Gilead Sciences, Inc. (NASDAQ:GILD) is expected to report third-quarter earnings on November 01. RBC Capital Markets analysts believe the data will be critical in turning some investor sentiment which has been mostly negative due to the last two somewhat tepid results and previous quarter’s first guidance cut in years.
The analysts raised their Q3 earnings per share (EPS) estimate for Gilead by $0.09 to $2.87 and 2016 EPS by $0.19 to $11.78, compared to the consensus forecast of $2.88 and $11.76, respectively. The bullish estimates are based on higher expected revenues from blockbuster HCV drug Sovaldi and its recently approved pan-genotypic HCV option Epclusa. “IMS suggests GILD HCV scripts are down -11% Q/Q but they are not declining as sharply as we had conservatively modeled (-20% Q/Q), primarily due to +8% Q/Q script growth for Epclusa and Sovaldi in Q3 that help offset -18% Q/Q decline in Harvoni scripts,” the analysts wrote. Note that Harvoni, an advanced version of Sovaldi, is currently Gilead’s top-selling medicine. It pulled in revenue of $2.56 billion last quarter, a nearly 29% plunge year-over-year.
RBC analysts maintained their conservative US Harvoni estimate but raised Sovaldi and Epclusa estimates based on IMS script data. They expect US Sovaldi sales to come in at $500 million and US Epclusa sales at $250 million in Q3. “We also raised our Q4 US HCV by $200M to account for stronger than expected Sovaldi and Epclusa growth,” they added.
The analysts note that IMS scripts data suggest that Merck’s newly launched, cheaper HCV rival drug Zepatier now controls over 9% share of the new prescription market. They believe the drug can maintain an 8%-10% share over time.
RBC analysts were particularly pleased with the market pickup of Gilead’s recently launched HIV drugs based on a safer version of TDF called TAF. They expect Genvoya to pull in $400 million in US sales, up from $268 million in the last quarter, based on IMS script trend. “We currently project $500M in Q3 US revenue for Genvoya, Descovy, and Odefsey,” they added.
RBC analysts also expect Gilead’s applied price increased on Cayston, Complera, Letairis, Stribild and Zydelig in July to provide additional upside to Q3 EPS.