Gilead HCV Sales Decline In US, But Offset By Global Growth
This article was originally published in Scrip
Strong sales growth continues almost unabated at Gilead Sciences Inc., but the virology powerhouse reported that domestic sales for its hepatitis C drugs actually decreased by 26% year-over-year during the fourth quarter.
The decline, however, was more than offset by hepatitis C virus (HCV) drug sales growth in the rest of the world, including a blockbuster launch of Harvoni (sofosbuvir/ledipasvir) and Sovaldi (sofosbuvir) in Japan.
During the Foster City, California-based firm's fourth quarter and full-year 2015 earnings call, Executive Vice President of Commercial Operations Paul Carter said decreased US sales in HCV could be attributed in part to a significant decline in purchasing by the Veterans Administration. He said the VA nearly exhausted the annual funding allocated for HCV treatment during the third quarter of 2015, and as a result there were very few HCV treatment starts during the fourth quarter.
Gilead realized global sales of $4.9bn for Harvoni and Sovaldi for the quarter, up 27% from fourth quarter 2014. US sales of $2.4bn still comprised 48% of the worldwide total. In Europe, sales of the two drugs totaled $846m for the quarter, up 56% year-over-year. In Japan, where both products launched in 2015, quarterly sales came to $1.7bn, comprising 34% of the total.
An indication of the upside Gilead could still realize in HCV derives from a continued substantial uptick in HCV treatment starts. Gilead reported 189,000 treatment initiations on sofosbuvir-based regimens globally in 2014, with 142,000 of those in the US, 32,000 in Europe and 15,000 in the rest of the world.
For 2015, the aggregate ballooned to 583,000 patient starts worldwide. US patient starts grew to 236,000, while EU starts more than tripled to 113,000, and rest-of-world initiations (not including Japan) increased more than 12-fold to 185,000. There were 49,000 starts in Japan, where Sovaldi launched in May, followed by Harvoni in September.
However, Jefferies analyst Brian Abrahams suggested that Gilead should not rely on Japan for HCV sales growth, both because of pricing pressure and the dwindling patient population. "Growing predominance of Japan, where a price cut is imminent, and weakness in US Harvoni, which is a leading indicator of HCV patient flow, are negatives," he said in a Feb. 2 note.
In a same-day note, ISI analyst Mark Schoenebaum pointed out that Gilead beat consensus expectations for total product sales by about 4%, despite just a slight increase for the HCV franchise. A $500m miss in the US was ameliorated by more than a $1bn beat in ex-US hepatitis C revenues, he pointed out.
Competitor AbbVie Inc. reported blockbuster earnings on Jan. 29 for its HCV combo product Viekira Pak (ombitasvir/paritaprevir/ritonavir tablets; dasabuvir tablets) at $1.6bn for the full year, broken down into $804m in the US and $835m ex-US. During the fourth quarter, Viekira brought in $554m worldwide, with $357m realized outside the US. The quarterly US sales of $197m were down from the previous quarter, with a lower run rate than the full-year total.
Real World Data Expected To Hold Off Competition
Carter said on the call that Gilead remains very confident about its competitive prospects, even with Merck & Co. Inc. reaching the market with its once-daily oral combination HCV therapy Zepatier (grazoprevir/elbasvir) on Jan. 28. Having set the wholesale acquisition cost for Zepatier about 30% below the price for Harvoni, it appears Merck is pursuing a price strategy to compete with Gilead and AbbVie, although publicly it talks instead about improving US patient access to new HCV therapies.
Gilead's confidence despite the declining US sales of Harvoni and Sovaldi, and pushback on pricing that the company has dealt with since the two drugs launched, stems from real-world data it outlined at the American Association for Study of Liver Diseases (AASLD) last November, Carter said. Those data show that Harvoni is equaling, and even exceeding, the high cure rates it produced in clinical trials, even in eight-week treatment regimens.
The firm's pricing of both HCV and HIV drugs has come under further pressure recently, with the Massachusetts Attorney General urging Gilead in a Jan. 22 letter to reduce the cost of Harvoni and Sovaldi and suggesting that the company's practices might violate the state's unfair trade practices law. Days later, the AIDS Healthcare Foundation filed suit against Gilead, claiming pricing of its new HIV combination drug Genvoya prevented "economical access" to the therapy.
Genvoya (elvitegravir/cobicistat/emtricitabine/TAF) posted quarterly sales of $45m during the fourth quarter, all but $1m of that coming from the US. Genvoya, a follow-on to Stribild that replaces the Viread component with the prodrug tenofovir alafenamide, obtained FDA approval on Nov. 5 and was approved in the EU later that month.
Carter told the earnings call about 80% of Genvoya's initial sales came from patients switching from Stribild.
Editor's note: A version of this article also was published in "The Pink Sheet" DAILY. Scrip Intelligence brings selected complementary coverage from sister publications to our subscribers.