5 Things Gilead Sciences' Q2 Earnings Numbers Didn't Tell You

The numbers didn't lie: Gilead Sciences (NASDAQ: GILD) posted pretty good second-quarter results. While revenue and earnings fell compared to the prior-year period, the big biotech still managed to beat expectations thanks to strong HIV drug sales and a better-than-expected performance from its hepatitis C virus (HCV) franchise. Gilead even upped its full-year 2017 guidance.

But any company's quarterly results are just a snapshot looking in the rearview mirror. They don't reveal everything investors need to know about where a company is headed.

However, management sometimes provides a few clues in the earnings conference call that can hepatitis investors get a better feel for what could be in store. With that in mind, here are five things Gilead Sciences' second-quarter earnings numbers didn't tell you -- but for which the biotech's management shared some insight. (Quotes courtesy of S&P Global Market Intelligence.)

1. What effect new competition will have on HCV sales

While Gilead's second-quarter HCV sales came in higher than analysts (and Gilead itself) expected, the company will have a new rival to contend with in the third quarter. AbbVie (NYSE: ABBV) announced European approval for its single-pill for treating all genotypes of HCV on July 28. The drug, branded as Maviret, is also under priority review in the U.S.

AbbVie's previous HCV drug, Viekira, didn't make as big of a splash as the company would have liked. Maviret, though, could be in position to challenge Gilead's pan-genotypic HCV drug, Epclusa. AbbVie's level of success with Maviret is important for Gilead, since Epclusa has been the main bright spot amid the dark overall picture for Gilead's HCV franchise.

Gilead's COO, Kevin Young, used guarded language when asked about the potential threat from AbbVie, saying that Gilead would need to see its rival's pricing and promotional strategy to determine what steps to take. Norbert Bischofberger, Gilead's head of research and development, was a little less cautious, though. He thought that AbbVie's clinical results weren't so impressive outside of HCV genotype 1. Expect Gilead's sales reps to hammer this point hard when positioning Epclusa against Maviret.

2. When HCV sales will stabilize

Despite a better-than-expected quarter for its HCV franchise, don't read too much into the results just yet. Kevin Young stated that Gilead continues to project "a gradual trend down" for HCV sales. He added, "where that sort of turns the corner or bottoms out right now still remains to be seen." While Gilead will face increased competition from AbbVie, there was a nugget of good news in the second quarter. Gilead launched a major educational campaign in October 2016 to encourage baby boomers to get tested for HCV. Young said that Gilead's research "shows that there has been an 80% increase in HCV antibody screening by baby boomers since the start of this initiative."

3. Just how dominant Gilead is in HIV

The second-quarter numbers for Gilead's HIV franchise looked great. That was especially the case for Genvoya, with sales of $857 million in the quarter -- up 184% year over year. But these numbers still don't reveal just how dominant Gilead continues to be in HIV.

Genvoya has a 41% market share in the treatment-naive HIV market, more than twice that of the No. 2 therapy. In France, the largest HIV market in Europe, Genvoya became the most-prescribed treatment for treatment-naive and switch patients just four months after its launch. Gilead's single-tablet regimens take four of the top five spots among the most-prescribed HIV treatments.

4. How big of an impact the pipeline will have

Although the numbers in Gilead's latest financial update don't tell us anything about its pipeline prospects, there was plenty of good news in the second quarter and shortly afterward. The biotech won FDA approval for HCV drug Vosevi in July. It submitted the bictegravir/F/TAF combo for U.S. approval in treating HIV.

The bictegravir combo will be enormously important for Gilead's future. The expected strength of this HIV drug landed Gilead a spot in the top five drug pipelines as ranked by market research firm EvaluatePharma.

But how well will the bictegravir combo compete against GlaxoSmithKline's (NYSE: GSK) Tivicay in combination with F/TAF? Norbert Bischofberger acknowledged that the two combos are "virologically identical." However, he pointed out that Gilead will have one single pill with only one co-pay required -- a potentially key differentiation from Glaxo's drug.

5. Which company Gilead will acquire and when it will happen

The main unanswered questions for Gilead are related to its acquisition strategy. Investors have been waiting a while for the big biotech to make a deal.

Gilead CEO John Milligan said that the company's focus and priorities on the business development front haven't changed. He referenced Gilead's staff additions, stating that this allows the company to "evaluate more different kinds of opportunities." Milligan added that Gilead is "very, very active" with respect to looking at acquisition opportunities.

When will something happen? Milligan simply stated, "When the things are right for us, we'll announce them. That's all I can say."

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Keith Speights owns shares of AbbVie and Gilead Sciences. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has the following options: short August 2017 $75 calls on Gilead Sciences. The Motley Fool has a disclosure policy.