Hepatitis C Pill Rockets Gilead Into Big Leagues

Updated July 23, 2014 7:52 p.m. ET

For decades, a liver disease that would slowly kill the infected person didn’t even have a name, let alone an effective medicine.

Now, a new pill promising to cure most cases of the disease, eventually called hepatitis C, is believed to be the biggest new drug launch ever, catapulting maker


Gilead Sciences Inc.



GILD +1.13%



Gilead Sciences Inc.


U.S.: Nasdaq


$90.34


+1.01
+1.13%



July 23, 2014 4:00 pm


Volume (Delayed 15m)
:
15.55M



AFTER HOURS



$90.00


-0.34
-0.38%


July 23, 2014 7:59 pm


Volume (Delayed 15m)
:
2.14M




P/E Ratio
30.21

Market Cap
$137.18 Billion


Dividend Yield
N/A

Rev. per Employee
$2,247,510









07/23/14 Hepatitis C Pill Rockets Gilea…
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into the ranks of the top-selling pharmaceutical companies.

The pill, Sovaldi, notched $3.5 billion in second-quarter sales, Gilead said Wednesday. As a result of its lucrative move into hepatitis C treatment, the Foster City, Calif., company roughly doubled its revenue guidance for the year’s net product sales to $21 billion to $23 billion.

Such sales would put Gilead, once best known for its drugs treating HIV/AIDS, on par with the total revenues of biotechnology trailblazer


Amgen Inc.



AMGN +0.74%



Amgen Inc.


U.S.: Nasdaq


$122.01


+0.90
+0.74%



July 23, 2014 4:00 pm


Volume (Delayed 15m)
:
3.48M



AFTER HOURS



$122.01


0.00
%


July 23, 2014 6:20 pm


Volume (Delayed 15m)
:
47,852




P/E Ratio
19.52

Market Cap
$91.68 Billion


Dividend Yield
2.00%

Rev. per Employee
$947,550









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and insulin pioneer


Eli Lilly



LLY +0.83%



Eli Lilly & Co.


U.S.: NYSE


$64.25


+0.53
+0.83%



July 23, 2014 4:00 pm


Volume (Delayed 15m)
:
4.49M



AFTER HOURS



$64.25


0.00
%


July 23, 2014 6:20 pm


Volume (Delayed 15m)
:
1.07M




P/E Ratio
17.90

Market Cap
$71.33 Billion


Dividend Yield
3.05%

Rev. per Employee
$585,213









07/23/14 Hepatitis C Pill Rockets Gilea…
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& Co.

As it enters the industry big leagues, Gilead is facing more public scrutiny. Sovaldi’s list price, about $1,000 a day for a 12-week course of treatment, has drawn criticism from politicians and insurance officials who say the health-care system can’t afford such expensive treatments.

Gilead counters with the pill’s effectiveness: Studies show it cures about 9 out of 10 patients, helping them avoid more costly care such as liver transplants. The company said in a conference call with analysts and investors that 9,000 patients have been cured by Sovaldi since it went on sale.

Gilead said 47 state Medicaid agencies are covering the cost of Sovaldi, albeit after authorizing its use for each patient, while the remaining three states are deciding whether to reimburse the drug. Gilead said it is preparing to talk with senators who have questioned the pricing.

The company has previously faced criticism from patients and insurers regarding its pricing of HIV/AIDS treatments.

Commercial challenges also loom for Gilead.


AbbVie Inc.,



ABBV +0.80%



AbbVie Inc.


U.S.: NYSE


$54.48


+0.43
+0.80%



July 23, 2014 4:01 pm


Volume (Delayed 15m)
:
14.35M



AFTER HOURS



$54.26


-0.23
-0.41%


July 23, 2014 5:53 pm


Volume (Delayed 15m)
:
657,330




P/E Ratio
21.12

Market Cap
$85.94 Billion


Dividend Yield
3.08%

Rev. per Employee
$760,960









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Bristol-Myers Squibb Co.



BMY +0.41%



Bristol-Myers Squibb Co.


U.S.: NYSE


$49.32


+0.20
+0.41%



July 23, 2014 4:00 pm


Volume (Delayed 15m)
:
6.14M



AFTER HOURS



$49.69


+0.37
+0.75%


July 23, 2014 7:55 pm


Volume (Delayed 15m)
:
143,965




P/E Ratio
28.02

Market Cap
$81.40 Billion


Dividend Yield
2.92%

Rev. per Employee
$584,464









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and


Merck



MRK -0.55%



Merck & Co. Inc.


