Riding the growth of its HIV franchise, Gilead Sciences Inc. reported solid earnings for the third quarter, beating consensus estimates by a penny.

The Foster City, Calif.-based company posted net income of $179.2 million, or 38 cents per share, for the three months ending Sept. 30, compared to net income of $113.2 million, or 25 cents per share for the third quarter of 2004. Total revenues reached $493.5 million, with much of that coming from sales of HIV drugs Truvada and Viread. Consensus estimates had projected total revenues of $487.6 million and earnings per share of 37 cents.

Despite Gilead's numbers coming in slightly higher than expected, the company's stock (NASDAQ:GILD) fell $2.22 Wednesday to close at $46.01.

But Wall Street's reaction likely was a "function of Gilead's success," said Ron Renaud, an analyst with JP Morgan in New York, adding that investors have become accustomed to "fairly significant upside surprises" from the company.

"It's a little unfair to them because they had a great quarter and put up impressive top-line numbers," he told BioWorld Today.

Renaud said the "bit of negative biotech sentiment" over the last couple of weeks also has provoked some down trading. South San Francisco-based Genentech Inc. and Cambridge, Mass.-based Genzyme Corp. also have faced "trading under some negative pressure," despite reporting good earnings for the third quarter, he added.

"There have been some disappointments in the sector, and it's the end of the year," Renaud said, so investors seem to be "sitting tight on biotech stocks right now."

Net revenues from product sales totaled $467.2 million. Gilead's combined HIV drug, Truvada (emtricitabine and tenofovir disoproxil fumarate), recorded sales of $162.4 million, a 32 percent increase over the second quarter of 2005. Truvada, launched in August 2004, is a fixed-dose combination of its two HIV medications, Viread (tenofovir disoproxil fumarate) and Emtriva (emtricitabine).

Since Truvada began selling in the U.S. last year, the once-daily drug has gained a significant share of the market, said Kevin Young, executive vice president of commercial operations. For the week ending Oct. 7, Truvada made up 22 percent of new prescriptions for the nucleoside reverse transcriptase inhibitor (NRTI) class of drugs, and 18 percent of total prescriptions.

Most of Truvada's sales so far have come from the U.S., but during the last nine months, Gilead has gained approval for the drug in several European countries. During the third quarter, Gilead also was "able to make significant progress to bring medication to HIV patients in developing countries through the Gilead Access program," said President and CEO John Martin.

In August, the company cut prices for Viread by 31 percent and Truvada by 12 percent, and both antiretrovirals now are available at no-profit prices in 97 developing countries. Gilead signed a deal with Aspen Pharmacare in April to develop and distribute the products in Africa. Aspen, of Johannesburg, South Africa, agreed to manufacture Truvada and Viread, according to U.S. standards and distribute the product in specified countries, and Gilead is providing the active pharmaceutical ingredients and necessary technology.

Despite the strong uptake of Truvada, sales of Viread are holding steady at $189.4 million for the third quarter, a 2 percent decrease from $193.9 million during the third quarter a year ago. That's due to the continued growth in regions in which the combined Truvada is not available. Sales of Emtriva were down 26 percent to $11.7 million for the quarter.

Burgeoning Truvada sales prompted Gilead to increase its financial guidance for the year. The company now expects to end 2005 with sales of Truvada falling between $1.365 billion and $1.385 billion, rather than the previous range of $1.275 billion to $1.325 billion.

Renaud said the road ahead looks promising for Gilead's HIV franchise.

"I see them still selling the leading HIV therapy in the world," he said, "and continuing to take the market share, though the market share they get from here on out will be much more difficult."

Further data also appear promising for Truvada, with more patients switching from Combivir, and trials showing a benefit with longer duration treatment with Truvada, Renaud added.

Gilead also continues work in its collaboration with New York-based Bristol-Myers Squibb Co. signed in December to create a once-daily, triple-drug regimen by combining Truvada with BMS' HIV drug, Sustiva. The companies reported a minor setback in August when a formulation of the fixed-dose tablet failed to show bioequivalence. After that, they decided to formulate the two drugs separately and then combine them into tablet form using bi-layered technology. Three bi-layered formulations are in development, and Gilead anticipates a new drug application in the first half of 2006. (See BioWorld Today, Aug. 11, 2005.)

In addition to its HIV drugs, Gilead also increased its 2005 sales guidance for its antifungal drug, AmBisome, from $205 million to $215 million to $210 million to $220 million. AmBisome recorded sales of $54.7 million for the third quarter, up 10 percent from the third quarter of 2004.

Its hepatitis B drug, Hepsera, which had sales of $46.9 million for the quarter, marking a 58 percent increase from the $29.7 million recorded a year earlier, also had its sales updated for the year. The company, which had estimated 2005 sales in the range of $160 million to $180 million, raised the low end to $170 million.

The company's development pipeline includes GS 9137, an oral HIV integrase inhibitor licensed in March from Japan Tobacco Inc., of Tokyo. That product began a Phase I/II study in June, with results expected next year.

Also in development is GS 9132, which is in Phase I for hepatitis C. That product is partnered with Achillion Pharmaceuticals Inc., of New Haven, Conn.

In June, Gilead notified Nutley, N.J.-based Hoffmann-La Roche Inc. that it was terminating its 1996 sales and marketing agreement for Tamiflu, a product developed at Gilead for influenza. Martin said the companies are awaiting arbitration to resolve the issue, and could not comment except to say that the outcome will not affect Roche's recent offering to sublicense Tamiflu manufacturing rights to other companies or governments for possible use against a bird flu pandemic.

As of Sept. 30, the company had cash, cash equivalents and marketable securities of about $1.7 billion.