Gilead Sciences' (NASDAQ:GILD) second-quarter results in July were overshadowed by the surprise announcement that CEO John Milligan was leaving the company at the end of the year. But the results were actually quite good.
The big biotech reported third-quarter results after the market closed on Thursday. This time around, there weren't any unexpected departures. Instead, the news focused on Gilead's HIV and hepatitis C virus (HCV) franchises. Here are the highlights from the company's third-quarter update.
Gilead Sciences results: The raw numbers
|$5.60 billion||$6.51 billion||
Net income from continuing operations
|$2.10 billion||$2.72 billion||
Adjusted earnings per share (EPS)
What happened with Gilead Sciences this quarter?
Gilead's best news in the third quarter came from its HIV lineup. The company reported total HIV drug sales in the quarter of $3.7 billion, up 12% year over year. It might be concerning at first glance that HIV revenue in Q3 was flat compared to the second quarter of 2018. However, Gilead noted in July that the second-quarter total was artificially boosted by a temporary shift in its typical payer mix.
New HIV drug Biktarvy lived up to its star billing. Gilead announced that third-quarter sales for the drug totaled $386 million, up from $185 million in the first quarter. Biktarvy is well on its way to becoming yet another HIV blockbuster for Gilead.
But what about the albatross hanging around Gilead's neck -- its HCV franchise? Total HCV sales in the third quarter were $902 billion, a 59% drop from the prior-year period. HCV sales fell 9.8% from the second quarter of 2018. This quarter-over-quarter decline was steeper than the 4.4% slide Gilead reported three months ago. The main culprit for continued deterioration in HCV sales was increased competition, primarily from AbbVie's Mavyret.
Gilead reported sales for cell therapy Yescarta of $75 million. That reflected a nice uptick from the $68 million in sales from the second quarter. Gilead obtained Yescarta through its acquisition of Kite Pharma last year and won Food and Drug Administration (FDA) approval for the drug in October 2017.
Sales for Gilead's other drugs in the third quarter totaled $751 million, down 14% year over year. This decline stemmed primarily from lower sales of hepatitis B virus drug Viread, due to generic competition.
Beyond the financial results
Gilead also had plenty of other developments during the third quarter unrelated to its financial results as the company announced more executive changes. Chief Medical Officer Andrew Cheng left Gilead to pursue another opportunity. Gilead hired Laura Hamill from Amgen to take over as executive vice president, worldwide commercial operations. Michael Amaroso left Eisai to join Gilead as senior vice president and head of worldwide commercial, cell therapy.
In September, Gilead announced plans to launch authorized generic versions of HCV drugs Epclusa and Harvoni in the U.S. The company established a new subsidiary, Asegua Therapeutics LLC, to market the generic versions. The move shouldn't hurt Gilead financially since the price tag for the generic versions will be roughly what the company currently makes on Epclusa and Harvoni after rebates.
The company also reported encouraging results in September from two clinical studies of autoimmune disease drug filgotinib. Gilead announced positive results from a phase 3 clinical study evaluating filgotinib in treating rheumatoid arthritis. It also reported that filgotinib met the primary endpoint in a phase 2 clinical study targeting the treatment of ankylosing spondylitis.
Gilead now is more optimistic about how the full year will pan out. The company revised its full-year 2018 revenue outlook upward to between $20.8 billion and $21.3 billion. Gilead's previous guidance was for full-year revenue in the range of $20 billion to $21 billion.
Although the biotech didn't provide earnings guidance, there's reason to expect better news on that front, as well. Gilead now expects its effective tax rate to be between 18% and 20% in 2018, lower than its previous projection of 19% to 21%.
The big thing for investors to watch for now is Gilead's pick to replace Milligan as CEO. Milligan has publicly stated that the company's next head should have expertise in non-alcoholic steatohepatitis (NASH) or oncology. The person Gilead chooses could signal the direction that the company will take in the future.