Gilead Sciences, Inc. (GILD) Blockbuster Pipeline, M&A to Offset HCV Declines


2017 was not a good year for Gilead Sciences, Inc. (NASDAQ:GILD), as the company announced weak sales of core hepatitis C drugs Harvoni, Sovaldi and Epclusa. These drugs are under pressure amid pricing problems and competition. Gilead also recently posted fourth quarter results that were not up to the expectations. Total HCV franchise revenue for the fourth quarter declined to $1.5 billion from $3.2 billion in the prior-year period. The company had to suffer a big loss amid a $5.5 billion provision for income taxes related to the recent U.S. tax reform legislation. However, it is important to note that this was a one-time hit, and the company will benefit from lower tax rates in the future.

Analysts were also disappointed from Gilead Sciences, Inc. (NASDAQ:GILD) estimates for 2018. The company expects net product sales to fall in between $20 billion and $21 billion, slightly lower than estimates. However, bullish analysts believe that Gilead has always been conservative with its outlooks, and tends to beat projections every time. For full-year 2017, the company had projected revenue of $24.5 billion and $25.5 billion, but actual revenue in the year totaled $25.7 billion.

Analysts are bullish on the company acquisition of Kite Pharma, a specialty cancer immunotherapy drug developer. In 2017, Kite Pharma increased its sales by a whopping 100% annually to reach $35 million. The company has already started integrating its services with Gilead’s inorganic R&D facilities.

Gilead Sciences, Inc. (NASDAQ:GILD) pipeline is healthy and has several growth catalysts. The pipeline includes drugs for HIV/AIDS, liver disease, hematology/oncology and inflammation/respiratory. The biggest catalyst for Gilead stock is the company’s HIV franchise. In the fourth quarter, Genvoya revenue increased by 88% year over year to $1.06 billion, while sales of Descovey jumped 145% year over year to $365 million. TAF-based HIV drug Odefsey more than doubled year over year.

Gilead Sciences, Inc. (NASDAQ:GILD) stock reversed its declines after FDA approved the company’s new HIV drug, a combination of bictegravir, emtricitabine, and tenofovir alafenamide. Analysts believe that the new drug’s sales could reach $1 billion in 2018 alone. Annual sales for Bictarvy are expected to reach $5 billion by 2024.

The company is also in talks to acquire Crispr Therapeutics, a leading gene-editing company to treat cancers and rare genetic diseases.

J.P. Morgan analyst Cory Kasimov recently said in a report that Gilead Sciences, Inc. (NASDAQ:GILD) HCV is declining and as a result, the company is focusing on HIV and M&A, which is very positive. RBC Capital Markets analyst Brian Abrahams also thinks that Gilead’s pipeline is “maturing” and the company is working on potential blockbusters acquisitions.

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