Gilead Q2 profit and HIV drug sales miss estimates

LOS ANGELES (Reuters) - Second-quarter sales of Gilead Sciences Inc's (GILD.O) core HIV drugs fell short of Wall Street estimates, and its shares fell 1 percent after-hours on Tuesday.

The biotech company also cut $100 million from its 2010 sales outlook, citing currency exchange rates, including a weaker euro. Earlier this year, the forecast had been trimmed by $200 million due to the impact of U.S. healthcare reform.

"For HIV, the U.S. business continues to perform very strongly. But the environment in the European union has been challenging," Gilead Chief Executive and Chairman John Martin said during a conference call.

During the global economic downturn, several European countries cut their prices for HIV drugs.

Second-quarter sales of AIDS drug Truvada rose 6 percent to $641.7 million, while sales of Atripla, which combines Truvada with Bristol-Myers Squibb Co's (BMY.N) Sustiva into a single pill, rose 26 percent to $715.8 million.

Analysts, however, had expected Truvada sales of $675 million and Atripla sales of $725 million, according to Wedbush Securities.

"I think there are some pricing pressures. At the same time they have kind of saturated the market," said Edward Nash, an analyst at Roth Capital Partners.

Shares of Gilead have lost about a quarter of their value this year amid questions about its strategy as patents covering key medicines begin expiring in a few years. Investors are also awaiting details, due later this week, from a clinical trial of experimental AIDS drug TMC278, nicknamed Btripla, that Gilead is developing with Johnson & Johnson (JNJ.N).

"The side effect profile is better, but virologic potency is kind of questionable," Nash said. "We need to see more about the resistance profile on 278."

Norbert Bischofberger, chief scientific officer at Gilead, said he was "very encouraged" by the pivotal trial data, adding that patients who could not tolerate the drug accounted for a significant portion of those deemed virologic failures.

If approved by regulators, the J&J/Gilead compound would be the second once-daily pill for the virus that causes AIDS.

With Atripla, currently the only triple-drug HIV pill, Gilead pays Bristol-Myers the full retail price for Sustiva, but the J&J deal gives the company a price discount of up to 30 percent.

Gilead said quarterly net income rose 25 percent to $712.1 million, or 79 cents per share, from $571.4 million, or 61 cents per share, a year earlier.

Adjusting for one-time items and stock-based compensation, the company earned 85 cents a share, which fell short of the 87 cents a share forecast by analysts, as compiled by Thomson Reuters I/B/E/S.

Revenue rose 17 percent to $1.93 billion, while product sales rose 15 percent to $1.81 billion. Analysts, on average, had expected revenue of $1.96 billion.

The company, based in Foster City, California, said it now expects full-year 2010 sales of between $7.3 billion and $7.4 billion. It also raised its tax rate estimate to between 26.5 percent and 27.5 percent, from 25 percent to 26 percent, citing higher U.S. versus European revenue.

Gilead said it spent $1.69 billion, out of a $5 billion allocation, to repurchase 44.3 million shares in the second quarter.

Shares of Gilead, which closed at $33.00 on the Nasdaq, declined to $32.50 after hours.

(Reporting by Deena Beasley. Editing by Robert MacMillan and Matthew Lewis)