U.S.: NYSE


$58.11


-0.32
-0.55%



July 23, 2014 4:01 pm


Volume (Delayed 15m)
:
6.23M



AFTER HOURS



$58.11


0.00
%


July 23, 2014 6:20 pm


Volume (Delayed 15m)
:
70,543




P/E Ratio
37.98

Market Cap
$170.75 Billion


Dividend Yield
3.03%

Rev. per Employee
$574,434









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& Co. are among the companies working on new drugs to compete with Gilead’s. A rival could gain advantage, analysts say, if it could develop treatment that works in less time than the 12 weeks with Sovaldi currently.

And companies including Merck, AbbVie and


Roche Holding AG



ROG.VX +1.69%



Roche Holding AG Part. Cert.


Switzerland: SWX Europe


CHF271.00


+4.50
+1.69%



July 24, 2014 11:05 am


Volume (Delayed 15m)
:
510,846




P/E Ratio
20.97

Market Cap
CHF228.32 Billion


Dividend Yield
2.88%

Rev. per Employee
CHF549,835









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are battling Gilead over valuable patent rights tied to Sovaldi, aiming to get a piece of that pie.

Analysts estimate Sovaldi will surpass $10 billion in sales this year, making it one of the world’s biggest sellers.

Early use of the pill, which the U.S. Food and Drug Administration approved last December, is outpacing the trajectory of the drug previously said to have the fastest launch ever, an older hepatitis C treatment called Incivek from


Vertex Pharmaceuticals Inc.



VRTX +0.41%



Vertex Pharmaceuticals Inc.


U.S.: Nasdaq


$98.14


+0.40
+0.41%



July 23, 2014 4:00 pm


Volume (Delayed 15m)
:
1.44M



AFTER HOURS



$98.14


0.00
%


July 23, 2014 6:20 pm


Volume (Delayed 15m)
:
13,768




P/E Ratio
N/A

Market Cap
$23.09 Billion


Dividend Yield
N/A

Rev. per Employee
$556,699









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07/23/14 Why a Trial for a Vertex Cysti…
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Sales could go even higher if Gilead wins approval for another hepatitis C pill, which it aims to combine with Sovaldi in the first all-oral treatment, an easier-to-take regimen sought by patients. The company said it saw signs that many patients were waiting for the new regimen to go on sale.

FDA review of the second pill, ledipasvir, is “moving ahead nicely,” said

Norbert Bischofberger,

Gilead’s research-and-development chief. The deadline for approval is Oct. 10.

Gilead’s chief operating officer,

John Milligan,

said he hoped insurers “will be preparing” for a potential ledipasvir approval. He attributed some of the insurer criticism of Sovaldi’s price to high levels of use that the plans didn’t expect.

Another Gilead executive,

Paul Carter,

suggested the company may not price ledipasvir as high as Sovaldi, saying the “majority of value” in its combination with Sovaldi would be in Sovaldi. Yet other executives said it was too early to speculate about pricing.

Gilead didn’t include in its guidance sales of a new blood-cancer drug, which the FDA approved Wednesday. Analysts estimate the pill, Zydelig, will have about $1 billion in sales in 2017. It marks Gilead’s first medicine for cancer, another disease it’s targeting.

It marks Gilead’s first medicine for cancer, the third disease it’s targeting.

In Gilead laboratories, “we’ve never had so many things going forward as we do today, and we’ve never felt more confident” about their prospects, Dr. Milligan said. Given its pipeline, he added, Gilead doesn’t feel a “strong need” to do deals to bring in new compounds. Given its pipeline, he added, Gilead doesn’t feel a “strong need” to do deals to bring in new compounds.

Gilead shares, up 53% over the past year through Wednesday’s close, rose 36 cents to $90.70 in after-hours trading.

Overall for the second quarter, Gilead reported a profit of $3.66 billion, or $2.20 a share, up from $722.6 million, or 46 cents a share, a year earlier. Excluding items, adjusted per-share earnings rose to $2.36 from 50 cents. Excluding items, adjusted per-share earnings rose to $2.36 from 50 cents. Revenue more than doubled to $6.53 billion from $2.77 billion.

