Analysts Wait With Bated Breath for Gilead Q2 Results, Possible Acquisition News
July 28, 2015
By Alex Keown, BioSpace.com Breaking News Staff
FOSTER CITY, Calif. – Gilead Sciences will release second quarterly financial results late this afternoon and investors are waiting with bated breath for a strong report, following Biogen’s reports last week that were upsetting to some analysts.
If Gilead shows positive financial gains this quarter, the company will assure investors “there's a lot more profits to be wrung out of its hepatitis C franchise,” the Street noted this morning. Investors will be closely paying attention to reported sales of the company’s two big hepatitis C drugs, Harvoni and Sovaldi. Consensus worldwide sales estimates for the quarter are $4.39 billion world wide, compares to first quarter sales of $4.5 billion, the Street said. Additionally, the Street noted the total number of prescriptions written for Gilead’s two hepatitis C drugs are in a “consistent flattening downtrend.” Gilead has predicted an annual run rate of around 240,000 genotype 1 patients, but last week AbbVie reported they are seeing a smaller run rate, around 180,000 in the United States, the Street said.
In addition to the discrepancy in run rate predictions, Gilead has run into some issues with its hepatitis drugs. Two Yale University-affiliated public health organizations, the Treatment Action Group (TAG) and the Global Health Justice Partnership (GHJP) filed a federal lawsuit to obtain information that Gilead Sciences provided the U.S. Food and Drug Administration Sovaldi (sofosbuvir) and Harvoni (sofosvubir/ledipasvir). The public health agencies said although the drugs had a high price tag and were widely approved for use, the company did not publicize the clinical trial data. In their lawsuit, the plaintiffs argue that public access to the raw data is important because it will allow health officials to make informed and cost-based decisions on treatments. The pricing for Sovaldi is about $84,000 for course of treatment and about $94,500 for Harvoni, or about $1,000 per pill. Additionally, China rejected a patent application for Sovaldi. Patents have also been challenged in India, Europe and the United States.
Gilead will host an earnings call at 4:30 p.m. Eastern Standard Time to discuss the company’s financial results and general business updates, the company said in a statement. The stock has not yet hit the numbers that some analysts were speculating. Earlier this year RBC Capital speculated the company’s stock could go as high as $118, while analysts at Citigroup Inc. set a $120 target on the stock.
Gilead is heading into the earnings call with stock down more than 2 percent at the end of trading Monday, closing at $110.54 per share.
Analysts at the Street said an announcement of a possible acquisition could also benefit the company. The publication said they have been expecting Gilead to announce an acquisition since the beginning of the fiscal year in order to expand its pipeline beyond hepatitis C drugs. However, analysts at Estimize.com said Gilead’s management has informed investors they will not rush into an acquisition and possibly overpay for a company. But, Estimize said many companies have benefitted from strategic mergers and acquisitions. The industry is on pace to see about $200 billion in M&A activity this year.
Estimize is forecasting an EPS figure of $2.77 and a revenue target of $7.54 billion. Wall Street estimates EPS to come in at $2.64 and revenues to be $7.36 billion.
While the analysts at the Street noted Gilead’s marriage to its hepatitis C drugs, Gilead is making inroads in other areas. Earlier this month, Gilead used a $125 million voucher to accelerate potential approval of a new HIV-1 drug submitted to the FDA. Gilead acquired the voucher which speeds up the FDA’s review process for New Drug Applications from Montreal-based Knight Therapeutics Inc. Gilead is hoping to see approval for its once-daily tablet HIV-1 drug that combines Gilead’s emtricitabine and tenofovir alafenamide (TAF) with Janssen Pharmaceutical’s rilpivirine for the treatment of HIV-1 in Adults and pediatric patients in January 2016 rather than May 2016.