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Gilead (GILD) Outperforms YTD: Will It Retain the Momentum?

Gilead Sciences, Inc. GILD is having a good run as shares have gained 15.1% in the year so far against the industry’s decline of 19.5%. In fact, the company is just among a handful of companies that have outperformed the industry and the S&P 500 Index in 2022 so far.

The company’s third-quarter results were better than expected, driven by strong sales of its flagship HIV therapy Biktarvy, which has maintained momentum for the company. Biktarvy remains the leading medicine for those seeking to switch to a new regimen in the United States as well as those starting treatments in both the United States and Europe.

Gilead already has a strong HIV portfolio with Biktarvy and Descovy. Gilead’s HIV franchise got a boost due to the European Commission’s approval of the HIV treatment lenacapavir under the brand name Sunlenca for treating HIV infection, in combination with other antiretroviral(s), in adults with multi-drug resistant HIV infection, for whom it is otherwise not possible to construct a suppressive anti-viral regimen.

Most anti-virals act on just one stage of viral replication. Sunlenca is designed to inhibit HIV at multiple stages of its lifecycle and has no known cross-resistance to other existing drug classes. In addition, Sunlenca is the only HIV treatment option administered twice a year, acting as a big advantage over the existing treatments and enabling Gilead to capture market share.

 

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Gilead is making efforts to develop its oncology business to diversify its revenue base as competition in the HIV business is stiff.

The Cell Therapy franchise, comprising Yescarta and Tecartus, is slowly and steadily gaining traction. The uptake of breast cancer drug Trodelvy has been strong and has boosted the top line.

Trodelvy’s sales increased 78% to $180 million, primarily driven by adoption in both the second- and third-line settings for the treatment of metastatic triple-negative breast cancer.

Gilead announced new positive data from the phase III TROPiCS-02 study on the breast cancer drug Trodelvy on the key secondary point of overall survival (OS). Results showed Trodelvy demonstrated a statistically significant and clinically meaningful improvement of 3.2 months in OS compared to TPC (physicians’ choice of chemotherapy, TPC). Other key secondary endpoints, including objective response rate (ORR), demonstrated statistically significant improvements favoring Trodelvy versus TPC. Time to deterioration (TTD) of Global Health Status/Quality of Life (QoL) and Fatigue scale per EORTC-QLQ-C30 also favored Trodelvy versus TPC.

The oncology space is lucrative and Gilead can capitalize on it, thereby creating a revenue growth driver in addition to the HIV franchise.

The company is also sitting on a huge cash balance. As of Sep 30, 2022, Gilead had $6.9 billion in cash, cash equivalents and marketable debt securities. Potential acquisitions to further expand its portfolio/pipeline will bode well for the stock.

However, competition is stiff in the HIV space from the likes of GSK plc GSK, and hence the approval of new treatments holds the key.

GSK’s HIV franchise recorded 7% growth in the third quarter. Growth was driven by new HIV products Dovato, Cabenuva, Rukobia, Juluca and Apretude and a favorable U.S. pricing mix.

Gilead currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the biotech space include Syndax Pharmaceuticals SNDX and Puma Biotechnology PBYI. While Syndax sports a Zacks Rank #1 (Strong Buy), Puma carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, loss estimates for Syndax have narrowed to $2.59 from $2.68. Syndax also surpassed estimates in each of the trailing four quarters, with the average being 95.39%.

Over the past 60 days, loss estimates for Puma have narrowed to 6 cents from 16 cents. Puma also surpassed estimates in three of the trailing four quarters, with the average being 201.37%.



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