Shares of Gilead Sciences Inc. plummeted almost 9% to 52-week lows after the company delivered a disappointing fourth-quarter financial release in the previous trading session.
At the close of Wednesday’s session, Gilead stock fell 8.6% to $66.45 and hit its lowest level since April 2014. It continued to be bearish in Thursday’s premarket hours, dipping 0.09%. Since the steep plunge in March 2016, the stock has been stuck in a downtrend that eventually dived to its current price yesterday.
Analysts are estimating that the stock will remain range-bound, and other analysts say the company is unlikely to grow in the near-term unless it engages in M&A.
Gilead Q4 earnings results
Backward-looking figures were relatively robust, including full-year revenue of $30.4 billion and net income of $9.94 per share, which put the company’s valuation at tremendously low levels yet again.
However, the biotech titan stated that it forecasts sales of its numerous products of just $22.5 billion to $24.5 billion, lower nearly 20% to 25% from 2016 levels in late Tuesday. Total product sales also retreated 14% in the fourth-quarter and 6.8% last year.
The company's HIV portfolio remains strong, reeling in 47% of sales in the fourth-quarter. Gilead CEO John Milligan expressed that they’re confident of their HIV franchise, which is going to be a good growth driver.
Need for acquisitions
During the company’s earnings conference call with analysts, Milligan admitted that besides its HIV pill bictegravir, Gilead does not have a lot of things launching over the next few years— putting more pressure on the company with its falling hepatitis C virus (HCV) franchise sales.
“Gilead must do three to four smaller deals and hit next two quarters to regain Street attention,” RBC analyst Michael Yee stated in a research report yesterday. Several analysts are speculating that acquisitions or strategic partnerships could lift Gilead, but until it moves forward, shareholders see a strong bearish trend.
Hepatitis C drugs, fewer HCV patients
While the firm’s HIV sales are solid, Gilead's HCV franchise sales declined yet again in the fourth quarter. The recently launched Epclusa somewhat helped counter the waning sales of Harvoni and Sovaldi, nonetheless.
Weak guidance for HCV products were worse than most analysts had projected; The biotech giant forecasts HCV sales to drop by 40% or more in 2017-- an estimated $7.5 billion to $9 billion in HCV drug sales, falling nearly $4 billion short of Wall Street's projections.
In the conference call, Gilead’s chief operating officer stated that unlike HIV, hepatitis C is a curable illness.
“This (hep C) disease has unique dimensions, the most important of which is that it can be cured,” Kevin Young said on the call. “And thanks to Harvoni, it can be cured in as little as eight weeks in a genotype 1 patient.”
Gilead witnessed 25,000 fewer HCV patients in 2016 compared with 2015 and anticipates a similar trend this year. Young noted a larger number of patients have a less advanced disease or conditions that hinder them from speedy treatment, such as unstable living circumstances, ongoing drug or alcohol use, and co-morbidities.
In Europe, Gilead's HCV drug sales dropped 26% year-over-year in the reported quarter, trailing a 77% slowdown in Japan where 40% of patients are over the age of 80. Countries such as Germany, France and Britain are demonstrating similar characteristics as the US: fewer and healthier patients.
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