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What Ails Gilead's SalesWhat Ails Gilead's SalesAlpert, Bill.Barron's (Online); New York In announcing March quarter results for Gilead Sciences, chief executive Dan O'Day tried to focus investors on the company's new initiatives against cancer and HIV. But sales of the company's existing products weren't what some investors hoped. After Thursday's market close, when Gilead released the news, the stock (ticker: GILD) slipped 3% in after-hours trading, to $62. The quarter saw Gilead arrange a new partnership with Merck (MRK) to combine their complementary long-acting anti-HIV drugs, O'Day said in the release. And Gilead's recently-acquired treatment Trodelvy got two more approvals for use against certain cancers. The first full quarter of Trodelvy sales, along with sales of the Covid-19 drug Veklury (also known by its generic name remdesivir), helped Gilead grow March quarter revenue 16% year-over-year, to $6.4 billion. But without the $1.5 billion boost from Covid-fighting Veklury , revenue in the quarter would have been down 11%. Gilead's HIV treatment franchise saw sales slip 12%, to $3.7 billion, after the October expiration of U.S. patent-protection for key products like Truvada and Atripla. The company blamed the pandemic's impact on patient starts, for a 30% drop in quarterly sales of its hepatitis C drugs, to $510 million. Gilead's sales were a disappointment to Wall Street's forecasts, falling about 7% below expectations. But earnings were roughly in-line. Earnings in the March quarter grew12%, to $1.37 a share. Excluding noncash charges and acquisition costs, Gilead said that earnings were $2.08 a share, up 24%. On a conference call, after the earnings release, O'Day told listeners that Gilead has high hopes for the long-acting HIV drugs that it's developing, which would allow dosing once a week, or even every three months. Gilead expects more than 20 milestone developments this year, from its research pipeline, including readouts from a number of cancer studies and the initiation of Phase 2 trials for its long-acting HIV treatments. Guidance for 2021 changed a bit. Gilead still expects its adjusted earnings to be in the range of $6.75 to $7.45 a share. But earnings calculated according to generally-accepted accounting principles are now expected to range from $4.75 to $5.45 a share, instead of the previous guidance of $5.25 to $5.95. RBC Capital Markets analyst Brian Abrahams wasn't among those disappointed in Gilead. With the stock trading at less than 10-times his earnings forecast, he rates Gilead an Outperform, with an $82 price target. |
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