Gilead Sciences may have some exciting prospects on the horizon, but for now, its cash-cow hepatitis C business is a big drag. After hepatitis C sales cratered in the first quarter—falling even more than expected—its CFO admitted that the company's bottoming out. The good news? A trough implies growth ahead.
In the first quarter, Gilead reported total revenues of $5.1 billion, a 21% decline versus the same period last year as hepatitis C sales plummeted by 60% to $1 billion, compared with last year's $2.58 billion.
Meanwhile, rival AbbVie generated hepatitis C sales of $919 million during the period. Approved in August, the pan-genotypic med Mavyret rocketed to $850 million for the quarter, far outgrowing analyst expectations. The med quickly scooped up 45% share in the U.S. and is seeing strong uptake around the world, AbbVie executives said.
The trends mean Gilead will have to look elsewhere for growth. Among other prospects at the company are CAR-T med Yescarta and HIV drug Biktarvy, but those products haven't yet started chipping in meaningful sales. Yescarta generated $40 million in the first quarter, while Biktarvy, a blockbuster combo med that only won its approval in February, brought in $35 million.
With the results, Gilead CFO Robin Washington said on Tuesday's conference call that Gilead is in a "trough year." But it's one "on which we can grow," she added. Gilead reiterated its 2018 guidance of sales between $20 billion and $21 billion.
Gilead's shares were down about 7% Wednesday morning after Thursday afternoon's post-market release.
Biktarvy is one big reason Gilead executives are optimistic. The new HIV med carries big expectations as analysts predict peak sales of about $6 billion. The team at Leerink Partners, however, sees up to $10 billion in annual sales, a hefty contribution to the top line.
Gilead is also an early leader in CAR-T and is rolling out its new therapy Yescarta, approved by the FDA in October to treat certain types of non-Hodgkin lymphoma, including diffuse large B-cell lymphoma. On Wednesday, Novartis' Kymriah picked up an indication in the lymphoma field, setting up a head-to-head battle between the drugmakers, which are the only two companies to boast CAR-T approvals in the U.S. so far.
On Tuesday's call, Washington said Gilead's Yescarta launch is intended to be "controlled" and "measured" as the company ushers in a new technology. So far, about 40 cancer centers are authorized to administer the drug.
Gilead this week started a new Yescarta educational campaign for doctors to identify and refer patients to specialists, CEO John Milligan added. And the company has secured "broad coverage" for the drug on commercial insurance plans, according to Washington.
All the developments come after massively successful years for Gilead's hepatitis C blockbusters Harvoni and Sovaldi, which brought in $19.1 billion at their peak in 2015. Since then, new competition has taken a big bite out of sales. Gilead is expecting $3.5 billion to $4 billion in hepatitis C revenues this year, down from $9.1 billion last year.