Gilead's COVID-19 antiviral Veklury brings in almost $2B in Q4'20

Gilead Sciences Inc.'s earnings for the fourth quarter of 2020 almost doubled compared to the same period a year ago, primarily due to almost $1.94 billion in sales of the COVID-19 drug Veklury, otherwise known as remdesivir.

Veklury treats half of all COVID-19-infected patients hospitalized in the U.S., Gilead CEO Daniel O'Day said on the company's fourth-quarter and full-year earnings call Feb. 4.

The antiviral drug, the first to gain an emergency use authorization for patients with COVID-19 from the U.S. Food and Drug Administration in October 2020, brought in $2.81 billion for Gilead in the year.

The company is looking to apply the drug to more patients, as well as to address variants of the virus that have cropped up around the world, O'Day said.

"For Veklury, we look to realize the full potential of the therapy as the pandemic evolves," O'Day said. "We are studying new formulations and routes of administration for Veklury as a treatment for COVID-19."

The windfall for Gilead, along with sales of its newest HIV medication Biktarvy, came at a time when some of the company's other drugs — former mainstay HIV drugs Atripla and Truvad in particular — were hurt by competition in the market. HIV product sales decreased 7% in the fourth quarter due to generic competition but rose 3% over the full year to $16.9 billion.

Treatments for hepatitis C, another major contributor to Gilead's past success, experienced a sales decline of 30% to $2.1 billion due to lower sales volume as a result of the pandemic.

The pandemic also affected other parts of Gilead's business negatively, including the cell therapy arm Kite, although sales of cancer treatments Yescarta and Tecartus still rose 33% to $607 million in 2020.

Although O'Day acknowledged the outsized impact Veklury had on the company's bottom line, the CEO said the company's core business remained strong.

"We reiterate our confidence that the next chapter of Gilead is here and that we are very confident in our ability to grow the business in the top and bottom line excluding Veklury," O'Day said.

Gilead CFO Andrew Dickinson also remarked on the growth of the business outside the COVID-19 drug.

"We do see this as a really important year where ... we expect to grow in the short term, the medium term and the long run from here," Dickinson said. "And we think we have all the puzzle pieces together that will allow us to do that."

RBC Capital analyst Brian Abrahams said in a Feb. 4 note that the revenue gained from Veklury could help Gilead prop up its other businesses.

"Veklury should provide another year of cash flow and earnings boost to enable the oncology franchise to further mature as a long-term growth engine," Abrahams said. "We continue to believe their HIV durability and oncology optionality are undervalued in shares."

Abrahams said he expects between $2 billion and $3 billion in Veklury sales in 2021.

Gilead completed the $21 billion acquisition of Immunomedics in October, and the cancer company's treatment Trodelvy brought in $49 million in sales.

Fourth quarter and full year 2020

Non-GAAP net income for the quarter increased 97% to $2.76 billion, or $2.19 per share, up from $1.4 billion, or $1.10 per share, from the same period the year before.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was $2.15.

On a GAAP basis, net income attributable to Gilead was $1.55 billion, or $1.23 per share, down 42% from $2.7 billion, or $2.12 per share, due to the acquisition of Galapagos.

The Foster City, Calif.-based company reported total revenue of $7.42 billion, up 26% from $5.88 billion.

Gilead said its quarterly product sales increased to $7.33 billion, also up 26% from $5.8 billion.

Full-year non-GAAP net income attributable to Gilead was $8.96 billion, or $7.09 per share, compared to $7.83 billion, or $6.13 per share, in 2019.

The S&P Capital IQ consensus normalized EPS estimate for the year was $7.05.

On a GAAP basis, net income attributable to Gilead for 2020 was $123 million, or 10 cents per share, versus $5.39 billion, or $4.22 per share, a year ago.

Total revenue was $24.69 billion, compared to $22.45 billion during the same period in 2019.

Gilead expects product sales during the full year 2021 in the range of $23.7 billion to $25.1 billion. According to the company, EPS on a non-GAAP basis will be $6.75 to $7.45 compared with the S&P Capital IQ consensus normalized EPS estimate of $6.90.

Gilead's board increased the quarterly cash dividend by 4.4% to 71 cents per share. The dividend is payable March 30 to shareholders of record as of March 15.