Gilead profit triples, hepatitis C drug sales beat by $1 billion
(Reuters) - Gilead Sciences Inc (GILD.O), which has ignited a fierce debate over prescription drug prices, said its new $1,000 hepatitis C pill generated record-breaking sales of $2.27 billion, helping the company's quarterly net profit nearly triple.
The Foster City, California-based company on Tuesday posted an adjusted profit of $1.48 a share, soundly beating the average Wall Street estimate of 91 cents a share, according to Thomson Reuters I/B/E/S.
"It's pretty remarkable that they can generate $2.3 billion in revenue (from hepatitis C drug Sovaldi) in the first 3 months on the market," said Sanford Bernstein analyst Geoffrey Porges. "People's numbers are going to go up dramatically for this year and next for Gilead."
Analysts had expected Sovaldi sales of $1.01 billion, according to Deutsche Bank.
The drug's quarterly sales of over $2 billion are the highest ever for a new medicine, said RBC Capital Markets analyst Michael Yee.
Shares of Gilead, which rose 1.8 percent to close at $72.86, were up another 2 percent at $74.62 after hours. The shares have more than doubled over the past two years, but have fallen some 15 percent since their high for the year in late February.
Gilead's decision to price Sovaldi, which was approved by U.S. regulators in December, at $84,000 for a 12-week course of therapy has rankled lawmakers and insurers, spurring an outcry over the rising costs of specialty medicines.
Investor concern over the pricing complaints has pressured shares of Gilead, as well as the wider biotech sector. The Nasdaq Biotechnology Index .NBI has fallen about 5 percent so far this year.
But sales of the drug led to a tripling of Gilead's first quarter net income to $2.23 billion from $722 million a year earlier.
The company's revenue doubled to $5 billion, beating by a wide margin the $3.98 billion average Wall Street analyst forecast.
Gilead continued to exclude sales of Sovaldi and other hepatitis C drugs from its forecast for 2014 product sales, which it still expects to total between $11.3 billion and $11.5 billion.
John Milligan, Gilead's chief operating officer, said during a conference call with analysts and investors that the drug has been "priced appropriately based on its benefit."
Gilead is awaiting U.S. approval for a combination of Sovaldi and experimental drug ledipasvir that would allow more patients to be cured of the virus with a single-pill regimen.
The company's pricing for that "simpler" regimen will take into account the additional benefit it provides, Milligan said.
UnitedHealth Group Inc (UNH.N), the largest U.S. health insurer, said last week that its first quarter costs to cover Sovaldi were much higher than expected, but it anticipated spending would moderate after the first big wave of patients are treated with the drug.
Pharmacy plan manager Express Scripts (ESRX.O) suggested its clients should stop using Sovaldi once rival products are on the market. Democratic lawmakers in the House of Representatives, led by California's Henry Waxman, have asked Gilead to explain the pricing on Sovaldi.
Before the new drug was available, patients infected with the liver-destroying hepatitis C virus had to be treated for at least six months with several drugs, including interferon, an injected medicine that can cause severe flu-like symptoms, and ribavirin, which can casue rash, anemia and other side effects.
Those regimens were shown in clinical trials to cure around 75 percent of patients, compared with Sovaldi's cure rate of more than 90 percent.
Around 3.2 million Americans are infected with hepatitis C, according to the Centers for Disease Control and Prevention. The World Health Organization estimates that globally, 150 million people are infected with the virus.
(Reporting by Deena Beasley; Editing by Leslie Adler, Chizu Nomiyama and Andrew Hay)
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