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Gilead's (GILD) Q1 Earnings Miss, Veklury Sales Plunge

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Gilead Sciences, Inc. (GILD - Free Report) reported lower-than-expected first-quarter results as a decline in Veklury (remdesivir) sales hurt its performance. Nevertheless, growth in the flagship HIV therapy Biktarvy beat estimates and oncology revenues increased, driven by the cell therapy franchise and Trodelvy.

Gilead’s stock has lost 2.6% in the year so far compared with the industry's decline of 6.9%.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

The company reported adjusted earnings of $1.37 per share in the quarter, missing the Zacks Consensus Estimate of $1.63 and our model estimate of $1.50, down from $2.12 in the year-ago quarter.

The year-over-year decline was due to higher operating costs, including rising acquired IPR&D expenses and lower revenues in 2023.

Total revenues of $6.35 billion marginally missed the Zacks Consensus Estimate of $6.38 billion but beat our model estimate of $6.14 billion. Revenues declined 4% year over year on lower Veklury sales, partially offset by increased sales in HIV and Oncology.

Quarter in Detail

Total product sales decreased 3% to $6.3 billion in the quarter under review. Excluding Veklury, product sales rose 15% year over year to $5.7 billion due to increased sales related to HIV, Cell Therapy, Trodelvy (sacituzumab govitecan-hziy) and Liver Disease.

HIV product sales grew 13% to $4.2 billion, reflecting higher demand and favorable pricing dynamics. Sales beat the Zacks Consensus Estimate and our model estimate of $4.1 billion.

Biktarvy sales increased 24.4% year over year to $2.7 billion, reflecting higher demand and favorable pricing dynamics. The Zacks Consensus Estimate and our estimate for sales of Biktarvy was $2.6 billion. Descovy (FTC 200 mg/TAF 25 mg) sales increased 20% to $449 million, primarily driven by favorable pricing dynamics and higher demand.

The Liver Disease portfolio sales, which include chronic hepatitis C virus (“HCV”), chronic hepatitis B virus (“HBV”) and chronic hepatitis delta virus (“HDV”), increased 6% to $675 million, primarily fueled by higher demand and the timing of purchases in the United States.

Cell Therapy product sales surged 64% to $448 million, surpassing the Zacks Consensus Estimate of $419 million and our model estimate of $431.4 million.

Yescarta sales increased 70% to $359 million on increased demand for relapsed or refractory (“R/R”) large B-cell lymphoma (“LBCL”). Tecartus sales totaled $89 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 52% to $222 million on increased adoption in metastatic triple-negative breast cancer in the United States and Europe, as well as the launch of the indication for pretreated HR+/HER2- metastatic breast cancer in the United States.

Veklury sales decreased 63% to $573 million, primarily driven by lower rates of COVID-related hospitalizations.

Adjusted product gross margin was 86.2% for the quarter, down from 87.4% in the year-ago quarter. Research and development expenses were $1.4 billion compared with $1.1 billion in the year-ago quarter. SG&A expenses were $1.3 billion, up from $1.1 billion in the year-ago quarter.

2023 Guidance

Product sales are projected 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 $2 billion. Adjusted earnings per share are anticipated to be $6.60-$7.00.

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

Other Updates

The FDA approved Trodelvy for the treatment of adult patients with unresectable, locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.

Our Take  

Gilead’s first-quarter results were pretty ordinary as the decline in Veklury sales dragged the top line.

Nevertheless, 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. Earlier, 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.

The oncology business also continues to perform well and the label expansion of Trodelvy will further boost the franchise.

However, competition from the likes of GSK plc (GSK - Free Report) is stiff. Strong patient demand for the new HIV medicines (Dovato, Cabenuva, Juluca and Apretude) was responsible for growth of GSK’s HIV franchise in the first quarter of 2023. In particular, sales growth was primarily driven by sales of Dovato and Cabenuva.

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) at present. 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 6 cents to $4.52. NVO topped earnings estimates in three of the last four quarters and missed in the remaining one, the four-quarter earnings surprise being 3%, on average.

Over the past 60 days, earnings estimates for Sanofi have increased to $4.40 from $4.46 for 2023. SNY also surpassed estimates in three of the trailing four quarters and missing in the other, the average surprise being 7.68%.

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