Gilead Sciences expects a third of sales to come from its cancer treatments by 2030, and GILD stock jumped Friday despite a mixed earnings report.
Sales of Trodelvy, Yescarta and Tecartus — Gilead's cancer drugs — surged a combined 38% to $728 million. That beat analyst expectations for $709 million, according to FactSet. RBC Capital Markets analyst Brian Abrahams says Gilead continues to see strong adoption for its HIV and cancer drugs.
"This should continue to provide valuation support and limit downside risk while the company's broader pivot into cancer (drugs) in the coming years, though meaningful near-term upside may also be capped by limited pipeline catalysts and upcoming competitor datasets," he said in a note to clients.
On today's stock market, GILD stock jumped 4.2% to close at 78.68.
GILD Stock: Veklury Weighs On Growth
Total second-quarter sales climbed 5% to $6.6 billion, above analyst forecasts for $6.45 billion. Excluding the impact of Gilead's Covid treatment, Veklury, total sales jumped 11%. Veklury sales tumbled 43% to $256 million. That was far short of projections for $354 million.
Further, adjusted earnings tumbled 15% to $1.34 per share and missed predictions for $1.64 a share. Third Bridge analyst Lee Brown noted the earnings miss is primarily due to a 32-cent charge related to an HIV treatment antitrust case.
Still, "there were several standout performances in the quarter, including Biktarvy, Descovy and Trodelvy," Brown said in his note to clients. "Conversely, Yescarta and Tecartus generated strong growth, but still fell shy of (analyst) expectations."
Biktarvy, an HIV treatment, brought in $2.98 billion in sales, above calls for $2.88 billion. Sales jumped 17%. Revenue from fellow HIV drug Descovy rose 12% to $516 million, beating GILD stock analysts' view for $493 million.
"As HIV drug Biktarvy goes, so goes Gilead given the drug generated 45% of Gilead's total revenue in the second quarter," Brown said. "Fortunately for Gilead, Biktarvy appears to be firing on all cylinders."
Cancer Treatments 'On Track'
Sales from breast cancer treatment Trodelvy skyrocketed 63% to $260 million. Gilead noted increased adoption among patients with a specific form of metastatic breast cancer. Analysts predicted just $243 million in Trodelvy sales.
Cell therapies Yescarta and Tecartus generated a respective $380 million and $88 million in sales. Yescarta sales jumped 29% and beat expectations for $375 million, according to FactSet. But Third Bridge's Brown said other estimates suggested Yescarta sales could come in higher.
Meanwhile, Tecartus sales rose 21% but were just shy of analyst forecasts for $91 million.
Gilead management believes the company is "on track" for have a third of revenue come from cancer treatments by 2030, Mizuho Securities analyst Salim Syed said. To achieve that goal, Gilead could look for partnership, licensing or buyout deals.
"Management plans to continue to be active in business development, potentially including oncology," he said in a note. "The focus could be predominantly partnerships and smaller acquisitions — Gilead's 'base case' expectation."
Gilead Boosts Its Sales Outlook
Gilead slightly raised its sales outlook for the year, while trimming its adjusted earnings forecast.
The company now expects full-year sales to come in at $26.3 billion to $26.7 billion. GILD stock analysts call for $26.67 billion in sales.
Gilead now expects to earn $6.45-$6.80 per share vs. its previous call for $6.60-$7 a share. The Street forecasts Gilead earnings of $6.72 per share. The company noted part of its decision to lower its profit outlook is related to the HIV antitrust litigation.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
