Gilead Sciences: Expanding Product Portfolio and Attractively Valued

| About: Gilead Sciences, (GILD)
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In just over 20 years, Gilead Sciences (NASDAQ:GILD) has become one of the largest biopharmaceutical companies in the world focused on research, development and commercialization of anti-infective medications. Building on its foundation of research and product development in infectious diseases, Gilead has brought to market the leading treatments for HIV and chronic hepatitis B. With a rapidly expanding product portfolio and a growing pipeline of investigational drugs, Gilead’s employees strive daily to impact the treatment of serious life-threatening diseases.

Gilead Sciences reported total revenues in the third quarter increased 8% to $1.94 billion with record product sales of $1.87 billion up 13% over the prior year period. Net income rose 5% to $70 million with EPS popping 15% higher to $.83 on lower shares outstanding. Gilead generated $2.1 billion of operating cash flow for the first nine months of 2010 and ended the quarter with $5.1 billion of cash on the balance sheet. The priority uses of cash over the next three years are to advance pipeline programs, make acquisitions and repurchase shares.

During the third quarter, the company repurchased $1.55 billion of its stock. Total share repurchase activity year-to-date was $3.4billion, representing 93.6 million shares, at an average cost of $36.40 per share. Shares repurchased so far in 2010 are about 10% of shares outstanding as of 12/31/09.

We agree with management that the stock is attractively valued at 11 times earnings and plan to add to our position in Gilead.

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