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Gilead (GILD) Q1 Earnings Beat on Solid COVID Treatment Sales

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Gilead Sciences, Inc. (GILD - Free Report) reported strong first-quarter results driven by sales from its antiviral COVID-19 treatment, Veklury (remdesivir).

Gilead’s stock has lost 15.3% so far in the year compared with the industry's decline of 20.4%.

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The company reported earnings of $2.12 per share in the quarter, which beat the Zacks Consensus Estimate of $1.77 and jumped from $2.04 in the year-ago quarter. The year-over-year increase was due to higher product sales.

Total revenues of $6.6 billion surpassed the Zacks Consensus Estimate of $6.2 billion and increased 3% from the year-ago quarter due to higher demand for Biktarvy [bictegravir 50mg/emtricitabine 200mg (FTC)/tenofovir alafenamide 25mg (TAF)] and Veklury. The increase was partially offset by the impact of the loss of exclusivity for Truvada [FTC/tenofovir disoproxil fumarate 300mg (TDF)] in the United States and unfavorable pricing dynamics for hepatitis C virus (HCV) products.

Quarter in Detail

Total product sales increased 3% to $6.5 billion in the quarter under review. Excluding Veklury, product sales increased 2% year over year to $5 billion due to higher demand for flagship HIV therapy Biktarvy as well as contributions from breast cancer drug Trodelvy (sacituzumab govitecan-hziy) and Cell Therapy.

HIV product sales increased 2% to $3.7 billion as higher Biktarvy sales and favorable pricing offset the decline in sales due to the loss of exclusivity of Truvada in the United States. Biktarvy sales increased 18% year over year in the quarter, reflecting higher demand.  Descovy sales increased 4% primarily driven by higher demand and favorable pricing.

Truvada sales decreased 72% year over year due to the loss of exclusivity in the United States in late 2020.

HCV product sales decreased 22% to $399 million due to fewer patient starts.

Hepatitis B virus (HBV) and hepatitis delta virus (HDV) product sales were up 7% to $235 million. Vemlidy sales grew 10%. Hepcludex (bulevirtide) contributed $11 million to sales as launch activities continued across Europe.

Cell Therapy product sales increased 43% to $274 million. Yescarta sales increased to $211 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. Tecartus sales totaled $63 million, driven by increased adoption in mantle cell lymphoma in the United States and Europe and launch in adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukemia.

Breast cancer drug Trodelvy’s sales increased 103% to $146 million, reflecting uptake in the second-line setting for the treatment of metastatic triple-negative breast cancer in the United States and Europe and metastatic urothelial cancer in the United States.

Veklury sales increased 5% to $1.5 billion due to higher demand.

Adjusted product gross margin was 78.2% compared with 78.5% in the year-ago period. Research & development expenses were $1.2 billion, up from $1 billion. SG&A expenses were $1.1 billion compared with $1.0 billion in the year-ago quarter.

2022 Guidance

Product sales are projected to be $23.8–$24.3 billion. Total product sales, excluding Veklury, are expected to be $21.8–$22.3 billion. Total Veklury sales are estimated at around $2 billion. Earnings per share are expected in the range of $6.20-$6.70. The Zacks Consensus Estimate for sales and earnings per share is pegged at $24.52 billion and $6.54, respectively.

Other Updates

The company recently received a complete response letter from the FDA related to vial compatibility issues for the new drug application of investigational lenacapavir for the treatment of HIV-1 infection in heavily treatment-experienced (HTE) people with multi-drug resistant HIV-1 infection.

The company announced results from the phase III TROPiCS-02 study of Trodelvy in patients with HR+/HER2- metastatic breast cancer who had been heavily pre-treated. The study met its primary endpoint, demonstrating a statistically significant improvement in progression-free survival compared to physician’s choice of chemotherapy.  The company received FDA approval for Yescarta for the treatment of adult patients with LBCL that is refractory to first-line chemoimmunotherapy or that relapse within 12 months of first-line chemoimmunotherapy.

The FDA has lifted the partial clinical hold on studies evaluating investigational magrolimab in combination with azacitidine for the treatment of myelodyspastic syndrome and acute myeloid leukemia.

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   

Gilead’s first-quarter results were better-than-expected due to an incremental contribution from Veklury sales. In addition, Biktarvy sales maintained momentum.

Gilead is making efforts to develop its oncology business to diversify its revenue base as competition is stiff in the HIV business from the likes of GlaxoSmithKline (GSK - Free Report) .

Glaxo’s HIV franchise recorded 14% growth in the quarter.  Growth was driven by new HIV products Dovato, Cabenuva, Rukobia, Juluca and Apretude and phasing.

Zacks Rank & Stocks to Consider

Gilead currently carries a Zacks Rank #3 (Hold).  A couple of better-ranked stocks are Vertex Pharmaceuticals Incorporated (VRTX - Free Report) and Voyager Therapeutics, Inc. (VYGR - Free Report) , both carrying Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus estimate for Vertex’s 2022 earnings has increased 23 cents over the past 90 days to $14.56. Shares of VRTX have gained 24.4% in the year so far.

Loss estimates for VYGR have narrowed to $1.35 from $2.20 for 2022 in the past 90 days. Earnings of Voyager surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 41%.