Today, let's look at three things investors should be watching regarding Gilead Sciences, as they'll provide us better insight into the company.
1. Patent expirations
With the pharmaceutical industry in the midst of its worst year for patent expirations on record, Gilead Sciences shareholders can rejoice in the fact that most of the company's patents don't expire until 2017 or later. That's saying something considering that Pfizer lost patent exclusivity on the best-selling drug in the world last year (Lipitor), while Bristol-Myers Squibb
The fact that patent expirations are so far off is very bullish for Gilead and its shareholders, as three of its 14 marketed drugs make up the lion's share of its revenue. Gilead's combination HIV treatments, Atripla, Truvada, and Viread, comprised $1.84 billion of Gilead's $2.21 billion in net product sales in the first-quarter. Atripla and Truvada's patents don't expire in the U.S. until 2021, with Viread's patents expiring in 2017. That's what I call safety in numbers, and it gives the company ample time to reinvigorate its pipeline before those patents expire.
2. Gilead's hepatitis-C pipeline
Just in case you weren't aware, the race to create the next blockbuster hepatitis-C treatment is heating up. That became evident when Gilead ponied up $11 billion last year to purchase Pharmasset to gain the rights to what is now called GS-7977, a game-changing hepatitis-C oral treatment that eliminated the virus in most patients within just four weeks when combined with Bristol-Myers Squibb's daclatasvir.
But just as GS-7977 is headed to the forefront and looking like a game-changing treatment, it will still need to butt heads with existing FDA-approved hepatitis-C drugs like Incivek from Vertex Pharmaceuticals (Nasdsaq: VRTX) and Victrelis from Merck
3. Gilead's non-hepatitis-C pipeline and potential partnerships
Aside from GS-7977, Gilead Sciences has a few tricks up its sleeve to protect its patents and increase in commanding market share lead in HIV treatment. The name of this next potential blockbuster is cobicistat, and last week Gilead filed paperwork with the FDA to approve the drug. Cobicistat works by blocking an enzyme in the body that breaks down drugs, which should ultimately boost blood levels. Cobicistat, if approved, could be the key to creating the first four-in-one pill whereby Gilead uses the combination drugs in Truvada and Atripla to create an HIV super-pill. In short, its approval or rejection has huge implications.
Keeping an eye on Gilead's partnerships and acquisitions will also be a key to its success. Gilead purchased Inhibitex earlier this year and has strong enough cash flow that it can continue to be on the prowl. Also, if GS-7977 is approved, look for large pharmaceutical companies with only mediocre hepatitis-C pipelines to come calling to Gilead for help.
Now that you know what to watch for, it should be easier to analyze Gilead Sciences successes and pitfalls in the future, and hopefully you'll gain a competitive investing edge.
If you're still craving even more info on Gilead Sciences, I would recommend adding the stock to your free and personalized Watchlist so you can keep up on all of the latest news with the company.
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Fool contributor Sean Williams has no material interest in any of the companies mentioned in this article. You can follow him on Motley Fool CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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