| Three Months Ended | |||||||
| March 31, | |||||||
| 2013 | 2012 | ||||||
| Product sales | $ | 2,393,568 | $ | 2,208,342 | |||
| Royalty, contract and other revenues | 138,067 | 74,107 | |||||
| Total revenues | $ | 2,531,635 | $ | 2,282,449 | |||
| Net income attributable to Gilead | $ | 722,186 | $ | 441,956 | |||
| Non-GAAP net income attributable to Gilead | $ | 801,943 | $ | 704,389 | |||
| Diluted EPS | $ | 0.43 | $ | 0.28 | |||
| Non-GAAP diluted EPS | $ | 0.48 | $ | 0.45 | |||
Product Sales
The increase in product sales during the first quarter of 2013 was due primarily to Gilead's antiviral franchise, resulting from increased sales of Complera®/Eviplera®(emtricitabine 200 mg/rilpivirine 25 mg/tenofovir disoproxil fumarate 300 mg) and the launch of Stribild® (elvitegravir 150 mg/cobicistat 150 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) in the third quarter of 2012.
Antiviral Product Sales
Antiviral product sales increased 7 percent to
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2013 | 2012 | % Change | |||||||||
| Antiviral product sales | $ | 2,061,078 | $ | 1,925,806 | 7 | % | |||||
| Atripla | 877,073 | 887,596 | (1 | )% | |||||||
| Truvada | 700,242 | 758,263 | (8 | )% | |||||||
| Viread | 210,332 | 191,693 | 10 | % | |||||||
| Complera/Eviplera | 148,189 | 52,180 | 184 | % | |||||||
| Stribild | 92,148 | — | — | ||||||||
Cardiovascular Product Sales
Cardiovascular product sales increased 26 percent to
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2013 | 2012 | % Change | |||||||||
| Cardiovascular product sales | $ | 214,393 | $ | 170,489 | 26 | % | |||||
| Letairis | 118,107 | 87,288 | 35 | % | |||||||
|
Ranexa |
96,286 | 83,201 | 16 | % | |||||||
Operating Expenses and Other
Non-GAAP research and development (R&D) expenses increased due to Gilead's continued investment in its product pipeline, particularly in liver disease and oncology. Non-GAAP selling, general and administrative (SG&A) expenses increased primarily due to expenses to support the ongoing growth of Gilead's business.
Interest expense decreased primarily due to the repayment of bank debt issued in connection with the acquisition of
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Non-GAAP research and development expenses (1) | $ | 459,976 | $ | 331,338 | ||||
| Non-GAAP selling, general and administrative expenses (1) | $ | 333,064 | $ | 307,741 | ||||
| Interest expense | $ | (81,787 | ) | $ | (97,270 | ) | ||
| Other income (expense), net | $ | (3,324 | ) | $ | (34,085 | ) | ||
(1) Non-GAAP R&D expenses and SG&A expenses exclude the impact of acquisition-related, restructuring and stock-based compensation expenses where applicable.
Net Foreign Currency Exchange Impact
The net foreign currency exchange impact on first quarter 2013 product sales and pre-tax earnings was an unfavorable
Cash,
As of March 31, 2013, Gilead had
Full Year 2013 Guidance Reiterated
|
Gilead reiterates its full year 2013 guidance which it provided on February 4, 2013: |
||
|
(in millions, except percentages and per share amounts) |
||
| Net Product Sales | $10,000 - $10,200 | |
| Non-GAAP * | ||
| Product Gross Margin | 74% - 76% | |
| R&D | $1,800 - $1,900 | |
| SG&A | $1,550 - $1,650 | |
| Effective Tax Rate | 26% - 28% | |
| Diluted EPS Impact of Acquisition-Related, Restructuring and Stock-Based Compensation Expenses | $0.21 - $0.24 | |
* Non-GAAP product gross margin, expense and effective tax rate exclude the impact of acquisition-related, restructuring and stock-based compensation expenses where applicable.
Corporate Highlights
In February, Gilead announced the completion of its acquisition of YM, a publicly-held drug development company that was primarily focused on advancing its lead product candidate momelotinib (formally known as CYT387), an orally administered, once-daily, selective inhibitor of the Janus kinase (JAK) family. The acquisition of YM represents an opportunity to add a complementary clinical program in the area of hematologic cancers to our growing oncology portfolio.
Also in February, Gilead announced that it reached an agreement in principle with
Product & Pipeline Update
Antiviral Program
In January, Gilead announced:
- Full clinical trial results from one cohort of the ongoing Phase 2 ELECTRON study examining a 12-week course of all-oral therapy with sofosbuvir (formerly GS-7977), ledipasvir (formerly GS-5885) and ribavirin (RBV) among genotype 1 hepatitis C virus (HCV) patients who had previously failed to respond to an interferon (IFN)-containing regimen, or "null responders." The data confirmed that all patients in this cohort achieved a sustained virologic response four weeks (SVR4) after stopping therapy.
