|Gilead CEO John Martin|
Gilead Sciences ($GILD) turned in another stunning quarter, beating the analysts forecasts on earnings and raising its expected take for the year by $1 billion. But some of the stock watchers saw ominous things in the fact that 10,000 fewer patients started on Gilead's hep C meds in Q2. Not to worry, CEO John Martin assured them. It was an explainable blip and there is more growth to come.
Gilead execs themselves pointed out there were 60,000 patients who started on its hep C drugs Sovaldi and combo treatment Harvoni last quarter compared to 70,000 in Q1. But according to a transcript of the analysts call, Martin said the 70,000 number in the first quarter was an aberration. It was tied to "warehousing" of patients by doctors who were waiting for the availability of Harvoni, which was approved late last year.
While Martin said there will likely be fewer patients added to the treatments in the second half of the year than the first, the company has only "touched the tip of the iceberg," of available patients. "We see that there are still a lot of patients in the U.S., in Europe, around other countries in the world to be treated."
There will be a point when the number of patients in the U.S. stabilizes, he said, but that point does not appear to have yet been reached. Gilead enjoys a 90% market share in the space and he expects payers to loosen restrictions on covering the drugs as they understand the benefits, enabling more patients to get the drugs.
To put it in context, EVP Paul Carter explained that the 130,000 patients starting the drugs in H1 was equal to all of the patients added in 2014. And the dip in new prescriptions didn't hurt the drugmakers bottom line. It reported total revenue from Sovaldi and Harvoni as $4.9 billion. In the U.S., hep C drug revenue totaled $3.4 billion with Harvoni representing $2.8 billion of that amount.
Earnings when adjusted for one-time items, hit $3.15 a share, well past the $2.71 in forecasts that Bloomberg reported. Revenue soared 26% to $8.24 billion, significantly beyond the $7.58 billion analysts projected. While known for its conservative projections, Gilead felt comfortable enough to say it now forecast product sales to reach $29 billion to $30 billion for the year, $1 billion more than the previous guidance in April of $28 billion to $29 billion.
The other question analysts, and investors, wanted Martin to answer was best phrased by Evercore ISI analyst Mark Schoenebaum when he posited to Martin: "The biggest question on everyone's mind for Gilead is who you're going to buy? Who you're going to buy? Who you're going to buy? Who you're going to buy? Who you're going to buy?"
President John Milligan answered with a long explanation about Gilead being in great shape with its innovation and people and finances. And finally: "And obviously further than that I can't comment specifically on any kinds of targets. That would be inappropriate."
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