Gilead Sciences Drops as Sales of Top-Selling Drugs Fall Short

(Bloomberg) -- Gilead Sciences Inc. fell after first-quarter sales of some of its best-selling antiviral treatments for hepatitis C and HIV failed to meet analysts' expectations.

Truvada, a treatment for HIV, was the biggest disappointment, while Epclusa and Sovaldi for viral liver disease also fell short of analysts' projections. Gilead's stock dropped as much as 3.4 percent Wednesday, the most in almost three months.

Gilead, based in Foster City, California, has warned investors that the hepatitis C market is slowing as competition has forced prices down, treatment times have shortened, and the bulk of the easiest-to-find patients have already received drugs. The company is replacing HIV drugs like Truvada and Atripla with new treatments such as Genvoya, which offset some of the older drugs' declines in the first quarter. It's also stocking up on therapies to treat another liver disease, called NASH, while acknowledging it needs external acquisitions to supplement in-house research efforts. 

Investor pressure to do a deal will likely rise. Gilead has the wherewithal -- it had $34 billion in cash and equivalents at the end of the first quarter, according to a statement released Tuesday. Though Chief Financial Officer Robin Washington has said the company is focusing on pursuing external transactions this year, Gilead's last major deal was in April 2016, when it paid Nimbus Therapeutics Inc. $400 million for a NASH treatment. The drugmaker spent $565 million on stock repurchases and $687 million on dividends in the first quarter.

The stock was down 2.3 percent to $67 at 11:04 a.m. in New York

The company's business development team is “fully engaged” with assessing partnership and acquisition opportunities, Chief Executive Officer John Milligan said on a conference call, with “a number of different opportunities which we think could play out over the coming year.”

Ignoring ‘Noise'

Milligan added that he's ignoring “noise” around possible tax reform by the Trump administration, saying, “there may be repatriation, but you can't count on it.” 

First-quarter sales of Truvada were $714 million, while the average of analysts' estimates compiled by Bloomberg was $815 million. Sales of Genvoya were $769 million, surpassing Truvada for the first time and beating analysts' projections of $645 million.

While Epclusa and Sovaldi missed expectations, hepatitis C drug Harvoni topped expectations, lifting sales of hepatitis C drugs to $2.58 billion, short of the $2.64 billion analysts had projected.

Excluding some items, earnings for the quarter were $2.23 a share, Gilead said Tuesday in a statement after the markets closed. That missed the average of analysts' estimates, $2.29 a share.

To contact the reporter on this story: Caroline Chen in San Francisco at cchen509@bloomberg.net.

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Cecile Daurat