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Gilead stock keeps rising after 4Q, study reports


A better-than-expected fourth quarter and encouraging early results from late-stage studies of a potential hepatitis C treatment lifted Gilead Sciences shares Tuesday.

THE SPARK: The Foster City, Calif., company said Monday an oral treatment combination of its potential drug, sofosbuvir, and an older treatment, ribavirin, did as well as the standard of care in one late-stage study of chronic hepatitis C patients who had not undergone treatment. And patients taking sofosbuvir as part of a treatment regimen in another late-stage study did much better than patients have historically done.

Gilead also said Monday that its fourth-quarter profit grew nearly 15 percent, edging past analyst estimates when adjusted for one-time costs.

THE BIG PICTURE: After decades as the dominant company in the HIV field, Gilead Sciences Inc. is positioning itself to move into the hepatitis C space with several potential treatments.

Hepatitis C is a virus that can lead to life-threatening liver damage and is the main cause of liver transplants in the United States. The disease is spread through the blood, and that can happen through sharing intravenous drug needles or having sex with an infected person. It can take years to manifest.

Analysts see hepatitis treatments as potentially lucrative for drugmakers because they expect the virus to become a growing health problem as the U.S. baby boom generation ages.

THE ANALYSIS: William Blair analyst John Sonnier said in a note the study results were encouraging, and he believes sofosbuvir could become "a very effective backbone therapy" for hepatitis C treatment. The analyst, who rates Gilead "Outperform," expects the FDA to approve it by the middle of next year.

Cowen and Co. analyst Phil Nadeau said in a separate note that he thinks investors will tolerate profit growth over the next year that's only modest because of the expected launch of drugs with big potential, like sofosbuvir.

SHARE ACTION: Up $1.10, or 2.8 percent, to $40.69 in Tuesday afternoon trading, after reaching a 52-week high price of $41.34 earlier. The company's shares have risen more than 10 percent so far in 2013.


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