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Gilead Sciences: Lack of Hep C Sales Guidance Doesn't Blemish Strong Year Ahead

FOSTER CITY, Calif. (TheStreet) -- Gilead Sciences (GILD - Get Report) excluded sales of its hepatitis C pill Sovaldi from its 2014 product sales guidance, thereby squashing a good bit of the fun from Tuesday's highly anticipated fourth-quarter and 2013 earnings call. Despite the conservative outlook, there was still a lot to like from Gilead's call.

Sovaldi sales in the fourth quarter totaled $139.4 million, well above consensus (which was ridiculously low) and basically in line with the buyside "whisper" number. Gilead only started selling Sovaldi in early December, so yeah, the drug is flying off the shelf. Sales attributed to patient demand in the quarter totaled about $50 million (in line with IMS prescription data), another $70 million was inventory stocking while Gilead filled a $15 million order for an undisclosed clinical trial (probably Bristol-Myers Squibb (BMY) combining Solvaldi with daclatasvir.)

Gilead said about 70% of Sovaldi sales in the fourth quarter were used to treat genotype 1 patients, which was a bit of a surprise given the company's comment at the J.P. Morgan conference that more genotype 2 patients were using the drug initially.

A small market research survey of Sovaldi was conducted by Gilead in January, indicating use in 70% genotype 1, 17% genotype 2 and 12% genotype 3.

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Sovaldi pricing in Europe looks good: Germany $66,000 at the high end and $57,000 in the United Kingdom, which will be closer to the pricing in the rest of Europe.

The Sovaldi/ledipasvir pill hasn't been filed with FDA or Europe yet but will before the end of the current quarter, if not sooner.

On 2014 guidance, Gilead forecast total product sales of $11.3 billion to $11.5 billion, which is better than consensus of $11.1 billion for what amounts to the company's "base" business i.e. HIV and everything else excluding the new hepatitis C franchise.

Gilead's actual revenue in 2014 will be much, much higher, of course, because Sovaldi is already on track to generate more than $1 billion in sales in the first quarter alone. Based on current prescription trends, Sovaldi is looking like a $5 billion-plus drug in 2014.

Current Street consensus is $14.6 billion in Gilead 2014 revenue, although this number is going higher.

Sovaldi sales improve Gilead's gross margin and lower its tax rate -- something Wall Street is going to really like. With this disclosure alone, Gilead's earnings estimates for 2014 and beyond will be going up.

With the regulatory filing of Sovaldi/ledipasvir imminent, Gilead will be in a position to start selling the all-oral, single-pill Hep C therapy this summer or fall. Noteworthy, Gilead said the regulatory filing will seek approval for genotype 1s with an 8 and 12-week course of therapy without ribavirin.

Competition will come from the all-oral regimen developed by Abbvie (ABBV - Get Report) and Enanta Pharmaceuticals (ENTA - Get Report), which is expected to reach the FDA in the second quarter. By the fourth quarter of this year, both therapies will be competing for Hep C patients.

As if Gilead's raging Hep C business is not enough, the company also reported strong results from its base HIV franchise. In cancer, the FDA has set approval decision dates for idelalisib of August 6 (for relapsed/refractory CLL) and Sept. 11 (for indolent NHL.) The CLL date was newly announced on last night's conference call. Idelalisib will be competing primarily against Pharmacyclics (PCYC) and Johnson & Johnson's (JNJ) Imbruvica.

GILD Chart
GILD data by YCharts

-- Reported by Adam Feuerstein in Boston.  

Follow Adam Feuerstein on Twitter.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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