April 23, 2009 - Gilead Sciences, Inc. (GILD-NASDAQ) a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics for the treatment of life-threatening infectious diseases. Its products include Truvada, Viread, Atripla, and Emtriva for the treatment of human immunodeficiency virus infection in adults; Hepsera, an oral formulation for the treatment of chronic hepatitis B; AmBisome, amphotericin B liposome injection to treat serious invasive fungal infections; Flolan, an injected medication for the long-term intravenous treatment of primary pulmonary hypertension and pulmonary hypertension; and Vistide, an antiviral medication for the treatment of cytomegalovirus retinitis in patients with acquired immunodeficiency syndrome (AIDS).

Gilead Sciences has operations in North America, Europe, and Australia. The company has research collaborations with Abbott Laboratories, Inc.; Novartis Institutes for BioMedical Research, Inc.; Novartis Vaccines and Diagnostics, Inc.; Genelabs Technologies, Inc.; AchillionPharmaceuticals, Inc.; Japan Tobacco, Inc.; Parion Sciences, Inc.; LGLife Sciences, Ltd.; and University of Texas System. It also has commercial collaborations with Astellas Pharma, Inc.; Emory University; F. Hoffmann-La Roche, Ltd.; Pfizer, Inc.; Dainippon Sumitomo PharmaCo., Ltd.; OSI Pharmaceuticals, Inc.; GlaxoSmithKline, Inc.; Japan Tobacco, Inc.; and Bristol-Myers Squibb Company. The company was founded in 1987 and is headquartered in Foster City, California.

Gilead just announced its earnings, and they were notable. Before the announcement, investors were nervous and took the stock down. They were wrong. While revenues jumped by 22%, earnings did even better in the first quarter. They were ahead 24% compared to first quarter of last year. Wall Street analysts expected 59 cents a share, got 63 cents, well above the 51 cents of a year ago in the first quarter. Since the company just announced this nice surprise and closed on the deal to buy CV Therapeutics last week, analysts are busy re-figuring estimates for next quarter and the rest of the year. For 2010, they're guessing $2.46 at this point, but that's subject to change quickly.

What was really heartening to investors was the consistent sales in most of Gilead's drugs. The bulk of revenues again came from HIV drugs. Truvada sales rose 23 percent to $590.4 million, and Atripla sales climbed 57 percent to $509.9 million. Atripla is made from a combination of three older drugs: Gilead's Viread and Emtriva, and Sustiva, which is made by Bristol-Myers Squibb. The one drug that came up short was Ranexa, a therapy for chronic angina, which was down 17% from the previous quarter and below analysts estimates. No explanation was given for the slower sales. The real concern here is that Ranexa is a drug contributed by the recently acquired CV Therapeutics and one reason investors felt the purchase made good sense. It is expected to grow into a meaningful profit contributor.

Two analysts made these comments: "Looking forward, we expect modest market growth driven by increased diagnosis and treatment rates as well as market share gains," BMOCapital Markets analyst Jason Zhang said in a note to investors.

He reaffirmed an "Outperform" rating and raised his outlook for HIV treatment sales at Gilead. The drug is expected to be launched in France in the second half of the year, the European Union's largest market for HIV drugs, he added.

Meanwhile, Thomas Weisel Partners analyst M. Ian Somaiya reaffirmed a "Overweight" rating following the financial results. He said several factors, including a potential inventory restocking and lack of patients seeking and receiving financial assistance bode well for the company's growth outlook.

"This suggests that Gilead's HIV franchise maybe more insulated from the economic weakness that is impacting drug sales of other biotechnology and pharmaceutical companies," Somaiya said, in a note to investors.

CV Therapeutics has more drugs than Ranexa, including cardiovascular drugs such as Lexiscan and waiting to be approved Darusentan. Both will complement Gilead's existing cardio offerings. They would also spread revenues over several drugs and relieve the company of relying so heavily on its HIV franchise.

More numbers: Market Cap is $42.10 billion. Forward P/E is 18.8. Price to Book is 9.58. Operating margin for the last 12 months was 50.4% while Profit margin was 37.69%. Total cash is $1.8 billion for $1.96 per share. Total debt is $1.33 billion. Current ratio is 3.52. Book Value per share is $4.56. Beta is .55. 52-week range is between $35.60 and $57.63. There are 910.95 million shares outstanding with a float of 898.63 million. Institutions own 95.5% of the stock. There is no dividend.

Since 2001, this stock has split 4 times, each 2 for 1. It's been a real winner since going public in 1992 and would seem to be entering a new phase of growth with its purchase of CV Therapeutics. Revenues have been consistently growing, as have earnings (it became profitable in 2002 with 11 cents a share and each year since has improved). This is a stock that is in great shape financially and seems to have the management in place to deliver solid results. Check it out if you're in the market for a defensive investment.

- Company Web site: www.gilead.com

- Ted Allrich