Gilead spending $50 million to test and manufacture COVID-19 drug candidate remdesivir - MarketWatch

Gilead Sciences Inc. reported better-than-expected earnings for the first quarter of the year Thursday, and detailed more of its work on remdesivir, an antiviral drug candidate aimed at helping COVID-19 patients.

While the experimental remdesivir is immaterial to Gilead GILD, +1.03%’s first-quarter earnings performance, the drugmaker said in its announcement that R&D expenses increased about $100 million from last year due to ongoing development of the therapy as a COVID-19 treatment. It included $50 million for manufacturing scale-up and the costs of clinical trials, though that increase was offset by the temporary halt to clinical trials for other investigational therapies as a result of the COVID-19 pandemic.

See also: Gilead reports early positive data in remdesivir studies as COVID-19 drug, though Chinese trial sees no benefit

Gilead told investors that it plans to have more than 140,000 treatment courses of remdesivir prepared by the end of May. Executives are expected to address more plans for the drug on a conference call at 4:30 p.m. Eastern time.

The company reported first-quarter earnings of $1.5 billion, or $1.22 a share, in the first quarter of 2020, down from $1.9 billion, or $1.54 a share, in the same quarter a year ago. Revenue grew to $5.5 billion in the first three months of the year, up from $5.3 billion in the year-ago period. Adjusted earnings per share were $1.68. Analysts surveyed by FactSet had estimated adjusted earnings of $1.59 per share on revenue of $5.4 billion.

The results, announced after the market’s close Thursday, initially sent Gilead’s stock down 0.9% in after-hours trading. The stock closed with a 1% increase at $84 Thursday, after a 5.8% gain Wednesday following the release of the remdesivir study data and public support from Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases.

The company’s HIV drug portfolio, which made up 74% of total sales last year, is anchored by Biktarvy, a drug that received Food and Drug Administration (FDA) approval in 2018 and has since generated billions of dollars in sales. Gilead said Biktarvy sales rose to $1.7 billion in the first quarter, up from $793 million in the same quarter in 2019. The FactSet consensus was $1.5 billion.

The company’s HIV product sales were $4.1 billion for the quarter, up from $3.6 billion in the first quarter of last year, driven by the Biktarvy uptick and increased consumer purchases as a result of the COVID-19 pandemic.

Read: COVID-19 treatment yields disappointing data in trial and shows it’s not easy to develop drugs

Like many of the pharmaceutical companies that have reported earnings so far this year, Gilead reported an uptick in quarterly sales as patients sought to stockpile drugs in advance of stay-at-home orders. However, Gilead said beyond the quarter that the pandemic could lead to fewer patients accessing treatment and prescriptions for HIV or hepatitis C, which could hamper sales of the drugs it markets for those diseases.

The drug may be near regulatory authorization in the U.S., unnamed sources told the New York Times, following early data readouts this week for a pair of clinical trials evaluating remdesivir as a COVID-19 treatment. One trial, which is being conducted by the NIAID, reported that the drug improved recovery times compared with patients taking a placebo.

Analysts remain skeptical about the financial benefit of remdesivir, with SunTrust Robinson Humphreys analysts saying it is unclear whether Gilead will charge for the drug, if authorized or approved by the Food and Drug Administration, and how they would price the therapy if they do charge for it. SVB Leerink’s Geoffrey Porges wrote in a note on Wednesday that the drug still has “limited economic value to the company and the stock.”

Shares of Gilead have gained 28.8% year-to-date, while the S&P 500 SPX, -0.92% has dropped 9%.

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