Gilead Sciences (NASDAQ:GILD), Inc. GILD missed on earnings in the fourth quarter due to legal settlement charges. Sales from its antiviral COVID-19 treatment, Veklury (remdesivir) also declined.
Hence, shares were down in after-hours trading. Gilead’s stock has gained 5.1% in the past year against the industry's decline of 36.7%.
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The company reported earnings of 69 cents per share in the quarter, which missed the Zacks Consensus Estimate of $1.53 and declined from $2.19 in the year-ago quarter. The year-over year decline was primarily due to the impact of $1.25 billion charge related to a legal settlement and a charge of $625 million related to the Arcus collaboration opt-in.
Total revenues of $7.2 billion surpassed the Zacks Consensus Estimate of $6.6 billion but decreased 2% from the year-ago quarter due to reduced demand for Veklury (remdesivir 100 mg for injection) for the treatment of COVID-19.
Quarter in Detail
Total product sales decreased 2% to $7.2 billion in the quarter under review. However, excluding Veklury, product sales increased 8% year over year to $5.8 billion due to higher demand for flagship HIV therapy Biktarvy (bictegravir 50 mg/FTC 200 mg/tenofovir alafenamide 25 mg (TAF) and favorable pricing dynamics in HIV as well as contributions from breast cancer drug Trodelvy (sacituzumab govitecan-hziy) and Cell Therapy.
HIV product sales increased 7% to $4.5 billion as higher Biktarvy sales and favorable pricing offset the decline in sales due to the loss of exclusivity of Truvada and Atripla in the United States. Biktarvy sales increased 22% year over year in the quarter, reflecting higher demand and favorable pricing dynamics. Truvada and Atripla sales decreased 58% and 29% year over year, respectively, due to the loss of exclusivity in the United States in late 2020.
HCV product sales decreased 7% to $393 million due to fewer patient starts.
Hepatitis B virus (HBV) and hepatitis delta virus (HDV) product sales were up 9% to $265 million. Vemlidy sales grew 17%, driven primarily by uptake in all regions. Hepcludex (bulevirtide) contributed $12 million to sales as launch activities continued across Europe.
Cell Therapy product sales increased 47% to $239 million. Yescarta sales increased to $182 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 $57 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, generated $118 million of sales fueled by increased use of the second-line treatment of metastatic triple-negative breast cancer (TNBC) in the United States and Europe as well as second-line metastatic urothelial cancer (UC) in the United States.
Veklury sales decreased 30% to $1.4 billion due to lower demand.
Adjusted product gross margin was 63.3% compared with 80.9% in the year-ago period. Research & development expenses were $2 billion, up from $1.5 billion, as higher R&D expenses primarily reflect a charge related to the Arcus collaboration opt-in and increased Trodelvy and magrolimab clinical activities.
2021 Results
Revenues came in at $27.3 billion, up 11% from 2020 due to increased demand for Veklury. Earnings per share increased to $7.28 for 2021 compared with $7.09 in 2020.
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, reflecting the recent surge in COVID-19 hospitalizations. 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 $24.2 billion and $6.89, respectively.
Other Updates
The company recently announced that dosing in the phase II study evaluating an investigational once-weekly oral combination treatment regimen of lenacapavir plus islatravir for the treatment of HIV was paused following clinical hold by FDA due to recent safety findings associated with Merck’s MRK islatravir.
Gilead also announced a collaboration with Merck to evaluate Trodelvy in combination with Keytruda in the first-line setting in patients with metastatic TNBC and in the first quarter of 2022 in patients with non-small cell lung cancer.
Our Take
Gilead’s fourth-quarter results were disappointing due to a slowdown in Veklury sales. Nevertheless, 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 (NYSE:GSK) GSK.
Glaxo recently announced that ViiV Healthcare (owned by GSK, Pfizer (NYSE:PFE) and Shionogi & Co. Limited) has agreed to settle the global patent infringement litigation between GSK, Shionogi and Gilead. The litigation related to ViiV Healthcare’s patents relating to dolutegravir, an antiretroviral medication used in combination with other medicines to treat HIV. GSK and its partners had alleged that Gilead’s Biktarvy infringed certain of their patents relating to dolutegravir. Per the terms, Gilead will make an upfront payment of $1.25 billion to ViiV Healthcare.
Zacks Rank & A Stock to Consider
Gilead currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Vertex Pharmaceuticals (NASDAQ:VRTX) VRTX, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for 2022 earnings for Vertex has increased 33 cents over the past 60 days to $13.65. Shares of VRTX gained 13% in the past year.
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