There’s no Stopping Gilead Sciences

Amanda is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Gilead Sciences (NASDAQ: GILD) is on a roll.  The biotechnology firm has seen its profile rise along with its stock as every week, it seems, it has some new development to report.  The company is a leader in the antiviral market, leaving big players like Roche, Merck and Bristol-Meyers Squibb trailing in their wake.  Known best for their research and development of HIV drugs, their stock is currently surging on news of another victory: a new combination drug therapy that cured a sample of hepatitis C patients after a short therapy timeline.

 This new breakthrough is directly attributable to Gilead’s recent purchase of Pharmaset Inc., whose cache of hepatitis treatment drugs Gilead coveted.  The company’s stock suffered a hit right after the deal closed, due to its large price tag of nearly $11 billion and some possible dicey investment activity surrounding Pharmaset days before the sale.  Three months later, the sown seeds are already bearing fruit and trouncing the competition.  Idenix Pharmaceuticals (NASDAQ: IDIX), whose own hepatitis C treatment was looking rather shiny, found its stock tanking in response to experts’ opinion that Gilead’s drug is far superior.

 While there was some concern over the fact that Gilead’s 2011 Q4 earnings per share missed analyst estimates by $0.08, they beat the revenue mark by $40 million, making forgiveness easy.  After all, those high R&D and acquisition expenses are obviously paying off.  Besides the hepatitis C development, Gilead has other irons in the fire.  Its mainstay business, HIV treatments, is gaining ground:   the combination drug Truvada, a once-a-day tablet, and Atripla, which combines Truvada with Bristol Myers Squibb’s Sustiva, both enjoyed increased sales.  Gilead also hopes to gain approval of its new HIV drug, Quad, and be marketing the product by the third or fourth quarter of this year.

 In addition to the HIV treatments, Gilead has a whole crop of new drugs in its pipeline, each in various stages of development.  Drugs for liver disorders, respiratory and cardiocascular diseases and a line of cancer and anti-inflammatory treatments should certainly assuage any fears investors have concerning the company’s too-heavy reliance on anti-HIV medications.

 Gilead’s sunny outlook has much to do with its management team, considered by many to be one of the best in the sector.  Its 12-member board of directors has only two insiders, leaving the majority independent — including the director.  The company knows how to market itself, as well.  Recently, for example, the company joined forces with 12 other pharmaceutical entities and the Bill & Melinda Gates Foundation to find treatments and cures for tropical diseases such as visceral leishmaniasis and leprosy. 

 Biotech is hot these days, and Gilead is turning up the heat faster than many of its competitors.  Where will Gilead Sciences go from here?  The sky’s the limit, it seems.  Savvy investors who hook their wagons to this shooting star will surely not be disappointed.


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