Modest revenue growth and a 2020 outlook that left analysts uninspired about its near-term prospects pushed Gilead Sciences Inc. shares (NASDAQ:GILD) down about 2% to close Feb. 5 at $65.87, despite growing sales of its HIV medicine, Biktarvy (bictegravir, emtricitabine and tenofovir alafenamide), and what CEO Daniel O'Day called "a sense of urgency" around further business development. The company, which still had $25.8 billion of cash and equivalents at the end of 2019, "will continue to make investments in our external pipeline, including transformative partnerships such as Galapagos and small to medium-sized bolt-on acquisitions," he said.
Total fourth-quarter revenues for the company were about the same year over year, hitting $5.9 billion in 2019 vs. $5.8 billion for the same period in 2018. Net income for the fourth quarter of 2019 was $2.7 billion compared to net income of $3 million for the same period in 2018, a quarter during which it was still accounting for its $11.9 billion acquisition of Kite Pharma Inc.
Net income for the full year, though, was relatively flat, dipping slightly to $5.38 billion in 2019 vs. $5.46 billion in 2018.
About 80% of people living with HIV who are on therapy in the U.S. are on a Gilead-based regimen, O'Day said, as the company reported $4.6 billion in HIV product sales for the fourth quarter of 2019, compared to $4.1 billion for the same period in 2018. For 2019, HIV product sales were $16.4 billion compared to $14.6 billion in 2018. The increases were primarily driven by higher sales volume as a result of the continued uptake of Biktarvy, which accounted for about a quarter of 2019's HIV sales, generating about $1.7 billion in revenue, Gilead reported. By contrast, Viiv Healthcare Ltd.'s competitive entrant, Dovato (dolutegravir/lamivudine) isn't projected to surpass the $1 billion sales mark until 2023.
Foster City, Calif.-based Gilead is also continuing work to shore up its hepatitis C virus (HCV) product sales, which dipped to $630 million for the fourth quarter of 2019 from $730 million for the same period in 2018, with a similar year-over-year picture: 2019 sales of $2.9 billion vs. 2018 sales of $3.7 billion. The company, which chalked up declines to lower average net selling price for its HCV products, said that since the introduction of authorized generics in the U.S., it has regained market share.
Milestones meet meh
Looking ahead, O'Day said the company is encouraged about the potential of its JAK1 inhibitor, filgotinib, which is under priority review at the FDA as well as under consideration by Japan and EU regulators for the treatment of rheumatoid arthritis. Meanwhile, the company continues to pursue work under its partnership with Mechelen, Belgium-based Galapagos NV.
O'Day also expressed enthusiasm about the company's progress with its approved CAR T drug, Yescarta (axicabtagene ciloleucel), for relapsed/refractory large B-cell lymphoma. During December's American Society of Hematology meeting, new data from the company's Zuma-1 trial showed, at minimum follow-up of three years, 47% of patients were alive, and median overall survival was 25.8 months. Results from a phase III second-line diffuse large B-cell lymphoma trial lie ahead in the second half of this year. Sales of Yescarta generated $122 million during the fourth quarter of 2019, compared to $81 million in 2018. For 2019, its sales were $456 million vs. $264 million in 2018.
Despite the progress, analysts expressed little enthusiasm for Gilead's near-term prospects. SVB Leerink analyst Geoffrey Porges said that "we continue to see little reason to get excited about GILD’s stock, given their relatively flat long-term outlook," while J.P. Morgan's Cory Kasimov opined that "we suspect many investors will remain on the sidelines until a good business development plan (or actions) materialize."
Early coronavirus moves
In addition to detailing the company's current economic picture and plans, O'Day also spoke to its part in ongoing global response to the novel coronavirus 2019-nCoV, against which China is now testing its NUC inhibitor, remdesivir, in a phase III trial.
The investigational compound has demonstrated in vitro and in vivo activity in animal models against the viral pathogens, MERs and SARS, which are structurally similar to the current strain of the coronavirus, O'Day said. "However, there are no antiviral data that show activity against this strain," he added. Gilead is working with the Chinese government and nongovernment organizations and regulatory authorities to develop a strategy to provide remdesivir to patients with coronavirus for emergency treatment in the absence of any approved treatment options and to support trials testing it. Progress on the program, though, "is early and unlikely to impact the stock fundamentally," Jefferies analyst Michael Yee said.