Gilead Sees Underwhelming Demand For FDA-Approved COVID-19 Drug Remdesivir

Gilead Sciences Inc GILD has slashed its earnings guidance for 2020, pointing to a “dynamic," "complex,” and evolving global health care environment affecting the revenue from its remdesivir drug for COVID-19.

What Happened: Remdesivir, also known by its brand name "Veklury," brought in a revenue of $873 million for Gilead in the third quarter of 2020. 

Analysts had pegged remdesivir revenue at $960 million, as per Refinitiv IBES data reported by Reuters.

The company has lowered its top-end product sales guidance to $23.5 billion in 2020 from an earlier $25 billion. The outlook is below $24.1 billion estimated by analysts, Reuters noted.

"The revision in guidance is tied not entirely, but almost entirely to expectations around Veklury," Gilead Chief Financial Officer Andrew Dickinson said during the company's Q3 earnings call.

“There was less demand in the third quarter than expected,” Dickinson admitted — adding that this plays through in the fourth quarter and the full year guidance but refused to provide any product-specific guidance.

Even though the United States saw an increase in COVID-19 cases in the summer, many of those affected were young and hospitalization rates actually fell, Reuters reported.

“Our assumption is in light of the surge this fall both in Europe and the U.S., those numbers will pop back up,” said, Johanna Mercier, Gilead's chief commercial officer.

Why It Matters: Remdesivir became the first drug to gain approval from the United States Food and Drug Administration for treatment of COVID-19 among hospitalized patients in the United States this month. 

Gilead told Reuters that some remdesivir sales which were recorded in the third-quarter are held in inventory for use in the next quarter. The amount of the drug purchased for government stockpiles was also less than the company’s projections.

Jefferies analyst Michael Yee said that there is “uncertainty about the pandemic and still lingering questions about the visibility of remdesivir with antibodies coming,” as per Reuters.

A global study conducted by the World Health Organization concluded that remdesivir has “little or no effect” on mortality of those hospitalized with COVID-19.

Gilead executives have defended the efficacy of remdesivir and questioned the design of the WHO study, according to the Financial Times.

Daniel O’Day, Gilead’s CEO, said on the effectiveness of the drug that it had been, “unequivocally demonstrated by the gold standard of global clinical trials.”

Gilead declared a third-quarter revenue of $6.6 billion on Wednesday, which beat analysts' estimate of $6.4 billion.

Earnings per share rose 20.57% compared with last year to $2.11, beating the estimate of $1.95.

Price Action: Gilead shares closed 2.15% lower at $58.72 on Wednesday and fell 1.65% to $57.75 in the after-hours session.