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Gilead Sciences (GILD) Stock Gains 20% YTD: What Lies Ahead?

·3-min read

Biotech giant, Gilead Sciences, Inc. GILD, a leader in virology disease drugs, has had a good year. Shares have gained 20.2% in the year against the industry’s 17.3% decline.

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Zacks Investment Research

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Gilead beat sales and earnings estimates in the third quarter of 2021, driven by increased contribution from COVID-19 treatment, Veklury (remdesivir). The strong performance of Veklury has boosted its top line this year as the pandemic continues.

Gilead has a strong HIV portfolio. HIV therapy, Biktarvy, continues to drive growth despite the ongoing impact of the pandemic. However, the loss of exclusivity of Truvada and Atripla has affected the HIV franchise’s performance.

Competition is stiff in the HIV market from the likes of GlaxoSmithKline GSK, among others.

Glaxo reported an 8% growth in its HIV franchise in the third quarter, driven by its new HIV products Dovato, Juluca, Rukobia and Cabenuva.

The decline in its legacy HCV business and increasing competition in the HIV business have propelled Gilead to diversify into the lucrative oncology space, which promises potential despite stiff competition.

To that end, Gilead has made good progress of late. It recently exercised its options for three programs in the Arcus Biosciences, Inc. RCUS clinical-stage oncology portfolio. The programs include both anti-TIGIT molecules, domvanalimab and AB308, as well as etrumadenant ((A2a/A2b Adenosine Receptor Antagonist) and quemliclustat (small Molecule CD73 Inhibitor).

Per the terms, with Gilead’s exercise of options, Arcus will receive option payments totaling $725 million. Gilead and Arcus will co-commercialize and equally share profits in the United States if the chosen targets achieve regulatory approval. Domvanalimab is an Fc-silent anti-TIGIT antibody in phase II and phase III studies in non-small cell lung cancer (NSCLC) and AB308 is an Fc-enabled anti-TIGIT antibody in phase I. Etrumadenant is a dual adenosine A2a/A2b receptor antagonist in phase I and phase II studies in NSCLC, colon cancer and prostate cancer. Quemliclustat is a small molecule CD73 inhibitor in a phase I study in metastatic pancreatic ductal adenocarcinoma (PDAC).

We remind investors that in October 2020, Gilead acquired Immunomedics for approximately $21 billion, which added breast cancer drug Trodelvy (sacituzumab govitecan) to its oncology portfolio. It is also approved for the treatment of adult patients with locally advanced or metastatic urothelial cancer who have previously received platinum-containing chemotherapy and either programmed death receptor-1 (PD-1) or programmed death-ligand 1 (PD-L1) inhibitor.

The European Commission recently granted marketing authorization to Trodelvy as a monotherapy indicated for the treatment of adult patients with unresectable or metastatic triple-negative breast cancer who have received two or more prior systemic therapies, at least one of them for advanced disease. Approval in additional indications will boost sales.

We expect Gilead to focus more on this space for now. Strategic deals/acquisitions might be in the pipeline as well.

Gilead currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Sarepta Therapeutics SRPT which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Loss per share estimates for Sarepta have narrowed from $6.95 to $4.99 for 2021 and from $4.83 to $3.61 for 2022 in the past 30 days. Sarepta delivered an earnings surprise of 11.06%, on average, in the last four quarters.

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