Gilead Sciences Inc. (NGS: GILD). On October 28, Gilead reported fiscal 3Q20 revenue of $6.58 billion, up 17% from the prior year and above the consensus by $274 million. Adjusted EPS rose 29% to $2.11. While the non-GAAP R&D expense fell year-over-year as a percentage of the company’s total revenue, management noted that it rose in absolute terms due to higher clinical trial expenses for Veklury (remdesivir) and increased spending on oncology programs.
Total product sales rose 18% to $6.49 billion in the third quarter and 4% for the first three quarters to $17.03 billion. Sales were driven by strong patient demand for Veklury and higher
volume for Gilead’s core HIV products, offset in part by lower sales of Truvada-based products and lower sales of hepatitis C drugs. HIV (70% of 3Q20 product revenue), Hepatitis C (7%), and Cell Therapy Products (2%). We also note that Veklury (remdesivir), a treatment for COVID-19, represents 13% of product revenue and that Other Products represent 7%.
The growth was driven primarily by higher volume in Gilead’s core HIV business, the continued patient uptake of Biktarvy, and the growth of Descovy for PrEP. Nevertheless, the third-quarter results were partially offset by lower sales of Truvada as the first generic became available in the U.S.
Third-quarter sales growth was driven by the continued uptake and expansion of Yescata in Europe, as well as the 3Q20 launch of Tecartus in the U.S.
The ACTT-1 trial showed the superior efficacy of Veklury compared with placebo, with the treatment reducing mortality by 70% at day 29 and resulting in five days faster recovery.
– On October 8, Gilead and the European commission signed a joint procurement agreement to enable rapid and equitable access to Veklury. The JPA enabled participating countries to purchase Veklury for both real-time demand and stockpiling, coordinated by the European Commission. The agreement covers purchases of Veklury over a six-month period and has the option to be extended.
– On January 6, 2021, Kite Pharma, a Gilead Company, entered a research collaboration with Oxford BioTherapeutics to evaluate five novel oncology drug targets for a number for hematologic and solid tumor indications. Through the collaboration, Oxford BioTherapeutics will validate the five drug targets and generate antibodies against the targets, while Kite and Gilead will have the exclusive right to develop and commercialize therapies based on the results.
– In early December, Gilead presented new data from its Phase 3 trial of Trodelvy in metastatic triple-negative breast cancer (mTNBC) at the 2020 San Antonio Breast Cancer Symposium. The new data continued to demonstrate the high clinical activity of Trodelvy in this patient population with traditionally poor outcomes. Having already received accelerated approval for the treatment of adult patients with mTNBC who have received at least two prior therapies for metastatic disease, a supplemental biologics license application (sBLA) is now under review for full marketing approval in mTNBC.
– Gilead announced on December 6, 2020 that magrolimab, a drug candidate for several hematological cancers, demonstrated high clinical response rates in previously untreated acute myeloid leukemia (AML) patients who are ineligible for intensive chemotherapy. Gilead gained the rights to magrolimab in April 2020 when it acquired immuno-oncology company Forty Seven, Inc. for $4.9 billion.
– On October 23, Gilead completed its acquisition of Immunomedics, a leader in next-generation antibody-drug conjugate (ADC) technology, for approximately $21 billion. As
part of the transaction, Gilead gained Trodelvy, a first-in-class Trop-2-direct antibody-drug conjugate approved by the FDA for the treatment of people with metastatic triple-negative breast cancer.
– In early September, Kite entered a two-year research collaboration and license agreement with HiFiBiO Therapeutics to discover novel targets and antibodies against acute myeloid leukemia. Under the terms of the agreement, HiFiBiO will use its proprietary technology platforms to identify novel AML targets and anti-AML specific antibodies, while Kite will have an exclusive option to opt in on any targets discovered through the collaboration.
The company has also posted updates on programs outside of oncology and COVID-19:
– On January 12, 2021, Gilead established a clinical collaboration with Vir Biotechnology to explore combination strategies for a functional cure for chronic Hepatitis B virus (HBV). The two companies plan to initiate a Phase 2 trial evaluating different combinations of immunomodulation and antigen suppression compounds.
– On December 15, Gilead and Galapagos NV amended their existing arrangement for the commercialization and development of Jyseleca (filgotinib) following the receipt of the FDA’s Complete Response Letter (CRL) related to the New Drug Application (NDA) for filgotinib as a treatment for rheumatoid arthritis (RA). Under the new terms of the agreement, Galapagos will assume sole responsibility in Europe for filgotinib in RA, where 200 mg and 100 mg doses were approved in September for the treatment of moderate to severe RA, and in all future indications. Gilead will receive royalties on European sales starting in 2024, while maintaining commercial rights outside of Europe, including Japan, where the drug was approved in September 2020. The two companies will also end their efforts to release the drug in the U.S. Outside of its use as a treatment for RA, Jyseleca is also being reviewed in Europe as a treatment for ulcerative colitis.
– On December 10, Gilead announced that it had entered a definitive agreement to acquire MYR GmbH, a German biotechnology company, for 1.15 billion euros in cash, plus future milestones up to 300 million euros. Since its approval, MYR has launched Hepcludex in France, Germany and Austria, and continues to prepare for launch in certain other markets in 2021.
EARNINGS & GROWTH ANALYSIS
Our estimates reflect recent momentum in the company’s product portfolio along with concerns about the introduction of a generic version of Truvada.
MANAGEMENT & RISKS
Andrew Dickinson is Gilead’s CFO, having previously served as the head of corporate development and strategy.