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Can Anything Stop Gilead Sciences?

http://www.fool.com/investing/high-growth/2012/09/06/can-anything-stop-gilead-sciences.aspx

Sean Williams
September 6, 2012

Shares of Gilead Sciences (Nasdaq: GILD  ) hit a 52-week high on Wednesday. Let's take a look at how it got there and see if clear skies are still in the forecast.

How it got here
Can anything actually stop Gilead Sciences? If you twisted my arm right now, I'd probably say "No!"

Gilead has recently benefited from a conglomeration of factors. To begin with, it received great news last week when the Food and Drug Administration approved (yet another) all-in-one combination HIV treatment, Stribild. The attraction of Stribild, as my colleague Brian Orelli has explained, is that relative to its combination therapy Atripla -- which is already on the market and uses a combination of drugs from Bristol-Myers Squibb (NYSE: BMY  ) and Johnson & Johnson (NYSE: JNJ  ) -- Stribild's four components are made completely in-house. That means no revenue sharing and more profits for Gilead, assuming it can get physicians to prescribe newly diagnosed patients the treatment.

Also putting some pep in Gilead's step has been the outstanding clinical trial results for GS-7977, the oral hepatitis-C compound it acquired when it purchased Pharmasset for $11 billion last year. At high doses, the drug has eradicated the virus in patients with still very high efficacy in lower doses. More remarkably, the side effects of the drug have been minimal.

The same can't be said for its peers. Bristol-Myers recently shelved BMS-986094, the drug it acquired for $2.5 billion when it purchased Inhibitex in January, because of the death of a patient and the hospitalization of nine others. Subsequent to this event, Idenix Pharmaceuticals (Nasdaq: IDIX  ) has had two of its hepatitis C clinical trials indefinitely halted because of safety concerns. Achillion Pharmaceuticals (Nasdaq: ACHN  ) has thus far escaped FDA safety scrutiny since its treatment is not nucleotide based; however, that doesn't save it from being miles behind Gilead in terms of clinical development.

How it stacks up
Let's see how Gilead Sciences stacks up next to its peers.

GILD Chart

GILD data by YCharts.

With the exception of Idenix Pharmaceuticals, whose smaller pipeline has make-or-break appeal, Gilead has easily outperformed its peers over the past five years.

Company

Price/Book

Price/Cash Flow

Forward P/E

Dividend Yield

Gilead Sciences 5.5 12.5 12.9 0%
Bristol-Myers Squibb 3.5 11.7 15.8 4.1%
Johnson & Johnson 3.1 12 12.1 3.5%
Idenix Pharmaceuticals 16.1 NM NM 0%

Source: Morningstar. NM = not meaningful (projected to be a negative value over next 12 months).

The comparison above tends to be pretty cut and dried, with these companies separated most by growth prospects and income stability.

Idenix offers speculators exactly what they're looking for: an all-or-nothing line of hepatitis C hopefuls, assuming its clinical halt comes to an end shortly. Bristol-Myers and J&J offer investors the stable income they're seeking, albeit from two different perspectives. J&J