—Tess Stynes contributed to this article

Write to Jonathan D. Rockoff at jonathan.rockoff@wsj.com

  Click to listen highlighted text! Updated July 23, 2014 7:52 p.m. ET For decades, a liver disease that would slowly kill the infected person didn’t even have a name, let alone an effective medicine. Now, a new pill promising to cure most cases of the disease, eventually called hepatitis C, is believed to be the biggest new drug launch ever, catapulting maker Gilead Sciences Inc. GILD +1.13% Gilead Sciences Inc. U.S.: Nasdaq $90.34 +1.01 +1.13% July 23, 2014 4:00 pm Volume (Delayed 15m) : 15.55M AFTER HOURS $90.00 -0.34 -0.38% July 23, 2014 7:59 pm Volume (Delayed 15m) : 2.14M P/E Ratio 30.21 Market Cap $137.18 Billion Dividend Yield N/A Rev. per Employee $2,247,510 07/23/14 Hepatitis C Pill Rockets Gilea… 07/21/14 Hepatitis C Spurs Unusual Pate… 07/20/14 Lucrative Drug Niche Sparks Le… More quote details and news » into the ranks of the top-selling pharmaceutical companies. The pill, Sovaldi, notched $3.5 billion in second-quarter sales, Gilead said Wednesday. As a result of its lucrative move into hepatitis C treatment, the Foster City, Calif., company roughly doubled its revenue guidance for the year’s net product sales to $21 billion to $23 billion. Such sales would put Gilead, once best known for its drugs treating HIV/AIDS, on par with the total revenues of biotechnology trailblazer Amgen Inc. AMGN +0.74% Amgen Inc. U.S.: Nasdaq $122.01 +0.90 +0.74% July 23, 2014 4:00 pm Volume (Delayed 15m) : 3.48M AFTER HOURS $122.01 0.00 % July 23, 2014 6:20 pm Volume (Delayed 15m) : 47,852 P/E Ratio 19.52 Market Cap $91.68 Billion Dividend Yield 2.00% Rev. per Employee $947,550 More quote details and news » and insulin pioneer Eli Lilly LLY +0.83% Eli Lilly & Co. U.S.: NYSE $64.25 +0.53 +0.83% July 23, 2014 4:00 pm Volume (Delayed 15m) : 4.49M AFTER HOURS $64.25 0.00 % July 23, 2014 6:20 pm Volume (Delayed 15m) : 1.07M P/E Ratio 17.90 Market Cap $71.33 Billion Dividend Yield 3.05% Rev. per Employee $585,213 07/23/14 Hepatitis C Pill Rockets Gilea… 07/17/14 Novartis Profit Creeps Higher … 07/16/14 Roche’s Experimental Alzheimer… More quote details and news » & Co. As it enters the industry big leagues, Gilead is facing more public scrutiny. Sovaldi’s list price, about $1,000 a day for a 12-week course of treatment, has drawn criticism from politicians and insurance officials who say the health-care system can’t afford such expensive treatments. Gilead counters with the pill’s effectiveness: Studies show it cures about 9 out of 10 patients, helping them avoid more costly care such as liver transplants. The company said in a conference call with analysts and investors that 9,000 patients have been cured by Sovaldi since it went on sale. Gilead said 47 state Medicaid agencies are covering the cost of Sovaldi, albeit after authorizing its use for each patient, while the remaining three states are deciding whether to reimburse the drug. Gilead said it is preparing to talk with senators who have questioned the pricing. The company has previously faced criticism from patients and insurers regarding its pricing of HIV/AIDS treatments. Commercial challenges also loom for Gilead. AbbVie Inc., ABBV +0.80% AbbVie Inc. U.S.: NYSE $54.48 +0.43 +0.80% July 23, 2014 4:01 pm Volume (Delayed 15m) : 14.35M AFTER HOURS $54.26 -0.23 -0.41% July 23, 2014 5:53 pm Volume (Delayed 15m) : 657,330 P/E Ratio 21.12 Market Cap $85.94 Billion Dividend Yield 3.08% Rev. per Employee $760,960 07/23/14 Hepatitis C Pill Rockets Gilea… 07/23/14 Durbin Harshly Criticizes Walg… 07/21/14 Edward D. Kleinbard: Tax Inver… More quote details and news » Bristol-Myers Squibb Co. BMY +0.41% Bristol-Myers Squibb Co. U.S.: NYSE $49.32 +0.20 +0.41% July 23, 2014 4:00 pm Volume (Delayed 15m) : 6.14M AFTER HOURS $49.69 +0.37 +0.75% July 23, 2014 7:55 pm Volume (Delayed 15m) : 143,965 P/E Ratio 28.02 Market Cap $81.40 Billion Dividend Yield 2.92% Rev. per Employee $584,464 07/23/14 Hepatitis C Pill Rockets Gilea… 07/20/14 Lucrative Drug Niche Sparks Le… 07/16/14 Eli Lilly Signs $45 Million De… More quote details and news » and Merck MRK -0.55% Merck & Co. Inc. U.S.: NYSE $58.11 -0.32 -0.55% July 23, 2014 4:01 pm