Shares of Gilead Sciences Inc. rose to all-time highs Friday after the company reported its first-quarter results and new trial data for two of its experimental hepatitis C drugs.
THE SPARK: Gilead posted its quarterly results after the market closed Thursday. The company said its net income climbed on lower costs and greater sales of its new HIV drugs Complera and Stribild. Sales of its heart drug Letairis and angina treatment Ranexa also improved, sending total sales up 11 percent.
The Foster City, Calif., company's income and revenue both fell short of analyst estimates. However, Wall Street was encouraged by the latest data for its hepatitis C drug candidates sofosbuvir and ledipasvir.
THE BIG PICTURE: Gilead's biggest selling drugs are the HIV medications Atripla and Truvada. Sales of both those drugs decreased in the first quarter, but that was countered by the improvement in sales of Complera, a three-in-one pill that was approved in 2011, and Stribild, a four-in-one drug approved in 2012.
In early 2012, Gilead spent $11.1 billion to buy hepatitis C drug developer Pharmasset, which put the company at the forefront of a race to develop new treatments for the disease that have fewer side effects and might cure patients faster. Last month Gilead filed for approval of Pharmasset's most advanced drug, sofosbuvir. The company also reported more data on a trial of a drug regimen that combines sofosbuvir with ledipasvir.
Hepatitis C is a virus that can lead to life-threatening liver damage and is the main cause of liver transplants in the United States. The disease is spread through the blood, and that can happen through sharing intravenous drug needles or having sex with an infected person. It can take years for symptoms to appear.
After a drought of about two decades, regulators approved two new hepatitis C drugs in 2011: Incivek, from Vertex Pharmaceuticals Inc. and Johnson & Johnson, and Victrelis from Merck & Co. Both of those drugs are given with interferon, a medication that can cause flu-like symptoms that last for months.
THE ANALYSIS: Cowen & Co. analyst Phil Nadeau said the data from the study of sofosbuvir and ledipasvir was "impressive" and said he expects greater sales of the hepatitis C drugs. He maintained an "Outperform" rating on the shares.
SHARE ACTION: Shares of Gilead Sciences rose $2.97, or 5.7 percent, to $55.15 on Friday. Earlier in the day the stock reached an all-time high of $56.35. Shares of Gilead Sciences have more than doubled in value in the last year and the stock is up 50.2 percent in 2013.