Gilead Sciences (GILD) is a good bio-technology companies with their strong franchise in HIV, a growing franchise in Hepatitis and potential in cardio-vascular therapies. Many think of Gilead as the provider of Tamiflu, a therapy for influenza. However, Tamiflu is a small part of the story and it has limited impact on the company’s prospects.

The strength of the company lies with its antiviral franchise, which experienced sales increase of 26 percent to $1.41 billion in the second quarter of 2009 due primarily to Truvada, which grew 18 percent and Atripla, which saw 60 percent sales increase. Tamiflu, sold through a partnership with Hoffmann-La Roche Ltd (Roche) provided royalties of $51.9 million in the second quarter of 2009. Europe is generating the best growth for Gilead’s HIV products.

While the company’s antiviral segment will continue to dominate the growth picture for the next year or more, Gilead has the potential to see new growth from its Liver Disease and Cardiovascular products that are just now coming onto the market. It is too early to tell if these products will achieve billion dollar status, though the eerily signs are positive. In countries where their liver disease products have been approved for use, they have achieved 13 percent market share. Management is now ramping up their product sales to help these products achieve even greater success. Since Hepatitis affects many people, the prospects for Gilead’s liver disease products have good potential to become important contributors to the growth of the company’s sales.

More recently, Gilead has become an important participant in the cardiovascular disease segment. Through acquisitions, most recently CV Therapeutics, Gilead now is becoming a participant in the cardiovascular disease segment. The potential for this segment is up in the air as it is to early to make and reasonable forecast on the potential sales that will stem from this segment.

After the second quarter of 2009 Gilead delivered a return on capital (EBIT/(Net working capital +Net Fixed Assets)) of 105%, an earnings yield (EBIT/(Enterprise value minus excess cash) of 5.6%, free cash flow margin of 51%, a free cash flow yield of 5.4%, and an enterprise value to free cash flow ratio of 18.2.

As a result, Gilead does an excellent job generating returns on their capital as indicated by the high return on capital. On the other hand, the higher value the market places on Gilead’s stock holds down the earnings yield.

Gilead produces a substantial level of free cash from their sales as indicated by their high free cash flow margin. Again, the value the market places on Gilead’s stock depresses the free cash flow yield.

Most people consider Gilead to be a growth company though their PE ratio is 19. I prefer the enterprise value to free cash flow ratio as a better indicator of the company’s ability to generate cash based on its valuation by the market. Their revenue growth that is greater than 25%, indicating Gilead may be undervalued for its growth potential and its ability to generate excess cash. Many analysts look for the PE ratio to be no more than two times their revenue growth rate, which is the case for Gilead (25*2=50). Gilead’s PE ratio is less than the growth rate of their revenues, a positive indication that there is upside to the share price as long as revenue growth can maintain its current level.

In the interest of full disclosure, I have a position in Gilead Sciences, which I expect to keep.

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In one of the most promising developments in more than 20 years, scientists claim that drugs used to control HIV/AIDS in patients may also be effective in preventing the disease in the first place.

The drugs in question are tenofovir (Viread) and emtricitabine, or FTC (Emtriva), sold in combination as Truvada by Gilead Sciences Inc. Gilead is the California company best known for inventing Tamiflu.

Previous research has been aimed at finding a vaccine against HIV/AIDS, with the intention of conditioning the immune system against the disease. But these drugs work differently. They simply keep the virus from reproducing, and have already been used successfuly by health care workers to prevent them from being infected by the virus carried by patients.

This approach to fighting HIV/AIDS has been tempting researchers for many years, but has only recently become feasible as preventative drugs have been developed that are safe for non-infected persons to take. Previous drugs had unreasonable effects for uninfected persons.

That situation changed when Tenofovir came on the market in 2001. Tenofovir is powerful and safe, and it only has to be taken once a day. It also does not interact with other medicines or birth control pills, and manifests less drug resistance than other AIDS medications.

** Monkey studies show exciting results

A major study by the CDC (Centers for Disease Control and Prevention) in Atlanta, Georgia involved six macaques. The monkeys were given a combination of Tenofovir and FTC and then administered a deadly combination of monkey and human AIDS viruses. They were given the viruses in rectal doses to simulate contact between *** men.

Each was given 14 weekly exposures of the virus, and none of the monkeys became infected. In a control group which did not receive the drugs, all but one got the disease, normally after just two exposures.

The scientists then stopped giving the drugs to the test group to see if the prevention was only temporary. The results were equally impressive. None of the monkeys contracted the disease. “We’re now four months following the animals with no drug, no virus. They’re uninfected and healthy,” reported a CDC researcher.

Now other research teams are pushing to have this drug combination tested on humans. A $29 million CDC study of drug users in Botswana will now be switched to this new drug combination.

