Gilead Sciences, Inc. (GILD)

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A biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need.

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Avatar NetscribeBiotech (85.25) Submitted: 2/27/07 8:13 AM : Start Price: $36.70 GILD Score: 61.14

Gilead Sciences, Inc. (Gilead) is a multinational biopharmaceutical company that discovers, develops and commercializes therapeutics to advance the care of patients suffering from life-threatening diseases. The company draws its revenues from nine approved products and marketing operations in twelve countries. Its pipe-line consists of several drugs in various stages of clinical and pre-clinical trails.

The company has reported robust revenue growth of 49% in fiscal 2006. Its HIV franchise which contributed about 70% to the top-line grew at 53% and brought home $ 2.13 billion dollars. Its royalty income almost doubled on back of higher sales of Roche’s Tamiflu. With Avian flu scare on the horizon, governments and institutions have started stock-piling Tamiflu.

Gilead’s strength lies in its superior product offering which offers more convenience and greater efficacy. Its drug Atripla represents the first single-pill, once-daily, formulation of a complete cocktail of HIV medications. Atripla is likely to boost an already robust HIV franchise of the company. The sales of tamiflu are also expected to be firm going forward. Besides Ambrisentan (Phase III) meant for Pulmonary Arterial Hypertension and GS9147 (Phase II), novel class of oral HIV medication is likely to significantly contribute to the revenues going forward.

The risks Gilead faces would be the generic risks associated with research and development and regulators. As it core strength remains HIV franchise any adverse development on that front would result in down tick for the stock. However at the end of the day it is a resource rich company with stable products and strong cash flows. Its valuation seems to be reasonable taking into account its growth prospects. Its investor profile also seems to be strong with institutional investors holding around 90% of the outstanding shares. Thus this stock might attract buying from portfolio investors and hence may outperform.

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Avatar NetscribeBiotech (85.25) Submitted: 5/30/07 7:08 AM

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Gilead has always been a company that centered on the concept of sticking to its established product lines to take it forward. This is clearly reflected in their financial statements, which is biased towards the revenue coming from Human Immunno Virus (HIV) product sales relegating the royalty revenue to the back bunch. The outbreak of bird flu brought royalty segment onto the limelight, courtesy Tamiflu that is being marketed by Roche.

There has been a dilution in this model to eliminate the risk the firm is facing by depending on a single class of products. Still in its infancy the strategy involves developing a Hepatitis B specific segment and another focusing on respiratory and cardiopulminorary diseases. For the first segment the company already has a few drugs while Gilead opted for an inorganic route to develop the second segment, by acquiring three firms last year.

These strategies have had a two-fold effect by adding to the product portfolio at the same time increasing the number of products in the pipeline. The year 2007 will see most of the clinical trials by the company entering Phase III stage.

On clinical trial front ambrisentan, pulled up a miracle of sort when the company announced that the U.S FDA might not require regular liver safety monitoring for patients under trial. This gives the drug an advantage over its competitors. Also its cystic fibrosis drug aztreonam lysine has met the main goal following a 28-day treatment and the company will be seeking marketing approval for the same in the second half of 2007. Thus with the strategic shift to diversify the risk working well in favour of the company and also with good news flowing in from clinical trials, the company scrip is expected to go up.

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Gilead Sciences, Inc. (GILD)

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