Gilead Sciences Continues to Creep Up as Hep C Sales Decline Eases

-By Helen Ackerley | [email protected]

Gilead has an interesting problem in that its Hepatitis C drugs are so good that they completely heal the patient. From a consumer standpoint, this is a miracle, but from a financial perspective Gilead has a 100% bounce-rate as customers leave as soon as they are cured.

The Hepatitis C market has seen a sharp rise followed by a sharp decline as it is becoming more difficult to keep finding patients. Since the patients are cured in one shot (a few months time) there is no recurring revenue. On the other hand, Gilead's HIV business is more of a treatment as there is not yet any cure that exists today.

During the quarter, Hep C sales fell 27% year over year to $2.9B. It's drug Epclusa attempted to offset the large dive in sales of Harvoni and Sovaldi. HIV sales were up year over year however, as the growth in this business continues to bolster the company while the other half declines. The HIV business generated $3.6B of revenue, which was up 16% YoY. Gilead was also boosted by its non-HIV and non-HCV business which grew 15.6% but only totalled $600M.

The stock has been slowly creeping up higher as the company isn't in as bad of shape as people initially thought. Although the stock is down drastically from its all time highs, it's up about $10 from its lows. The best part about the quarter was likely the confidence that Gilead showed in its guidance, by raising its forecasts, and amassing $36B of cash in total, showing that it is ripe for an acquisition.

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