Gilead Sciences Inc. (>> Gilead Sciences, Inc.) first-quarter earnings slid 32% as the biopharmaceutical company reported higher expenses and weaker margins, though adjusted profits improved.
Product sales, which generate the majority of the company's revenue, have been rising steadily in recent quarters. In the latest period, product sales rose 19%. Sales of antiviral products, its dominant revenue stream, increased 18 as HIV drugs Atripla and Truvada saw sales gains of 19% and 13%, respectively.
The company also receives royalties for Tamiflu from Roche Holding AG (RHHBY, ROG.VX). Royalty, contract and other revenue from collaborations were also up 19% last quarter.
Lately, Gilead has been focusing on simplifying HIV therapy, a treatment market that it dominates. In December, U.S. regulators accepted Gilead's new drug application for its Quad combination HIV drug, which analysts view as a potential growth driver. The Food and Drug Administration in February also granted Truvada a priority-review schedule, advancing what could become the first treatment labeled for HIV prevention.
Earlier this year, Gilead bought Pharmasset Inc. for more than $11 billion in a deal expected to accelerate the development of treatments for hepatitis C, a hotly contested market. A key drug candidate it obtained with Pharmasset, GS-7977, suffered a setback in February as a majority of hepatitis-C patients in one arm of a clinical trial had a relapse, raising questions about the drug's potential.
In the latest quarter, Gilead posted a profit of $442 million, or 57 cents a share, down from $651.1 million, or 80 cents a share, a year earlier. Excluding acquisition-related expenses, restructuring and stock-based compensation, earnings rose to 91 cents from 87 cents.
Revenue gained 19% to $2.28 billion.
Analysts polled by Thomson Reuters had expected a profit of 93 cents a share and revenue of $2.2 billion.
Operating margin narrowed to 35.1% from 46.8% as total costs and expenses jumped 45%.
Shares were down 1.4% to $52 after-hours. Through the close, the stock is up 29% since the start of the year.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; [email protected]