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Gilead's (GILD) Q2 Earnings Miss, Revenues Beat on Oncology
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Gilead Sciences, Inc.'s (GILD - Free Report) second-quarter 2023 earnings declined year over year due to $525 million litigation accrual for settlements with certain plaintiffs in the HIV antitrust litigation. Nevertheless, growth in the flagship HIV therapy Biktarvy and breast cancer drug Trodelvy drove an increase in sales.
Gilead’s stock has lost 12.1% year to date compared with the industry's decline of 13%.
Image Source: Zacks Investment Research
The company reported second-quarter adjusted earnings of $1.34 per share, which missed the Zacks Consensus Estimate of $1.60 and declined from $1.58 in the year-ago quarter. The year-over-year decline was due to higher operating costs.
Total revenues of $6.6 billion beat the Zacks Consensus Estimate of $6.4 billion. Revenues increased 5% year over year on higher sales in HIV and oncology.
Quarter in Detail
Total product sales increased by 7% to $6.6 billion in the quarter under review. Excluding Veklury, product sales increased 11% year over year to $6.3 billion due to increased sales related to HIV, oncology and liver disease.
HIV product sales increased 9% to $4.6 billion, reflecting higher demand and favorable pricing dynamics. Sales beat the Zacks Consensus Estimate of $4.4 billion and our model estimate of $4.2 billion.
Biktarvy sales increased 17% year over year to $3 billion, reflecting higher demand and favorable pricing dynamics. Biktarvy sales beat the Zacks Consensus Estimate of $2.8 billion and our estimate of $2.7 billion. Descovy (FTC 200 mg/TAF 25 mg) sales increased 12% to $516 million, primarily driven by favorable pricing dynamics and higher demand, and beat the Zacks Consensus Estimate of $491 million and our model estimate of $496.9 million.
The Liver Disease portfolio sales, which include chronic hepatitis C virus, chronic hepatitis B virus and chronic hepatitis delta virus, increased by 4% to $711 million, primarily fueled by higher demand.
Cell Therapy product sales increased 27% to $469 million, missing the Zacks Consensus Estimate of $476 million and our model estimate of $489.2 million.
Yescarta sales increased 29% to $380 million on increased demand in the second- and third-line settings for relapsed or refractory large B-cell lymphoma. Tecartus sales increased 21% year over year to $88 million, driven by increased demand in adult R/R B-cell precursor acute lymphoblastic leukemia and mantle cell lymphoma in the United States and Europe.
Breast cancer drug Trodelvy’s sales increased 63% to $260 million on increased adoption in pre-treated HR+/HER2- metastatic breast cancer (“mBC”) in the United States. Sales beat the Zacks Consensus Estimate of $242 million and our model estimate of $235 million.
Veklury sales decreased 43% to $256 million, primarily driven by lower rates of COVID-19-related hospitalizations.
Adjusted product gross margin was 86.9% for the quarter, up from 85.6% in the year-ago quarter. Research & development expenses were $1.4 billion compared with $1.1 billion in the year-ago quarter. SG&A expenses were $1.8 billion, up from $1.3 billion in the year-ago quarter.
2023 Guidance Updated
Product sales are projected to be between $26.3 billion and $26.7 billion (previous guidance: $26-$26.5 billion). Total product sales, excluding Veklury, are expected to be $24.6 billion to $25 billion (previous guidance: $24-$24.5 billion). Total Veklury sales are estimated at around $1.7 billion (previous guidance: $2 billion). Adjusted earnings per share are anticipated in the range of $6.45-$6.80 (previous guidance: $6.6-$7).
Other Updates
The European Commission approved Trodelvy as monotherapy for the treatment of adult patients with unresectable or metastatic HR+/HER2- mBC who have received endocrine-based therapy and at least two additional systemic therapies in the advanced setting.
Gilead Sciences, Inc. Price, Consensus and EPS Surprise
Gilead’s second-quarter earnings were hit by legal charges but revenues increased despite the expected decline in Veklury sales.
Nevertheless, Biktarvy remains the leading treatment choice for those seeking to switch to a new regimen in the United States as well as for those switching therapies. 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 oral two-drug regimen (Oral 2DR- Dovato, Juluca) and long-acting medicines (Cabenuv and Apretude) was responsible for the growth of GSK’s HIV franchise in the second quarter of 2023.
The loss per share estimate for DVAX has narrowed by 5 cents to 51 cents for 2023 in the past 30 days. Dynavax has risen 25.8% in the year-to-date period. DVAX’s earnings beat estimates in two of the trailing four quarters and missed in the remaining two, the average surprise being 25.78%.
The Zacks Consensus Estimate for Alkermes’ earnings per share has moved up from 50 cents to $1.64 for 2023 and from $1.78 to $2.11 for 2024 in the past 60 days. The stock has risen 5.7% in the year-to-date period.
ALKS’ earnings beat estimates in all the trailing four quarters, the average surprise being 81.98%.
