Today: Gilead's expensive, breakthrough hepatitis drug gives a huge boost to profits and revenues. Also: Facebook stock moves to record highs after earnings.
The Lead: Gilead's breakthrough hepatitis drug boosts sales
Gilead Sciences needed only six months to top its 2013 sales total and racked up more profits in just the second quarter than it did all of last year, thanks to its breakthrough hepatitis C drug that can cost up to $1,000 a pill.
The Foster City biotech giant reported Wednesday that it compiled $3.66 billion in net income during the second quarter on sales of $6.53 billion, after posting profits of $3.08 billion on sales of $11.2 billion for the 2013 calendar year. The gains can almost entirely be attributed to Sovaldi, the anti-hepatitis C drug that hit the market at the end of last year and produced $3.48 billion in sales during the quarter after totaling $2.27 billion in sales in its debut quarter.
The bulk of the sales were in the United States, which swallowed $3 billion worth of the drugs, and Gilead expects to expand availability to other countries, thus also adding to its revenues.
"Since December's launch, Sovaldi has been prescribed for more than 80,000 patients in the U.S. and Europe, underscoring the medical community's recognition of the benefits of this product," Gilead CEO John C. Martin said in Wednesday's news release. "We look forward to making Sovaldi available in additional countries."
Sovaldi has added to the billions Gilead makes from drugs for HIV and AIDS, which accounted for slightly more than $2.5 billion in sales in the quarter, up from $2.3 billion in the year-ago quarter. Gilead also received good news from the Food and Drug Administration on Wednesday, with the approval of a drug that will be used in specific blood cancers and cost $7,200 per month, a discount from the $8.200 charged by Silicon Valley rival Pharmacyclics for its drugs aimed at the same ailments. Like Sovaldi, the FDA classified it as a "breakthrough" drug, speeding its approval.
"(We) are now focused on making this medicine available to patients as expeditiously as possible," Martin said.
Gilead has faced heat for the cost of Sovaldi, which can reach as high as $84,000 for a full cycle, but president and chief operating officer John Milligan on Wednesday defended the company, which acquired the drug in an $11 billion merger.
"The value of a cure, I tend to think, is underestimated in terms of the overall advantage that the health care system receives from it," he said in Wednesday's conference call, later adding, "Sovaldi was priced appropriately based on the benefit that it provides today."
Martin backed up Milligan's statement during the call, saying that recent research shows that hepatitis C patients in the U.S. can run through as much as $42,000 a year in treatment for the disease without a cure, a cost that would repeat until a patient dies from the ravages of the illness.
Gilead stock recorded an all-time closing high of $90.34 Wednesday, and declined slightly in immediate after-hours trading, dipping lower than $90.
SV150 market report: Facebook heads to record highs after earnings
Wall Street experienced uneven trading Wednesday, with the Dow Jones industrial average falling while the SV150 and Nasdaq indexes gained ahead of a raft of tech earnings reports in the afternoon.
Facebook joined Gilead in blowing away forecasts for its earnings Wednesday, and the Menlo Park social network reached its highest stock prices yet in after-hours trading. Facebook reported net income of $791 million, or 30 cents a share, on revenues of $2.9 billion, gains of more than 135 percent for profits and 61 percent for sales from a year ago. The company's ad business has been booming, with Chief Operating Officer Sheryl Sandberg revealing that the company now has 1.5 million advertising customers. "We're seeing our existing advertisers spend more and we're seeing new people come on to the platform," Sandberg told Reuters. Facebook stock closed with a 2.9 percent increase at $71.29, then blew past its intraday record price of $72.59 in late trading, topping $75.
In other SV150 earnings reports: Varian Medical reported net income of $92.7 million, or 89 cents a share, on revenues of $778.5 million; Polycom earned $9 million, or 6 cents a share, on revenues of $332 million; Linear Technology earned $129.7 million, or 53 cents a share, on sales of $365.4 million; Infinera managed to produce previously elusive profits, reporting net income of $4.8 million, or 4 cents a share, on sales of $165.4 million; Fortinet announced net income of $6.1 million, or 4 cents a share, on sales of $184.1 million; and Natus Medical earned $7.7 million, or 24 cents a share, on sales of $86.3 million.
Apple reached its highest prices since 2012 after its earnings report revealed declining iPad sales but growth for the iPhone and Mac; the Cupertino company's shares rose 2.6 percent to $97.19 as analysts continued to clamor for big new products by the end of the year. Other companies that joined Apple in Tuesday's gaggle of Silicon Valley earnings reports were not as fortunate: Juniper Networks dropped 9.6 percent to $22.43, Electronic Arts declined 6.2 percent to $36.04, VMware dropped 1.6 percent to $94.52, and Xilinx plummeted 14.3 percent to $41.26. The only SV150 company to join Apple in post-earnings gains Wednesday was Intuitive Surgical, the Sunnyvale surgical robotics firm that rocketed 17.7 percent higher to $461.63 after its new system showed strong early sales.
Up: LinkedIn, Yahoo, Facebook, Apple, Tesla, eBay, Splunk, Gilead, Pandora, Zynga
Down: Juniper, EA, GoPro, Applied Materials, Nvidia, VMware, AMD, Cisco, SunPower, Intel, Netflix
The SV150 index of Silicon Valley's largest tech companies: Up 9.63, or 0.62 percent, to 1,553.26
The tech-heavy Nasdaq composite index: Up 17.68, or 0.4 percent, to 4,473.7
The blue chip Dow Jones industrial average: Down 26.91, or 0.16 percent, to 17,086.63
And the widely watched Standard & Poor's 500 index: Up 3.48, or 0.18 percent, to 1,987.01