Just a day after Gilead Sciences' investigational COVID-19 candidate remdesivir posted its first major set of positive data, analysts hounded CEO Daniel O’Day with one key question: When will the drug start making money?
No fewer than three analysts on Thursday afternoon’s first-quarter conference call tried to pry an answer from O’Day in one form or another, with Evercore ISI’s Umer Raffat pointing out that “there does seem like there will be a commercial business in the broader COVID landscape.”
But O’Day stayed tight-lipped on the plan—mostly because “we just don’t have the answers yet,” he said.
“We really need some time now to reflect upon a very volatile, changing situation” to figure out “what the right sustainable model is,” he said, telling analysts to “rest assured that we’ll come back to you as soon as we can digest that.”
So far, Gilead has pledged to donate 1.5 million vials of remdesivir—“the entirety of our supply through the early summer”—for use in clinical trials, compassionate use cases and beyond. But as the drug begins to rack up regulatory approvals, which are widely expected after it showed Wednesday that it could cut the recovery time for hospitalized patients by 31%, “we’ll allocate accordingly,” O’Day said.
“We deeply respect and appreciate the fact that when we get into millions of doses, we have to have a sustainable economic model that works here and that achieves access and affordability for patients around the world,” he added.
In the meantime, Gilead’s current moneymaking engines are continuing to do their jobs, execs said on the call. Revenues in the company’s HIV portfolio—by far its most important sales driver—rose 14% year over year on the back of strong showings for Biktarvy, the No. 1 most-prescribed HIV therapy in the U.S., and Descovy, Gilead’s newcomer in the HIV prevention category.
On the whole, the unit brought in $4.1 billion, helped by about $200 million that was “pulled forward” because of the pandemic as patients took home 90-day supplies and early refills of their HIV meds, Chief Financial Officer Andy Dickinson told investors. “We expect this to reverse itself out over subsequent quarters,” he said.
Like many of its peers, Gilead has seen the pandemic’s effects on its business, mostly in April, when new patient starts in HIV and HIV prevention began to slow, Dickinson said. But by and large, “to date, the overall effect on our business has been modest,” he said, adding that he expects HIV treatment patients to continue to refill their prescriptions and access their doctors via telemedicine.
“Our core business is very strong, durable and provides a solid foundation to navigate the current environment,” he said.
Overall, Gilead raked in $5.5 billion in sales for the quarter and chipped in $1.68 in earnings per share, just topping Wall Street’s expectations and hardly thrilling analysts.
“It was not a huge beat even with the $200M of COVID buy-up,” Jefferies’ Michael Yee pointed out in a note to clients, while JPMorgan’s Cory Kasimov called the financial performance “uninspiring.”