GILD Gilead Sciences Inc

By Tess Stynes 

Gilead Sciences Inc. said its revenue from its hepatitis C drugs continued to fall, dropping 19% during the second quarter, with sales of Harvoni missing expectations as competition from rival drugs and pricing pressures intensified.

Shares of the company slipped 3% to $85.90 after hours.

The Foster City, Calif., biopharmaceutical company also lowered its 2016 product sales outlook to $29.5 billion to $30.5 billion, from its previous estimate for products sales of $30 billion to $31 billion.

For the latest quarter, Gilead reported Harvoni sales decreased 29% to $2.56 billion, while Sovaldi sales rose 5.2% to $1.36 billion. Analysts had expected Harvoni sales of $2.87 billion and Sovaldi sales of $1.19 billion, according to FactSet.

The company also said its recently approved combination hepatitis C drug, Epclusa, which is priced lower than the older hepatitis C treatments, generated sales of $64 million.

Gilead dominates the market for hepatitis C drugs, where prices for the costly medicines have come down amid growing competition and as the portion of government-funded payers have risen and discounts to commercial health insurers have increased. Rivals AbbVie Inc., maker of hepatitis C treatment Viekira Pak, and Merck & Co., maker of recently approved Zepatier, plan to release their second-quarter results Friday.

In a conference call, Gilead executives attributed the slowing sales partly to the competition as well as a mandatory price cut in Japan. Gilead Chief Executive John Milligan also said many of the patients suffering from the most severe stage of the disease had been treated, though he expressed optimism that there would be a steady and significant demand for treatment.

Gilead, which previously had been known mostly for its HIV drugs, also reported that sales of Atripla, its top-selling HIV drug, declined 14% to $673 million. Its No. 2 HIV treatment, Stribild posted sales of $429 million, a decrease of 4%. Analysts expected Atripla sales of $688 million and Stribild sales of $489 million, according to FactSet.

Total sales of Gilead's HIV and other antiviral products rose to $3.1 billion from $2.7 billion a year earlier, primarily thanks to sales of tenofovir alafenamide-based drugs, which aim to advance the long-term treatment of HIV.

Gilead reported a profit of $3.5 billion, or $2.58 a share, down from $4.5 billion, or $2.92 a share, a year earlier. Excluding acquisition-related expenses, stock-based compensation and other items, adjusted per-share earnings fell to $3.08 from $3.15. Product sales decreased 5.8% to $7.65 billion.

Analysts polled by Thomson Reuters expected per-share profit of $3.02 and product sales of $7.77 billion.

Jonathan D. Rockoff contributed to this article.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

July 25, 2016 19:31 ET (23:31 GMT)

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