Gilead Sciences Inc.'s COVID-19 treatment Veklury drove the company to 16% sales growth in the first quarter of 2021, but total sales of the drugmaker's other products fell 11% due to competition weighing on the core HIV business.
Half of all patients with COVID-19 in the U.S. receive Veklury, and the antiviral brought in $1.46 billion in sales in the first quarter. Veklury previously accrued $2.8 billion in the final months of 2020 after gaining emergency use authorization in October that year.
Total product revenue outside Veklury was $4.9 billion, which reflected the loss of exclusivity for HIV drugs Atripla and Truvada, as well as the effects of the pandemic on the HIV and hepatitis businesses that shape the company's base, Gilead Chief Commercial Officer Johanna Mercier said on an April 29 earnings call.
For the year, Gilead expects product sales between $23.7 billion and $25.1 billion, including the added bonus of Veklury sales as high as $3 billion.
Gilead's stock was down 2.49% to $62.25 per share in pre-market trading as of 6:35 a.m. ET April 30.
One reason for weak sales in the HIV business is that the class is subject to seasonal variability, RBC Capital Markets analyst Brian Abrahams said in an April 29 note.
"HIV sales were soft across the board, notably Biktarvy, but also several other legacy products," Abrahams said. "However, the company's unchanged guidance suggests most of this weakness represents expected seasonal dynamics — albeit to a somewhat exaggerated degree — that should recover in the coming quarters."
Abrahams noted that the company's cell therapy and hepatitis businesses were brighter during the quarter.
Gilead, which provides Veklury royalty-free to areas such as India with growing COVID-19 case rates, expects to continue to see the drug used globally to fight infections.
Mercier said that Veklury sales are directly proportional to hospitalization rates, and those numbers decreased in March but held steady around the world. The recovery could last longer than many would hope, the executive pointed out.
"I know nobody wants to hear it, but we think the tail is longer than anybody thought originally," Mercier said. "And I think that's what we're seeing as we go into Q2, that it will be a gradual recovery — so we do believe that Veklury still will have an important role to play within the next couple of quarters and potentially beyond into 2022."
HIV team-up with Merck
During the first quarter, Gilead entered an agreement with Merck & Co. Inc. to combine two investigational HIV drugs — Gilead's lenacapavir and Merck's islatravir — for a long-acting therapy.
In the partnership, Gilead will take the reins on a single tablet regimen to take advantage of its expertise in co-formulating oral medicines, CFO Andrew Dickinson said. Merck will lead a program for an injectable formulation.
"This is a win-win," Dickinson said. "Both companies will be involved in both programs and we think by doing that, we're going to be able to advance these programs more quickly than we could individually."
Foster City, Calif.-based Gilead will take on more of the cost-sharing when it comes to the development of the drugs, but Dickinson explained that this comes from calculations of upside potential.
"When we put it all into the mix, I think there was a clear alignment between the two companies that it made sense at certain revenue levels for Gilead to share disproportionately in more of the profits," the CFO added. "But in exchange for that, fairly, we had to agree to take a little bit more of the R&D expense, which we are happy to do."