Since the beginning of 2012, the biotech sector has been on the rise and Gilead Sciences Inc. ( GILD ) is no exception. GILD has seen a big jump in its prices and already has gained over 50 percent year-to-date. Every time I turn around, it seems GILD's stock price has ticked up higher. Right now, I still see GILD as an attractive buy, especially if you're a long-term investor.
As the world population increases and a growing number of people are living longer, there will be a need for more and better medicines. People are striving to live longer and healthier lives; therefore I believe GILD will continue to benefit for many years to come. So I recommend adding GILD to your portfolio. Because of its vast products pipeline and the diseases they're targeting, I expect Gilead Sciences will continue to do well in the long term and will benefit investors going forward.
Gilead is a research-based biopharmaceutical company aiming to treat life-threatening illnesses around the world. Gilead's products pipeline treats viral infections such as HIV/AIDS, hepatitis B and C, severe chronic conditions such as respiratory and cardiovascular conditions, and cancer. To date, there are no cures for these conditions. Gilead knows how important it is for those who are affected by these diseases to find effective treatments, and the company makes it a priority to assist those patients. Gilead is also working with federal and state patient-assistance programs to ensure all patients have access to their medications. From their beliefs I infer that GILD is a company with the right philosophy to help people who need proper care. That alone almost gives me enough reason to want to invest in the company. Because of its research and development, and its determination to find the cure for these life-threatening diseases, I believe Gilead is a good investment in the long term.
In January 2012, Gilead acquired Pharmasset for $11 billion. With that acquisition, GILD has been able to develop the first all-oral Hepatitis C virus (HCV) regimen (Sofosbuvir), which will benefit approximately 3.2 million people worldwide. On April 8, 2013, Gild submitted a New Drug Application to the U.S. Food and Drug Administration (FDA) for Sofosbuvir to treat HCV infection. In phase 3 clinical trials, Sofosbuvir has shown a significant efficacy rate for genotypes 2 and 3. For genotypes 1, 4, 5, and 6, patients who are on a 12-week, all-oral treatment in combination with Ribavirin and Pegylated Interferon are considered cured of their HCV infection. That's essential for GILD, considering that there isn't any drug out there to treat HCV that has such a proven significant result as Sofosbuvir. Now if the FDA approves Sofosbuvir, which I think they will soon due to its positive clinical trial results, Sofosbuvir will be a very important milestone for GILD. Sofosbuvir will be a significant addition to their products pipeline and will help extensively increase their revenue growth in 2014 and beyond.
In the field of cancer, GILD has developed another important drug, Idelalisib, to treat Chronic Lymphocytic Leukemia. It works by blocking the production of P13-K delta proteins that are overactive in B-Cell Lymphoma. Already Idelalisib's phase 2 study has shown some promising response rates for previously untreated Chronic Lymphocytic Leukemia (CLL), which is the second most common form of leukemia in the U.S. Currently CLL is being treated with Rituximab and combined with chemotherapy (Rituximab was developed by Idec Pharmaceutical and co-marketed with Genetech). With the positive data results in phase 2, I believe GILD can perfect Idelalisib in phase 3 of their clinical trial and should receive FDA approval soon. Idelalisib will help Gilead's revenue significantly once the medication is approved and commercialized.
What I also like about Gilead, in addition to its pipeline, is that it's a profitable biopharmaceutical company with a strong balance sheet. It has enough cash flow to support its research and drug development and can bring new products to the market. Currently, Gilead has a portfolio of 15 marketed products, not including Sofosbuvir and Idelalisib, which they sell on their own or through various partnerships. As of March 31, 2013, the end of the first quarter, GILD has $2.63 billion in cash, an increase of $50 million from its $2.58 billion at the close of the fourth quarter of 2012. Before it acquired Pharmasset for $11 billion, GILD had $9.96 billion as of Dec. 31, 2011. Gilead has a 5-year annual revenue growth rate of 18 percent. The point behind all these numbers is that GILD has the capability to make money from quarter to quarter and year to year. Because it has a positive cash flow and pursues varied research in different fields of medicine, I believe Gilead Sciences will continue to grow. With over $2.63 billion in cash, plus the acquisition of Pharmasset and two exciting drugs awaiting FDA approval (Sofosbuvir and Idelalisib), Gilead is likely to make many more acquisitions and produce many new drugs in the future.
I'm behind Gilead as a long-term buy. At this price level, because of its rich pipeline and considering that it's a profitable biopharmaceutical company, I think GILD has more upside momentum. I wouldn't worry about timing when to get in on Gilead. I look at Gilead as a good, classic example of a stock that you'd like to dollar average in and hold for a few years. I would view any pullback as a good opportunity to buy more. I recommend buying it now and adding more when the opportunity arises.
Disclosure: I am long GILD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.