Remdesivir to the rescue
Gilead's COVID-19 treatment is clearly having a major impact on its top line. During its third-quarter 2020 that ended on Sept. 30, the company reported total revenue of $6.6 billion, 17% higher than the year-ago period. Remdesivir generated revenue of $873 million, and excluding the coronavirus medicine, sales of the company's products grew by a meager 2% to $5.6 billion.
On Jan. 11, Gilead Sciences provided an updated guidance for its fiscal year 2020, which ended on Dec. 31. The company now expects its product sales to be between $24.3 billion and $24.35 billion, up from its previous guidance of $23 billion to $23.5 billion. The new guidance would represent year-over-year growth of about 10%, and once again, remdesivir would be to thank for it.
Without the revenue from the COVID-19 treatment, the company's guidance indicates that its product sales would decline slightly compared with the fiscal year 2019. Unfortunately, remdesivir also seems to be facing some obstacles. First, in November, the World Health Organization (WHO) recommended against using the antiviral to treat hospitalized coronavirus patients because, according to the agency, there was no evidence that it improves survival or other outcomes in these patients.
Second, given that several vaccines for the disease have been approved, there will be less of a need for coronavirus treatments. Gilead will have to turn elsewhere for growth. The company's most promising area at the moment is its HIV lineup. According to CEO Daniel O'Day, Biktarvy, one of the company's top-selling HIV products, Biktarvy, has become "the gold standard in HIV treatment."
During the third quarter, Gilead Sciences' HIV sales grew by 8% to $4.5 billion. However, the company is also facing some headwinds in this area. A generic version of the drug Truvada became available for the first time in October 2020, and as a result, the biotech expects sales of this HIV drug to decline significantly. Biktarvy will likely continue to gain steam, but this growth will be offset in part by Truvada's declining revenue.
On the bright side, Gilead does have 42 clinical programs in its pipeline. The company will likely turn at least a handful of those into solid sources of revenue.
The verdict
Gilead Sciences has long been one of my favorite biotechs, but the company is facing too many obstacles: filgotinib's regulatory setback, Truvada's generic competition, and the recommendation against using remdesivir from the WHO (not to mention competition from newly approved COVID-19 vaccines). I am inclined to believe Gilead will recover in the long run, but there is too much uncertainty with the company at the moment, and there are other biotech stocks that are much better options.