Washington Editor

Shares of Gilead Sciences Inc. gained 5.7 percent Wednesday after the Foster City, Calif.-based firm reported a 22 percent increase in first-quarter profits, beating Wall Street's expectations.

The bulk of the company's revenue came from sales of its HIV drugs, including Truvada and Atripla.

Shares of Gilead (NASDAQ:GILD) closed at $46.22, a gain of $2.49.

Gilead's first quarter was "another very strong and productive quarter" for the firm, said CEO John Martin. "It was a very busy but rewarding quarter," he told investors and analysts Tuesday night during a conference call.

Gilead reported product revenues of $1.45 billion for the first quarter of 2009, up 27 percent over the same period last year, with non-GAAP earnings per share of 66 cents, up 25 percent.

Chief Financial Officer Robin Washington said the first quarter marked Gilead's sixth consecutive quarter of surpassing $1 billion in total product sales, with the firm having more than five consecutive quarters of product sales growth.

Total revenues for the quarter, which include product sales and royalty contracts and other revenues, were $1.53 billion, a 22 percent increase from the same time last year.

Antiviral product sales grew 28 percent to $1.34 billion for the first quarter, from $1.05 billion in the same period last year.

Sales of Truvada (emtricitabine-tenofovir disoproxil fumarate) increased 23 percent to $590.4 million in the first quarter last year. Washington said that escalation was due primarily to sales volume growth in the U.S. and Europe.

Sales of Atripla, a three-in-one combination drug containing Gilead's Emtriva (emtricitabine) and Viread (tenofovir disoproxil fumarate) and Bristol-Myers Squibb Co.'s Sustiva (efavirenz), increased 57 percent to nearly $510 million, which Washington said also was driven primarily by sales volume growth in the U.S. and Europe.

Kevin Young, executive vice president of commercial operations at Gilead, noted that U.S. sales of Atripla were at $374 million, up 22 percent over a year ago, and U.S. sales of Truvada increased 16 percent to $281 million.

"Truvada maintained its position as the backbone of choice for antiretroviral therapy in the U.S., with 195,000 patients on therapy or approximately 34 percent of all treated patients," Young told investors and analysts.

As new antivirals, such as Tibotec Therapeutics' Prezista (darunavir), begin to gain third-agent market share, "Truvada is the most frequently prescribed combination partner for the delivery of heart therapy," he said. Atripla remained the most prescribed regimen in HIV, with 31 percent of patients, Young noted, adding that Atripla together with Truvada continue to account for greater than four out of five treatment-naïve HIV patients.

Other antiviral product sales in the quarter were down 1 percent to $240.6 million, Washington said, noting that Viread (tenofovir) sales were $161 million for the first quarter, while Hepsera (adefovir dipivoxil) generated sales of $73 million.

Sales of Letairis (ambrisentan), a drug used to treat pulmonary arterial hypertension, skyrocketed 95 percent to $39.6 million, Washington said, adding that those increases were driven primarily by sales volume growth in the U.S.

The company said foreign currency had a net unfavorable impact of $22 million on Gilead's first-quarter 2009 revenue, compared with the same period last year.

Revenues resulting primarily from collaborations with corporate partners were nearly $83 million, a decrease of 29 percent from a year ago, Washington said, adding that the decrease was driven primarily by lower Tamiflu (oseltamivir) sales from partner Roche AG of $33.2 million compared with $93.4 million during the same quarter last year.

The company blamed the drop on worldwide reductions in pandemic flu planning initiatives.

The company reported a non-GAAP product gross margin of 77.6 percent, compared with non-GAAP product gross margin of 79.1 percent for the same time last year and 77.4 percent for the fourth quarter of 2008.

As of March 31, Gilead had cash, cash equivalents and marketable securities of $3.61 billion, compared with $3.24 billion at the end of fourth-quarter 2008.

Since Gilead's acquisition of CV Therapeutics Inc. was not yet complete in the first quarter, the results reported late Tuesday did not include any impact of the Palo Alto, Calif.-based firm's business on Gilead, Washington said. (See BioWorld Today, March 13, 2009.)

The merger of CVT and Gilead "represents a strong strategic fit, scientifically and commercially that will broaden and strengthen our growing cardiovascular portfolio, providing us with a proven organization capable of advancing an extensive pipeline," Martin said.

The acquisition immediately delivered two marketed products, Ranexa (ranolazine extended-release tablets) and Lexiscan (regadenoson), to Gilead, in addition to a pipeline that includes "several interesting candidates" in clinical development, he added.

Gilead is now at the point where it can begin to integrate the CVT organization into its company, and "we will be doing so in a thoughtful manner, but as quickly and efficiently as possible," Martin said.

Cowen & Co. analyst Phil Nadeau noted that Gilead has escaped any major impact to its business from the current economic slowdown.

"We think investors who want good long-term growth not correlated with the economy should use any weakness over the next several months to buy Gilead," he said in a research note.

While many of Gilead's peers have reported weak results, blaming the economy, the company has bucked the trend and has showed itself to be "deserving of its premium multiple," said Credit Suisse Securities analyst Michael Aberman.

"While it has become increasingly hard to justify its high multiple in the current environment, with HIV likely to continue to drive above peer growth despite the economy, relative immunity to health care reform, and data from the quad pill by the year end, Gilead remains a top pick in biotech," Aberman said in a research note.

In other earnings news:

• Genzyme Corp., of Cambridge, Mass., reported first quarter revenue rose 4 percent to $1.15 billion, but fell short of Wall Street's estimates. Investors reacted by pushing shares (NASDAQ:GENZ) down 5.8 percent Wednesday, to close at $51.34, a loss of $3.16. The company said GAAP net income rose 35 percent to $195.5 million, or 70 cents per diluted share, compared with $145.3 million for the same quarter last year. Non-GAAP net income grew 10 percent to $288.1 million, or $1.04 per diluted share, compared with $260.9 million for the first quarter in 2008. Genzyme reported revenue of $67.4 million for its Pompe disease drug Myozyme (alglucosidase alfa), which was only slightly up from $67.3 million in the same period last year. The company said that the revenue reflects its inability to sell the product for use by late-onset Pompe disease patients in the U.S., and a global supply management program under which adults with Pompe disease temporarily missed doses in order to preserve constrained supply for infants and children. Genzyme received a complete response letter from the FDA for its application for the 2,000 L bioreactor scale version of Myozyme, known as Lumizyme. The firm said it has received final comments from the agency on its response to the complete response letter and anticipated approval of Lumizyme late in the second or third quarter. (See BioWorld Today, March 4, 2009.)

• Cubist Pharmaceuticals Inc., of Lexington, Mass., reported revenues for the first quarter of 2009 increased 37 percent to $121.1 million over the same period last year. The company said the increase was attributable primarily to net U.S. sales of Cubicin (daptomycin for injection), which increased 31 percent to $112.4 million in the first quarter of 2009 from $86.1 million in the first quarter of 2008. International net product revenues for the first quarter of 2009 were $2.2 million, an increase of 22 percent over the first quarter of 2008. As of March 31, Cubist had $405.9 million in cash, cash equivalents and long-term investments. The total number of Cubist's common shares outstanding was 57.5 million.