Gilead Sciences (GILD) raised its growth forecasts for the year on strong third-quarter results, marking a shift from its COVID earnings and fueling investor expectations for new products in the near future.
In Wednesday’s third-quarter earnings results, the company raised its 2024 guidance — beating the opposite trend of major pharmaceutical peers this quarter — and beating both top- and bottom-line results.
CEO Daniel O’Day told Yahoo Finance that the company’s third quarter was its best this year.
“This has been the strongest quarter of the year for us. It really shows the strength of our business model … and that applies to both … our legacy business, our HIV business, our virology business, but also the new business areas of oncology and also inflammatory diseases,” he said.
During the post-earnings call with investors, CFO Andrew Dickinson said the company’s gains were due to the surprise increase in sales of the COVID-19 antibody drug Veklury, as well as the sale of its existing HIV portfolio.
“We expect full-year 2024 total product sales in the range of $27.8 billion to $28.1 billion, up from $650 million at the midpoint compared to the previous range,” Dickinson said.
The company reported revenue of $7.5 billion, up 7% year over year, and beat Wall Street estimates by about 7%. Additionally, Gilead reported adjusted earnings per share of $2.02, beating Wall Street expectations by nearly 30%.
The stock rose nearly 6% on Thursday and is trading at more than $96 per share, compared to a market closing price of $91.69 per share. Jefferies analyst Michael Lee said in a note to clients late Wednesday that the stock is up 40% since the summer, when it bottomed at $63 per share.
Sales of the company’s HIV portfolio increased 9%, an area the company has continued to rely on for its strength as it diversified into oncology and inflammatory diseases over the past five years. That includes the $12 billion acquisition of Kite Pharma, which boosted Gilead’s oncology pipeline.
“What the investment community is realizing is that the sustainability of those core businesses will continue well into the late 2030s and early 2040s. And that’s very different from the outlook we had five years ago,” O’Day said.
He said this is why the company does not face the same pressures as larger pharmaceutical companies, such as the federal government’s pricing and patent policies. However, Gilead has faced its own series of investigations and legal settlements related to patent gaming – most recently a $40 million settlement for delaying the introduction of a life-saving HIV treatment to boost profits.
The company has built its portfolio over the past five years to deliver mid- to high-single-digit growth year over year, Dickinson told Yahoo Finance.
And according to O’Day, there is increasing anticipation for new products in the existing portfolio for HIV prevention and treatment.
‘Not only do we not have any significant patent expirations in that field until 2033, but before then we are redefining that entire business from one pill, once a day… [to] oral treatments of once a week and once a month are now in development. Many of these will come to market before 2033,” O’Day said.
Biktarvy, a once-daily pill against HIV, is one of the company’s best-selling drugs and will lose its patent in 2033. The company reported third-quarter revenue for Biktarvy of $3.4 billion, or an increase of 12.5% year over year. year.
The next product to attract investor interest is lenacapavir, a biannual drug to prevent HIV. The company is expected to apply for approval by the end of the year and the drug will hit the market next year.
That’s why the company is in a strong position despite pricing pressure from the federal government and patent and deal investigations by the Federal Trade Commission, Dickinson said.
“We are in a unique position relative to many of our peers where we have a portfolio that is relatively young,” he said.
“We don’t have any major patent cliffs in the next 10 years. Many of our colleagues may have to look at major mergers and acquisitions; that’s not something we should do. We’ve been committed to diversifying the business and now you’re starting to see it the outcome of that,” Dickinson added.
While executives don’t provide guidance for 2025, Dickinson noted that changes to Medicare Part D are expected to weigh slightly on the company’s growth, reducing revenue potential from patients’ out-of-pocket spending, “but it doesn’t change the overall slope .” of growth.”
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharmaceutical, insurance, healthcare services, digital health, PBMs, and health policy and politics. This of course also applies to GLP-1s. Follow Anjalee on most social media platforms @AnjKhem.
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