Dive Brief:
- Gilead Sciences on Tuesday evening reported first-quarter revenue that missed analysts' expectations by 6%, coming in at just $5.09 billion for the three-month period.
- Continued decline of Gilead's hepatitis C portfolio, which fell 59% year over year to $1.05 billion in sales, put further pressure on the company.
- Shares in Gilead fell by as much as 9% on Wednesday, as analysts and investors searched for bright spots in a largely negative earnings report.
Dive Insight:
Gilead CEO John Milligan and other execs didn't inspire much confidence in investors on Tuesday evening, acknowledging on the call that 2018 would represent a low point for revenues.
Executives, however, were quick to point out the company's hopes that sales will rebound in future years from growth outside of hepatitis C.
"We do believe that 2018 is a trough year for us on which we can grow. We'll have seasonality fluctuations from quarter to quarter, but we're very confident, hence, reiterated our overall guidance for the year and expect to be able to grow off of our 2018 base going forward," added CFO Robin Washington.
While the big biotech was once considered a wild success, the declining revenues from its hepatitis C business have weighed on the company for several quarters. By creating what generally constitutes a cure for the disease, Gilead essentially set a timer for the franchise.
"Consistent with our expectations, in Q1 we observed a downward pricing and market share trend across the major geographies as a result of a more competitive environment," said Washington. "Price has now largely stabilized, and we expect market share to stabilize by midyear. In addition, patient starts have become more predictable, and we expect a slow and steady decline moving forward."
This frustrated investors; competitor AbbVie reported a sales uptick in its hepatitis C portfolio, beating expectations by $300 million.
Hopes have now turned to Gilead's HIV portfolio — which is typically a win for the company — and its new CAR-T offering Yescarta (axicabtagene ciloleucel). Yet the HIV portfolio also disappointed this quarter, coming in at about $3 billion and well below analysts' estimates. Yescarta was a bright spot, although too small to move the needle much for the biotech.
The CAR-T therapy brought in $40 million in sales, beating expectations of $18 million. But the treatment still has a long way to go to prove that it is commercially viable and able to reach the blockbuster expectations of the company and outside analysts. Adding further pressure, competitor Novartis has gained approval for an additional indication for its own CAR-T therapy Kymriah (tisagenlecleucel), setting up the two drugs to compete more directly.
"The future is incredibly bright for cellular therapy, and we're excited to be at the forefront of the field pursuing a variety of approaches to develop the next generation of cellular therapy in blood cancers and solid tumors," said Milligan on the call about the living drug.
"In addition, we will look for business development opportunities that add to our pipeline and capabilities across our therapeutic areas, diversify our portfolio, and increase future opportunities for growth," said Milligan about M&A opportunities.