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Gilead Sciences
Rank: 56 Ticker: GILD Market value: $29 billion
WHY IT'S HOT: Gilead's success in the HIV market has rocketed the company into the No. 3 spot among biotechs. Gilead has launched five drugs in six years, including Atripla, a revolutionary combination pill that allows HIV patients to take three treatments at once.CHALLENGES AND OPPORTUNITIES: HIV is a very narrow market, and it accounts for 70 percent of Gilead's $2 billion in sales. The company also receives royalties on Roche's sales of Tamiflu, which is being stockpiled as a treatment for bird flu. Much of those profits could evaporate if the threat of that disease fades. Gilead is testing Viread, currently used as an HIV treatment, to see whether it can help healthy people avoid contracting the disease. But the company needs to expand beyond that one market. With $2.5 billion in cash and marketable securities on the books, CEO John Martin has money to spend on acquisitions. Most recently, he paid $365 million in August for privately held Corus Pharma, which is developing an inhaled antibiotic used to treat lung infections in patients with cystic fibrosis. Analysts speculate a bigger deal may be near - perhaps one that takes Gilead into the highly lucrative cancer market. STOCK OUTLOOK: Biotech is one of the few areas of the market where a P/E of 30 is considered cheap. But Gilead's relatively low multiple reflects the concern that investors have for the company's thin pipeline. Gilead's HIV franchise is indeed potent. But until Martin comes up with another growth driver, the stock is no bargain. |
