Gilead Shares Slide as Product Sales Forecast Revised Lowerby
Drugmaker wants to add ‘non-antiviral’ assets to pipeline
Adjusted profit of $3.08 exceeded analysts’ average estimate
Gilead Sciences Inc. fell the most in almost three months after the company cut its product sales forecast for 2016 and reported lower-than-expected quarterly sales for its hepatitis C drugs.
Net product sales will be $29.5 billion to $30.5 billion for the year, down from a previous outlook of $30 billion to $31 billion, Foster City, California-based Gilead said Monday in a statement. The company also expects to spend more on research and development this year.
The shares fell 7.7 percent to $81.76 at 10:30 a.m. in New York, the biggest intraday decline since April 29. The stock had dropped 20 percent in the past year through Monday.
Profit excluding some items totaled $3.08 a share, topping the $3.02 average of estimates compiled by Bloomberg. The drugmaker’s hepatitis C pills, Sovaldi and Harvoni, brought in $3.92 billion, missing the $4.06 billion average of projections.
Gilead is facing a number of challenges in sustaining the record-breaking sales from the antiviral pills. With both AbbVie Inc. and Merck & Co. offering similar products, prices are being driven down. In addition, more patients are being treated with the shorter eight-week regimen of the drug instead of a 12-week course.
The drugmaker has seen lower hepatitis C revenue per patient because of discounting in the U.S. and lower prices in Europe, as well as shorter treatment regimens and some competition from other drugs, said Chief Financial Officer Robin Washington on a conference call with analysts.
Gilead recently received FDA approval for Epclusa, the first hepatitis C pill to work for all six subtypes of the disease, which may help it maintain market leadership. It will take three to six months to get health insurers, pharmacy benefit managers and other payers to approve coverage of the drug, said Chief Operating Officer Kevin Young on the call.
Chief Executive Officer John Milligan said Monday that he was eager to “add more things to our pipeline, especially in the non-antiviral area.” In a May interview, he said he was eager to score a key asset in cancer, and on Monday’s call he said the company was still committed to oncology.
Gilead’s HIV drug Truvada posted $942 million in sales, topping the $911.1 million average of analysts’ estimates.