Gilead Earnings Beat Estimates, But All Eyes Are on a New HIV Shot

All attention is on Yeztugo, Gilead’s just-launched twice-yearly HIV prevention shot. (Justin Sullivan / Getty Images)

Gilead Sciences reported better second quarter results than Wall Street had expected late Thursday while raising its full-year guidance, but the earnings beat, while reassuring, is largely beside the point for investors.

Instead, all attention is on Yeztugo, the just-launched twice-yearly Gilead HIV prevention shot that the Food and Drug Administration approved in June. Gilead shares are up nearly 20% this year, and 45% over the past 12 months, amid Wall Street’s enthusiasm for the shot.

Gilead didn’t break out Yeztugo sales in its Thursday report, but CEO Daniel O’Day told Barron’s that the launch had started off well, and that the first doses were delivered within days of the drug’s approval.

“We’re really ahead of our internal expectations on how quickly it went out the door,” O’Day said.

The larger question is whether insurers will pay for Yeztugo. The shot has a list price of more than $28,000 a year; generic versions of Gilead’s older HIV prevention drug Truvada cost a small fraction of that amount.

O’Day said that so far, the reaction from insurers has been positive. “We’re right in line with our expectations around the ongoing work with insurers on the access program,” O’Day told Barron’s. “The reaction we’re getting from payers is good. We’re still early days. We’re building it. But it’s very much in line with our expectations.”

Yeztugo was more than 99.9% effective at keeping participants HIV negative in Phase 3 trials. While older Gilead HIV prevention drugs are pills that need to be taken daily, Yeztugo’s two annual injections leaves little risk of patient error.

An unsettled political environment has raised concerns, however, as Yetzugo has begun to roll out. Late last month, Robert F. Kennedy Jr., the health secretary, canceled the meeting of an expert panel that dictates the preventive health services insurers need to cover. The Wall Street Journal reported that Kennedy plans to remove all of the panel’s members.

That panel currently recommends HIV prevention drugs that had been available before Yeztugo’s approval. There has been speculation and concern that a Kennedy-appointed panel could pull back on its recommendations, impacting insurer coverage for Yeztugo and other drugs.

O’Day said that the company hasn’t heard anything officially from the Department of Health and Human Services. “We have constant dialogue with HHS,” he said. “And I can just tell you, from my own experience, that they are very impressed by the profile of Yeztugo.”

Amid the questions about the Yeztugo rollout, Gilead’s second quarter performance offered some reassurance about the company’s broader business, and shares were up 2% after hours.

Gilead on Thursday said it was raising its full-year guidance. It now expects sales of between $28.3 billion and $28.7 billion this year, up from its prior estimate of between $28.2 billion and $28.6 billion. It expects non-GAAP diluted earnings of between $7.95 and $8.25 a share, up from its prior estimate of between $7.70 and $8.10 a share.

The new guidance is roughly in line with consensus estimates. Analysts had been anticipating earnings of $8.02 a share on sales of $28.8 billion, according to FactSet.

In the second quarter, Gilead revenue was $7.1 billion, beating the FactSet consensus estimate of $7 billion. Non-GAAP diluted earnings were $2.01 a share, better than the $1.96 a share consensus estimate.

Sales of the HIV medicine Biktarvy, the company’s top-selling drug, were $3.5 billion, up from $3.2 billion in the same quarter last year and just ahead of the FactSet consensus estimate of $3.4 billion.

The company said that its base business, which excludes the Covid-19 treatment Veklury, grew 4% compared with the same quarter last year. “The important thing on that 4% growth in our base business is that it’s coming from a variety of drivers,” O’Day said.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com