Gilead's Q2 results outpace analyst expectations

Gilead Sciences announced second-quarter results Wednesday showing that the company's net income was $3.1 billion, compared to $3.5 billion for the corresponding 2016 period. Quarterly revenues totalled $7.1 billion, down from $7.8 billion in the year-ago period, but surpassing consensus estimates of about $6.4 billion in sales. 

In the three-month period, Gilead recorded $3.6 billion in combined revenue for its HIV and hepatitis B products, up from $3.1 billion in the year-ago period. The drugmaker attributed the growth to continued uptake of its tenofovir alafenamide-containing treatments Genvoya, Descovy and Odefsey. 

Sales of the company's hepatitis C treatments Harvoni, Sovaldi and Epclusa totalled $2.9 billion, compared to $4 billion in the second quarter of last year, but still came in ahead of the $2.2 billion analysts were expecting. Gilead noted that increased sales of Epclusa, which was approved in the US and EU last year, partially offset lower revenue for Harvoni and Sovaldi "across all major markets." 

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Commenting on the news, Leerink analyst Geoffrey Porges remarked "people had a sense they were going to beat on the [hepatitis C] side and that's where most of [the optimism] came from." However, Porges cautioned that Gilead's stronger sales trend is not expected to continue given the likely approval next month of a competing therapy from AbbVie. 

Gilead CEO John Milligan said the competitive threat depends on various "unknowns," including AbbVie's pricing, how it markets its therapy and how it contracts with health insurers and other payers. He indicated that Gilead remains confident in its prospects for both the HIV and hepatitis C markets, but has nonetheless been "very, very active" in evaluating possible business opportunities, adding "when the things are right for us, we will announce them." According to Porges, Gilead has been "very clear that they are preparing themselves to be much more acquisitive," pointing to moves such as scaled-back share buyback plans and cuts to research spending.

For the full year, Gilead forecasts revenue of $24 billion to $25.5 billion, versus prior estimates of between $22.5 billion and $24.5 billion. Specifically, the drugmaker anticipates that its hepatitis C products will generate sales of $8.5 billion to $9.5 billion for 2017. 

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