Download Gilead Sciences (7-03

Ticker: GILD
Sector:
Healthcare
Industry: Biotechnology
Own:
800 shares
Buffet Evaluation: $56.51
Recommendation:
Buy
Pricing
Closing Price $52.17 (07/01/08)
52-wk High $56.95 (06/05/08)
52-wk Low $35.22 (08/29/07)
Market Data
Market Cap $47.93B
Total assets $5.87B
Trading vol. 7.68M (10 Day avg)
6.69M (3 month avg)
Valuation
EPS
P/E
PEG
Div Yield
$1.76(ttm)
29.44 (ttm)
1.10
N/A
Profitability & Effectiveness (ttm)
ROA
32.43%
ROE
59.66%
Gross Margin 81.23%
Oper. Margin 50.95%
Profit Margin 38.21%
Brian Stieren
Gilead Sciences
Gilead Sciences, Inc., a biopharmaceutical
company, engages in the discovery,
development, and commercialization of
therapeutics for the treatment of life-threatening
infectious diseases. Its products include
Truvada, Viread, Atripla, and Emtriva for the
treatment of human immunodeficiency virus
infection in adults; Hepsera, an oral formulation
for the treatment of chronic hepatitis B;
AmBisome, amphotericin B liposome injection to
treat serious invasive fungal infections; Flolan,
an injected medication for the long-term
intravenous treatment of primary pulmonary
hypertension and pulmonary hypertension; and
Vistide, an antiviral medication for the treatment
of cytomegalovirus retinitis in patients with
acquired immunodeficiency syndrome (AIDS).
The company also offers Tamiflu, an oral
antiviral for the treatment and prevention of
influenza A and B; Macugen, an intravitreal
injection for the treatment of neovascular agerelated macular degeneration; Letairis, an
endothelin receptor antagonist for the treatment
of pulmonary arterial hypertension in patients
with WHO Class II or III symptoms; and
Cicletanine, which is being evaluated for the
treatment of pulmonary arterial hypertension.
Gilead Sciences has operations in North
America, Europe, and Australia. The company
has research collaborations with Abbott
Laboratories, Inc.; Novartis Institutes for
BioMedical Research, Inc.; Novartis Vaccines
and Diagnostics, Inc.; Genelabs Technologies,
Inc.; Achillion Pharmaceuticals, Inc.; Japan
Tobacco, Inc.; Parion Sciences, Inc.; LG Life
Sciences, Ltd.; and University of Texas System.
It also has commercial collaborations with
Astellas Pharma, Inc.; Emory University; F.
Hoffmann-La Roche, Ltd.; Pfizer, Inc.; Dainippon
Sumitomo Pharma Co., Ltd.; OSI
Pharmaceuticals, Inc.; GlaxoSmithKline, Inc.;
Japan Tobacco, Inc.; and Bristol-Myers Squibb
Company. The company was founded in 1987
and is headquartered in Foster City, California.
DIRECT COMPETITOR COMPARISON
GILD
BMY
GSK
Industry
RHHBY.PK
Market Cap:
48.01B
41.15B
120.03B
N/A
113.71M
Employees:
2,979
42,000
103,483
N/A
60
22.30%
20.00%
1.70%
N/A
25.10%
4.46B
20.21B
45.47B
N/A
14.20M
81.23%
68.95%
76.77%
N/A
97.33%
2.33B
5.23B
17.41B
N/A
-23.09M
50.95%
21.61%
33.66%
N/A
-251.42%
Net Income (ttm):
1.70B
2.03B
9.98B
N/A
-17.05M
EPS (ttm):
1.765
1.077
3.63
N/A
-0.54
P/E (ttm):
29.49
19.30
12.50
N/A
22.14
1.1
1.11
2.81
1.8
1.06
10.79
2.01
2.55
N/A
8.86
Qtrly Rev Growth (yoy):
Revenue (ttm):
Gross Margin (ttm):
EBITDA (ttm):
Oper Margins (ttm):
PEG (5 yr expected):
P/S (ttm):
Opportunities:
2
Approximately 1.2 million Americans are living with HIV and half are not being treated.
Half a million people world wide are treating HIV with one of Gilead’s products which
generated revenues of 3 billion in 2007.
Hepsera is the leading antiviral to treat Hepatitis B, there are more than 400 million
infected world wide.
Terminology
Clinical trials are conducted in phases. The trials at each phase have a different purpose
and help scientists answer different questions:
In Phase I trials, researchers test an experimental drug or treatment in a small group of
people (20-80) for the first time to evaluate its safety, determine a safe dosage range, and
identify side effects.
In Phase II trials, the experimental study drug or treatment is given to a larger group of
people (100-300) to see if it is effective and to further evaluate its safety.
In Phase III trials, the experimental study drug or treatment is given to large groups of
people (1,000-3,000) to confirm its effectiveness, monitor side effects, compare it to
commonly used treatments, and collect information that will allow the experimental drug
or treatment to be used safely.
In Phase IV trials, post marketing studies delineate additional information including the
drug's risks, benefits, and optimal use.
News
June 13, 2008 Gilead announces data from a Phase III study of Aztreonam Lysine for
Inhalation in Patients with Cystic Fibrosis.
June 2, 2008 U.S. Patent Office confirms second of four Viread Patents.
May 29, 2008 Data from a Phase III study of Letairis for Pulmonary Arterial
Hypertension.
May 20, 2008 U.S. Patent Office confirms first of four Viread Patents.
May 1, 2008 Gilead initiates a Phase IV study of Letairis.
