Drug company Gilead Sciences (Nasdaq: GILD) continues to outperform in the highly competitive biotechnology arena. The company constantly rolls out new or improved products that are capturing significant market share.



Recent Results Booming
Gilead's current drug portfolio, especially HIV drugs Truvada and Atripla, is generating significant growth for the company. According to Gilead's first-quarter 10-Q, Truvada sales were $345.9 million, an increase of 39% compared to the same quarter last year. Truvada sales accounted for approximately 49% of total HIV product sales and approximately 41% of Gilead's total product sales. Atripla sales were $190.2 million in the first quarter of 2007, a sequential increase of 38% from $137.4 million in the fourth quarter of 2006.

Gilead also has a new Hepatitis B drug, Hepsera, whose sales totaled $71.3 million for the first quarter of 2007, a 35% increase from the same quarter of last year. Also, the company's acquisition of Myogen could soon begin producing revenue.

Let's look at the company's results for the first quarter of 2007. GILD reported earnings growth of 55% with its sales of HIV drugs rising by 56% over the same period a year ago. This is a very nice franchise that should continue to perform well for Gilead, especially as the company expands throughout the world. Total revenues were $1.03 billion, up 48% over first quarter 2006 with product sales of $840.2 million, up 50% over the same quarter in 2006. Finally, first-quarter earnings per share were 85 cents per share, compared 55 cents per share a year ago, a jump of 55%. (To learn more about EPS, see Getting The Real Earnings.)

New Drugs with Tremendous Potential
While 50% growth appears difficult to sustain, Gilead has some new drugs about to come to market that could contribute to this growth. Last year's acquisition of Myogen gave Gilead several potential drugs that offer great potential. Ambrisentan, a once-daily treatment of pulmonary arterial hypertension (PAH), is one of the drugs that came along with the acquisition. On February 16, 2007 the FDA announced GILD received Priority Review status for marketing approval of Ambrisentan. The target review date is June 18, 2007.

Analysts expect up to $1 billion revenue from Ambrisentan, once it is fully accepted into the market. Marketing of Ambrisentan will begin immediately after the company receives approval. The company has conducted sales training with selected staff to help it penetrate the approximately 100 key medical centers that specialize in heart treatment. While it will take a while to reach full potential, this drug could contribute to the rapid growth of Gilead.




The Future Looks Good
For the entire year of 2007 Gilead is expecting product sales of $3.4 billion to $3.5 billion compared to product sales in 2006 of $2.59 billion. This guidance does not include any sales from new products and it does not include royalty and contract revenue. This translates into a 31.3% to 35% increase for the year. With the growth in international sales just beginning, I suspect this might be an estimate on the lower end. Keep in mind, Gilead is very good at under promising and over delivering.

On May 8, Gilead's board of directors approved a two-for-one stock split of the company's outstanding common shares through a stock dividend. Shareholders of record as of the close of business on May 24, 2007 received an additional share of common stock for each share they owned. Shareholders should receive their new shares on about June 22, 2007. It looks like management and the board has confidence in the future of Gilead as well. (To learn more, see Understanding Stock Splits.)

Final Thoughts
Gilead's share price should grow at least 25% per share in the next 12 months based on its revenue and earnings growth. This could be a time to buy on dips in price, as Gilead could very well be a winner in your portfolio.

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