to higher Veklury sales. Total product sales, excluding Veklury, are expected around $21.5 billion compared with $21.7 billion to $21.9 billion previously, primarily reflecting the longer-than-expected pandemic impact on the business.

Total Veklury sales are now estimated between $4.5 billion and $4.8 billion (earlier projection: $2.7 billion and $3.1 billion), primarily reflecting the surge in COVID-19 hospitalizations in the third quarter. Earnings per share are expected in the range of $7.90-$8.10, up from the previously expected range of $6.90-$7.25. The Zacks Consensus Estimate for sales and earnings per share is pegged at $25.3 billion and $7.23, respectively.

Other Updates

The FDA approved Tecartus for the treatment of adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukemia.

Gilead also announced a collaboration and supply agreement with Merck MRK to evaluate the efficacy of Trodelvy in combination with the latter’s anti-PD-1 therapy, Keytruda (pembrolizumab), as a first-line treatment for patients with locally advanced or metastatic TNBC.

Gilead Sciences, Inc. Price, Consensus and EPS Surprise

Gilead Sciences, Inc. Price, Consensus and EPS Surprise
Gilead Sciences, Inc. Price, Consensus and EPS Surprise

Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote

Our Take

While Gilead’s third-quarter results were better than expected due to Veklury, the slowdown in legacy business continues to worry investors. The ongoing pandemic has adversely impacted the HIV and HCV businesses as treatment prescription volumes remained below the pre-pandemic levels. Generic competition for the HIV business affected sales. Competition is stiff as well from the likes of GlaxoSmithKline GSK.

Gilead currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Regeneron Pharmaceuticals REGN which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron’s earnings estimates are up $8.24 for 2021 in the last 60 days. The stock is up 29.4% in the year so far.

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Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report

GlaxoSmithKline plc (GSK) : Free Stock Analysis Report

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Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report

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