- Investors wondering when sales of Gilead Sciences Inc.'s hepatitis C drugs will stabilize will have to wait a bit longer, after the Foster City biotech warned Thursday that the effect of new competition would be felt more fully in the fourth quarter.
- Gilead's hepatitis C drugs, which propelled the company to new heights over the past three years, have been in decline as prices in the market have come down and less patients start therapy. Combined, Gilead's four medicines for the liver disease earned $2.2 billion in the third quarter — down 34% year over year.
- While the drop in revenue was expected, company executives noted that the recent entry of AbbVie's pan-genotypic Mavyret (glecaprevir/pibrentasvir) would begin to impact Gilead's market share and pricing starting next quarter and into 2018.
Overall, Gilead delivered a solid quarter. While hepatitis C revenues came in lower than expected, stronger growth from the company's HIV business made up for the difference.
"[Gilead] had low expectations going in and did a little better, which is a relatively good thing," wrote Jefferies equity analyst Michael Yee in a Oct. 26 note.
Still, the company's caution about greater competition and pricing pressure in hepatitis C will likely draw the most attention from markets. Although AbbVie's Mavyret was approved in August, Gilead said the competitive effect would only be fully felt starting in the fourth quarter.
Anticipating that hit, Gilead trimmed the upper end of its full-year guidance for the hepatitis C business by $500 million. The revision brought the forecasted revenue range to between $8.5 billion and $9 billion.
Shares in the biotech fell 4% after market close on Thursday.
Executives emphasized Gilead was not yet through the contracting process for 2018, waving off analyst questions trying to gauge whether the company believed pressure from Mavyret and other rivals would intensify further.
"Whilst we are seeing changes from competition, we still believe we are in a strong position with regards to our portfolio," said Kevin Young, Gilead's chief operating officer.
On the HIV side of the business, Gilead was much more bullish on the performance of its top drugs. Sales of HIV medicines containing TAF, an improved compound used as a backbone in Gilead's three newest products, rose 14% from the second quarter to reach $1.6 billion.
Head of commercial operations Jim Myers noted that widespread physician acceptance of Descovy (emtricitabine/tenofovir alafenamide) had helped spur uptake of TAF-containing drugs.
Gilead expects non-HCV product revenue, which includes its hepatitis B business, to total between $16 billion and $16.5 billion for the year.
If anything, the third quarter results served as another reminder of how quickly the HIV and hepatitis C businesses are trading places, with HIV now the chief growth driver. Gilead's acquisition of Kite Pharma Inc. and its CAR-T therapy Yescarta (axicabtagene ciloleucel) was another clear effort by the company to build for a future with less and less revenues coming from a business that had vaulted Gilead to the top ranks of biotech.