Will Strong HIV Sales Fuel Gilead (GILD) In Q2 Earnings?
Biotech bigwig Gilead Sciences Inc. GILD develops drugs for the treatment of human immunodeficiency virus (“HIV”), liver diseases such as chronic hepatitis C virus (“HCV”) infection and chronic hepatitis B virus (“HBV”) infection, and cardiovascular, hematology/oncology and inflammation/respiratory diseases.
Gilead is a dominant player in the HIV market with an impressive portfolio for the same. The company was the first to bring to market a single-tablet regimen (“STR”) for the treatment of HIV — Atripla. Gilead is looking to transition the HIV market to drugs with improved long-term safety profiles.
STRs for HIV in the market include Complera/Eviplera and Stribild among others. The tenofovir alafenamide (TAF)-based products — Genvoya, Odefsey and Descovy — are performing well with strong adoption in both the United States and Europe. Genvoya has already become the most-prescribed regimen for both treatment-naïve and switch patients, since its launch in November 2015.
Also, Genvoya has been listed as a preferred regimen in several HIV treatment guidelines. The Zacks Consensus Estimate for sales of Genvoya is $1.1 billion.
In addition, Truvada, for use in pre-exposure prophylaxis setting, continued to maintain momentum with an estimated 167,000 patients using the drug, by the end of the first quarter. The Zacks Consensus Estimate for sales of Truvada is $680 million.
The company received a major boost when the FDA approved the company’s once-daily single tablet regimen (“STR”), Biktarvy (bictegravir 50mg/emtricitabine 200mg/tenofovir alafenamide 25mg, BIC/FTC/TAF) for HIV-1 infection. The recent approval of Biktarvy in Europe will further strengthen the company’s HIV franchise. The approval of this new HIV therapy will also pose stiff competition to GlaxoSmith’s GSK existing therapies, Tivicay and Triumeq.
Gilead’s stock has returned 9.8% in the year so far compared with the industry's loss of 2.0%.
However, the HCV franchise continues to be under competitive and pricing pressure, leading to a massive decline in Harvoni and Sovaldi sales. Harvoni and Sovaldi have been facing competition from AbbVie’s ABBV Viekira Pak and Viekira XR and Merck‘s MRK Zepatier, among others. The franchise suffered a significant plunge in sales due to new competition and fewer patient starts.
While pricing has largely stabilized, market share will stabilize by mid-2018 and patient starts are expected to decline further. HCV revenues are projected to decline further and will constitute a smaller portion of the top line, going forward.
Consequently, Gilead is now banking on its HIV franchise and newer avenues like the CAR-T therapy to drive growth.
Gilead has a decent track record, with the company’s earnings beating estimates in three of the last four. However, in the last reported quarter, the company missed expectations by 10.8%. Overall, the company recorded an average positive earnings surprise of 4.9%.
We expect the strength in the HIV franchise to offset the HCV franchise weakness, making it highly likely for the company to beat on earnings in the second quarter. (Read more:Will HIV Sales Drive Gilead to Beat in Q2 Earnings?)
Zacks Rank
Gilead currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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