Gilead 2020 outlook short of Wall Street estimates, shares dip 2%

(Reuters) - Gilead Sciences Inc GILD.O on Tuesday forecast 2020 results below Wall Street estimates, including revenue largely flat from 2019, and the drugmaker's shares fell more than 2%.

The company also reported a lower-than-expected fourth-quarter profit, as it recorded a variety of charges.

Shares fell to $65.91 in extended trading from a close at $67.40.

For 2020, the Foster City, California-based company forecast adjusted earnings of $6.05 to $6.45 per share, including stock-based compensation, on sales of $21.8 billion to $22.2 billion.

Full-year 2019 revenue totaled $22.4 billion.

The forecast is “flattish to down” from Wall Street expectations due in part to higher operating expenses, said Jefferies analyst Michael Yee.

Excluding special items, Gilead said it earned $1.30 per share in the fourth quarter, 37 cents below the average analyst estimate compiled by Refinitiv IBES.

Yee attributed the earnings miss to 39 cents per share in inventory writedowns, which Gilead explained as excess raw materials related to lower demand for the company’s hepatitis C products.

Gilead also recorded a writedown of $800 million related to its $12 billion acquisition in 2017 of Kite Pharmaceuticals. That followed a similar $820 million impairment charge last year.

The latest charge “is a reminder of a deal that most view as overpriced,” Raymond James analyst Steven Seedhouse said in a research note.

Investors have been eager to see whether Gilead Chief Executive Officer Daniel O’Day, who was hired after the Kite deal, will turn to acquisitions to jumpstart growth at the biotech company.

O’Day, speaking on a conference call, emphasized that Gilead currently has 40 products in clinical development. But he acknowledged a “high” sense of urgency around business development.

“We are going to take appropriate risks,” he said.

Gilead’s fourth-quarter revenue rose to $5.9 billion from $5.8 billion, in line with analyst estimates.

Sales of HIV drugs rose 11% to $4.6 billion.

Sales of Gilead’s hepatitis C drugs fell to $630 million from $738 million a year earlier, as medicines from Gilead and others have cured many patients infected with the liver-damaging virus and drugmakers compete on price.

Sales of the Kite unit’s cancer cell therapy Yescarta rose 50% to $122 million, but fell short of analyst estimates of $134 million.

Reporting by Deena Beasley; Editing by Bill Berkrot