Gilead misses the mark in Q3 due to Obamacare fee and dip in Sovaldi revenue

Gilead's Sovaldi--Courtesy of Gilead

Gilead Sciences ($GILD) is charging full speed ahead in 2014, charting eye-popping sales for blockbuster Sovaldi and chalking up a key regulatory approval for its new hep C combo pill, Harvoni. But the company's third-quarter earnings fell short of analysts' estimates in light of a hefty Obamacare fee and lower-than-expected revenue for its top-selling hep C drug.

The Foster City, CA-based company raked in $2.73 billion in net income during Q3, a threefold increase from last year's $789 million. Earnings rang in at $1.84 a share, missing the average of 25 analysts' estimates by 9 cents, according to data compiled by Bloomberg.  

Gilead's numbers were hampered by a $337 million payment required by Obamacare, also known as the Branded Prescription Drug Fee. The drugmaker reported the fee based on 2014 year-to-date sales instead of just the current quarter, and adjusted earnings would have rang in at $2.05 a share without the fee, Robin Washington, Gilead's chief financial officer, said during the company's Q3 earnings call.

Sovaldi, the company's powerhouse hep C med, brought in sales of $2.8 billion in the third quarter, falling short of the $2.96 million average predicted by analysts, Bloomberg reports. The lower numbers were not unexpected, as doctors often "warehouse" patients waiting for the treatment and Gilead recently launched its all-oral hep C combination pill Harvoni, said Deutsche Bank Analyst Robyn Karnauskas (as quoted by Bloomberg). The company expects the drug to peak at more than $10 billion a year, usurping Sovaldi's title as the fastest-growing drug of all time.

The drugmaker is also seeing a faster rate of adoption for Harvoni, as physicians appreciate the "simplicity" of the regimen and are writing more scripts, Paul Carter, Gilead's executive vice president of commercial operations, said on an earnings call. And although Harvoni comes with a high price tag, $94,500 for a 12-week regimen and $63,000 for 8 weeks of therapy, the shorter treatment regimen could draw in more patients.

Meanwhile, Gilead continues to deal with government and payer pushback for Sovaldi. Earlier this month, the French government proposed arm-twisting taxes for pricey hep C meds, a move that could undercut the $1,000-per-pill therapy. And while in September the U.K.'s National Institute for Health and Care Excellence (NICE) backed Sovaldi for use by the NHS, behind closed doors the agency is still weighing the drug's benefits against the costs.

- read Gilead's earnings statement
- here's the SeekingAlpha earnings call transcript
- get more from Bloomberg

Special Report: The new drug approvals of 2013 - Sovaldi - Gilead

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