Thursday, January 24, 2008

Gilead Preps for Atripla in Europe

Gilead Sciences (GILD) reported a good, but not outstanding, 4th quarter of 2007 in its analyst conference on January 23, 2008 [See my summary of the Gilead conference].

There were 2 key take-aways. Revenues and net income would have been much better if royalties from Tamiflu sales (from Hoffmann-La Roche) had not dropped by about 1/2 from the previous year and 28% from Q3. Tamiflu revenues are delayed by a quarter, so this was really about Q3 sales. The flu season and the bird-flu situation have both been relatively mild this year. This is one of the risks of those who sell therapies: you don't do well when people are not sick.

Direct sales of Gilead products, mostly for HIV infections, did great. They were up 35% from year-earlier mainly on gains in Atripla, a once-a-day, three-drugs-in-one-pill medication. Almost all this income was from the United States.

In 2008 Gilead will be ramping sales in Europe. There may be Q1 revenues, but countries will come in one at a time, with some not producing income to Q4 or later.

That means, most likely, big gains in Gilead revenues and net income in 2008. Which leaves the company's stock (which I own some of) looking undervalued to me at current prices. According to its Nasdaq summary page, the PE (price to earnings ratio) at this moment is 27.4, which is quite reasonable for a company with rapidly growing profits.

In addition, Gilead has a huge amount of cash ($2.72 billion) and a strong pipeline of possible future medications.

To see more of my writing, including summaries of past analysts conferences, see my Gilead page.

For some help on investing in biotechnology stocks, see my Biotechnology Investor Help page.

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