UPDATE: Gilead 4Q Profit Up 43%, 2010 Sales Outlook Bright

Gilead Sciences Inc.'s (GILD) fourth-quarter profit rose 43% on strong sales of its HIV drugs, as it offered a bright revenue outlook for 2010.

The Foster City, Calif., company benefited from a spike in royalties related to Tamiflu amid the swine flu pandemic, as well as the continued rollout of Atripla, a combination HIV therapy that is now the company's biggest seller. Furthermore, the company said it will begin two late-stage clinical trials for its "Quad" combination HIV treatment by mid-2010.

Investors applauded the outlook and pipeline news, as shares rose 6.4% to $47.73 in after-hours trading, from Tuesday's close of $44.87.

Gilead reported net income of $802.2 million, or 87 cents a share, for the three months ended Dec. 31, up from $560 million, or 59 cents a share, a year earlier. Excluding items, earnings rose to 93 cents, exceeding analysts' expectations of 85 cents a share, according to a survey from Thomson Reuters.

Revenue climbed 42% to $2.03 billion, also beating a Wall Street projection of $1.93 billion.

Gilead projects 2010 net product sales of $7.6 billion to $7.7 billion, translating to growth of 17% to 19% for the year.

Wall Street currently projects total revenue for the year of $7.9 billion, which includes revenue from royalties, contracts and other sources, according to Thomson Reuters. In 2009, the company reported product sales of $6.47 billion and revenue of $7.01 billion.

On a conference call, Chief Executive and Chairman John Martin said he expects the HIV-related business to be "very healthy" for the year, citing new HIV treatment guidelines that advise physicians to start patients earlier on the therapies and new testing initiatives.

Notably, Gilead said it would soon review recent clinical trial results for its Quad HIV treatment pill with the Food and Drug Administration, and plans to begin two Phase III studies before the middle of 2010.

In December, Gilead reported that a mid-stage study had shown its Quad combination was effective when compared to Atripla. It will report the full results in mid-February.

The Quad combination includes Gilead's GS 9350, an experimental boosting agent, along with its popular HIV combination drug therapy Truvada and an experimental compound called elvitegravir. The company also plans to launch a late-stage trial of the booster by mid-2010.

Wall Street looks forward to the success of the Quad, partly because all revenue from its sales will go to Gilead.

Atripla, a triple treatment that consists of Truvada along with Bristol-Myers Squibb Co.'s (BMY) Sustiva, saw sales rise 50% to $697.8 million, exceeding Truvada sales for the first time and beating Wall Street views of $648 million, according to MDRx Financial, a health-care market research firm.

Fourth-quarter sales of Truvada, which includes two Gilead drugs, rose 19% to $670.7 million, well ahead of a Wall Street consensus estimate of $642 million.

The company said that sales of both drugs were driven by sales-volume growth in the U.S. and Europe.

Gilead noted strong market-share growth in central Europe for Atripla. It launched Atripla in Belgium during the quarter and in Australia at the beginning of the year.

Truvada and Atripla also maintained a strong presence in the U.S., with the 85% of new patients with HIV using one of the treatments.

As earlier projected, royalties from Tamiflu soared to $194.1 million from $16 million a year earlier, as countries stocked up on the drug in response to the swine flu pandemic.

Gilead discovered Tamiflu but licensed it to Roche Holding AG (RHHBY) for royalty payments that it receives with a one-quarter lag.

Gilead confirmed that it is has discontinued the development of darusentan for treatment-resistant high blood pressure after it failed a late-stage study in December.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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