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Gilead (GILD) Q4 Earnings & Sales Top on Biktarvy & Oncology

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Gilead Sciences, Inc. (GILD - Free Report) reported better-than-expected fourth-quarter results, driven by continued solid demand for its HIV portfolio with further share growth for flagship therapy Biktarvy and oncology revenues driven by the cell therapy franchise and Trodelvy.

The upbeat guidance for 2023 also boosted investor sentiment.

Shares of the company are up in post-market trading following the results.

Gilead’s stock has gained 27.4% in the past year compared with the industry's decline of 8.7%.


Zacks Investment Research
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The company reported earnings of $1.67 per share in the quarter, which easily beat the Zacks Consensus Estimate of $1.50 and our estimate of $1.40 and was up from 69 cents in the year-ago quarter.

The year-over-year increase was primarily driven by two charges in the year-ago quarter (the $1.25 billion charge for a legal settlement and the $625 million charge for the Arcus Biosciences, Inc. collaboration opt-in), which did not recur in 2022.

Total revenues of $7.4 billion surpassed the Zacks Consensus Estimate of $6.6 billion and our estimate of $6.4 billion and increased 2%, primarily due to increased sales in HIV and oncology drugs.

Quarter in Detail

Total product sales increased 2% to $7.3 billion in the quarter under review. Excluding Veklury, product sales increased 9% year over year to $6.3 billion due to increased product sales related to HIV, hepatitis C virus (“HCV”) and oncology.

HIV product sales increased 5% to $4.8 billion, reflecting higher demand and favorable pricing dynamics. Sales surpassed the Zacks Consensus Estimate of $4.5 billion and our estimate of $4.4 billion.

Biktarvy sales increased 15% year over year to $2.9 billion reflecting higher demand and favorable pricing dynamics. Descovy (FTC 200 mg/TAF 25 mg) sales increased 13% to $537 million, primarily driven by favorable pricing dynamics and higher demand, partially offset by lower channel inventory. The Zacks Consensus Estimate and our estimate for sales of Biktarvy was $2.8 billion.

HCV product sales increased 12% to $439 million, primarily driven by increased patient starts and favorable pricing dynamics in the United States.

Hepatitis B virus (HBV) and hepatitis delta virus (HDV) product sales decreased 4% to $255 million. Vemlidy (TAF 25 mg) sales decreased 2%, driven primarily by lower demand and pricing dynamics outside of the United States.

Cell Therapy product sales surged 75% to $419 million, surpassing the Zacks Consensus Estimate of $406 million.

Yescarta sales increased to $337 million, primarily driven by increased demand in relapsed or refractory (“R/R”) large B-cell lymphoma (“LBCL”) in the United States and Europe. Tecartus sales totaled $82 million, driven by increased demand in adult R/R B-cell precursor acute lymphoblastic leukemia (“ALL”) and mantle cell lymphoma (“MCL”) in the United States and Europe.

Breast cancer drug Trodelvy’s sales increased 65% to $195 million, reflecting continued adoption in metastatic triple-negative breast cancer (“TNBC”) in the United States and Europe.

Veklury sales decreased 26% to $1 billion, primarily driven by lower rates of COVID-19-related hospitalizations.

Adjusted product gross margin was 86.8% for the quarter, up from 70.5% in the year-ago quarter. Research & development expenses were $1.5 billion, compared to $1.3 billion in the year-ago quarter. SG&A expenses were $2 billion, up from $1.6 billion in the year-ago quarter.

2022 Results

Revenues of $27.3 billion in 2022 were flat compared to 2021, driven by increased sales in oncology and HIV, offset by lower sales of Veklury. Adjusted earnings of $7.26 were up from $7.18 in 2021.

2023 Guidance

Product sales are projected to be between $26.0 billion and $26.5 billion. Total product sales, excluding Veklury, are expected to be $24 billion to $24.5 billion. Total Veklury sales are estimated at around $2 billion. Adjusted earnings per share are expected in the range of $6.60-$7. The Zacks Consensus Estimate for sales and earnings per share is pegged at $25.43 billion and $6.77, respectively.

Other Updates

The FDA approved Sunlenca (lenacapavir), in combination with other antiretroviral(s), for the treatment of HIV-1 infection in heavily treatment-experienced adults with multi-drug-resistant HIV-1 infection.

Our Take  

Gilead’s fourth-quarter results were impressive, driven by strong Biktarvy sales and oncology sales. Per the management, 2022 saw the strongest growth since 2015 when growth was driven by the peak of HCV 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. The oncology business also put up stellar business in 2022 and the label expansion of Trodelvy will further boost the franchise.

However, competition from the likes of GSK (GSK - Free Report) is stiff.

Strong patient demand for the new HIV medicines (Dovato, Cabenuva, Juluca, Rukobia and Apretude) boosted GSK’s HIV franchise in 2022.

Zacks Rank & Stocks to Consider

Gilead currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the healthcare sector are Novo Nordisk (NVO - Free Report) and Sanofi (SNY - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 60 days, earnings estimates for NVO for 2023 have gained 24 cents to $4.20. NVO topped earnings estimates in three of the last four quarters and has a four-quarter earnings surprise of 3.09%, on average.

Over the past 60 days, earnings estimates for Sanofi have increased to $4.41 from $4.25 for 2023. SNY also surpassed estimates in two of the trailing four quarters, with the average surprise being 9.50.

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