October 26, 2017 / 9:33 PM / a year ago

UPDATE 1-Gilead profit beats estimates, but shares drop after hours

(Adds company comments, share price)

By Deena Beasley

Oct 26 (Reuters) - Gilead Sciences Inc posted better-than-expected third-quarter profits on Thursday, but shares fell after hours as use of its flagship hepatitis C drugs waned further and the company said it had yet to feel the full impact of more competition.

Shares of Gilead, which in August paid nearly $12 billion for cancer immunotherapy company Kite Pharma, fell as much as 4 percent after hours and was last trading at $74.98.

For the quarter, the drugmaker said it earned $2.27 a share after one-time items. Wall Street analysts, on average, had forecast $2.13 a share, according to Thomson Reuters I/B/E/S.

Gilead said it was still working on logistics for launching sales of newly-approved Yescarta, the $373,000 one-time treatment for non-Hodgkin lymphoma developed by Kite.

Gilead's quarterly sales of hepatitis C drugs Sovaldi, Harvoni, Epclusa and Vosevi totaled $2.2 billion, down from $3.3 billion a year earlier, and near the $2.24 billion forecast by analysts. The company's antiviral and HIV drug sales rose to $3.6 billion from $3.5 billion.

Gilead warned earlier this year that sales of its high-priced hepatitis C drugs were declining as fewer patients were deemed eligible for treatment and competition increased from rivals like AbbVie Inc.

"New compeition has further eroded Gilead's market share and net pricing," Gilead Chief Executive Officer John Milligan said on a conference call with investors. "The impact ... will be more fully reflected beginning in the fourth quarter."

The company said it now expects full-year 2017 hepatitis C sales of no more than $9 billion, down from a previous high-end estimate of $9.5 billion.

Gilead also raised the lower end of its full-year 2017 product sales outlook to $24.5 billion from a previous estimate of $24 billion, but left the upper end unchanged at $25.5 billion.

Overall revenue fell to $6.5 billion from $7.5 billion, while analysts had forecast $6.4 billion. Research and development costs dropped to $789 million from $1.14 billion.

Net income fell to $2.7 billion from $3.3 billion in the year-ago quarter. (Reporting by Deena Beasley; Editing by Sandra Maler and David Gregorio)

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