HIV Segment To Aid Gilead (GILD) Beat Q1 Earnings Estimates?
Zacks Investment Research | Apr 27, 2018 03:41AM ET
Biotech bigwig Gilead Sciences Inc. (NASDAQ:GILD) develops drugs for the treatment of human immunodeficiency virus (“HIV”), liver diseases such as chronic hepatitis C virus (“HCV”) infection and chronic hepatitis B virus (“HBV”) infection, cardiovascular, hematology/oncology and inflammation/respiratory diseases.
The HCV franchise boasts drugs like Sovaldi and Harvoni and the recently launched Epclusa. However, the HCV franchise continues to grapple with competitive and pricing pressure leading to a massive decline in Harvoni and Sovaldi sales. Harvoni and Sovaldi have been facing competition from AbbVie’s (NYSE:ABBV) Viekira Pak and Merck‘s (NYSE:MRK) Zepatier, among others.
Gilead is a dominant player in the HIV market with an impressive portfolio for the same. The company was the first to bring to market a single-tablet regimen (“STR”) for the treatment of HIV — Atripla. STRs for HIV in the market include Complera/Eviplera and Stribild among others.
The newly launched tenofovir alafenamide (TAF)-based products Genvoya, Odefsey and Descovy are performing well with strong adoption in both the United States and Europe. Genvoya has already become the most-prescribed regimen for both treatment-naïve and switch patients since its launch in November 2015.
Also, Genvoya has been listed as a preferred regimen in several HIV treatment guidelines. The TAF-based regimens now represent 62% of total Gilead HIV prescription volume following the launch of Genvoya and the launches of Odefsey and Descovy in 2016. The Zacks Consensus Estimate for sales of Genvoya is $1074 million.
Truvada, for use in the pre-exposure prophylaxis setting, also put up a strong performance. The company saw a significant uptick in PrEP usage in 2017 with approximately 153,000 patients using Truvada by the end of 2017. We note that HIV is one of the primary areas of focus for Gilead and the company is working to bring new HIV treatments to market to further boost sales of the franchise.
The company received a major boost when the FDA approved the company’s once-daily STR, Biktarvy (bictegravir 50mg/emtricitabine 200mg/tenofovir alafenamide 25mg, BIC/FTC/TAF) for HIV-1 infection. The approval provides a major boost to Gilead’s HIV franchise.
Biktarvy combines the novel, unboosted integrase strand transfer inhibitor (“INSTI”) bictegravir, with the demonstrated safety and efficacy profile of the Descovy, (FTC/TAF) dual nucleoside reverse transcriptase inhibitor (“NRTI”) backbone and is the smallest INSTI-based triple-therapy STR available. The approval of this new HIV therapy will pose stiff competition to GlaxoSmith’s (NYSE:GSK) existing therapies, Tivicay and Triumeq.
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Gilead’s stock has returned 10.9% in the last twelve months compared with the industry's loss of 8.9%.
Gilead has a decent track record, with the company’s earnings beating estimates in three of the last four while missing in one. In the last reported quarter, the company’s earnings beat expectations by 4.7%. Overall, the company recorded an average positive earnings surprise of 7.5%. We expect the strength in the HIV franchise to offset the HCV franchise weakness making it highly likely for the company to beat on earnings in the first quarter. (Read more: )
Zacks Rank
Gilead currently carries a Zacks Rank #2 (Buy).
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