Gilead stock pared its gains Friday after Gilead Sciences beat first-quarter sales forecasts on the back of its Covid treatment, Veklury.
In morning trades, Gilead stock rose just 0.2% to close at 65.42. In after-hours trading Thursday, following the earnings release, shares jumped more than 3%.
Veklury generated $555 million in sales, topping Street expectations for $367 million to $375 million, according to FactSet and Needham analyst Joseph Stringer.
In an interview with Investor's Business Daily, Gilead Chief Executive Daniel O'Day called the Veklury sales increase a "meaningful beat relative to Wall Street's expectations." But Needham's Stringer noted the Street doesn't see the Covid drug as a long-term driver. Meanwhile, Biktarvy drove its HIV business, and two out of three of Gilead's cancer drugs missed sales forecasts.
Analysts were relatively split on the quarter. RBC Capital Markets analyst Brian Abrahams, who cut his Gilead stock price target to 74 from 76, says the solid quarter despite seasonal headwinds "may help convince some that shares have bottomed out."
Gilead stock is down almost 26% since mid-January.
Sales Top Gilead Stock Analysts' Views
Overall, Gilead's revenue climbed 5% to $6.69 billion, beating Gilead stock analysts' forecasts for $6.36 billion, according to FactSet.
The company lost an adjusted $1.32 per share after taking a $3.9 billion tax hit due to the takeover of CymaBay. Gilead has since filed for approval of CymaBay's seladelpar. Seladelpar was tested in patients with a rare liver disease.
Excluding that, Gilead would have beat earnings expectations with $1.82 per share, O'Day said. In the year-earlier period, Gilead earned $1.37 a share.
Revenue from Gilead's biggest moneymaker, Biktarvy, surged 10% to $2.95 billion, topping forecasts for $2.9 billion. But sales of fellow HIV treatment Descovy were light at $426 million, down 5%. Andrew Dickinson, Gilead's chief financial officer, says patients are switching from the legacy products to Biktarvy, a newer drug.
Gilead is testing a drug called lenacapavir as a means to prevent HIV. The company expects to have the results of that study in the latter half of the year, with plans to launch in 2025. Dickinson expects that launch to be "paradigm-changing." Descovy is also largely used as an HIV prevention drug.
It will be important to watch "how we manage Descovy during this paradigm-changing launch," he said in an interview with IBD.
Oncology Business Comes Up Light
In the oncology business, cell therapy Tecartus and antibody drug conjugate Trodelvy lagged sales views. Tecartus treats forms of lymphoma and leukemia, while Trodelvy is a breast and bladder cancer treatment. Sales of cell therapy Yescarta, on the other hand, beat estimates. Yescarta treats lymphoma.
Collectively, all three drugs brought in $789 million, lagging Gilead stock analysts' expectations by $11 million.
Dickinson says cell therapy uptake is slowly improving. Cell therapy involves making bespoke cancer treatments using a patient's own immune cells. He expects momentum to pick up late this year amid salesforce improvements and better market dynamics.
"These are important growth franchises for us," he said. "These franchises have a long future ahead of them in terms of market exclusivity."
Needham's Stringer, who has a hold rating on Gilead stock, noted Trodelvy sales have been driven by higher demand, but pockmarked by lower prices in Europe and inventory drawdown in the U.S. The company expects to have the results of studies in metastatic bladder and lung cancers this quarter.
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