Gilead Sciences, Inc.’s GILD first-quarter 2016 earnings (including stock-based compensation expenses) of $2.98 per share fell significantly short of the Zacks Consensus Estimate of $3.03. Reported earnings were, however, higher than the year-ago figure of $2.90 per share. We expect investors to react negatively to the news.
Total revenues of $7.79 billion were also way below the Zacks Consensus Estimate of $8.13 billion. However, quarterly revenues were up 2.6% year over year.
Quarter in Detail
Product sales increased 3.7% to $7.7 billion. Antiviral product sales for the quarter registered growth of 2.8% to $7.2 billion.
Gilead’s blockbuster hepatitis C virus (HCV) drug, Harvoni, plunged 15.7% year over year to $3 billion in the reported quarter. The decline was due to lower sales in the U.S. (plunged $53.3% to $1.4 billion) reflecting lower patient starts and the full-quarter impact of higher commercial rebates, which were entered into during the first quarter of 2015. However, sales of Sovaldi, another HCV drug at Gilead, registered year-over-year growth of 31.4%.
Nevertheless, other anti-viral products, such as HIV treatments Complera/Eviplera (up 19.1% to $381 million) and Stribild (up 34% to $477 million) performed well. Sales of older HIV drugs like Truvada (up 16.5% to $898 million) were also impressive. Viread sales escalated 16.2% to $272 million. However, Atripla sales declined 8% to $675 million.
Recently launched (Nov 2015) Genvoya, the company’s first tenofovir alafenamide-based regimen for the treatment of HIV-1 infection, recorded sales of $158 million, significantly higher than $45 million in the fourth quarter of 2015.
Other products including Letairis, Ranexa and AmBisome recorded sales of $175 million (up 15.9%), $144 million (up 23.1%) and $86 million (up 1.2%), respectively. Newly launched Zydelig also performed well, recording revenues of $49 million, up 22.5% sequentially.
Research & development (R&D) expenses (including stock-based compensation expenses) were up 16.9% to $810 million. Selling, general and administrative (SG&A) expenses (including stock-based compensation expenses) were up 5.4% to $682 million.
2016 Guidance Reiterated
Gilead maintained its 2016 guidance. The company continues to expect net product sales in the range of $30–$31 billion.
Adjusted product gross margin for 2016 is still expected in the range of 88–90%. While R&D expenses (excluding stock-based compensation expenses) are still projected in the range of $3.2–$3.5 billion, SG&A expenses (excluding stock-based compensation expenses) are expected to be $3.3–$3.6 billion.