April 23 (Bloomberg) -- Gilead Sciences Inc. overwhelmed sales estimates for its new blockbuster hepatitis C pill in what analysts called the biggest drug start ever.
Sovaldi, the company’s $1,000-a-pill medicine to treat hepatitis C, had sales of $2.27 billion in the first quarter, the company said in a statement. That beat an average of analyst estimates by more than $1 billion. The Foster City, California-based company also reported profit excluding certain items of $1.48 a share, beating by 56 cents the analysts’ average estimate.
The hepatitis C sales are “above even the high end of buy-side expectations,” Mark Schoenebaum, an analyst with ISI Group LLC in New York, said in a note to clients. He called it the best drug introduction in history. Gilead, the world’s biggest makers of HIV drugs, yesterday reported total first-quarter revenue of $5 billion.
Gilead rose 1.4 percent to $73.86 at the close in New York. The shares have gained 38 percent in the past 12 months.
Sovaldi sells for $84,000 for a 12-week course of treatment. That cost has attracted scrutiny from health insurers and lawmakers. The high demand for the treatment may blunt an attempt to by pharmacy benefit managers to slow use of the therapy until the price comes down.
Express Scripts Holding Co., the largest benefit manager, has said it may try to start a price war once competing medicines from AbbVie Inc. and Merck & Co. reach the market. CVS Caremark Corp., the second-biggest pharmacy manager, has said it might try to slow down the use of the drug.
Gilead is awaiting U.S. regulatory approval of a two-drug combination with Sovaldi that does away with shots that boost the immune system, yet produce side effects. Company executives said they are aware of the price criticism and the sustainability of spending on the drug.
“There are natural limits on what I think is appropriate for next generation products,” Chief Operating Officer John Milligan said yesterday on a conference call.
About 30,000 patients have started on the medicine, company executives said on the call. Some of the sales also were from distributors building inventory, Gilead said. Sovaldi is projected by analysts to generate $11.9 billion in 2017.
“There’s no doubt this is a tremendously impressive drug launch,” Marshall Gordon, an investor with ClearBridge Investments LLC, said in a telephone interview. “But everybody knows that, and there’s limited visibility on the sustainability of it.”
Gilead will use the cash it generates from hepatitis C to accelerate share buybacks, and won’t go on a spending spree acquiring companies and new drugs, company executives said.
“Just because we have more money available doesn’t mean we’re going to spend it,” said Norbert Bischofberger, Gilead’s head of research and development.
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