LOS ANGELES |
Reuters) - Gilead Sciences Inc's (GILD.O) first-quarter profit fell a deeper-than-expected 24 percent as U.S. state-funded purchases of its core AIDS drugs were lower than expected and royalty revenue slipped.
The company's shares dropped more than 3 percent in after-hours trading.
Sales of HIV drug Truvada rose 2 percent to $673.1 million, while sales of Atripla rose 7 percent to $744.5 million -- but the totals fell short of respective average analyst estimates of $688 million and $793 million.
Gilead said U.S. sales were hit by temporary cutbacks at state-funded AIDS drug assistance programs (ADAPs) in Florida and Texas.
"Investors will want clarity on whether this is indicative of a longer-term trend," said Cowen & Co analyst Phil Nadeau. "Gilead did maintain its full-year guidance, which suggests that this is not an ongoing problem."
The company still expects full-year product sales of between $7.9 billion and $8.1 billion.
"We believe that the fundamentals of our business remain strong with regard to patient demand and prescription growth in the retail sector," John Milligan, Gilead's president and chief operating officer, said on a conference call.
The company's quarterly adjusted profit of 87 cents per share fell well below the average Wall Street analyst forecast of 97 cents per share, according to Thomson Reuters I/B/E/S.
Gilead attributed the mismatch between U.S. demand and its sales revenue to budget problems in Texas and Florida, adding that the federal government recently set a fiscal 2011 ADAP budget of $885 million -- up 6 percent from the prior year.
"The very latest intelligence we have gathered at the state level indicates that there is second-quarter purchasing by ADAP programs, including Florida, within the last week," said Kevin Young, head of commercial operations at Gilead.
He said he had not heard about renewed buying by the Texas program.
The company's net income fell to $651.1 million, or 80 cents per share, from $854.9 million, or 92 cents per share, a year earlier.
Total revenue for the quarter fell to $1.93 billion from $2.09 billion a year earlier. Analysts expected $2.04 billion.
Royalty, contract and other revenue fell 79 percent to $62.5 million. Gilead derives most of its royalty revenue from Roche Holding's (ROG.VX) sales of Tamiflu.
Research and development costs rose to $254.4 million from $218.7 million a year earlier.
Gilead shares, which have gained about 11 percent so far this year to close at $40.78 on Wednesday, were trading at $39.40 after hours.
(Editing by Ted Kerr, Steve Orlofsky and Andre Grenon)
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