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Gilead's (GILD) Q2 Earnings Miss, Revenues Beat on Oncology
Gilead Sciences, Inc.'s (GILD - Free Report) second-quarter 2023 earnings declined year over year due to $525 million litigation accrual for settlements with certain plaintiffs in the HIV antitrust litigation. Nevertheless, growth in the flagship HIV therapy Biktarvy and breast cancer drug Trodelvy drove an increase in sales.
Gilead’s stock has lost 12.1% year to date compared with the industry's decline of 13%.
Image Source: Zacks Investment Research
The company reported second-quarter adjusted earnings of $1.34 per share, which missed the Zacks Consensus Estimate of $1.60 and declined from $1.58 in the year-ago quarter. The year-over-year decline was due to higher operating costs.
Total revenues of $6.6 billion beat the Zacks Consensus Estimate of $6.4 billion. Revenues increased 5% year over year on higher sales in HIV and oncology.
Quarter in Detail
Total product sales increased by 7% to $6.6 billion in the quarter under review. Excluding Veklury, product sales increased 11% year over year to $6.3 billion due to increased sales related to HIV, oncology and liver disease.
HIV product sales increased 9% to $4.6 billion, reflecting higher demand and favorable pricing dynamics. Sales beat the Zacks Consensus Estimate of $4.4 billion and our model estimate of $4.2 billion.
Biktarvy sales increased 17% year over year to $3 billion, reflecting higher demand and favorable pricing dynamics. Biktarvy sales beat the Zacks Consensus Estimate of $2.8 billion and our estimate of $2.7 billion. Descovy (FTC 200 mg/TAF 25 mg) sales increased 12% to $516 million, primarily driven by favorable pricing dynamics and higher demand, and beat the Zacks Consensus Estimate of $491 million and our model estimate of $496.9 million.
The Liver Disease portfolio sales, which include chronic hepatitis C virus, chronic hepatitis B virus and chronic hepatitis delta virus, increased by 4% to $711 million, primarily fueled by higher demand.
Cell Therapy product sales increased 27% to $469 million, missing the Zacks Consensus Estimate of $476 million and our model estimate of $489.2 million.
Yescarta sales increased 29% to $380 million on increased demand in the second- and third-line settings for relapsed or refractory large B-cell lymphoma. Tecartus sales increased 21% year over year to $88 million, driven by increased demand in adult R/R B-cell precursor acute lymphoblastic leukemia and mantle cell lymphoma in the United States and Europe.
Breast cancer drug Trodelvy’s sales increased 63% to $260 million on increased adoption in pre-treated HR+/HER2- metastatic breast cancer (“mBC”) in the United States. Sales beat the Zacks Consensus Estimate of $242 million and our model estimate of $235 million.
Veklury sales decreased 43% to $256 million, primarily driven by lower rates of COVID-19-related hospitalizations.
Adjusted product gross margin was 86.9% for the quarter, up from 85.6% in the year-ago quarter. Research & development expenses were $1.4 billion compared with $1.1 billion in the year-ago quarter. SG&A expenses were $1.8 billion, up from $1.3 billion in the year-ago quarter.
2023 Guidance Updated
Product sales are projected to be between $26.3 billion and $26.7 billion (previous guidance: $26-$26.5 billion). Total product sales, excluding Veklury, are expected to be $24.6 billion to $25 billion (previous guidance: $24-$24.5 billion). Total Veklury sales are estimated at around $1.7 billion (previous guidance: $2 billion). Adjusted earnings per share are anticipated in the range of $6.45-$6.80 (previous guidance: $6.6-$7).
Other Updates
The European Commission approved Trodelvy as monotherapy for the treatment of adult patients with unresectable or metastatic HR+/HER2- mBC who have received endocrine-based therapy and at least two additional systemic therapies in the advanced setting.
Gilead Sciences, Inc. Price, Consensus and EPS Surprise
Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote
Our Take
Gilead’s second-quarter earnings were hit by legal charges but revenues increased despite the expected decline in Veklury sales.
Nevertheless, Biktarvy remains the leading treatment choice for those seeking to switch to a new regimen in the United States as well as for those switching therapies. 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 oral two-drug regimen (Oral 2DR- Dovato, Juluca) and long-acting medicines (Cabenuv and Apretude) was responsible for the growth of GSK’s HIV franchise in the second quarter of 2023.
Zacks Rank & Stocks to Consider
Gilead currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the overall healthcare sector are Dynavax Technologies (DVAX - Free Report) and Alkermes (ALKS - Free Report) . While DVAX sports a Zacks Rank #1 (Strong Buy) at present, Alkermes carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The loss per share estimate for DVAX has narrowed by 5 cents to 51 cents for 2023 in the past 30 days. Dynavax has risen 25.8% in the year-to-date period. DVAX’s earnings beat estimates in two of the trailing four quarters and missed in the remaining two, the average surprise being 25.78%.
The Zacks Consensus Estimate for Alkermes’ earnings per share has moved up from 50 cents to $1.64 for 2023 and from $1.78 to $2.11 for 2024 in the past 60 days. The stock has risen 5.7% in the year-to-date period.
ALKS’ earnings beat estimates in all the trailing four quarters, the average surprise being 81.98%.