Gilead Sciences Is on an FDA Approval Hot Streak. Should You Buy the Stock Like There's No Tomorrow?

Gilead Sciences (NASDAQ: GILD), a biotech leader, has outperformed broader equities this year. The company's financial results have been fairly strong, contributing to its year-to-date performance. However, another factor behind Gilead Sciences' run is its important regulatory progress, which has improved its lineup of approved drugs. That's all well and good, but after climbing by almost 30% this year, are Gilead's shares still attractive?

Recent approvals could move the needle

Over the past few years, Gilead Sciences has experienced declining sales from its coronavirus medicine, Veklury. The company's financial results have sometimes been mixed as a result, but things are trending up for the biotech giant. In the second quarter, Gilead Sciences' revenue came in at $7.8 billion, up 10% year over year. Product sales excluding Veklury also grew by 10% compared to the year-ago period. The company reported a non-GAAP loss per share of $6.75, compared to earnings per share of $2.01 in the year-ago period. The decline was mostly due to acquisition-related expenses.

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Gilead Sciences' core HIV portfolio was the primary driver of this performance. HIV product sales came in at $5.7 billion, up 12% year over year. The good news is that recent approvals (and label expansions) will help strengthen the company's HIV lineup and diversify its portfolio. In late August, Gilead Sciences announced that the U.S. Food and Drug Administration (FDA) had approved Bixlenvo, an HIV regimen. Bixlenvo is a daily oral tablet that combines two existing HIV medicines.

It helps simplify treatment for certain patients who were taking more than one pill per day. According to some estimates, that represents 5% of HIV patients in the U.S. That's in the neighborhood of 58,000 people. So, this market isn't huge. But the approval of Bixlenvo helps solidify Gilead Sciences' leadership position in the HIV market. Moving beyond HIV, Gilead Sciences received a label expansion for Trodelvy, a cancer medicine, in June. Trodelvy can now be used as a first-line treatment in metastatic triple-negative breast cancer.

The medicine was already indicated for previously treated breast cancer, but the first-line indication tends to be the most lucrative. That's because drugs approved as second- or third-line treatments are eligible for only a fraction of the patient pool, whereas being indicated as a first-line treatment means eligibility for all newly diagnosed patients. That's why the recent Trodelvy label expansion in one of the deadliest cancers in the world could be particularly important.

Lastly, in May, Gilead Sciences earned approval for Hepcludex, a medication for chronic hepatitis delta virus (HDV) infection. It will be a nice addition to the company's liver disease portfolio, which is performing fairly well. Second-quarter liver disease sales came in at $877 million, up 10% year over year. Management expects Hepcludex to be a modest growth contributor in this segment.

A reliable dividend stock

Gilead Sciences' brand-new approvals -- and the Trodelvy label expansion -- should help the company's revenue and earnings move in the right direction over the medium term as the impact of Veklury on its financial results fades. Of course, the biotech giant can still count on several of its flagship products. None is more important than Biktarvy, an HIV medicine. Biktarvy is the leading HIV treatment in the U.S. Descovy for PrEP is another important growth driver.

Gilead Sciences should also make significant clinical and regulatory progress over the next few years, especially in HIV and oncology. So, the company's financial results should remain strong in the medium term. Here's another good reason to consider Gilead Sciences: It is a solid dividend stock. The company boasts a forward yield of 2.2%, compared with the S&P 500's average of 1.1%, and has increased its payouts by 74.5% over the past decade. Gilead Sciences appears to be an attractive dividend payer for long-term investors.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool has a disclosure policy.