Gilead plummets on weak outlook and downgrades

Gilead Sciences’ shares nose-dived after offering a weaker-than-expected sales outlook, primarily because of challenges in the company’s Hepatitis C medicine.

The biopharmaceutical company’s stock tumbled 9 percent in midday trading.

“We are lowering net product sales guidance to a range of $29.5 billion to $30.5 billion,” Robin Washington, the company’s chief financial officer, said during a conference call with analysts.

Product sales should range from $29.5 billion to $30.5 billion for the year, the company estimated. The old guidance was $30 billion to $31 billion.

The big problem? Revenue per patient for Hepatitis C has declined for a variety of reasons. These include fewer patient starts with the medicine and reduced amount of time using the drug, Harvoni.

Gilead’s second-quarter results were mixed. The company beat earnings expectations by a modest amount. However it failed to beat revenue estimates.

Both earnings and revenues declined compared to the same quarter the year before.

The disappointment caused some analysts to downgrade Gilead’s stock.

“The launch of these drugs were unprecedented in our industry and patients were treated at a much faster initial rate than we or anyone else thought possible,” John Milligan, Gilead’s chief executive officer, told the analysts.

It turns out in retrospect, that peak use of the drug occurred within six to nine months after it was introduced, Milligan said during the conference call.

“We now see the market maturing to a slower rate of treatment for Hepatitis C-infected individuals,” Milligan said. This may be a “more normal pace of patient starts.”

 

Photo: One of the company’s Hepatitis C pills. (Gilead Sciences)

 

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