Thanks, grandpatb, for posting on this important topic.
>Infectious disease doctors recommended in August that treatment start when the number of CD4 cells drops to 350 per milliliter of blood, up from an earlier standard of 200.<
350 is better than 200, but still not good enough.
>The new study, reported today at an infectious disease meeting in Washington, may spark discussion on raising the standards and could increase the number of people on medication, said John Bartlett, at Johns Hopkins University in Baltimore. “A lot of us are pretty convinced that the recommendation is going to 500… We'd be treating an enormously larger number of people than we are now.”<
A much higher CD4 threshold for beginning treatment combined with increased political support for HIV testing (#msg-31419107) will lead to many more US patients on HIV treatment, according to GILD. All drug companies in the HIV arena will benefit.
<font size=3><font color=red> “The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”
[This article was written before the announcement of the Paragraph-IV challenge against Truvada (#msg-33586477), but this news doesn’t affect any of the 2009-based valuation metrics cited in the article.]
Wall Street has called many health-care companies recession proof. Gilead Sciences (ticker: GILD), a leading maker of life-saving treatments for AIDS and HIV, might actually deliver on that lofty promise.
Down 20% since hitting a record high on Aug. 12, the stock got caught up in the stock market's recent blood bath.
But Gilead's shares have been gaining ground and should keep climbing as the company delivers the kind of profit growth that's now a distant memory for many large drug makers.
"You are getting an A-plus stock right now at a discount," says Geoffrey Meacham, an analyst with J.P. Morgan Securities.
AIDS patients can't afford to stop taking their medications. And thanks to changing treatment guidelines, Gilead could grab a bigger share of an expanding market for AIDS and HIV drugs.[The guidelines in question are twofold: those that officially classified GSK’s Epzicom as a less desirable option than Truvada in the treatment-naïve setting; and those that recommended the initiation of treatment earlier (i.e. with higher CD4 counts).]
"AIDS is an epidemic that is not going away," says Roseanne Ott, manager of the Alger Health Sciences Fund. "Gilead's drugs are life saving, and entrenched as standards of care. So the outlook remains favorable."
Others appear to agree.
On Oct. 17, J.P. Morgan placed Gilead on a list of 16 stocks that investors should own in a global recession.
Since then, Banc of America Securities upgraded Gilead to a Buy and Sanford C. Bernstein hiked it to Outperform.
The share price, meanwhile, has climbed 18% in the last month, according to Thomson Reuters.
Founded in 1987, Gilead is best known for developing and selling treatments for infectious diseases such as influenza, hepatitis and AIDS.
Sales from a half-dozen AIDS medications totaled $3.1 billion in 2007, generating two-thirds of the company's revenues. And now the company controls nearly half of a worldwide market worth $10 billion annually.
Gilead has been working to widen its focus.
The company co-owns the influenza treatment Tamiflu, and is developing treatments for hepatitis C and respiratory illnesses. In November 2006, Gilead purchased Myogen, acquiring a series of drugs, new and in development, for a rare and potentially lethal form of high blood pressure.
Still, Gilead's crown jewels are the AIDS drugs Truvada and Atripla, each of which combine several medications into one pill.
AIDS and HIV patients are treated with a cocktail of three drugs that prevent the human immunodeficiency virus from reproducing. Drug makers combine medications into one pill so patients don't miss doses and risk getting sicker.
Truvada combines Viread and Emtriva, two older AIDS drugs that are called nucleoside reverse transcriptase inhibitors (NRTIs). Atripla combines Truvada and Sustiva, another type of AIDS drug made by Bristol-Myers Squibb (BMY).
Sales of both drugs totaled $2.49 billion in 2007 and could rise 45% this year, says Geoffrey Porges, an analyst with Bernstein.
And they should keep climbing, not least because the government recently yanked GlaxoSmithKline's (GSK) AIDS drug Epzicom (another member of the NRTI drug class) off the list of preferred initial treatments for HIV due to safety worries.
It's a big boon for Truvada, which remains the only NRTI on the preferred list.
Doctors, meanwhile, are lobbying government officials to change guidelines so that more HIV patients get treated with powerful medications like Truvada sooner.
Less than 500,000 of the about 1.1 million Americans diagnosed with HIV are now treated with Gilead's Truvada, Bristol's Sustiva and other drugs.
Previously, doctors were counseled to hold off on treating HIV-positive patients who were not showing symptoms of AIDS until the number of CD4 T-cells -- which coordinate the immune system's response to viruses and bacteria -- fell to 200 per milligram of blood from a normal level of 1,000.
U.S. officials in January and the International AIDS Society in August recommended starting treatment when the CD4 T-cell count falls to 350. And in October, studies suggested raising the bar further to save more lives[#msg-33124429]. [Actually, raising the CD4 count that justifies treatment is *lowering* the bar, not raising it.]
Still, the new regulations "are a huge boon for Gilead," says Bernstein's Porges, adding that Gilead could add 200,000 to 300,000 U.S. patients to the marketplace.
And J.P. Morgan's Meacham says every 10,000 patients who switch to Truvada could add five cents a share to profits in 2009.
Wall Street expects Gilead to earn $2.04 a share this year, a 22% gain over 2007. And in 2009, analysts see profits climbing 16% to $2.37 a share.
At first glance, the stock looks pricey. At 19.4 times forward earnings, the stock trades at a 70% premium to the Standard & Poor's 500, according to Thomson Reuters.
That's still below a five-year historical median of almost 28 times forward earnings, and the lowest price-to-earnings multiple in five years.
The company, also, faces risks.
Worsening unemployment could eventually hurt AIDS drugs sales. And Gilead could get hit by further improvement to the U.S. dollar.
Several Big Pharma companies are making inroads into the AIDS drug market. And with Gilead spending a smaller portion of revenues on research and development than its peers, some analysts worry about the long-term sustainability of Gilead's AIDS franchise.
Still, with fast-growing HIV drug sales and a large wad of cash at its disposal, Gilead's future looks healthy, despite the economy.
And the stock offers generous returns for investors willing to pay up a bit.‹
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