- Initiation of the Phase 3 ION-1 study evaluating the fixed-dose combination of sofosbuvir/ledipasvir with and without RBV for 12 or 24 weeks in treatment-naïve genotype 1 patients.
- Screening of patients for the second Phase 3 ION-2 study evaluating the fixed-dose combination of sofosbuvir/ledipasvir with RBV for 12 weeks and with and without RBV for 24 weeks of therapy in treatment-experienced genotype 1 HCV patients.
- Enrollment of patients in LONESTAR, a Phase 2 study evaluating sofosbuvir/ledipasvir for 12 weeks and sofosbuvir/ledipasvir with and without RBV for eight weeks in genotype 1 treatment-naïve patients. Two additional arms in this trial will evaluate this combination with and without RBV for 12 weeks in treatment-experienced genotype 1 patients who had previously received a protease inhibitor-containing regimen.
- Initiation of two Phase 3 clinical trials (Study 104 and 111) evaluating a single tablet regimen containing tenofovir alafenamide (TAF) for the treatment of HIV-1 infection in treatment-naïve adults.
In February, Gilead announced:
- Topline results from the Phase 3 FISSION study, evaluating therapy with either a 12-week course of sofosbuvir plus RBV or standard of care with 24 weeks of treatment with pegylated interferon (peg-IFN) plus RBV in genotype 2 or 3 HCV patients. The study met its primary efficacy endpoint of non-inferiority of sofosbuvir plus RBV to peg-IFN plus RBV, with 67 percent of patients achieving SVR in the sofosbuvir plus RBV treatment group versus 67 percent in the peg-IFN plus RBV treatment group.
- Topline results from the Phase 3 NEUTRINO study, evaluating a 12-week course of therapy with sofosbuvir, RBV and peg-IFN in genotype 1, 4, 5 or 6 HCV patients. This study met its primary efficacy endpoint of superiority compared to a predefined historic control SVR rate of 60 percent, with 90 percent of patients achieving a sustained virologic response 12 weeks after completing therapy.
- Topline results from the Phase 3 FUSION study evaluating 12- and 16-week courses of therapy with the once-daily sofosbuvir plus RBV in treatment-experienced patients with genotype 2 or 3 chronic HCV infection. The study met its primary efficacy endpoint of superiority compared to a predefined historic control SVR rate of 25 percent.
In March, Gilead announced:
- Results from a 24-week Phase 2 study (Study 102) evaluating a once-daily single tablet regimen containing TAF for the treatment of HIV-1 infection. A regimen of TAF 10 mg/elvitegravir 150 mg/cobicistat 150 mg/emtricitabine 200 mg was found to be similar to Stribild based on the percentage of patients with HIV RNA levels less than 50 copies/mL at 24 weeks of treatment.
-
The
Committee for Medicinal Products for Human Use , the scientific committee of theEuropean Medicines Agency , adopted a positive opinion on the company's Marketing Authorisation Application for the once-daily, single tablet regimen Stribild for the treatment of HIV-1 infection in adult patients who are antiretroviral-naïve or are infected with HIV-1 without known mutations associated with resistance to any of the three antiretroviral agents in Stribild. - An update on the Phase 3 ION-1 study evaluating a once-daily fixed-dose combination of sofosbuvir/ledipasvir with and without RBV for 12 or 24 weeks in treatment naïve genotype 1 HCV patients. A planned review by the study's Data and Safety Monitoring Board of safety data from patients in all four arms and of SVR4 rates from patients in the two 12-week duration arms concluded that the trial should continue without modification. This recommendation was based upon the observed SVR4 rates exceeding the predefined threshold and the absence of significant safety issues. Enrollment of the remaining patients in ION-1 is underway.
- Completion of enrollment in the second Phase 3 ION-2 study evaluating the fixed-dose combination of sofosbuvir/ledipasvir with RBV for 12 weeks, and with and without RBV for 24 weeks, in treatment-experienced genotype 1 HCV patients.
Cardiovascular Program
In March, Gilead announced data from the Phase 4 TERISA (Type 2 Diabetes Evaluation of Ranolazine In Subjects With Chronic Stable Angina) study, which demonstrated that the addition of ranolazine to background antianginal therapy in chronic angina patients with type 2 diabetes significantly reduced the frequency of weekly angina episodes compared to background antianginal therapy alone.