Another study of 400 heterosexual women in Ghana by the Family Health Initiative, and funded by the Bill and Melinda Gates Foundation, is studying the effects of tenofovir alone.

But several other studies have failed to materialize because studies of this nature immediately raise suspicions that scientists are using local people as guinea pigs. The fear is that they will intentionally expose the test subjects to the virus.

The cost of tenofovir and Truvada also make testing difficult. In African countries condoms are now liberally donated by companies, aid groups, UN agencies, and western governments. While the drugs are relatively cheap, the cost remains an impediment.

Nevertheless researchers have been reinvigorated by the stunning results out of Atlanta, and new tests are going ahead in pockets of interest around the world.

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About Tamiflu – its manufacturer

Tamiflu (Oseltamivir) is an oral antiviral treatment for influenza, and belongs to a class of medicines called neuraminidase inhibitors (NAI). Tamiflu prevents the influenza virus from spreading inside the body and are designed to be active against all clinically relevant influenza virus strains. It is proven to be effective in the treatment and for the prevention of influenza in adults and in children 1 year and older.

Roche, the manufacturer of Tamiflu since 1996, acquired the worldwide rights to develop and market the drug from Gilead Sciences, Foster City, California.

Comes in the strength of

Tamiflu can be used both for prevention and treatment of influenza. An oral medication, it is a convenient 75mg capsule which affects all key sites in the body where the virus multiplies. The dose for the adult treatment of influenza is a 75mg capsule, taken twice daily for five days. A pack of Tamiflu contains a full treatment course of 10 capsules.

Treatment must commence within 48 hours of the onset of symptoms for full efficacy. For post exposure prophylaxis the dosage is one 75mg capsule daily for up to 6 weeks.

Tamiflu is proven to be effective in adults and in children one year and older.

What is an influenza virus?

Influenza is an acute infectious disease caused by a member of the orthomyxovirus family: influenza virus A and B or, to a much lesser extent, influenza virus C. However, the term ‘flu’ is often used for any febrile respiratory illness with systemic symptoms that may be caused be a myriad of bacterial or viral agents as well as influenza viruses.

According to the WHO 3-5 million cases of seasonal influenza occur every year.

The influenza virus is classified into three categories: A, B, and C. Type A is the most serious and usually appears every two or three years. Prone to mutation, it regularly produces nonresistant strains; has caused many epidemics; and is also responsible for pandemics, in which entire continents are affected.

Type B influenza virus is the strain responsible for smaller infection outbreaks. Once infected with this virus, the immune system successfully resists this type of virus for many years. This type commonly infects uninfected children aged between 5-14 years.

Type C influenza virus is a very mild strain of the infection, similar to symptoms of a common cold. This can be treated with bed rest and plenty of fluid intake.

How to treat the influenza virus?

The flu targets the respiratory system which is the nose, lungs, throat and the bronchial tubes. During the flu, a patient exhibits some or all of the following symptoms.

Loss of appetite

Fever

Congestion that turns to a runny nose

Sore throat

Cough that turns productive

Exhaustion and weakness

Muscle aches and pains

It is possible to treat the flu using medication as well as make a rapid recovery using various other means like:

Keeping fluid intake to the optimum – Flu sufferers lose a lot of fluids from having high fevers. Water, orange juice (vitamin C) and sports drinks like Gatorade help replenish electrolytes.

Proper sleep – Adequate rest helps in recovery.

Taking a healthy diet – Nutrition is an important part of recovery.

Minimal exertion – It is better to stay in bed and recuperate through relaxation..

Keeping the fever in check – Young children often suffer higher fever during the flu.

Toddlers should be attended to by a pediatrician in the event of a high fever that lasts for a day and for adults a doctor should be consulted when the fever exceeds 103 degrees or lasts longer than two days and is accompanied by significant fatigue or any kind of pain. The elderly and those with diabetes, a weakened immune system, cardiovascular disease, pregnancy beyond the first trimester, lung disease or asthma should call their doctor when flu symptoms arrive.

Tamiflu dosage is said to deliver a 38% reduction in the severity of symptoms, a 67% reduction in secondary complications such as bronchitis, pneumonia and sinusitis in otherwise healthy individuals and a 37% reduction in the duration of influenza illness.

