U.S. sales of Harvoni are tracking in line for 1Q and Epclusa ahead of cons., which should help Gilead Sciences, Inc. (NASDAQ:GILD) hit numbers for now and perhaps improve sentiment. Jefferies is cautious about over-interpreting recent Rx trends given VA/pricing dynamics are not captured and many headwinds could increase over '17, and remain below cons. for out-yrs. Still, the firm likes GILD on LT HIV sustainability and BD optionality, and believe any deal & acceptable HCV 1Q #s could improve sentiment.
Harvoni: U.S. sales for 1Q17 look to be tracking in line with Jefferies' $800M estimate and $790M consensus. Based on the firm's proprietary projector, which has accounted for this quarter’s streak of holiday weeks and the usual week-over-week lumpiness, and looking at the total number of prescriptions from 9 full weeks of data year to date, Jefferies estimates total U.S. Harvoni sales will come in around $800M for 1Q17. This aligns to Jefferies' $800M current estimate and the Street's $790M expectation, though this likely would represent a best case, with a sharper-than-expected dropoff in residual VA usage (which is not captured in IMS but Jefferies believes peaked in 2Q16) potentially leading to a modestly lower number. With a potential ex-U.S. contribution of $530-570M, worldwide Harvoni sales could at least beat consensus' $1.33B est, -- which given recent sentiment could provide some reassurance -- though the firm notes ex-U.S. patterns are difficult to predict.
Epclusa: Rx look to be maintaining better than expected for 1Q, with scripts down 0-7% q-o-q, though with some greater cannibalization of Sovaldi, trending into the mid-$800M's (vs. Jefferies'/consensus $650-716M est.). Scripts for Sovaldi, though a less material product, are down by nearly 50% q-o-q, suggesting U.S. sales closer to $60M -- below the firm's/consensus $86-90M est.
Thoughts on full-year 2017 numbers:
Many questions remain on what the early 1Q trends toward flatter Harvoni script patterns mean for full year '17 numbers. While Harvoni may be tracking with estimates in 1Q and recast expectations since the YE16 call, Rx are still down 15% q-o-q, and there are multiple headwinds (less urgency to treat, VA drying up, socioeconomic limitations, competition by year-end, and meaningful access constraints). Harvoni's removal from ESRX's exclusion list for '17 may have also provided a one-time payer access bolus which will wane over the course of the year. Projecting from current trends even accounting for declines from here U.S. Harvoni sales look to be tracking at $2.7-2.8B for '17, vs. Jefferies'/consensus $2.7B est.
Epclusa's recent resilience is encouraging though Jefferies remains conservative given the potential for the GT-2/3 warehousing effect to rapidly wane as the firm gets through the year. Accounting for some acceleration in Rx decline from current higher-than-expected levels suggest Epclusa projecting out closer to $2.7B, $700-900M above the firm's/consensus ests. and potentially driving full-year U.S. HCV revs to nearly $5.7B. Depending on ex-U.S. dynamics, which are difficult to predict, this could provide more comfort around GILD's ability to ultimately post sales at least on the upper end of their WW $7.5-9B 2017 HCV guidance.
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