GSK Stock: Will HIV Drug Sales Boost the GSK Share Price?

A diversified portfolio and product pipeline have helped maintain GSK share price growth since the Covid-19 pandemic. HIV drug sales are likely to be in focus when the British pharma giant reports Q1 earnings on Wednesday.

Approved by the US Food and Drug Administration in 2021, GSK’s [GSK] long-acting HIV drug Cabenuva can be a more effective treatment for some patients than taking daily pills, the pharmaceutical company’s subsidiary ViiV Healthcare announced in March.

A third of people living with HIV in the US “struggle with maintaining viral suppression”, according to Kimberly Smith, Head of Research and Development at ViiV Healthcare. “The findings of the study show that long-acting injectable [Cabenuva] could be important for some people in this group, giving them another option to help keep their virus under control and improve their health,” she added.

Cabenuva is injected every four weeks.

With GSK set to lose its patent for its HIV drug dolutegravir in the US in April 2028 and in mid-2029 in Europe, long-acting drugs like Cabenuva are expected to be key in offseting any revenue loss. GSK is expecting long-acting injectables to make up 40% of its sales by 2027.

According to Stockcircle, six ‘super investors’ bought $83.4m worth of GSK shares in Q4 2023, while another five sold $24.3m worth.

Ken Fisher, Founder, Executive Chairman and Co-chief Investment Officer of Fisher Investments, boosted his holding by 10.6%, snapping up approximately 1.4 million GSK shares, while Ray Dalio, Founder and former CEO, Chief Investment Officer and Chairman of Bridgewater Associates, added 36,000 shares, increasing his position by 20.2%.

Jim Simons, Founder of Renaissance Technologies, reduced his stake by 5%, selling approximately 147,000 shares. Ken Griffin, Founder, CEO and Co-Chief Investment Officer of Citadel, offloaded 414,000 shares, slashing his holding by 77.8%.

2023 HIV Sales See “Notable Acceleration”

In January, GSK reported a Q4 2023 net profit of £0.29 per share, up 25% year-over-year, on sales of £8.1bn, up 15% year-over-year. It was the first full-year earnings being reported since GSK spun off Haleon in mid-2022. Total sales for 2023 increased 5% to £30.3bn.

Sales of HIV products grew by 13% to £6.4bn in 2023 in Q4, driven by a “notable acceleration” in sales of Cabenuva, which jumped more than 100% to £708m for the year and 78% to £223m for the quarter.

“For long-acting regimens specifically, more than 80% of US healthcare prescribers now tell us they are convinced that these regimens will become a key part of HIV care,” commented ViiV Healthcare CEO Deborah Waterhouse on GSK’s Q4 earnings call.

GSK Raises Long-term Guidance

GSK is scheduled to report Q1 2024 earnings on Wednesday. Though it hasn’t provided any guidance for the quarter, it has projected sales for the whole year to grow in the range of 5–7%, while adjusted EPS is projected to grow at a 6–9% rate.

According to GSK, analysts are expecting it to report earnings per share of £0.37 on revenue of £7.1bn for Q1, up from £6.95bn in Q1 2023. HIV medicines are forecast to bring in £1.6bn, including £216m from Cabenuva sales, up from £127m in the year-ago quarter.

GSK is expecting sales to grow at a CAGR of more than 7% between 2021 and 2026, with adjusted operating profit growing at a CAGR of more than 11%. Adjusted sales should hit £38bn annually by 2031, up from previous guidance of £33bn, which the company now expects to reach by 2026.

“We are now planning for at least 12 major launches from 2025, with new vaccines and specialty medicines for infectious diseases, HIV, respiratory and oncology,” said CEO Emma Walmsley in the Q4 press release.

Product Pipeline Helps Maintain GSK Share Price

A diversified portfolio and product pipeline has been key to maintaining the GSK share price growth since the Covid-19 pandemic. The stock is up 12% year-to-date through 29 April and up 18.8% in the past 12 months.

As well as buying GSK shares directly, another way to gain exposure to the stock is through thematic ETFs.

The VanEck Pharmaceutical ETF [PPH] has allocated GSK 4.5% of its portfolio as of 26 April. The fund is up 7.3% year-to-date and up 12.3% over the past 12 months.

The Horizon Kinetics Medical ETF [MEDX] has allocated 2.8% of its portfolio to GSK as of 29 April. The fund is down 1.6% year-to-date and down 4.1% in the past year.