Date: 25 January 2011

Source:  Reuters

* U.S. FDA turns back application for new AIDS drug
* Forecasts 2011 product sales of $7.9 to $8.1 billion
* Q4 adjusted EPS $0.95 vs Wall Street view $0.95
* Additional share buybacks planned
* Shares fall 2 percent (Adds company comment, background, updates share
price)

Gilead Sciences Inc`s (GILD.O) fourth-quarter profit fell 22 percent as higher sales of its core AIDS
drugs failed to offset a drop in royalty revenue and higher expenses.

The company also said U.S. regulators did not accept -- citing insufficient information -- a marketing application for an experimental HIV drug that it is developing with Johnson and Johnson (JNJ.N) and Gilead`s shares fell 2 percent after hours.

"It sounds very scary, but they said they could refile at the end of this quarter," said BMO Capital Markets analyst Jason Zhang. "If they can do that, it is not going to be a big problem."

The new HIV pill, which combines Gilead`s Truvada with J&J`s TMC278, is seen as key to Gilead`s future because it could be used instead of Atripla -- a once-daily pill that combines Truvada with Sustiva, an older drug made by Bristol-Myers Squibb Co (BMY.N).

Gilead earns no profit on the Bristol drug and all of the Atripla components lose patent protection in the next few years.

Under the deal with J&J, Gilead would keep up to 30 percent of TMC278 sales.

The regulatory setback is "a minor delay" associated with a change in methodology for measuring degradation of the medicine, Gilead Chief Scientific Officer Norbert Bischofberger said on a conference call. Before the delay, the FDA had been expected to approve the drug by May 23.

For the full year, Gilead forecast 2011 product sales of between $7.9 billion and $8.1 billion, which brackets analyst estimates.

But the company also forecast higher research and other costs for this year, "thus suggesting that consensus EPS estimates may be too high," according to ISI Group analyst Mark Schoenebaum.

The company`s fourth quarter net income fell to $629.4 million, or 76 cents a share, from $802.2 million, or 87 cents a share, a year earlier.

Keywords: Gilead / AIDS / U.S.