Gilead Sciences (NASDAQ:GILD): Fingers of traders on the sell button as of a routine practice has produced an initial decline in GILD price after refreshing financial results. The firm has exceeded analysts’ exaggerated expectations. Nobody was stunned about the stock’s initial decline, as everybody has become accustomed to the rule of thumb – sell on good news and obviously on bad news, i.e., sell, sell, sell; that’s all. The initial selling was initiated before and even after the announcement of Gilead’s second quarter financial results.
Nevertheless, Gilead’s sales of HIV drugs and antiviral drugs in general have exceeded Wall Street projections. The antiviral drugs have risen 11% to $1.76 billion in the quarter, beating analysts' consensus estimate of $1.73 billion. Overseas sales soared and the U.S sales did much better than the previous quarter, where external reasons, including many states’ cutbacks on HIV drug assistance programs, contributed to a decline in sales. In the second quarter, Gilead’s net income has climbed to $746.2 million, or 93 cents a share, from $712.1 million, or 79 cents in 2010 same quarter. Total revenues in the quarter rose to $2.14 billion from $1.93 billion one year ago.
Concerns about Gilead's future in the past year have not come out of mere reality, but out of fake fear-derived feelings. Negative investors, writers and commentators instigated the fear. Their strategy is to keep digging to find negatives, any negatives, regardless of how minute, knowing in fact that magnification of negative consequences is at hand. Wouldn’t it be wise that, from time to time at least, investors would consider the projections of the reliable firms themselves, in addition to other speculations that come mostly out of unreliable sources? Gilead realistic expectations for 2011 are $7.9 billion to $8.1 billion in products’ sales.
Gilead’s financial results are convincing. About the future, though, Gilead’s HIV strategy, which aims at producing fixed-dose combination tablets, is providing a shop full of options for individual treatment needs. Gilead’s business shrewdness, orientation and insight combined with scientific excellence add assurance that the firm is capable of executing its long-term strategy. Regarding the combined tablets’ program, recent news announced that a single tablet combining Gilead’s Truvada (tenfovir/emtricitabine) with its collaborator Tibotec’s non-nucleoside reverse transcriptase inhibitor Edurant (rilpivirine) is currently under review by U.S. and EU regulatory authorities. The authorities’ decisions are expected in the second half of this year.
Gilead has also stricken a license agreement with Tibotec for the development and commercialization of a new fixed-dose antiretroviral combination of Gilead’s boosting agent cobicistat and Tibotec’s anti-HIV protease inhibitor Prestiza (darunavir). Gilead is also investigating cobicistat as part of a “Quad” pill that also contains elvitegravir, tenofovir, and emtricitabine.
For a longer-term future, Gilead is planning the development and commercialization of a future single-tablet regimen combining Prestiza, Emtriva (emtricitabine), cobicistat and Gilead’s next-generation nucleotide reverse transcriptase inhibitor, GS 7340, a prodrug of tenofovir that is in Phase Ib trials.
Gilead has gotten good news from a 48-week pivotal Phase III Study #145. The data demonstrated that the firm’s oral HIV integrase inhibitor elvitegravir in treatment-experienced patients was non-inferior to the integrase inhibitor raltegravir.
Good news also has come with the growing body of evidence supporting the success of using Viread (tenofovir disoproxil fumarate) in monotherapy and Truvada as preventive of HIV infection. The first evidence came in the release of from an NIH-sponsored study designed to determine if treatment can prevent HIV transmission between HIV discordant couples. This study was performed in Botswana, Brazil, India, Kenya, Malawi, South Africa, Thailand and Zimbabwe. More than 1,750 HIV-positive individuals have either taken a combination of antiretroviral drugs immediately or delay the initiation of therapy until their CD4 counts fell below 250 or they were diagnosed with an HIV-related illness. The results were positive. Earlier initiation of antiretroviral therapy led to a 96% reduction in HIV transmission to the HIV-uninfected partner. These results were so obviously positive that Data Safety Monitoring Board recommended stopping the trial four years ahead of schedule.
Another Phase III trial sponsored by the University of Washington and involved 4,758 heterosexual couples, in which one partner was infected with HIV and the other was not, daily use of either oral Viread or oral Truvada by the HIV-negative participants reduced their risk of acquiring HIV by 62% and 73%, respectively. The DSMB recommended that results be made public and the placebo arm of the study discontinued. Another trial demonstrated the same successful outcome. Gilead is taking the necessary steps towards commercializing its tablets for prevention.
Gilead’s trials with hepatitis drugs are ongoing. The firm believes that before the end of the year, it will have started multiple Phase II studies in hepatitis C, evaluating different combinations of compounds in over 2,000 patients. Gilead is evaluating multiple regimens that reduce or eliminate the use of peg-related interferon in both treatment-naive and treatment-experienced patients.
Gilead’s future looks bright. It was not luck, or serendipity that caused this firm’s success, but hard work, beautiful minds and insight.
Disclosure: Long GILD.