Last week, biotech giant Gilead Sciences (NASDAQ:GILD) announced financial results from another blossoming quarter, with its most important drugs showing no weakness in sales.

With Gilead, the most important part of its operations are its HIV franchise drugs like Truvada, Atripla, and Viread. In total, sales of these combination compounds were up 56% in the quarter and accounted for 69% of Gilead's $1 billion in revenues. As can be seen below, sales are not slowing any bit for these compounds, despite intense competition from the likes of GlaxoSmithKline (NYSE:GSK) among the front-line HIV therapies.

HIV Franchise Sales*

Y-O-Y Growth

Q1 2007

$705

56%

Q4 2006

$642

67%

Q3 2006

$557

53%

Q2 2006

$475

38%
*In millions

What makes drug development for most diseases such as HIV interesting is that the biggest competitive threats -- like Merck's (NYSE:MRK) novel integrase inhibitor, Isentress -- can turn out to be important complementary drugs if they can be used in combination therapies. This is what has happened with Bristol-Myers' (NYSE:BMY) and Gilead's HIV treatments, Sustiva and Truvada, respectively, which have been combined in the more conveniently dosed and commercially successful Atripla from Gilead.

Gilead's financials and near-term earnings strength are not in any doubt. Its top and bottom lines have been climbing at double-digit rates and there are no near-term competitive threats from other companies pipelines to worry about. As the go-go '90s tech stock bubble taught us, though, valuations still do matter.

What's important for investors to figure out is whether the valuation on shares of Gilead needs to shrink or expand in order to meet its future financial fortunes. Trading at 29 times its trailing twelve month non-GAAP earnings per share, I don't see Gilead's shares as very richly priced considering its growth prospects and the competitive landscape of HIV treatment.

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GlaxoSmithKline is an Income Investor recommendation; Merck is a former newsletter pick.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.