Gilead beats Q2 expectations as analysts remain confident in HIV drug dominance

Gilead Earnings

In the ever-changing world of biotech, there have been worries regarding one of the biggest pharmaceutical companies in the sector.

Facing possible competition from Merck (NYSE: MRCK) in regards to a future, next-generation HIV drug among other things, some investors have become worried that Gilead (NASDAQ: GILD) could lose its dominance in this potentially massive market.

However, worries were put at ease on Tuesday as the company reported strong financial results for their second quarter.

The company slightly raised its projected sales for the full fiscal year, which they say is largely due to the sale of their HIV drug. Truvera, which is the only HIV prevention drug on the market right now, currently is in a monopoly-like position in what’s expected to become a massive market in the years to come.

Gilead Earnings

During Q2 2019, Gilead sold $4 billion worth of its HIV drugs, which was up from $3.7 billion during the same time last year. Total product sales ended up at $5.6 billion, which beat Wall Street’s expectations of $5.5 billion.

“We saw strong revenue growth quarter-over-quarter, primarily driven by our HIV medicines and the rapid adoption of Biktarvy,” a new HIV drug, said the company’s chairman and CEO, Daniel O’Day, in a statement. “Based on this momentum and our confidence in the outlook for the coming months, we are raising our full-year product sales guidance for 2019.”

A new mandate from the Trump administration to eliminate HIV transmission by 2030 will lead to a surge in demand from the HIV prevention pill market. While Gilead currently is leading in this market, Merck made news earlier this month when they announced their own next-generation HIV drug which they consider to be a “game-changer.”

Merck’s new drug is able to be taken as a once per year implant, as opposed to a daily pill. Considering that the main reason why HIV patients stop taking their drugs comes down to either forgetting or finding a daily dosage to be inconvenient, having a once-per-year implant option could make Merck’s new drug quite desirable.

However, such a drug is still years away, and Gilead is developing their own line of next-generation products to compete with Merck when the time comes. Until then, Gilead will remain at the top of the HIV market, with these recent results confirming this to be the case. At least for the next 2-3 years, investors don’t have much to fear from potential competition.

Earlier this week, one Wall Street analyst went on to say that Gilead is their top pick and that the stock could surge by over 40 percent soon. The way things are going at present, this seems quite likely.

Gilead Company Profile

Gilead Sciences develops and markets therapies to treat life-threatening infectious diseases, with the core of its portfolio focused on HIV and hepatitis B and C. The acquisitions of Corus Pharma, Myogen, CV Therapeutics, Arresto Biosciences, and Calistoga have broadened this focus to include pulmonary and cardiovascular diseases and cancer.

Gilead’s acquisition of Pharmasset brought rights to hepatitis C drug Sovaldi, which is also part of combination drug Harvoni, and the Kite acquisition boosted Gilead’s exposure to cell therapy in oncology. – Warrior Trading News