Gilead (GILD) Q3 Earnings & Sales Top, Guidance Raised
Gilead Sciences, Inc. GILD reported better-than-expected third-quarter results, driven by continued solid demand for its HIV portfolio with further share growth for flagship therapy Biktarvy, and oncology revenues driven by cell therapy and Trodelvy. Sales of COVID-19 treatment, Veklury (remdesivir) declined but came in better than expected.
Consequently, management upped its revenue guidance.
Shares of the company are up in pre-market trading following the results.
Gilead’s stock has lost 3.3% so far in the year compared with the industry's decline of 23.3%.
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The company reported earnings of $1.90 per share in the quarter, which easily beat the Zacks Consensus Estimate and our estimate of $1.44 but were down from $2.65 in the year-ago quarter. The year-over-year decline was due to the MiroBio acquisition, as well as lower product gross margin and revenues.
Total revenues of $7 billion surpassed the Zacks Consensus Estimate and our estimate of $6.1 billion but decreased 5% primarily due to lower Veklury sales, partially offset by increased sales in HIV and oncology drugs.
Quarter in Detail
Total product sales decreased 5% to $7 billion in the quarter under review. Excluding Veklury, product sales increased 11% year over year to $6.1 billion due to increased product sales related to HIV, cell therapy, hepatitis C virus (“HCV”) and Trodelvy (sacituzumab govitecan-hziy).
HIV product sales increased 7% to $4.5 billion, driven by a favorable channel mix associated with government utilization leading to higher average realized price, as well as higher demand. Sales surpassed the Zacks Consensus Estimate and our estimate of $4.3 billion.
Biktarvy sales increased 22% year over year to $2.8 billion due to higher demand and channel mix. Descovy (FTC 200mg/TAF 25mg) sales increased 16% to $500 million, primarily driven by channel mix and higher demand, partially offset by inventory dynamics. The Zacks Consensus Estimate for sales of Biktarvy and Descovy was $2.6 billion and $453 million, respectively, while our estimates were $2.6 billion and $427 million.
HCV product sales increased 22% to $524 million, primarily due to a favorable resolution of a prior year rebate claim in Europe and other favorable pricing dynamics in the United States, partially offset by fewer patient starts.
Hepatitis B virus (HBV) and hepatitis delta virus (HDV) product sales increased 7% to $264 million. Vemlidy (TAF 25mg) sales increased 10%.
Cell Therapy product sales increased 79% to $398 million and surpassed the Zacks Consensus Estimate of $396 million but were short of our estimate of $444 million.
Yescarta sales increased 81% to $317 million, primarily driven by demand in relapsed or refractory (“R/R”) large B-cell lymphoma (“LBCL”) in the United States and Europe. Tecartus sales totaled $81 million, primarily driven by demand in R/R mantle cell lymphoma (“MCL”) in the United States and Europe as well as in adult R/R B-cell precursor acute lymphoblastic leukemia (“ALL”) in the United States.
Breast cancer drug Trodelvy’s sales increased 78% to $180 million, primarily driven by adoption in both the second- and third-line settings for the treatment of metastatic triple-negative breast cancer.
Veklury sales decreased 52% to $925 million, primarily driven by lower rates of COVID-related hospitalizations compared to the year-ago quarter.
Adjusted product gross margin decreased to 86.8% compared with 90% in the year-ago period. Research & development expenses were $1.2 billion, flat year over year. SG&A expenses were $1.2 billion, flat with the year-ago quarter.
Gilead Sciences, Inc. Price, Consensus and EPS Surprise
Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote
2022 Guidance Updated
Product sales are now projected between $25.9 billion and $26.2 billion (earlier projection- $24.5–$25 billion). Total product sales, excluding Veklury, are expected to be $22.5 billion to $22.8 billion (previous projection: $22–$22.5 billion). Total Veklury sales are now estimated at around $3.4 billion (earlier estimate: $2.5 billion). Adjusted earnings per share are expected in the range of $6.95-$7.15 (previous estimate: $6.35-$6.75). The Zacks Consensus Estimate for sales and earnings per share is pegged at $25.29 billion and $6.54, respectively.
Other Updates
The European Commission (“EC”) granted Marketing Authorization to lenacapavir under the brand name Sunlenca (lenacapavir) for the treatment of HIV infection, in combination with other antiretroviral(s), in adults with multi-drug resistant HIV infection for whom it is otherwise not possible to construct a suppressive antiviral regimen.
Gilead and partner Merck MRK plan to resume their phase II study under an amended protocol. The study will evaluate an investigational once-weekly oral combination treatment regimen of Merck’s islatravir at a lower weekly dose and Gilead’s lenacapavir.
The FDA accepted for Priority Review the supplemental biologics license Aapplication of Trodelvy for the treatment of patients with pre-treated HR+/HER2- metastatic breast cancer.
Gilead acquired MiroBio for $414 million in cash.
Our Take
Gilead’s third-quarter results were better than expected, driven by strong Biktarvy sales and oncology sales. Biktarvy remains the leading medicine for those seeking to switch to a new regimen in the United States as well as those starting treatments in both the United States and Europe.
Gilead is making efforts to develop its oncology business to diversify its revenue base as competition is stiff in the HIV business.
Zacks Rank & Stocks to Consider
Gilead currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the healthcare sector are Puma Biotechnology PBYI and Dynavax DVAX. Both the stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Loss estimates for Puma have narrowed to 6 cents from 16 cents over the past 60 days. Puma surpassed estimates in three of the trailing four quarters and missed in the other one, the average being 201.37%.
Earnings estimates for Dynavax have increased to $1.74 from $1.15 for 2022 over the past 90 days. Earnings of Dynavax surpassed estimates in two of the trailing four quarters.
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