You'd think Gilead Sciences (NASDAQ:GILD) would be on top of the world right now. After all, the big biotech quickly emerged as a leader in treating COVID-19 and has announced sizable acquisitions to bolster its pipeline. Yet its shares are down year to date.

Gilead announced its third-quarter results after the market closed on Wednesday. Were those results enough to move the needle for the biotech stock? Probably not. Gilead posted strong Q3 results, but the glint isn't as bright as it might appear at first glance.

Magnifying glass over tiles spelling remdesivir

Image source: Getty Images.

By the numbers

Gilead reported revenue of $6.6 billion in the third quarter, a solid 17% increase from the $5.6 billion reported in the same quarter of the previous year. This result topped the average analyst revenue estimate of $6.39 billion.

The company announced net income in the third quarter of $360 million, or $0.29 per share, based on generally accepted accounting principles (GAAP). This reflected a major improvement from Gilead's GAAP net loss of $1.2 billion, or $0.92 per share, posted in the prior-year period.

Gilead generated adjusted net income in Q3 of $2.7 billion, or $2.11 per share, compared to $2.1 billion, or $1.64 per share, in the same period in 2019. This handily beat the consensus Wall Street earnings estimate of $1.95 per share.

Behind the numbers

One drug fueled most of Gilead's revenue growth in Q3: Veklury (remdesivir). Although the Food and Drug Administration approved the COVID-19 drug just last week, Gilead began marketing it after the FDA granted Emergency Use Authorization in May. Veklury raked in $873 million in its first full quarter on the market. 

Excluding Veklury, Gilead's growth didn't look nearly as impressive. Sales for its hepatitis C virus (HCV) franchise plunged 31% year over year to $464 million due to the COVID-19 pandemic and lower average selling prices. Gilead continued to face headwinds for pulmonary arterial hypertension drug Letairis and angina drug Ranexa from generic competition.

Sales for the company's flagship HIV franchise grew, but by only 8% year over year. The pandemic weighed on sales of HIV pre-exposure prophylaxis (PrEP). Gilead also saw Biktarvy and Descovy continue to cannibalize market share for Truvada-based products. 

At first glance, cell therapy might seem like Gilead's brightest spot in Q3. Combined sales for its two cell therapies, Yescarta and Tecartus, jumped 25% year over year. Most of this gain stemmed from higher sales for Yescarta in Europe. Tecartus was approved by the FDA during the third quarter. However, the revenue generated by these cell therapies totaled only $147 million -- just a drop in the bucket for Gilead.

Looking ahead

Gilead lowered its full-year 2020 revenue and earnings guidance. The biotech now anticipates revenue of $23 billion to $23.5 billion, down from its previous outlook of $23 billion to $25 billion. GAAP earnings per share are expected to come in between a loss of $0.25 and a gain of $0.10 versus Gilead's previous guidance range of earnings per share between $0.83 and $2.23. The company now looks for non-GAAP earnings per share between $6.25 and $6.60, with the top end of that range lowered from the previous guidance of $7.65.

The main reason behind this gloomier outlook is the impact of the COVID-19 pandemic, which is expected to especially weigh on HCV and PrEP sales. However, Gilead thinks that its core business will recover gradually in Q4 and in the first half of next year. The company is also counting on its acquisition of Immunomedics to immediately boost revenue and begin to add to its earnings growth in 2023.