Gilead Sciences

Gilead Sciences (GILD) has been a superstar stocks for several years now. The company has able to maintain gross margin around 87%, and despite running a loss for several years, operating margins are now running about 50%.
Barrons reports that Gilead is getting also a boost thanks to governments stockpiling Tamiflu, the company’s influenza drug.

Founded in 1987, the California-based biotechnology giant develops and sells medications that treat infectious diseases like AIDS and hepatitis.
But Gilead shuns protein-based therapies and concentrates on small molecules, which are chemical compounds and thus normally the realm of large pharmaceutical companies.
“This is what happens when you focus and you are able to introduce several products in the same category,” says Yaron Werber, an analyst with Citigroup.
Gilead invented Tamiflu, the popular antiviral drug, but licensed it to Roche Holding Ltd. in 1996.
Between 2001 and 2004, Tamiflu’s annual sales were $200 million, which earned Gilead royalties of between 7% and 11%.
But fear of the Avian flu and a possible pandemic has prompted 30 governments, including that of the U.S., to stockpile the drug.
Gilead has launched a legal battle to wrest control of Tamiflu from Roche. If it’s successful, that would be a major coup: Citigroup’s Werber projects Tamiflu’s sales will reach $850 million in 2005.
Meanwhile, Gilead’s AIDS drugs — Viread, Emtriva and Truvada — remain the company’s crown jewels, accounting for 69% of sales, or $908 million, in 2004.
And the most glittering prize appears to be Truvada, which combines Viread and Emtriva, Gilead’s older AIDS drugs, into one pill.

Posted by on October 7th, 2005 at 10:34 am


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