As Gilead Sciences' (NASDAQ:GILD) announcement of its second-quarter earnings approached, there were three big things investors were looking to see. One was any sign that the company's hepatitis C virus (HCV) franchise sales might have begun to stabilize. Another was how well new HIV drug Biktarvy performed. And investors also hoped that the rest of the big biotech's HIV lineup held up against the competition.
Gilead answered all those questions when it provided an update of its second-quarter performance after the market closed on Wednesday, but it also raised a new question. Here are the highlights from the company's second-quarter results.
Gilead Sciences results: The raw numbers
|$5.65 billion||$7.14 billion||
Net income from continuing operations
|$1.82 billion||$3.07 billion||
Adjusted earnings per share (EPS)
What happened with Gilead Sciences this quarter?
Although Gilead's HCV revenue fell more than 65% year over year to $1 billion, the more important comparison to look at is second-quarter sales versus first-quarter sales. The quarter-over-quarter decline was only 4.4% -- much better than the 30% quarter-over-quarter drop that Gilead reported in May 2018. It looks as if the long-awaited stabilization in HCV revenue might be very close.
The brightest spot in Gilead's second-quarter results was the performance of Biktarvy. Gilead's new HIV drug raked in $185 million in its first full quarter on the market, and all but $2 million of that total was made in the United States. As European sales also ramp up, Gilead should soon have its next blockbuster HIV drug.
Thanks in part to Biktarvy's successful launch, the biotech's total HIV sales in the second quarter increased 15.6% year over year to $3.7 billion. But Gilead's other TAF-based HIV drugs also helped tremendously. Sales for Genvoya jumped 35% from the prior-year period to $1.16 billion. Percentage sales growth for Descovy and Odefsey was even more impressive, with sales for Descovy increasing nearly 41% year over year to $403 million and sales for Odefsey jumping 49% year over year to $385 million.
Gilead's older HIV drugs, including Truvada, Atripla, and Stribild, saw sales drop from the prior-year period. However, these declines were expected with generic competition in Europe and the ascendence of the company's own TAF-based drugs.
Yescarta, the chimeric antigen receptor T-cell therapy picked up with Gilead's acquisition of Kite Pharma last year, generated revenue of $68 million during the second quarter. That's up from $40 million in sales for Yescarta in the first quarter of 2018.
Revenue from Gilead's other drugs fell 13.4% year over year to $807 million. The primary factor behind this decline was significantly lower sales for hepatitis B virus drug Viread.
Gilead's other big news
Overall, Gilead's second-quarter results were pretty good despite the poor comparisons with the prior-year period. However, investors might have reeled a bit from the company's other news: CEO John Milligan is stepping down at the end of 2018.
Milligan was named CEO of Gilead in March 2016 and has been with the company for 28 years. A tenure of fewer than three years at the helm was definitely unexpected.
Milligan stated, "It has been an honor to work at Gilead for my entire professional career, and now that the company is on solid footing for the future, the board and I have agreed it is a good time to turn the reins over to a new leader." He added, "I'm looking forward to a well-deserved break and will then move on to new and different opportunities."
In addition, John Martin, former Gilead CEO and current chairman of the board, announced that he will step down from the company's board of directors at the end of the year. Martin felt that "this would be a natural transition point from his successive roles as CEO, executive chairman, and chairman," according to Gilead's press release about Milligan's upcoming departure.
In Gilead's first-quarter conference call, CFO Robin Washington said 2018 would be a "trough year" for the company. The biotech's second-quarter results hint that Gilead might now begin moving past the bottom of the trough on its way to renewed growth.
Investors can look forward to continued momentum for Biktarvy and Gilead's newer HIV drugs. It now seems that the worst for the company's HCV franchise could be over. Gilead also should report results for its promising immunology drug, filgotinib, in the near future.
But probably the biggest thing to watch now is whom Gilead will hire as its new CEO. Regardless of who it is, the person should inherit a company with better prospects than would have been the case a year ago.