April 25, 2008 The European Union Approves Viread to treat Chronic Hepatitis B.
April 24, 2008 Data from two The Phase III studies evaluating Viread for the treatment of
chronic Hepatitis B.
3
October 22, 2007 Gilead announces that they will repurchase $3 billion of their shares.
November 17, 2006 Gilead purchased Myogen Inc. for $2.42 billion.
Buffett Evaluations
I used a beta of 0.585 which is a average of Rueters and Yahoo! and 3.983, the ten year
T-Bill, for the risk free rate.
Risks:
Competition in healthcare can be brutal. If another company develops the cure for HIV,
Gilead could easily be put out of business.
Developing new medicines are expensive. Medicines that are denied by the government
in Phase III studies drastically affect the price of the stock price.
Recommendations:
The stock price is hugely affected by the phases new medicines have been approved for.
In the recent past a solid base of innovative medicines have already been approved and
are being used; income from these medicines will continue to come in at lower costs.
Growth has been steady and it seems that it will continue in the future.
Balance Sheet
4
View: Annual Data | Quarterly Data
All numbers in thousands
31-Dec-07
31-Dec-06
968,086
203,892
947,660
599,966
308,688
816,007
120,844
905,347
564,145
22,863
707,913
1,615,972
480,964
216,903
70,456
Total Current Assets
Long Term Investments
Property Plant and Equipment
Goodwill
Intangible Assets
Accumulated Amortization
Other Assets
Deferred Long Term Asset Charges
3,028,292
1,550,444
447,696
290,742
220,183
297,359
2,429,206
452,715
361,299
317,743
222,479
302,539
3,092,208
242,568
333,582
29,400
66,893
Total Assets
5,834,716
4,085,981
3,764,651
705,242
286
30,747
727,752
18,747
17,777
376,779
60,206
18,353
Total Current Liabilities
Long Term Debt
Other Liabilities
Deferred Long Term Liability Charges
Minority Interest
Negative Goodwill
736,275
1,300,000
136,836
61,316
140,299
-
764,276
1,300,000
91,847
61,049
53,091
-
455,338
240,650
32,725
8,160
-
Total Liabilities
2,374,726
2,270,263
736,873
-
-
-
PERIOD ENDING
Assets
Current Assets
Cash And Cash Equivalents
Short Term Investments
Net Receivables
Inventory
Other Current Assets
Liabilities
Current Liabilities
Accounts Payable
Short/Current Long Term Debt
Other Current Liabilities
Stockholders' Equity
Misc Stocks Options Warrants
Redeemable Preferred Stock
Preferred Stock
31-Dec-05
5
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
Other Stockholder Equity
932
249,080
3,214,341
(4,363)
461
(891,363)
2,704,399
2,221
460
809,642
2,206,228
11,448
Total Stockholder Equity
3,459,990
1,815,718
3,027,778
$3,169,248
$1,497,975
$2,694,196
Net Tangible Assets
Income Statement
View: Annual Data | Quarterly Data
All numbers in thousands
Total Revenue
Cost of Revenue
31-Dec-07
4,230,045
768,771
31-Dec-06 31-Dec-05
3,026,139 2,028,400
433,320
260,326
Gross Profit
3,461,274
2,592,819 1,768,074
PERIOD ENDING
Operating Expenses
Research Development
Selling General and Administrative
Non Recurring
Others
Total Operating Expenses
Operating Income or Loss
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest And Taxes
Interest Expense
Income Before Tax
Income Tax Expense
591,026
705,741
-
383,861
573,660
2,394,051
-
277,724
379,248
-
-
-
-
2,164,507
(758,753) 1,111,102
109,823
2,283,438
13,100
2,270,338
655,040
134,642
47,137
(617,845) 1,162,234
20,362
442
(638,207) 1,161,792
551,750
347,878
6
Minority Interest
Net Income From Continuing Ops
Non-recurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Preferred Stock And Other Adjustments
Net Income Applicable To Common Shares
9,108
1,615,298
-
1,615,298
$1,615,298
6,266
(1,189,957)
-
(1,189,957)
-
3,995
813,914
-
813,914
-
($1,189,957) $813,914
Cash Flow
View: Annual Data | Quarterly Data
PERIOD ENDING
Net Income
All numbers in thousands
31-Dec-07 31-Dec-06 31-Dec-05
1,615,298 (1,189,957) 813,914
Operating Activities, Cash Flows Provided By or Used In
Depreciation
51,279
47,284
Adjustments To Net Income
334,886 2,585,879
Changes In Accounts Receivables
(138,034) (184,370)
35,777
126,210
13,753
7
Changes In Liabilities
Changes In Inventories
Changes In Other Operating Activities
Total Cash Flow From Operating Activities
189,077
(34,619)
(252,489)
1,765,398
298,379
162,889
(358,184) (81,923)
19,028 (355,540)
1,218,059
715,080
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures
(78,648) (105,208) (47,951)
Investments
(1,177,376) 1,102,046 (643,965)
Other Cashflows from Investing Activities
(46,443) (2,736,172)
Total Cash Flows From Investing Activities
(1,302,467) (1,739,334) (691,916)
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid
Sale Purchase of Stock
(244,116)
Net Borrowings
(99,459)
Other Cash Flows from Financing Activities
76,276
(141,556)
695,558
95,259
143,283
298,613
-
Total Cash Flows From Financing Activities
Effect Of Exchange Rate Changes
649,261
(19,892)
441,896
(38,056)
Change In Cash and Cash Equivalents
(267,299)
(43,553)
$152,079
$108,094
$427,004
8