(Adds insurance group, company, analyst comment, cancer drug approval)
By Bill Berkrot
July 23 (Reuters) - Gilead Sciences Inc said on Wednesday that its new hepatitis C drug Sovaldi had sales of $3.5 billion in the second quarter, demonstrating that the furor over its price has not curtailed early use.
Analysts had been forecasting Sovaldi sales of about $2.6 to $2.9 billion for the quarter.
In its first two industry record shattering quarters on the market, Sovaldi has racked up sales of $5.8 billion despite reports that thousands of patients are still waiting for Gilead’s two drugs in one pill combination treatment expected to gain U.S. approval in October.
Since its December launch, Sovaldi has been prescribed for more than 80,000 patients in the United States and Europe, the company said. It said it expects to file for approval of Sovaldi in Japan in the fourth quarter.
Sovaldi has been a lightning rod for a fierce debate over drug prices. Its $84,000 cost for 12-weeks of treatment that works out to $1,000 per pill has caused concerns that high demand will place a huge burden on government-run health plans and private insurers.
A prominent U.S. health insurer trade group called on Gilead to lower the Sovaldi cost.
“While it was a blockbuster quarter for Gilead, people who can’t access the drug because of its price didn’t fare nearly as well,” Brendan Buck, spokesman for America’s Health Insurance Plans, said in a statement.
Only three U.S. states are not yet covering Sovaldi pending further review, Gilead said.
Gilead has argued that Sovaldi’s price is comparable to older medicines that require far longer treatment duration with much lower cure rates and nasty side effects.
“Sovaldi is a remarkable drug. We are curing people of a horrible disease in a very rapid time period,” said Chief Operating Officer John Milligan, adding that Gilead is complying with requests from U.S. Senators for pricing information.
Gilead and others are testing drug combinations that could cut treatment to as few as 4 to 6 weeks while maintaining cure rates in excess of 90 percent.
While calls for price cuts have driven down Gilead’s share price at times, the criticism is not all bad in the company’s view.
“The controversy around Sovaldi is a constant reminder to patients that there is a new treatment option out there,” Milligan said.
Gilead shares slipped to $89.85 in extended trading from a Nasdaq close at $90.34.
Gilead said its net profit soared to $3.66 billion, or $2.20 per share, from $772.6 million, or 46 cents per share, a year ago. Excluding items, the company earned $2.36 per share, topping analysts’ average expectations by 57 cents, according to Thomson Reuters I/B/E/S.
Gilead said it now expects 2014 revenue of $21 billion to $23 billion. Excluding Sovaldi, it had previously forecast sales of $11.3 billion to $11.5 billion.
RBC Capital Markets analyst Michael Yee suggested shares were down due to a conservative forecast that implied flat Sovaldi sales in the second half. “I don’t think there’s any reason for Gilead to want to parade around a huge projected number for the full year given a lot of (pricing) focus by press and government and payers,” he said.
Revenue for the quarter was $6.53 billion, topping analysts’ estimates of $5.86 billion, as Gilead’s newer HIV drugs also saw solid sales growth.
“What’s remarkable is that their expenses didn’t increase, so you see this spectacular earnings beat,” Sanford Bernstein analyst Geoffrey Porges said.
Earlier on Wednesday, Gilead won U.S. approval of its first oncology product, Zydelig (idelalisib), for the treatment of chronic lymphocytic leukemia and two other blood cancers. (Reporting by Bill Berkrot; Editing by Bernard Orr)