Clock Ticks for Gilead as Earnings Miss Sends Shares Falling
(Bloomberg) -- Gilead Sciences Inc. missed analyst estimates in the first quarter as sales of its hepatitis C drugs fell faster than expected, sending shares tumbling more than 6 percent in late trading.
The biotech giant brought in $5.1 billion in revenue last quarter, compared with the $5.4 billion analysts had anticipated on average, the company reported Tuesday. Adjusted earnings per share were also lower than expected, at $1.48 compared with estimates of $1.66.
The shares fell to as low as $67.89 in in New York.
The miss was driven in part by declining revenue from Gilead’s hepatitis C franchise, which brought in $1.05 billion, compared with the $1.15 billion that analysts anticipated on average. The drugs are facing increasing competition from AbbVie Inc., whose rival treatment exceeded expectations by more than 45 percent when it reported last week.
Gilead warned investors last year that the competitor’s treatments would have a larger impact on its own drugs’ sales than previously believed. Before any discounts, AbbVie’s drug, Mavyret, launched with a list price of $13,200, compared with the $31,500 price for Gilead’s Harvoni at the time. Last quarter, Gilead said it expects revenue for the franchise to be $3.5 billion to $4 billion this year, far lower than the $9.1 billion the drugs brought in during 2017.
On a call with analysts, company executives highlighted the growth of its HIV drugs and the promise of research in cell therapies, while downplaying the decline of its hepatitis C franchise, which it attributed to lower prices and shrinking market share.
“We do believe that 2018 is a trough year for us on which we can grow,” Chief Financial Officer Robin Washington said on the call. “We’re off to a great start. We’ve reiterated guidance, and the year is progressing in-line with our expectations.”
The company sees the hepatitis C market as “durable and albeit a smaller component of our revenues going forward,” she said. Gilead said that the drugs’ prices have stabilized and anticipates that market share will stabilize by mid-year.
With sales from one of its key programs declining more quickly than expected, the Foster City, California-based drugmaker must find a way to replace lost revenue. The drugmaker bet billions on a new field of cancer research when it acquired Kite Pharma Inc. last year. Yescarta, a drug it got as a part of that deal, brought in $40 million last quarter, more than what analysts expected though much less than the declining sales of its other drugs.
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