UPDATE 2-Gilead posts higher profit, strong hepatitis C drug sales
By Deena Beasley
Feb 4 (Reuters) - Gilead Sciences Inc, which recently began selling a new hepatitis C drug seen generating billions of dollars in sales, posted a better-than-expected quarterly profit on Tuesday as sales of its flagship HIV drugs beat Wall Street estimates.
Fourth-quarter net income rose 4 percent to $791.4 million from $762.5 million a year earlier. Adjusting for one-time items, the California-based company earned 55 cents a share, which beat the average analyst estimate of 50 cents a share, according to Thomson Reuters I/B/E/S.
Revenue rose 20 percent to $3.12 billion, ahead of the average Wall Street forecast of $2.85 billion.
Sales of hepatitis C drug Sovaldi, which was approved by U.S. regulators in early December, totaled $139.4 million for the quarter.
Gilead declined to estimate 2014 sales of the drug but said demand is strong and broadly based. "We've got a well-tolerated, highly effective cure," said Kevin Young, head of commercial operations at Gilead. "This is transformational medicine."
RBC Capital Markets analyst Michael Yee said he expects 2014 Sovaldi sales of $6 billion.
In the United States, the drug is priced at $84,000 for a 12-week course of treatment. The U.K. price is about $57,000 - likely the benchmark for European countries overall - while the price in Germany is slightly higher at around $66,000, Young said.
"It looks like the prescription trend we've all been watching was spot on for the revenue trajectory, which means that there's going to be off-the-charts numbers this year," said Sanford Bernstein analyst Geoffrey Porges. "And behind all that the HIV business is chugging along nicely."
The World Health Organization estimates that about 3 percent of the world's population has been infected with the hepatitis C virus and that more than 170 million chronic carriers are at risk of developing liver cirrhosis, liver cancer or both.
The often-undiagnosed virus is transmitted through contaminated blood. While U.S. infection rates have dropped since the early 1990s - due in part to the introduction of blood and organ screening - many older adults remain at risk, according to the Centers for Disease Control and Prevention, which has called for baby boomers to be routinely tested for the virus.
Gilead excluded sales of Sovaldi and other hepatitis C drugs from its forecast for 2014 product sales, which it projected would increase between 6 percent and 8 percent from 2013 to total between $11.3 billion and $11.5 billion.
Analysts have forecast the company's full-year 2014 revenue at $14.66 billion.
"It's hard to imagine that they won't exceed $15 billion or $16 billion with Sovaldi," Porges said. "Revenue is going to be up 40 to 50 percent."
The robust early Sovaldi sales provided further evidence that thousands of hepatitis C patients had put off treatment while awaiting newer therapies that did not require the use of injected interferon, which causes miserable flu-like symptoms.
For the past two years Vertex Pharmaceuticals Inc's Incivek owned 75 percent of the hepatitis C market with annual sales in excess of $1 billion. By the fourth quarter of last year with the approval of Sovaldi, Incivek sales all but evaporated, plunging some 90 percent to just $19.3 million.
Gilead's fourth-quarter sales of HIV drug Atripla rose 2 percent to $933.6 million, while sales of an older product, Truvada, fell 2 percent to $832.7 million. Sales of the company's newest HIV drug, Stribild, rose 409 percent to $203.8 million.
Shares of Gilead, which rose 4 percent to close at $82.02 in regular Nasdaq trading, were down 27 cents at $81.75 after hours. Over the past 12 months, the stock has nearly doubled.