Side effects of Tamiflu

The drug Tamiflu is to be given in proper dosages as prescribed by the doctor. Exceeding the dosage limits for any drug can lead to serious side effects. If you should become affected with any of the allergic reactions do not wait for the swelling to subside and go to the nearest emergency room. As with any drug, Tamiflu also has the potential to affect you in the following ways. You may experience:

Serious allergic reaction

Difficulty breathing

Swelling of the tongue or lips

Constriction of the throat

Swelling of your face

More serious side effects have also sometimes been reported. While these ‘reports were mostly in children,’ it is still not known if they were actually caused by taking Tamiflu. According to the FDA, there have been reports (mostly from Japan) of patients causing:

Self-injury

Experiencing delirium (confusion, hallucinations, speech problems)

Other than this you may experience less serious side effects like:

Dizziness

Nausea

Vomiting

Diarrhoea

Abdominal pains or abdominal cramps

Sleeplessness (insomnia)

Fatigue

Cough

Other respiratory symptoms

The side effects of Tamiflu, when you are taking other medication are almost none. Though so far no clinical tests have proved that Tamiflu reacts with other medication it would be a good idea to tell your doctor that you are taking other medication when you are being prescribed Tamiflu.

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About Tamiflu – It’s Manufacturer

Tamiflu (Oseltamivir) is an oral antiviral treatment (not a vaccine) for influenza, and belongs to a class of drugs called neuraminidase inhibitors (NAI). It prevents the virus from spreading inside the body and works well against all strains.

Roche, the manufacturer of Tamiflu since 1996, acquired the worldwide rights to develop and market the drug from Gilead Sciences, Foster City, California.

Comes in the Strength Of

Tamiflu can be used both for prevention and treatment of influenza. An oral medication, it is a convenient 75mg capsule which affects all key sites in the body where the virus multiplies. The dose for the adult treatment of influenza is a 75mg capsule, taken twice daily for five days. A pack of Tamiflu contains a full treatment course of 10 capsules.

Treatment must commence within 48 hours of the onset of symptoms for full efficacy. For post exposure prophylaxis the dosage is one 75mg capsule daily for up to 6 weeks.

Tamiflu is proven to be effective in adults and in children one year and older.

What is an Influenza Virus?

Influenza is a disease caused by a member of the Orthomyxoviridae. Many features are common with those of the Paramyxovirus infections of the respiratory tract. Influenza, commonly called – the ‘flu’- is a serious disease caused by influenza A and B viruses, which usually occurs seasonally in the autumn and winter months. According to the WHO 3-5 million cases of seasonal influenza occur every year.

The influenza virus is classified into three categories: A, B, and C. Type A is the most serious and usually appears every two or three years. Prone to mutation, it regularly produces nonresistant strains; has caused many epidemics; and is also responsible for pandemics, in which entire continents are affected.

Type B influenza virus is the strain responsible for smaller infection outbreaks. Once infected with this virus, the immune system successfully resists this type of virus for many years. This type commonly infects uninfected children aged between 5-14 years.

Type C influenza virus is a very mild strain of the infection, similar to symptoms of a common cold. This can be treated with bed rest and plenty of fluid intake.

How to Treat Influenza Virus

The flu targets your respiratory system (nose, lungs, throat and bronchial tubes). During the flu, a patient exhibits some or all of the following symptoms.

Loss of appetite

Fever

Congestion that turns to a runny nose

Sore throat

Cough that turns productive

Exhaustion and weakness

Muscle aches and pains

It is possible to treat the flu using medication as well as make a rapid recovery using various means like:

Keeping your fluid intake to the optimum – Flu sufferers lose a lot of fluids from having high fevers. Drink plenty of water. Orange juice is good for its vitamin C content, too, and sports drinks like Gatorade help replenish electrolytes.

Proper sleep – Adequate rest also helps in recovery.

Taking a healthy diet – Even though you don’t feel like eating, nutrition is an important part of recovery.

Minimal exertion – It is better to stay in bed and recuperate through relaxation..

Keeping the fever in check – Young children often suffer higher fever during the flu.

Toddlers should be attended to by a pediatrician in the event of a high fever that lasts for a day and for adults a doctor should be consulted when the fever exceeds 103 degrees or lasts longer than two days and is accompanied by significant fatigue or any kind of pain. The elderly and those with diabetes, a weakened immune system, cardiovascular disease, pregnancy beyond the first trimester, lung disease or asthma should call their doctor when flu symptoms arrive.

When administered according to its approved dosage (75 mg twice daily for 5 days), Tamiflu delivers a 38 per cent reduction in the severity of symptoms, a 67 per cent reduction in secondary complications such as bronchitis, pneumonia and sinusitis in otherwise healthy individuals and a 37 per cent reduction in the duration of influenza illness. This data were derived from seasonal outbreaks of influenza.

Side Effects of Tamiflu

Possible Tamiflu side effects, although not common, include:

Nausea

Vomiting

Diarrhea

Bronchitis

Stomach pain

Dizziness

Headache

More serious side effects have also sometimes been reported. According to the FDA, there have been reports (mostly from Japan) of patients causing self-injury or experiencing delirium (confusion, hallucinations, speech problems) while using Tamiflu.

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