April 16 (Bloomberg) -- Gilead Sciences Inc., the world's largest maker of AIDS medicines, said first-quarter profit climbed 22 percent as demand for its top product gained on tests showing it was more effective than a competing drug.

Net income in the period was $496.1 million, or 51 cents a share, compared with $407.4 million, or 42 cents, a year earlier, the Foster City, California-based company said today in a statement. Earnings excluding certain costs beat analysts' expectations of 50 cents.

Gilead's best-seller, Truvada, was found more effective at controlling high amounts of the virus than GlaxoSmithKline Plc's Epzicom in a study of 1,858 patients released in February. An independent monitoring group recommended patients on Epzicom be counseled about switching. A separate study published in The Lancet found that regimens containing abacavir, the active ingredient of Epzicom, raised the risk of heart attack.

``Once again, Gilead is poised to be the best performer in the group for earnings,'' said Michael Aberman, an analyst with Credit Suisse in New York, in a note to clients April 6. ``It is hard to imagine a scenario where Gilead's Truvada and Atripla do not take share from abacavir-containing drugs.''

Demand for Gilead's AIDS drugs has surged for more than a year as additional patients get screened for HIV, the virus that causes AIDS, because of faster and cheaper tests and a recommendation by the Centers for Disease Control and Prevention, the company has said. Gilead's top drugs combine antiviral medicines that allow patients to take fewer pills a day.

Shares

Gilead fell 56 cents, or 1.1 percent to $51.24 at 5:48 p.m. New York time in extended trading after the earnings report. Earlier, they climbed 73 cents, or 1.4 percent, to $51.80 at 4 p.m. on the Nasdaq Stock Market. The stock has gained 30 percent in the past 12 months, outpacing a 5.7 percent drop in the Amex Biotechnology Index.

Gilead surpassed Glaxo in 2007 for the first time as the world's largest maker of AIDS medicines. Gilead generated $3.14 billion in sales of AIDS drugs for the year, compared with $2.88 billion for Glaxo, according to company reports.

Earnings excluding certain costs, such as employee stock options, were 54 cents a share in the first quarter, beating the 50-cent average estimate, according to 25 analysts surveyed by Bloomberg.

Product Sales

Gilead generated $1.14 billion in product sales in the quarter. Truvada generated $479.4 million in sales, a 39 percent increase from $345.9 million a year earlier, the company said. Analysts were expecting $454 million this quarter, Aberman said.

Sales of Atripla, the first once-a-day HIV drug in a single tablet, climbed to $324.2 million in the quarter. The average Wall Street estimate was $308 million in first-quarter sales, Aberman said.

Gilead also is working to diversify by marketing Letairis, a new drug for the fatal lung disease pulmonary arterial hypertension. The drug, obtained in the 2006 acquisition of Myogen Inc., was approved by the U.S. Food and Drug Administration in June. Letairis generated $20 million in sales in the first quarter, Gilead said.

The company repeated its forecast of $4.7 billion to $4.8 billion in 2008 product sales. It also doesn't expect any significant changes to expenses, though the company tax rate may be 1 percent lower than previously forecast, said John Milligan, Gilead's chief operating officer, on a conference call with analysts.

``I can't really see how anybody could be disappointed with the performance,'' Milligan said in a telephone interview. ``We've performed pretty consistently.''

Gilead wants later this year to expand the use of Viread, an older HIV medication, into a new group of patients with hepatitis B. It also plans to introduce a new inhaled antibiotic for cystic fibrosis.

To contact the reporter on this story: Luke Timmerman in San Francisco at ltimmerman@bloomberg.net

Last Updated: April 16, 2008 19:13 EDT