Veklury, the antiviral drug for COVID-19, blew past Wall Street expectations in the third quarter, lifting what would have otherwise been a weak earnings season for its developer, Gilead.
During the three-month period, 2 million people received Veklury or a licensed generic version of it, according to Gilead. That use translated to almost $2 billion in sales, nearly triple what analysts had forecasted.
Yet some wonder how long Veklury can make up for the rest of Gilead’s business, which fell 3% over the same timeframe. More people worldwide are getting vaccinated, while coronavirus cases are on the decline following a major surge due to the delta variant.
Competition is also nearing, as Merck & Co. and others advance oral antiviral drugs that are generally considered more convenient than Veklury, which is used in hospitalized patients and given via an intravenous infusion.
Veklury is "not likely to be a sustainable franchise in our view given our expectations for COVID waning and small molecule antiviral availability," wrote Brian Abrahams, an analyst at RBC Capital Markets, in a note to clients.
Still, Abrahams and his team believe Veklury’s strong sales provide Gilead with "a highly effective hedge against pandemic headwinds to their other franchises." The company recorded $7.4 billion total product sales in the quarter, up 13% from the same period a year prior.
As one of the earliest approved treatments for COVID-19, Veklury has been a valuable asset to both doctors and Gilead. Over 60% of patients hospitalized with the disease in the U.S. receive Veklury, according to the company. On a Thursday call with investors, executives amended their full-year revenue outlook for the drug, increasing it from the old range of $2.7 billion to $3.1 billion to a new one of $4.5 billion to $4.8 billion.
Despite that change, leadership noted how Veklury’s performance is tied to patient hospitalizations. So if case numbers go down, sales are likely to follow.
"After the wave of infections and hospitalizations in recent months, we believe we have moved past the peak of the pandemic for the year," said Andrew Dickinson, the company’s chief financial officer.
"We continue to expect that Veklury will play an important role in the treatment of patients with COVID -19 globally," he added. "However, assuming we do not experience another surge, we expect Veklury revenue to step down significantly in the fourth quarter."
Veklury may run into additional obstacles from Merck, which announced this month that an antiviral pill it’s been developing with partner Ridgeback Biotherapeutics dramatically reduced the number of hospitalizations from COVID-19, compared to a placebo, in a clinical trial.
More specifically, the pill lowered the risk of hospitalization or death by about 50% in patients with mild or moderate disease. Merck is now trying to secure an emergency authorization in the U.S. "as soon as possible," and, on the company’s own earnings call Thursday, executives forecasted between $5 billion and $7 billion in sales of the drug through the end of 2022.
Gilead has been working on oral antivirals too, though they aren’t as far along as Merck’s or other experimental treatments from Pfizer and Atea Pharmaceuticals. The company’s chief medical officer, Merdad Parsay, said data updates will be provided "as those molecules begin to mature," adding that one of the main aims is to provide alternative treatment options, especially in the outpatient setting.
Outside of COVID-19, Gilead is hoping to move the needle in cancer treatment after spending $27 billion last year on deals meant to establish it as a leader there. Among the assets it acquired are magrolimab, an experimental drug for blood cancers, and Trodelvy, an approved therapy for breast cancer.
Investors are now looking forward to data from key clinical trials testing those drugs, though they’ll have to wait a bit longer than expected. Gilead said Thursday that readouts from both trials have been pushed back to the first quarter of 2022.
The company’s cancer work has become a focal point — not only because of how much money it’s wagered, but also because of challenges to its core business of antiviral drugs. In HIV, for example, Gilead’s third quarter product sales were $4.2 billion, an 8% decline that reflected the loss of patent protection on the medicines Truvada and Atripla in the U.S.
"Success from any of the oncology programs or new indications could transform Gilead’s outlook by providing a real growth driver to their top line," wrote SVB Leerink analyst Geoffrey Porges in a note to clients.
Investors appear cautious about Gilead’s outlook for now, however. Shares of the company were down almost 3.5% mid-morning Friday.