Gilead Profit Soars on Hepatitis C Drugs Sales

Gilead Sciences Inc. said its two key hepatitis C drugs, Sovaldi and Harvoni, generated about $4.45 billion in sales in the first quarter, topping Wall Street estimates, thanks to better than expected sales of Harvoni.

For the year, Gilead raised its guidance for net product sales by $2 billion and now expects $28 billion to $29 billion.

Shares rose 1.8% to $102.29 in recent after-hours trading.

The drugs represent two of the most successful drug launches ever, marked by their high cure rates, fewer side effects and imposing price tags; however, they also face increasing competition from new hepatitis C treatments like AbbVie Inc.'s Viekira Pak, which started sales in December. Merck & Co. has a hepatitis C treatment in the works.

For the quarter ended March 31, Sovaldi had sales of $972 million, a decline 57% from a year earlier and its lowest total other than the quarter it first came to market.

Harvoni, which combines Sovaldi with another drug and received regulatory approval in October, had $3.58 billion in sales in its second quarter on the market, compared with $2.11 billion in the previous quarter.

Analysts were expecting sales of $1.33 billion for Sovaldi and $2.197 billion for Harvoni, according to a note by Evercore ISI analyst Mark Schoenebaum.

Investors likely will be watching for signals of how prices for hepatitis C drugs will be affected by increased competition and discounts offered to win preferential treatment on health plan formularies. In February, Gilead estimated discounts that it gives on new hepatitis C drug would more than double this year.

Some health plans and drug-benefit managers have complained about the high cost of Sovaldi and Harvoni, which carry price tags of $1,000 a day or more for certain patients. Rival Viekira Pak has won preferential treatment on some formularies after AbbVie offered undisclosed discounts.

Overall, Gilead reported a profit of $4.33 billion, or $2.76 a share, up from $2.23 billion, or $1.33 a share, a year earlier. Excluding items such as acquisition-related, restructuring and stock-based compensation expenses, per-share earnings rose to $2.94 from $1.48. Revenue surged 52% to $7.59 billion.

Analysts polled by Thomson Reuters expected per-share profit of $2.32 and revenue of $6.92 billion.

Write to Tess Stynes at [e-mail]

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