HIV/AIDS and Gilead Sciences, Inc. (NASDAQ:GILD)

In honor of National Black HIV/AIDS Awareness Day, I focus on one of the biotech companies leading the charge against HIV/AIDS: Gilead Sciences, Inc. (NASDAQ:GILD).  The company’s drugs help to lengthen the lives of many people living with HIV, while also providing sizeable revenue.  Further, the stock is currently attractively valued, and, with solid future growth prospects, is worth consideration by investors seeking exposure to the healthcare sector.

More than 30 years have passed since the CDC first recognized AIDS.  Since then, the disease has killed tens of millions of people.  As of 2011, according to UNAIDS, about 34 million people, children and adults, were living with HIV.  African Americans in the US are particularly hard hit.  The CDC states: “Although comprising just 14 percent of the U.S. population, blacks account for half of the more than 1.1 million Americans living with HIV, nearly half of all new HIV infections in the United States and half of all those who have died with AIDS in this country.”  Although the CDC is taking steps to arrest the spread of HIV, it is tough battle for many reasons.

One of the problems with anti-HIV drug treatments has been the number of pills patients have had to take.  Often, patients were prescribed cocktails of many different drugs.  Biotech and pharmaceutical companies sought ways to reduce the number of pills.  This is an area where Gilead has made considerable headway since 2004, when the FDA approved its drug Truvada, which combined its anti-HIV drugs tenofovir and emtricitabine.

More recently, in August of last year, the FDA approved Stribild, which combines Truvada with Gilead’s drugs elvitegravir and cobicistat.  What is particularly interesting about cobicistat is that it prevents the liver from metabolizing the HIV drugs.  The idea is that it enables patients to be treated with lower doses and fewer side effects, all in a single pill.  Because of this, I expect Stribild will become widely prescribed by infectious disease physicians going forward.  Sales of Stribild hit $40 million in the fourth quarter of last year.  Sales of other anti-HIV drugs remained strong.  For example, sales of Atripla and Truvada each climbed 11% in 2012.

Gilead’s existing drugs have met considerable demand.  Over the last five years, Gilead’s sales have grown at a compounded annual pace of nearly 23%.  While very fast growth rates are unsustainable over the long term, it is worth noting that Gilead’s revenue in 2012 climbed 15.7%, just a touch slower than its three-year pace of 16.3%.