You might say the first quarter of 2019 was a turning point for Gilead Sciences (NASDAQ:GILD). For the first time in quite a while, the big biotech reported revenue and earnings growth. It was also the first quarter with Gilead's new CEO, Daniel O'Day, at the helm.
Investors found out if Gilead could keep its momentum going when the company announced its second-quarter results after the market closed on Tuesday. Here are the highlights from Gilead's quarterly update.
Gilead Sciences results: The raw numbers
|$5.68 billion||$5.65 billion||
Net income from continuing operations
|$1.88 billion||$1.82 billion||
Adjusted earnings per share (EPS)
What happened with Gilead Sciences this quarter?
Gilead's HIV franchise took center stage in the second quarter, as it has done throughout much of the company's history. HIV product sales totaled $4 billion, up 8% year over year. Biktarvy continued to generate especially impressive growth, with sales soaring 503% year over year and nearly 41% quarter over quarter to $1.16 billion.
Some of Biktarvy's growth, however, came at the expense of Gilead's other HIV drugs. Sales for Atripla, Complera/Eplivera, Descovy, Genvoya, Stribild, and Truvada declined year over year. Odefsey was an exception, with sales rising to $387 million from $385 million in the prior-year period. Gilead's revenue from Symtuza, which is marketed by Johnson & Johnson, also increased 546% year over year to $84 million.
The biotech's hepatitis C virus (HCV) franchise continued to show signs of stabilization. Gilead reported total HCV sales of $842 million in the second quarter, down nearly 16% year over year. However, HCV sales were up nearly 7% from the previous sequential quarter.
Yescarta also showed sustained momentum. Sales for the cell therapy jumped 76% year over year to $120 million. The total reflected a 25% increase from the first quarter of 2019.
Gilead's weakness in the second quarter came from its other products. Total sales of its other drugs fell 25% from the prior-year period to $604 million. The decline primarily stemmed from lower sales of angina drug Ranexa and pulmonary arterial hypertension drug Letairis, both of which now have generic competition.
The year-over-year improvement in Gilead's earnings on a generally accepted accounting principles (GAAP) basis resulted from the company's revenue growth and from lower operating expenses. However, Gilead's non-GAAP adjusted earnings per share declined from the prior-year period total, primarily because of a lower adjustment for stock-based compensation expenses in the second quarter of 2019 compared with the prior-year period and a $0.10-per-share negative swing related to unrealized gains and losses from equity securities.
Gilead also noted several key business developments during the quarter, including:
- A major collaboration agreement with Galapagos.
- Collaboration and/or licensing agreements with Novartis, Carna Biosciences, Nurix Therapeutics, Humanigen, Goldfinch Bio, Insitro, and Novo Nordisk.
What management had to say
Gilead Sciences Chairman and CEO Daniel O'Day said:
I am very pleased with Gilead's performance and our ability to continue to reach patients around the world with our medicines. I am also very excited about the progress we are making to strengthen our pipeline, including the recently announced Galapagos collaboration, to bring forward our next generation of products. We saw strong revenue growth quarter-over-quarter, primarily driven by our HIV medicines and the rapid adoption of Biktarvy. Based on this momentum and our confidence in the outlook for the coming months, we are raising our full-year product sales guidance for 2019.
Gilead upped its full-year 2019 outlook based in part on what it called "favorable demand trends observed in the first half of 2019" for its products. The company now expects full-year product sales between $21.6 billion and $22.1 billion, compared with its previous guidance of product sales between $21.3 billion and $21.8 billion.
There are also a couple of important pipeline milestones coming up in the not-too-distant future. In April, Gilead submitted a supplemental new drug application (NDA) to the FDA for Descovy as pre-exposure prophylaxis treatment for HIV. The company submitted a priority review voucher with its filing, which means the FDA should make a decision on an accelerated timeline later this year. Gilead also plans to submit an NDA to the FDA for filgotinib in treating rheumatoid arthritis later in 2019.