Gilead Beats on Q3 Earnings and Sales, Raises Annual Outlook

Gilead Sciences, Inc. GILD reported better-than-expected third-quarter results and raised its annual earnings guidance.Adjusted earnings per share (EPS) of $2.02 beat the Zacks Consensus Estimate of $1.58. In the year-ago quarter, the company reported adjusted earnings of $2.29 per share.The year-over-year decrease was due to higher acquired IPR&D and tax expenses.Total revenues of $7.5 billion beat the Zacks Consensus Estimate of $7 billion. Revenues also increased 7% year over year, primarily due to higher HIV, Veklury, oncology and liver disease drug sales.The stock was up 2% in after-market trading on Nov. 6 in response to better-than-expected quarterly results and raised guidance. The stock is also up in pre-market trading today.Gilead’s shares have risen 13.2% year to date against the industry's decline of 2.5%.Image Source: Zacks Investment ResearchFind the latest EPS estimates and surprises on Zacks Earnings Calendar.GILD’s Q3 HighlightsTotal product sales rose 7% year over year to $7.5 billion. Excluding Veklury, product sales increased 7% to $6.8 billion.HIV product sales grew 9% year over year to $5.1 billion, driven by a higher average realized price due to increased demand. The figure beat the Zacks Consensus Estimate of $4.8 billion and our model estimate of $4.9 billion.Flagship HIV therapy Biktarvy’s sales increased 13% year over year to $3.5 billion, driven by higher demand and average realized price. The reported number beat both the Zacks Consensus Estimate and our model estimate of $3.4 billion.Per GILD, Biktarvy accounts for more than 49% share of the treatment market in the United States.Descovy (FTC 200 mg/TAF 25 mg) sales increased 15% year over year to $586 million, driven by higher demand and average realized price. The reported number beat the Zacks Consensus Estimate of $525 million and our model estimate of $520 million.The Liver Disease portfolio sales, which include chronic HCV, chronic hepatitis B virus and chronic hepatitis delta virus, increased 4% to $733 million. The increase was driven by higher demand for viral hepatitis medicines.Veklury sales increased 9% to $692 million, driven by increased rates of COVID-19 related hospitalizations, particularly in the United States. Sales beat the Zacks Consensus Estimate of $296 million and our model estimate of $237.1 million.Cell Therapy product (comprising Yescarta and Tecartus) sales were flat year over year at $485 million. The figure missed the Zacks Consensus Estimate of $541 million and our model estimate of $580.9 million. Yescarta sales decreased 1% year over year to $387 million due to competition in the United States.Tecartus (adult acute lymphoblastic leukemia) sales increased 2% year over year to $98 million, driven by increased demand.Breast cancer drug Trodelvy’s sales increased 17% year over year to $332 million, primarily driven by higher demand in all regions. However, Trodelvy's sales missed the Zacks Consensus Estimate of $354 million and our model estimate of $337.5 million.Cost AnalysisAdjusted product gross margin increased to 86.8% from 85.9% in the year-ago quarter due to product mix.Research and development expenses totaled $1.4 billion, down from $1.5 billion in the year-ago quarter. This was due to the timing of clinical activities, including the winding down of studies on magrolimab and obeldesivir.SG&A expenses amounted to $1.4 billion, up 8.2% due to the timing of commercial activities, including the launch of Livdelzi (seladelpar) in the United States, and other corporate activities.Acquired IPR&D expenses totaled $505 million, driven by a $320 million charge related to the buy-out of global Livdelzi royalties from Janssen Pharmaceutica NV and payments related to ongoing collaborations.GILD Raises 2024 GuidanceProduct sales are now projected to be between $27.8 billion and $28.1 billion (previous guidance:  $27.1-$27.5 billion). Total product sales, excluding Veklury, are now expected to be between $26 billion and $26.3 billion (previous guidance:  $25.8 billion to $26.2 billion).Total Veklury sales are now estimated to be $1.8 billion (previous guidance: $1.3 billion).Adjusted EPS is now anticipated to be in the range of $4.25-$4.45, up from the previous guidance of $3.60-$3.90.Pipeline UpdatesThe FDA granted accelerated approval to seladelpar for the treatment of primary biliary cholangitis (PBC), in combination with ursodeoxycholic acid (UDCA), in adults who have had an inadequate response to UDCA, or as monotherapy in patients unable to tolerate UDCA.The candidate was approved under the brand name Livdelzi. Seladelpar was added to GILD’s portfolio/pipeline through the acquisition of CymaBay Therapeutics Inc. for $4.3 billion in March 2024. The approval of Livdelzi strengthens GILD’s liver disease portfolio.Gilead also announced that it will voluntarily withdraw Trodelvy’s use in pre-treated adult patients with locally advanced or metastatic urothelial cancer in the United States, following the results of the phase III TROPiCS-04 trial announced in May 2024.GILD announced the results of PURPOSE 2, the second phase III study of twice-yearly lenacapavir for HIV prevention. 99.9% of participants did not acquire HIV infection in the lenacapavir group, with 2 incident cases among 2,179 participants. Lenacapavir reduced HIV infections by 96% compared to background HIV incidence in cisgender men and gender-diverse people, and additionally demonstrated superiority to daily Truvada.Gilead expects to file for approval of lenacapavir for HIV prevention before the end of the year.Our Take on GILD's Q3 PerformanceGilead’s third-quarter results were impressive as Biktarvy maintained its dominant position for HIV treatment across major markets.The growth in Veklury sales benefited the company’s quarterly results.The positive data on lenacapavir bodes well. Per GILD, lenacapavir, with its twice-yearly dosing, could set a new bar for HIV prevention and allow PrEP to reach larger number of people who could benefit from a prevention regimen.Approval of better HIV treatments should strengthen the HIV franchise in the wake of increasing competition from the likes of GSK plc GSK.GSK posted 8% growth in HIV sales, driven by strong patient demand for two drug regimens — Dovato and Juluca — and long-acting drugs (Cabenuva and Apretude).GILD's Zacks Rank & Stocks to ConsiderGilead currently carries a Zacks Rank #3 (Hold).A couple of better-ranked stocks in the biotech sector are Amicus Therapeutics FOLD and Exelixis EXEL. While FOLD sports a Zacks Rank #1 (Strong Buy), EXEL carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.In the past 90 days, estimates for Amicus Therapeutics’ 2024 EPS have moved up from 20 to 22 cents. EPS estimates for 2025 have remained stable at 53 cents during the same period. FOLD’s earnings beat estimates in three of the trailing four quarters and missed the mark once, delivering an average surprise of 23.96%.Estimates for EXEL’s 2024 EPS have increased 30 cents to $1.83 in the past 90 days. Shares of EXEL have risen 48% year to date. Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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