Gilead Sciences, Inc. (GILD)’s Entry Into Cancer Therapy

Figure3:

As of March 31, 2013, Gilead had $2.63 billion in cash and cash equivalents compared to $2.58 billion as of December 31, 2012; generating $672.1 million in operating cash flow during the first quarter of 2013. This shows that Gilead does have the potential to develop the product candidates available in clinical trials.

Figure4:

Gilead is currently trading at a price of $55.81, an upward trend of nearly 121% compared to same period last year, due to increased sales growth and profitability.

Figure5:

Peer analysis

For leukemia and other blood cancers, Gilead competes with a few marketed products: Gleevec and Jakavi from Novartis; and Rituxan from Roche.

Novartis provides a group of medicines for cancer therapies. Out of these, Gleevec is a PI3K inhibitor used for the treatment of leukemia; and Jakavi, a JAK inhibitor used for myelofibrosis. In addition, a few potential molecules are in developmental stages that might be a prospective medicine in future. In the first quarter of 2013, group net sales were $14 billion, up by 2% to 4% in constant currency due to rising growth across all divisions. Adjusted EPS was $1.32, up by 9% compared to last year.

Roche provides medicines for cancer therapies. Though there’s a group of medicines available in the Roche cancer portfolio, products like Rituxan are primarily used for chronic lymphocytic leukemia. During the first quarter 2013, group net sales were CHF12 billion, up by 5% or 6% in constant currency due to increase pharmaceutical sales, driven by rising demand for cancer medicines and Tamiflu.

Conclusion

Gilead’s entry into the competitive oncology market may seem to be the most challenging factor for the company at present. However, the company has novel product candidates with high potential, especially in blood cancer therapies, that are likely to be well accepted within the leukemia market. In addition, continued demand of HIV and HCV products and the company’s known status as an anti-viral product maker will provide growth opportunity in coming years.

Dr. Kanak Kanti De has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences.

The article Gilead’s Entry Into Cancer Therapy originally appeared on Fool.com and is written by Dr. Kanak Kanti De.

Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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