UPDATE 2-Gilead Sciences 2nd-qtr profit rises 8.6 pct

(Adds company comment, analyst comment, byline, updates stock price)

By Deena Beasley

LOS ANGELES, July 17 (Reuters) - Gilead Sciences Inc (GILD.O) reported an 8.6 percent increase in second-quarter profit on Thursday, driven by higher sales of its drugs that fight the virus that causes AIDS.

But the results fell slightly short of Wall Street estimates and Gilead said expenses for the year will rise. Shares of the biotechnology company were down about 4 percent in after hours trading.

Foster City, California-based Gilead said net profit rose to $442.8 million, or 46 cents per share, from $407.9 million, or 42 cents per share, a year ago.

Excluding in-process research and development expense, Gilead earned 47 cents a share, which fell a penny short of the average analyst estimate, according to Reuters Estimates.

The company raised its outlook for 2008 sales, but said expenses also will increase as Gilead invests more heavily in research and development.

"We have more programs going faster than ever before," Chief Operating Officer John Milligan said on a conference call.

Second-quarter revenue jumped 22 percent to $1.28 billion, outstripping the $1.25 billion expected by Wall Street analysts. Product sales increased 34 percent to $1.22 billion during the quarter.

"We are very pleased with the top-line results," said Jason Kantor, an analyst at RBC Capital Markets.

Gilead as benefited from the emergence of AIDS trial data earlier this year showing that regimens containing Epzicom, a two-drug combination pill sold by GlaxoSmithKline Plc (GSK.L), were less effective at controlling the HIV virus for some patients than regimens containing Truvada, which combines Gilead's Viread and Emtriva. Glaxo's drug also was associated with a higher risk of heart attack.

Gilead's second-quarter sales of antiviral drugs rose 34 percent to $1.12 million, which included a 34 percent jump in sales of Truvada to $516.1 million.

Sales of the newer Atripla, which combines Truvada with Bristol-Myers Squibb Co's (BMY.N) Sustiva into a single pill, rose 67 percent to $355.1 million.

Rodman & Renshaw analyst Mike King said some investors had feared that a buildup by distributors of Atripla in the first quarter could hurt second-quarter demand for the HIV treatment. "But that didn't materialize, so there's a sigh of relief," he said.

Gilead raised its outlook for 2008 drug sales to between $4.9 billion and $5.0 billion from its previous estimate of $4.7 billion to $4.8 billion.

Analysts have projected 2008 sales of around $4.9 billion, according to Deutsche Bank analyst Mark Schoenebaum.