(Adds company comment, analyst comment, share price)
By Deena Beasley
April 22 Gilead Sciences Inc, 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
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
"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 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
The company's revenue doubled to $5 billion, beating by a
wide margin the $3.98 billion average Wall Street analyst
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
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, 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 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)