Sovaldi was in the news recently as U.S. lawmakers raised concerns over the pricing of this new hepatitis C drug. This long-awaited drug, approved in December 2013, costs $1,000 per pill or $84,000 for a 12-week course to treat a hepatitis C patient (read: Inside the Wild Ride of Biotech ETFs).
Though the company's shares have plunged roughly 15% from the high hit in late February following the pricing concern, its share prices have recovered 8% in the past 5 days.
This drug has enabled Gilead to report outstanding earnings results. While revenues have doubled, profits have tripled from the year-ago quarter (read: 3 ETFs Tumble Most on Biotech Sell-off).
Gilead Earnings in Focus
The company reported earnings per share of $1.33 for the first quarter of 2014, easily outpacing the Zacks Consensus Estimate of 75 cents and way above the year-ago earnings of 43 cents per share.
Moreover, total revenues for the reported quarter came in at $4.9 billion, beating our estimates by around 36%. Revenues from the company's antiviral product sales jumped 119% to $4.5 billion, mainly led by solid Sovaldi sales.
The company generated nearly half of its revenues, or $2.7 billion, from the sale of Sovaldi during the reported quarter, beating an average of analyst estimates by more than $1 billion. Revenues from Sovaldi were almost triple the sales from the company's next biggest drug, Atripla, which reported an 11% year-over-year fall.
Gilead has reiterated its full-year 2014 guidance and expects product sales to be between $11.3 billion and $11.5 billion, excluding the sales of Sovaldi and other hepatitis C drugs.
Amgen Earnings in Focus
While GILD cheered the markets, another biotech major, Amgen (NASDAQ: AMGN), came out with disappointing results. The company reported revenues of $4.5 billion, missing our estimates by more than 4%.
Though adjusted earnings per share came in at $1.87, slightly above our estimates of $1.81, it dropped 5% year over year. Moreover, the company reported a 25% fall in net income due to a jump in production and research costs.
ETF Impact
While the outstanding results by Gilead caused its share prices to gain 2.9% to $75.63 after market hours, AMGN shares declined 2.4% in after market hours.
Given the mixed results from the two major biotech companies, Gilead and Amgen, investors having exposure to the Health & Biotech ETF space must keep a close watch, and especially for these ETFs highlighted below:
Market Vectors Biotech ETF (ETF:BBH)
This fund tracks the Market Vectors US Listed Biotech 25 Index, holding 26 securities in the basket with a tilt toward large cap and growth stocks. The product has so far amassed $505.3 million in its asset base while charging 35 bps in annual fees.
The duo, GILD and AMGN, together have more than 20% exposure in the fund.
The fund has gained 25% in the past one year and is up around 7% in the last week (see: all the Healthcare ETFs here).
iShares Nasdaq Biotechnology ETF (NASDAQ: IBB)
This fund provides exposure to 123 firms by tracking the Nasdaq Biotechnology Index. IBB is one of the most popular funds in the biotech space with AUM of $4.8 billion and annual fees of 48 bps.
AMGN occupies the top spot, while GLD occupies the fourth spot here with exposures of 8.9 % and 7.6%, respectively. The fund is quite heavily invested in its top 10 assets which form more than half of the fund's holdings.
The fund has gained around 8% in the past one week and is up 35% in the past one year.
Health Care Select Sector SPDR Fund (ETF:XLV)
XLV is the most popular healthcare ETF on the market and tracks the S&P Health Care Select Sector Index. This fund manages about $9.3 billion in its asset base and charges an expense ratio of 16 basis points annually. In total, the fund holds about 55 securities in its basket (read: Solid JNJ Earnings Put Healthcare ETFs in Focus).
GLD and AMGN together have around 9% exposure in the fund. Pharma accounts for 46% share from a sector look while biotech, healthcare providers and services, and equipment and suppliers make up for double-digit exposure.
The fund gained nearly 2.8% in the past one week and is up 5% since the start of the year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
AMGEN INC (NASDAQ: AMGN): Free Stock Analysis Report
MKT VEC-BIOTECH (ETF:BBH): ETF Research Reports
GILEAD SCIENCES (NASDAQ: GILD): Free Stock Analysis Report
ISHARES NDQ BIO (NASDAQ: IBB): ETF Research Reports
SPDR-HLTH CR (ETF:XLV): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!