Volume (Delayed 15m) : 6.23M AFTER HOURS $58.11 0.00 % July 23, 2014 6:20 pm Volume (Delayed 15m) : 70,543 P/E Ratio 37.98 Market Cap $170.75 Billion Dividend Yield 3.03% Rev. per Employee $574,434 07/23/14 Invoking Anti-Fraud Law, Louis… 07/23/14 Hepatitis C Pill Rockets Gilea… 07/20/14 Lucrative Drug Niche Sparks Le… More quote details and news » & Co. are among the companies working on new drugs to compete with Gilead’s. A rival could gain advantage, analysts say, if it could develop treatment that works in less time than the 12 weeks with Sovaldi currently. And companies including Merck, AbbVie and Roche Holding AG ROG.VX +1.69% Roche Holding AG Part. Cert. Switzerland: SWX Europe CHF271.00 +4.50 +1.69% July 24, 2014 11:05 am Volume (Delayed 15m) : 510,846 P/E Ratio 20.97 Market Cap CHF228.32 Billion Dividend Yield 2.88% Rev. per Employee CHF549,835 07/24/14 European Markets Struggle to S… 07/24/14 Roche Profit Dented by Currenc… 07/23/14 Hepatitis C Pill Rockets Gilea… More quote details and news » are battling Gilead over valuable patent rights tied to Sovaldi, aiming to get a piece of that pie. Analysts estimate Sovaldi will surpass $10 billion in sales this year, making it one of the world’s biggest sellers. Early use of the pill, which the U.S. Food and Drug Administration approved last December, is outpacing the trajectory of the drug previously said to have the fastest launch ever, an older hepatitis C treatment called Incivek from Vertex Pharmaceuticals Inc. VRTX +0.41% Vertex Pharmaceuticals Inc. U.S.: Nasdaq $98.14 +0.40 +0.41% July 23, 2014 4:00 pm Volume (Delayed 15m) : 1.44M AFTER HOURS $98.14 0.00 % July 23, 2014 6:20 pm Volume (Delayed 15m) : 13,768 P/E Ratio N/A Market Cap $23.09 Billion Dividend Yield N/A Rev. per Employee $556,699 07/23/14 Hepatitis C Pill Rockets Gilea… 07/23/14 Why a Trial for a Vertex Cysti… 07/17/14 Vertex Drug for Cystic Fibrosi… More quote details and news » Sales could go even higher if Gilead wins approval for another hepatitis C pill, which it aims to combine with Sovaldi in the first all-oral treatment, an easier-to-take regimen sought by patients. The company said it saw signs that many patients were waiting for the new regimen to go on sale. FDA review of the second pill, ledipasvir, is “moving ahead nicely,” said Norbert Bischofberger, Gilead’s research-and-development chief. The deadline for approval is Oct. 10. Gilead’s chief operating officer, John Milligan, said he hoped insurers “will be preparing” for a potential ledipasvir approval. He attributed some of the insurer criticism of Sovaldi’s price to high levels of use that the plans didn’t expect. Another Gilead executive, Paul Carter, suggested the company may not price ledipasvir as high as Sovaldi, saying the “majority of value” in its combination with Sovaldi would be in Sovaldi. Yet other executives said it was too early to speculate about pricing. Gilead didn’t include in its guidance sales of a new blood-cancer drug, which the FDA approved Wednesday. Analysts estimate the pill, Zydelig, will have about $1 billion in sales in 2017. It marks Gilead’s first medicine for cancer, another disease it’s targeting. It marks Gilead’s first medicine for cancer, the third disease it’s targeting. In Gilead laboratories, “we’ve never had so many things going forward as we do today, and we’ve never felt more confident” about their prospects, Dr. Milligan said. Given its pipeline, he added, Gilead doesn’t feel a “strong need” to do deals to bring in new compounds. Given its pipeline, he added, Gilead doesn’t feel a “strong need” to do deals to bring in new compounds. Gilead shares, up 53% over the past year through Wednesday’s close, rose 36 cents to $90.70 in after-hours trading. Overall for the second quarter, Gilead reported a profit of $3.66 billion, or $2.20 a share, up from $722.6 million, or 46 cents a share, a year earlier. Excluding items, adjusted per-share earnings rose to $2.36 from 50 cents. Excluding items, adjusted per-share earnings rose to $2.36 from 50 cents. Revenue more than doubled to $6.53 billion from $2.77 billion. —Tess Stynes contributed to this article Write to Jonathan D. Rockoff at jonathan.rockoff@wsj.com Powered By GSpeech