The COVID-19 pandemic continues to offer a mixed bag for Gilead Sciences. On the one hand, the biotech has reaped billions on the back of its antiviral treatment remdesivir, which has helped offset worse-than-expected hits to its mainstay HIV and hepatitis C drugs.
As vaccinations pick up and hospitalizations decline, it’s anyone’s guess how long the biotech’s other medicines can piggyback off remdesivir. To Gilead executives, the drug still has room to run this year and potentially into 2022. Meanwhile, the company had to discount a key HIV drug in the first quarter to fend of copycats for an older med.
Gilead reported $6.4 billion in first-quarter revenue, a 16% increase compared with the same period last year. Remdesivir, marketed as Veklury, drove the increase, pulling in $1.5 billion during the quarter.
While that marked a dip compared with nearly $2 billion in sales for the med last quarter as COVID-19 hospitalizations skyrocketed, it fell in line with analysts’ consensus estimates. The bigger problem was with Gilead’s underlying business, and that may raise red flags for investors.
Excluding the COVID-19 antiviral, the company’s revenues actually declined 11% year over year to $4.9 billion, falling short of expectations. Gilead chief Daniel O’Day acknowledged that the biotech’s “core business was more impacted by COVID‐19” during the quarter than the company anticipated. The CEO has been tapped to usher the drugmaker into its next stage, but investors still have questions about the company's future.
The California-based drugmaker’s HIV and hepatitis C drugs, which typically generate the weight of its total sales, struggled as fewer people visited doctors offices during the pandemic. Hepatitis C sales sank 30% compared with last year to $510 million, while revenue from its flagship HIV franchise also slid 12% during the quarter to $3.7 billion. HIV sales were hit by the company’s loss of U.S. exclusivity for Truvada and Atripla, executives said.
What's worse, Gilead discounted its Truvada follow-up Desovy in order to maintain insurance coverage for the newer drug in the face of cheaper copycats to its older med, Bernstein analyst Ronny Gal wrote to clients. Sales for Descovy slipped 22% to $359 million, with about half the decline coming from increased rebating. The analyst projects $1.8 billion in peak sales for the drug and said that "prices concessions will offset volume growth" going forward.
The company’s shares fell nearly 3% in after-hours trading following its Thursday evening earnings drop. The company’s stock price has now fallen roughly 25% from the highs it set in 2020.
“The market is still dampened because of this pandemic as you can appreciate with the social dynamics that we are all living with,” Johanna Mercier, Gilead’s chief commercial officer, said on an a call with analysts, adding that there was some improved uptake for HIV drugs over the last month. Gilead noted that stockpiling in the first quarter last year also played a role in the declines.
Despite those challenges, remdesivir’s share of the market remains strong: Roughly half of hospitalized COVID-19 patients in the U.S. now receive the antiviral, which continues to “play a key role as a standard of care treatment” for patients globally, O’Day said.
Remdesivir sales have also remained steady in other markets beyond the U.S., including Europe and Asia, operating chief Mercier said. In fact, despite accelerating vaccine rollouts, the global pandemic recovery has been more sluggish than once thought, which means “a slower pandemic‐recovery for the second quarter.”
“We've always said that, we think the tail is longer,” Mercier said. “We do believe that Veklury still will have an important role to play within the next couple of quarters and potentially beyond into 2022.”