Gilead Sciences (GILD -0.01%) will release its quarterly report on Tuesday, and investors are still riding high as the biotech stock kept climbing in January -- after doubling in 2013. But even as the company celebrates success in the hepatitis C space that might finally break Gilead's streak of only marginal earnings growth, competitors AbbVie (ABBV 0.22%), Merck (MRK -0.94%), and Johnson & Johnson (JNJ 0.12%) are still aiming to eat into the company's earnings with competing products.

Gilead Sciences has had a huge track record of success, becoming one of the first biotech companies to achieve consistent success with its products. Lately, though, Gilead investors have had to wait for promising treatment prospects to make their way through the pipeline. Now that Gilead has products like its Sovaldi oral hepatitis-C treatment starting to take off, investors want to see the pent-up growth they've been anticipating for a long time. Let's take an early look at what's been happening with Gilead Sciences over the past quarter and what we're likely to see in its report.

Source: Gilead Sciences

Stats on Gilead Sciences

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$2.85 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance

Can Gilead earnings begin to climb this quarter?
Analysts are finally starting to ratchet up their views on Gilead earnings in the long run. They've raised their fourth quarter estimates by a penny per share and boosted their full-year 2014 projections by a much more substantial 7.5%. That has helped the stock rise another 17% since late October.

Gilead's third-quarter results showed its continuing ability to keep raising revenue, with a 15% jump in sales coming from both established HIV treatments like Atripla and Truvada as well as newer HIV drugs like Stribild and Complera. Yet even though earnings grew from the previous year, Gilead didn't make as much money as investors had hoped.

Yet shareholders are much more excited about Gilead's future prospects. In December, the company got FDA approval for its Sovaldi hepatitis-C treatment, assuming the role as the first interferon-free treatment for certain genotypes of the disease. Even though Johnson & Johnson beat Sovaldi to the punch with its Olysio hep-C therapy, Olysio addresses a far-narrower subset of patients than Sovaldi does.

Sovaldi is such a huge opportunity for Gilead that many of the company's rivals are making legal allegations about whether Gilead infringed on intellectual property to create it. Idenix Pharmaceuticals (NASDAQ: IDIX) has seen its shares soar after Sovaldi's approval, with the company alleging that Gilead infringed on Idenix's patent rights in producing the treatment. Just last week, Gilead won a decision from the U.S. Patent and Trademark Office denying Idenix priority of invention, but the case will likely continue for years. Similarly, Merck has argued Sovaldi infringes on some of its patents as well, requesting royalties equal to 10% of Sovaldi's eventual sales.

But the real question is what impact AbbVie's competing all-oral hepatitis treatment cocktail could have on Gilead. Gilead hopes to apply for FDA approval of a treatment regimen including Sovaldi this quarter, potentially beating AbbVie's second quarter expected date. But with Sovaldi currently carrying a high price tag, an eventual price war could prevent Gilead from seeing the earnings boost that investors are counting on from the treatment.

In the Gilead earnings report, watch to see how the company responds to calls that Sovaldi is too expensive. With so much attention on health care costs lately, Gilead has to navigate carefully in order to avoid getting painted with negative publicity that could hurt its future earnings prospects.

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