Gilead Sinks on Lack of Forecast for Hepatitis C Drug

Gilead Sciences Inc., the world’s largest maker of HIV medicines, declined to forecast 2014 revenue of its new hepatitis C drug, sending shares down.

Total sales this year may be $11.3 billion to $11.5 billion, not including the new medicine, Gilead said in a statement yesterday. The Foster City, California-based drugmaker fell 4.7 percent to $78.15 at the close, the shares’ biggest one-day decline since April.

Gilead received U.S. approval in December for Sovaldi, the treatment for hepatitis C it acquired in its $11 billion purchase of Pharmasset Inc. in 2012. With about 150 million people worldwide estimated by the World Health Organization to be infected with the virus, the drug is expected by analysts to generate more than $10 billion in revenue for Gilead by 2018. Sovaldi generated fourth-quarter sales of $139.4 million, more than analysts’ $37.2 million average estimate.

The “Street is clearly worried that this was a ‘signal’ by management that sell-side numbers are getting out of hand,” Mark Schoenebaum, an analyst with ISI Group, wrote about the company’s forecast in a note to clients today. “Personally, I disagree as this company has a history of extreme conservatism.”

Gilead’s forecast compares with an $11.5 billion estimate from analysts without the hepatitis C medicine, he said. Analysts projected the therapy will produce $3.14 billion in 2014.

Net Income

Net income in the fourth quarter rose 3.8 percent to $791.4 million, or 47 cents a share, from $762.5 million, or 47 cents, a year earlier, Gilead said yesterday. Excluding one-time items, earnings of 55 cents a share topped by 4 cents the average of 25 analysts’ estimates compiled by Bloomberg. Revenue gained 21 percent to $3.12 billion.

A little more than half of Gilead’s December sales of Sovaldi, or about $70 million, were due to inventory stocking at the largest wholesalers, Kevin Young, head of commercial operations, said yesterday on a conference call with investors and analysts. Another $15 million were from an order for a clinical trial, while the remaining $50 million represented patient demand.

The drug costs $84,000 per 12-week course of treatment in the U.S. The company said it will sell for almost 49,000 euros in Germany (about $66,000), and almost 35,000 pounds (about $57,000) in the U.K.

“As a benchmark for the majority of Europe, that would be a good price point for you going forward,” Young said of the U.K. price. German pricing “typically is a little bit higher.”

Gilead shares have risen 93 percent in the last 12 months.

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