Important note: Information in this article was accurate in 2009. The state of the art may have changed since the publication date.
San Francisco Chronicle - April 22, 2009
Bob Egelko, Chronicle Staff Writer
The court denied review Monday, without comment, of Gilead's appeal from a lower-court ruling last August that reinstated the lawsuit. Business organizations, including the National Association of Manufacturers and the Biotechnology Industry Organization, had urged the court to take up the case.
Viread, an anti-retroviral drug taken in combination with other drugs, has helped to make Gilead the nation's leading seller of AIDS medications. The suit said Gilead ignored Food and Drug Administration restrictions and marketed the drug for AIDS and hepatitis-B patients for whom it had not been approved, generating a favorable earnings report that increased the stock price by 13.4 percent in July 2003.
The FDA warned Gilead against misleading promotions in a letter the agency made public in August 2003, but the stock price fell only after a new, gloomier financial report two months later. A federal judge cited the time lag in dismissing the suit, saying no connection could be proven between the FDA's letter and the later stock drop. But in last year's ruling, the Ninth U.S. Circuit Court of Appeals said the plaintiffs may be able to show that the alleged fraud and its disclosure had hurt investors who bought stock between the first and second financial reports.
Susan Alexander, the plaintiffs' lawyer, said Tuesday the court's action "reflects the market reality that when corporate fraud unravels, that's often reflected in a company's financial bottom line rather than through defendants' admissions."
Cara Miller, a spokeswoman for Gilead, said, "We remain confident in our position."
Meanwhile, the company released its first-quarter earnings Tuesday, saying that profit rose 21 percent on increased demand for its medicines.
Net income was $589.1 million (63 cents per share), compared with $488.3 million (51 cents) a year earlier, the company said in a statement. Earnings beat analysts' estimates by 4 cents.
Revenue rose 22 percent to $1.53 billion, led by increased use of AIDS drugs, which accounted for about 85 percent of revenue last year, according to the company. Gilead's shares closed at $43.73, down 4 cents Tuesday, but gained $1.70 in after-hours trading.
E-mail Bob Egelko at begelko@sfchronicle.com.
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