July 21, 2009 / 8:25 PM / 10 years ago

UPDATE 4-Gilead profit rises 31 pct, but shares dip

* Net profit 61 cents per share

* Beats analysts’ estimate by 4 cents per share

* Revenue increases 29 pct to $1.65 billion

* Shares fall more than 4 percent after hours (Adds analyst comment, updates share price)

By Deena Beasley

LOS ANGELES, July 21 (Reuters) - Gilead Sciences Inc (GILD.O) said on Tuesday its quarterly profit rose 31 percent on higher sales of its drugs to treat the virus that causes AIDS, but some sales went to inventory, and the company’s shares fell more than 4 percent after hours.

Gilead also slightly raised its forecast for 2009 product sales, but said expenses would also increase.

“They did beat, but there was inventory build-up,” said Jefferies & Co analyst Eun Yang. “Also, they increased the guidance, but only by about 3 percent — the consensus is currently higher.”

Chief Financial Officer Robin Washington said on a conference call that wholesale inventories of HIV drugs Atripla and Truvada increased during the second quarter and “may decrease in second-half 2009.”

Gilead posted a second quarter net profit of $571.4 million, or 61 cents per share, compared with $434.8 million, or 45 cents per share, a year earlier.

Excluding acquisition-related expenses and restructuring costs, Gilead earned 65 cents a share during the quarter, topping analysts’ average estimate of 61 cents a share according to Reuters Estimates.

“These are pretty strong results, a more than 10 percent beat,” said Morgan Joseph managing director Shiv Kapoor. “Gilead’s current revenue, Gilead’s current HIV franchise continues to be very strong, much stronger than folks’ expectation.”

Quarterly revenue rose 29 percent to $1.65 billion and product sales rose 29 percent to $1.57 billion.

For the full year, the CFO said Gilead now expects product sales of $6.1 billion to $6.2 billion, up from its previous estimate of $5.9 billion to $6.0 billion. Wall Street is projecting full-year sales of $6.24 billion, Yang said.

Washington also forecast 2009 research and development costs of $850 million to $870 million, compared with a previous range of $800 million $820 million, and said sales and administrative costs are likely to total $810 million to $830 million — up from $720 million to $740 million.

Second-quarters sales of Atripla, which combines Gilead’s Truvada with Bristol-Myers Squibb Co’s (BMY.N) Sustiva into a single pill, totaled $569 million, exceeding the Wall Street consensus of $547 million, as compiled by Deutsche Bank analyst Mark Schoenebaum.

Royalty, contract and other revenue rose 29 percent to $78.8 million. Gilead gets much of its royalty revenue from Roche Holding AG’s ROG.VX sales of the Tamiflu flu treatment.

Shares of Gilead, which rose 1.2 percent to close at $48.55 on Nasdaq before the earnings announcement, fell to $46.40 after hours. (Reporting by Deena Beasley in Los Angeles; additional reporting by I-Ching Ng in New York; editing by Richard Chang and Andre Grenon)

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