Gilead Sciences Sees Strong Growth Ahead
Third Quarter Earnings Exceed Expectations
Gilead Sciences has raised its growth forecast for the year, driven by strong third quarter results that mark a significant shift away from its COVID-related revenues. The company’s impressive performance has sparked investor excitement for new products in the pipeline.
Beating Estimates Across the Board
On Wednesday, Gilead reported revenue of $7.5 billion, a 7% increase year over year, surpassing Wall Street estimates by about 7%. Additionally, the company’s adjusted earnings per share of $2.02 beat expectations by nearly 30%. This strong performance has sent the stock soaring, up nearly 6% to over $96 per share.
HIV Portfolio Remains a Strength
Gilead’s HIV portfolio sales were up 9%, demonstrating the continued strength of this legacy business. The company has successfully diversified into oncology and inflammatory diseases over the past five years, including the $12 billion acquisition of Kite Pharma, which has boosted its oncology pipeline.
Durability of Base Business
CEO Daniel O’Day attributes the company’s success to the durability of its base business, which is expected to remain strong well into the late 2030s and early 2040s. This is in contrast to the outlook from five years ago, and sets Gilead apart from larger pharma companies facing pricing and patent policy pressures.
New Products on the Horizon
Investors are eagerly anticipating new products in Gilead’s legacy HIV-prevention and treatment portfolio. The company is developing once-a-week and once-a-month orals, which will come to market before 2033, when its top-selling drug Biktarvy is set to lose its patent. Lenacapavir, a twice-yearly HIV prevention drug, is expected to file for approval by the end of the year and hit the market next year.
Strong Position Despite Challenges
Despite facing price pressures from the federal government and scrutiny of patents and deals, Gilead is in a strong position due to its relatively young portfolio and lack of major patent cliffs for the next decade. CFO Andrew Dickinson notes that the company has successfully diversified its business and is now seeing the benefits of this strategy.
Looking Ahead to 2025
While the company is not providing 2025 guidance, Dickinson notes that Medicare Part D changes are expected to have a slight impact on growth. However, this does not change the overall slope of the growth trajectory, and Gilead remains poised for continued success.
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