Gilead Sciences Inc.GILD

Morningstar Rating

Stock Research and Analysis

by Karen Andersen, CFA

Gilead Sciences' focus on infectious disease has paid off in spades, and the firm's HIV franchise continues to dominate a growing, global market and drive impressive profitability. Although key patents don't begin to expire until 2017, management is Read more

Bulls Say

Atripla, which contains Truvada and Bristol-Myers' Sustiva, is the first pill approved by the Food and Drug Administration as an all-in-one HIV treatment. Once-daily dosing greatly increases patient compliance because of the relative ease of program maintenance, and it could slow the development of drug resistance.

The Centers for Disease Control and Prevention recently recommended that HIV testing become part of routine medical care, which could lead many of the 250,000 undiagnosed HIV-positive Americans to begin treatment with Gilead's therapeutics.

Through several recent acquisitions, Gilead is creating a portfolio of cardiovascular drugs to bolster internal drug-development efforts.

Gilead faces minimal exposure to patent expirations, compared to its larger pharmaceutical peers; key patents for Viread don't expire until 2017.

After Sustiva's patent protection ends in 2013, the economics of Gilead's deal with Bristol for Atripla--and Gilead's overall gross margin--should improve significantly. Read more

Bears Say

Gilead's HIV franchise provided 81% of sales in 2008. If resistance to tenofovir (a molecule in Viread, Truvada, and now Atripla) should become more prevalent, Gilead would be severely crippled.

While Gilead gains chronic angina drug Ranexa with the acquisition of CV Therapeutics, it also brings on 170 cardiologist-focused salespeople. Given darusentan's failure in Phase III trials, Gilead may not see significant synergies from this acquisition.

Gilead's HIV pipeline centers on integrase inhibitor elvitegravir, and the firm is taking a substantial risk by putting its candidate head-to-head with Merck's newly approved integrase inhibitor Isentress in Phase III trials.

While H1N1 concerns bolstered Tamiflu sales once again in 2009, Gilead may see fewer royalties in the future, as government orders for pandemic preparedness dry up.

Hepatitis B drug Hepsera is starting to see competition from new products such as Bristol-Myers' Baraclude, and sales of Viread--recently approved in this indication--could cannibalize those of Hepsera. Read more

Strategy

Gilead Sciences focuses on developing drugs to fight infectious diseases. The company conducts research and development in HIV, as well as hepatitis B and C, and has stretched its focus to include pulmonary Read more

Management

On the basis of Gilead's superior board independence and qualifications, we assign the company a Stewardship Grade of B. Chairman and CEO John Martin is one of only two insiders on Gilead's board, which has an independent lead director. Experienced Read more

Profile

Gilead Sciences develops and markets therapies to treat life-threatening infectious diseases, and acquisitions are broadening this focus to include pulmonary and cardiovascular Read more

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