Gilead banks on blockbuster remdesivir with sunnier 2020 outlook

Gilead
Gilead expects to sell 1 million to 1.5 million treatment courses of remdesivir in COVID-19 in 2020 as it plans increased supply to meet "real time global demand" from October. (Gilead Sciences)

Gilead is part of a long list of drugmakers that have suffered from business slowdowns caused by COVID-19. But unlike its peers, the Big Biotech has an unexpected blockbuster source of revenue that led it to elevate its full-year outlook: COVID-19 therapy remdesivir.

The company on Thursday increased its 2020 sales guidance to the range of $23 billion to $25 billion, from a previous $21.8 billion to $22.2 billion, even after it was hit with a bigger-than-expected year-over-year top-line decline of 9.6% in the second quarter.

The reason? It now expects to sell 1 million to 1.5 million treatment courses of remdesivir in COVID-19, Chief Financial Officer Andrew Dickinson told investors during a conference call on Thursday. By RBC Capital Markets analyst Brian Abrahams’ calculation, that roughly equates to $3.5 billion in additional second-half 2020 sales of the antiviral.

Sept. 15-17,2020

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Gilead's previous guidance, meanwhile didn’t include any contributions from remdesivir. It was only in late April—on the eve of Gilead’s first-quarter earnings report—that the National Institutes of Health unveiled the first data from a placebo-controlled clinical trial, showing the drug cut recovery time by 31% for hospitalized COVID-19 patients. And it wasn’t until two months later that the company unveiled its commercial plan, setting the list price at $3,120 for a standard five-day treatment course for private insurance plans and $2,340 per course for government purchases from developed countries.

In a controversial move, the U.S. Department of Health and Human Services has secured over 500,000 treatment courses of remdesivir for U.S. use through September. That represents nearly all of Gilead’s projected yield during the period. As it works to ramp up manufacturing, the company now expects to have enough supplies to “meet real-time global demand” from October, Gilead CEO Daniel O’Day said during the call.

RELATED: Gilead to start testing inhaled remdesivir, eyeing earlier COVID-19 use

Gilead executives acknowledged that there remain many uncertainties around how the pandemic will evolve in the second half of the year, which explains why the company is leaving a wide $2 billion difference between the two ends of its full-year sales expectations. But in a Friday note to clients, SVB Leerink analyst Geoffrey Porges said he expects there will be “significant demand” for remdesivir given the disease’s unrelenting grip on the world, and that government negotiations on stockpiling will start in the fourth quarter.

Industry watchers have long had concerns over Gilead’s sustainable growth; after all, the only noticeable growth driver at the company these days is HIV superstar Biktarvy, whose sales jumped 44% in Q2 to reach $1.6 billion. But they would be wrong to think Gilead’s relying on remdesivir for mid- to long-term growth, O’Day said.  

Some near-term contribution from the COVID-19 drug could be what Gilead needs right now. Due to COVID-19 lockdowns, the company’s hepatitis C franchise slid 42% year-over-year in Q2 to $761 million.

Its HIV PrEP drug Truvada—which can also be paired with other meds in the treatment setting—declined 46% to $718 million as the company saw “reduced initiations and therapy discontinuations due to fewer people seeing their healthcare providers and social dynamics,” Gilead’s chief commercial officer, Johanna Mercier, said during the call.

On the bright side, the company met its goal of switching 43% of Truvada PrEP patients to newer option Descovy by June, as generic Truvada entry is expected in September.

Overall, Gilead’s Q2 haul of $5.07 billion came 4% below the Street’s consensus. Over the longer term, O’Day emphasized the company’s core HIV business and a focus on the immuno-oncology space, as well as moving into inflammation. Its Galapagos-partnered JAK inhibitor filgotinib is currently awaiting an FDA decision in rheumatoid arthritis.

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