Gilead Sciences' HCV Albatross Weighs on Its Results Yet Again

HIV sales up, hepatitis C virus (HCV) sales down. That was the story for Gilead Sciences (GILD -1.15%) when the big biotech reported its third-quarter results in October. And it's been the story for Gilead for a while.

Gilead announced its fourth-quarter results after the market closed on Feb. 4, and anyone looking for a significant plot twist came away disappointed. Here are the highlights from Gilead's fourth-quarter update. 

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Gilead Sciences results: The raw numbers

Data source: Gilead Sciences.

What happened with Gilead Sciences this quarter?

Although Gilead's revenue dropped yet again, the small fourth-quarter decline was the company's best performance in a long time. As has been the case for the past few years, Gilead's HCV franchise continued to weigh on results. Gilead reported total HCV sales of $738 million in the fourth quarter, down nearly 51% year over year and falling more than 18% from the previous quarter. 

However, a strong performance from Gilead's HIV drugs, especially Biktarvy, was nearly enough to offset the HCV sales decline. The company reported total HIV sales of $4.1 billion in the fourth quarter, up nearly 21% over the prior-year period. Biktarvy generated sales of $578 million during the quarter, accounting for close to four-fifths of the year-over-year sales increase for Gilead's HIV franchise.

Gilead's other TAF-based HIV drugs also fared well in the fourth quarter. Sales for Genvoya, Descovy, and Odefsey increased by 13.8%, 12.6%, and 37.8%, respectively. Former top HIV drug Truvada also had a solid quarter, with sales growing 3.2% year over year despite the launches of generic versions in Europe.

While HCV and HIV are the primary revenue sources for Gilead, the company's other products made significant contributions. Cell therapy Yescarta made the biggest difference in comparisons with the prior-year period, with sales soaring from $7 million in the fourth quarter of 2017 to $81 million in the recent quarter. 

Gilead squeaked by with a small GAAP profit of only $3 million in the fourth quarter. This minimal amount was due largely to the company's $820 million write-off of the anti-BCMA program picked up with the Kite acquisition in 2017. However, the year-over-year comparison looked favorable because of a big tax hit taken in the fourth quarter last year.

Throughout 2018, Gilead's cash stockpile ranked among the highest in the biopharmaceutical industry. That's still the case even though Gilead used a sizable amount of cash last year. Gilead reported cash, cash equivalents, and marketable debt securities totaling $31.5 billion as of Dec. 31, down from $36.7 billion at the end of 2017. 

Check out the latest Gilead earnings call transcript.

Looking forward

Interim CEO Gregg Alton said at the J.P. Morgan Healthcare Conference in early January that Gilead should return to year-over-year product revenue growth in 2019. CFO Robin Washington reiterated that 2018 was a "trough year" for the biotech. However, Gilead's guidance indicates that 2019 might be another "trough year." 

The company expects full-year 2019 net product sales between $21.3 billion and $21.8 billion. The midpoint of that range represents a slight decrease from the $21.7 billion in product sales the company achieved in all of 2018. The anticipated entry of generic versions of Letairis and Ranexa in the U.S. and continued market share erosion for older TDF-based HIV drugs in Europe will negatively affect Gilead's results in 2019.

Perhaps the most important thing to watch with Gilead in the near term is what changes incoming CEO Daniel O'Day might make. O'Day joins Gilead on March 1, after serving as CEO of Roche Pharmaceuticals. It wouldn't be surprising for O'Day to lead Gilead to use some of its large cash reserves to make some strategic acquisitions.