UPDATE: Gilead 2Q Net Income Up 4.8% On HIV Drug Sales

Gilead Sciences Inc.'s (GILD) second-quarter profit rose 4.8% on strong sales growth of its HIV drugs, with a benefit from foreign exchange changes, and the drug maker backed its 2011 sales projections.

The Foster City, Calif., company's results exceeded Wall Street expectations, while U.S. sales of its leading HIV drugs were weaker than projected. Revenue from flu-treatment Tamiflu, sold by partner Roche Holding AG (RHHBY), continued to drop because pandemic-related stockpiling has significantly declined.

Shares of Gilead rose slightly in late trading, up 19 cents, to $42.35. The stock is up 16% since the beginning of the year.

The results come as Gilead is looking to extend its dominance of the HIV treatment market with the development of a once-daily four-in-one pill. Data from two major studies of the drug are expected in the third quarter and will be closely watched on Wall Street as the market gets increasingly competitive.

Gilead is also seeking approval of a follow-up to Atripla, a triple combination commonly called "B-tripla" that contains a drug from Johnson & Johnson (JNJ). A decision from the Food and Drug Administration is expected in August.

Looking forward, Gilead expects net product sales for 2011 of $7.9 billion to $8.1 billion. Wall Street currently projects total revenue for the year of $8.27 billion, which includes revenue from royalties, contracts and other sources. In 2010, the company reported product sales of $7.39 billion and revenue of $7.95 billion.

For the three months ended June 30, Gilead reported net income of $746.2 million, or 93 cents a share, up from $712.1 million, or 79 cents a share, a year ago. Excluding items, per-share earnings were $1 a share, beating analysts' expectations by a penny, according to Thomson Reuters.

Revenue climbed dropped 11%, to $2.14 billion, beating a Wall Street projection of $2.07 billion.

Foreign exchange added $27.3 million to revenue in the quarter, and $9.7 million to pre-tax earnings, when compared to the year-ago quarter.

During the quarter, the company repurchased $723.9 million in stock and had $5.5 billion in cash, cash equivalents, and marketable securities.

Second-quarter sales of Truvada, which includes two Gilead drugs, rose 11%, to $711.3 million.

The company's biggest seller, Atripla, a triple treatment of Truvada with Bristol-Myers Squibb Co.'s (BMY) Sustiva, had sales rise 15%, to $822 million.

While the total sales of the drugs were strong, ISI analyst Mark Schoenebaum notes that U.S. sales of the products were actually below expectations.

U.S. sales of Truvada were $334 million in the period, compared to a Wall Street expectations of $353 million, according to Schoenebaum. Atripla sales in the U.S. were $510 million, also missing projections of $517 million.

Sales of Letairis, a treatment for a rare lung disease, rose 22%, to $73.6 million. In March, the Food and Drug Administration allowed the removal of a warning about liver injury from the label of Letairis, a move that was expected to give it a competitive boost.

Royalty, contract and other revenue from collaborations dropped 19%, to $97.7 million in the quarter, largely because Tamiflu royalties from Roche fell 39%, to $50.6 million. Tamiflu was developed by Gilead, which licensed it to Roche.

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

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