Gilead increases 2024 outlook, expects new drug filing by end of year
11/08/2024 01:18
Gilead reported strong Q3 results and expects a consistent growth trajectory for the coming years.
Gilead Sciences (GILD) increased its growth forecast for the year on strong third quarter results, marking a shift away from its COVID revenues and spurring investor anticipation for new products in the near future.
In third quarter earnings Wednesday, the company increased its 2024 guidance — bucking the opposite trend by large pharma peers this quarter — and beat on both top- and bottom-line results.
CEO Daniel O'Day told Yahoo Finance the company's third quarter was the its best this year.
"This has been the strongest quarter of the year for us. It really shows the strength of our business model ... and that's true for both ... our legacy business, our HIV business, our virology business, but also for the new business areas of oncology and also inflammation," he said.
On the post-earnings call with investors, CFO Andrew Dickinson said the company's beat was due to surprise increased sales of the COVID-19 antibody drug Veklury, as well as the legacy HIV portfolio sales.
"We ... expect full‐year 2024 total product sales in the range of $27.8 to $28.1 billion, an increase of $650 million at the midpoint compared to the prior range," Dickinson said.
The company reported revenue of $7.5 billion, up 7% year over year, beating Wall Street estimates by about 7%. In addition, Gilead reported adjusted earnings per share of $2.02, beating Wall Street expectations by nearly 30%.
The stock is up nearly 6% Thursday, trading at more than $96 per share, compared to a market close price of $91.69 per share. Jefferies analyst Michael Lee said in a note to clients late Wednesday that the stock is up 40% since the summer, when it bottomed out at $63 per share.
The company's HIV portfolio sales were up 9%, an area it has continued to rely on for strength as it diversified into oncology and inflammatory diseases in the past five years. That includes the $12 billion acquisition of Kite Pharma, which boosted Gilead's oncology pipeline.
"What the investment community is realizing is the durability of that base business goes well into late 2030s and early 2040s. And that's very different than the outlook that we had five years ago," O'Day said.
He said this is why the company isn't facing the same pressures as larger pharma companies, such as pricing and patent policies from the federal government. However, Gilead has faced its own set of inquiries and legal settlements related to patent gaming — most recently a $40 million settlement for slowing the release of a life-saving HIV treatment in order to boost profits.
The company has spent the last five years building out its portfolio to sustain mid- to high-single-digit growth year over year, Dickinson told Yahoo Finance.
And anticipation is building for new products in its legacy HIV-prevention and treatment portfolio, according to O'Day.
"Not only do we not have any patent expiries of significance in that business until 2033, but actually prior to them we're redefining that whole business from a one pill, once a day ... [to] once-a-week, once-a -month orals in development now. Many of which will come to market before 2033," O'Day said.
Biktarvy, a once-daily pill to treat HIV, is one of the company's top-selling drugs, set to lose its patent in 2033. The company reported revenues of $3.4 billion for Biktarvy in the third quarter, or a 12.5% increase year over year.
The next product stoking investor interest is lenacapavir, a twice-yearly HIV prevention drug. The company is expected to file for approval by the end of the year, and the drug will hit the market by next year.
It's why, despite price pressures from the federal government and scrutiny of patents and deals by the Federal Trade Commission, the company is in a strong position, Dickinson said.
"We are in a unique position relative to many of our peers, where we have a portfolio that is relatively young," he said.
"We don't have any major patent cliffs for roughly the next decade. Many of our peers may need to look at large M&A; that's not something we need to do. We leaned into diversifying the business and now you're starting to see the output of that," Dickinson added.
While the executives aren't providing 2025 guidance, Dickinson noted that Medicare Part D changes are expected to weigh slightly on the company's growth, lowering revenue potential from patients' out-of-pocket spend, "but it doesn't change the overall slope of the growth."
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on most social media platforms @AnjKhem.
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