Two weeks ago, as the season for public companies to release their first-quarter earnings was kicking off, MedCity News reported that the Covid-19 pandemic’s effects on drugmakers’ financial fortunes would depend on their product mixes. For example, companies with a lot of self-administered drugs that were well-established in the market would likely fare better than those with a lot of newly launched products administered in physician offices, while telemedicine would help to offset the impact of fewer physician office visits.
Now, as most of the big drug companies have announced their earnings, a clearer picture of how the pandemic could affect some large pharmaceutical and biotechnology companies is emerging.
Gilead Sciences
Headquarters: Foster City, California
Ticker symbol: GILD (Nasdaq)
Market cap: $100.1 billion
Thanks to its development of the antiviral remdesivir, to which the Food and Drug Administration granted an emergency use authorization on Friday, Gilead is one of the most closely watched companies amid the Covid-19 pandemic. In its first-quarter earnings call last week, the company said that lessened healthcare provider access and fewer patient visits would likely have an adverse effect on sales in the second quarter and possibly beyond.
The company’s hepatitis C business would be particularly affected due to the acute nature of the therapy, though it expects to recoup those losses this year or into next year.
The pandemic also appears to be affecting the company’s HIV business, with deferred healthcare visits resulting in fewer patients starting on the drug Descovy (tenofovir alafenamide, emtricitabine), its drug for pre-exposure prophylaxis meant to succeed Truvada (tenofovir disoproxil fumarate, emtricitabine), which will soon go generic. However, HIV treatment is expected to see less of an effect thanks to patients refilling prescriptions and having access to physicians through telemedicine.
Reduced access to authorized treatment centers may adversely affect the company’s cell therapy business – it currently markets the CAR-T therapy Yescarta (axicabtagene ciloleucel) for aggressive non-Hodgkin’s lymphoma – due critically ill patients facing challenges in terms of access.
Pfizer
Headquarters: New York
Ticker symbol: PFE (NYSE)
Market cap: $209.2 billion
The New York-based drugmaker said the update to its guidance that it announced reflected several assumptions related to the Covid-19 pandemic, including that clinical trial enrollment would fully resume in the second half of this year, including starts of new studies, and that patient visits to physicians, vaccinations and elective surgical procedures would also rebound. At the same time, the company said its revenue and earnings-per-share guidance for the year had not changed since it announced its fourth quarter and full-year 2019 earnings. Adjusted EPS guidance remained at a range of $2.82-$2.92, and revenue guidance was reaffirmed at $48.5 billion to $50.5 billion.
Eli Lilly
Headquarters: Indianapolis
Ticker symbol: LLY (NYSE)
Market cap: $146.2 billion
The Indianapolis-based drugmaker said in its April 23 earnings announcement that it had increased the range on its EPS guidance for 2020, both on a reported and non-GAAP basis, to reflect the impact of Covid-19. The company anticipates EPS to fall within a range of $6.20-$6.40 on a reported basis and $6.70-$6.90 on a non-GAAP basis, from the respective ranges of $6.18-$6.28 and $6.70-$6.80 that it forecast at the end of the fourth quarter.
Johnson & Johnson
Headquarters: New Brunswick, New Jersey
Ticker symbol: JNJ (NYSE)
Market cap: $391.6 billion
While stating that its long-term fundamentals remain intact, Johnson & Johnson said in its first-quarter 2020 earnings on April 14 that it had lowered its 2020 guidance to reflect the impact of Covid-19. Reported sales are expected to fall within a range of $77.5-$80.5 billion, compared with the $85.4-$86.2 billion that the company forecast in January, while adjusted EPS is expected to be $7.50-$7.90, versus the $8.95-$9.10 forecast previously. Both ranges would represent a decline compared with what was reported last year. However, it is important to note that J&J is a highly diversified healthcare company – making things like medical devices and over-the-counter products – and not just a drugmaker. In a call with investment bank analysts, CFO Joe Wolk said he expects the company’s pharmaceutical segment to remain “resilient.”
Merck
Headquarters: Kenilworth, New Jersey
Ticker symbol: MRK (NYSE)
Market cap: $194.2 billion
Citing Covid-19, Merck said last week that it lowered its 2020 sales guidance from what it had forecast in its fourth-quarter 2019 earnings, from a range of $48.8-$50.3 billion to $46.1-$48.1 billion. EPS guidance was also lowered, from a range of $5.62-$5.77 to $4.12-$4.32.
Amgen
Headquarters: Thousand Oaks, California
Ticker symbol: AMGN (Nasdaq)
Market cap: $135.9 billion
In a conference call with investment bank analysts Thursday, Dave Reese, the company’s head of research and development, noted that it has already completed enrollment in the registration-directed Phase II study of sotorasib, also known as AMG 510, a small-molecule inhibitor of hitherto “undruggable” KRAS G12C mutations. However, the company has paused enrollment in a Phase I study exploring the combination of sotorasib with Merck’s Keytruda (pembrolizumab), as well as the Phase III confirmatory trial. The company reaffirmed its revenue and EPS guidance for the year.
Photo: Spencer Platt, Getty Images