Conference Call
At
A replay of the webcast will be archived on the company's website for one year, and a phone replay will be available approximately two hours following the call through
About Gilead
Non-GAAP Financial Information
Gilead has presented certain financial information in accordance with U.S. generally accepted accounting principles (GAAP) and also on a non-GAAP basis. Management believes this non-GAAP information is useful for investors, taken in conjunction with Gilead's GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead's operating results as reported under GAAP. A reconciliation between GAAP and non-GAAP financial information is provided in the table on pages 8 and 9.
Forward-looking Statements
Statements included in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: Gilead's ability to achieve its anticipated full year 2013 financial results; Gilead's ability to sustain growth in revenues for its antiviral, cardiovascular and respiratory franchises; availability of funding for state AIDS Drug Assistance Programs (ADAPs); continued fluctuations in ADAP purchases driven by federal and state grant cycles which may not mirror patient demand and may cause fluctuations in Gilead's earnings; the possibility of unfavorable results from clinical trials involving sofosbuvir, the fixed-dose combination of sofosbuvir/ledipasvir and single tablet regimens containing TAF for the treatment of HIV-1 infection; the levels of inventory held by wholesalers and retailers which may cause fluctuations in Gilead's earnings; Gilead's ability to submit new drug applications for new product candidates in the timelines currently anticipated, including sofosbuvir and sofosbuvir/ledipasvir for the treatment of HCV; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current products, including Stribild from the
Gilead owns or has rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD®,
ATRIPLA® is a registered trademark belonging to Bristol-Myers Squibb &
For more information on
|
GILEAD SCIENCES, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except per share amounts) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Revenues: | ||||||||
| Product sales | $ | 2,393,568 | $ | 2,208,342 | ||||
| Royalty, contract and other revenues | 138,067 | 74,107 | ||||||
| Total revenues | 2,531,635 | 2,282,449 | ||||||
| Costs and expenses: | ||||||||
| Cost of goods sold | 634,448 | 580,931 | ||||||
| Research and development | 497,632 | 458,211 | ||||||
| Selling, general and administrative | 374,296 | 443,121 | ||||||
| Total costs and expenses | 1,506,376 | 1,482,263 | ||||||
| Income from operations | 1,025,259 | 800,186 | ||||||
| Interest expense | (81,787 | ) | (97,270 | ) | ||||
| Other income (expense), net | (3,324 | ) | (34,085 | ) | ||||
| Income before provision for income taxes | 940,148 | 668,831 | ||||||
| Provision for income taxes | 222,438 | 231,300 | ||||||
| Net income | 717,710 | 437,531 | ||||||
| Net loss attributable to noncontrolling interest | 4,476 | 4,425 | ||||||
| Net income attributable to Gilead | $ | 722,186 | $ | 441,956 | ||||
| Net income per share attributable to Gilead common stockholders - basic (1) | $ | 0.47 | $ | 0.29 | ||||
| Net income per share attributable to Gilead common stockholders - diluted (1) | $ | 0.43 | $ | 0.28 | ||||
| Shares used in per share calculation - basic (1) | 1,521,372 | 1,512,572 | ||||||
| Shares used in per share calculation - diluted (1) | 1,665,060 | 1,554,776 | ||||||
| (1) Net income per share and the number of shares used in the per share calculations for all periods presented reflect the two-for-one stock split in the form of a stock dividend declared on December 10, 2012 which took effect on January 25, 2013. |
|
GILEAD SCIENCES, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (unaudited) (in thousands, except percentages and per share amounts) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2013 | 2012 | |||||||
| Cost of goods sold reconciliation: | ||||||||
| GAAP cost of goods sold | $ | 634,448 | $ | 580,931 | ||||
| Stock-based compensation expenses | (1,841 | ) | (2,101 | ) | ||||
| Acquisition related-amortization of purchased intangibles | (21,264 | ) | (15,836 | ) | ||||
| Non-GAAP cost of goods sold | $ | 611,343 | $ | 562,994 | ||||
| Product gross margin reconciliation: | ||||||||
| GAAP product gross margin | 73.5 | % | 73.7 | % | ||||
| Stock-based compensation expenses | 0.1 | % | 0.1 | % | ||||
| Acquisition related-amortization of purchased intangibles | 0.9 | % | 0.7 | % | ||||
| Non-GAAP product gross margin(1) | 74.5 | % | 74.5 | % | ||||
| Research and development expenses reconciliation: | ||||||||
| GAAP research and development expenses | $ | 497,632 | $ | 458,211 | ||||
| Stock-based compensation expenses | (26,875 | ) | (118,623 | ) | ||||
| Restructuring expenses | (4,757 | ) | (5,514 | ) | ||||
| Acquisition related-contingent consideration remeasurement | (6,024 | ) | (2,736 | ) | ||||
| Non-GAAP research and development expenses | $ | 459,976 | $ | 331,338 | ||||
| Selling, general and administrative expenses reconciliation: | ||||||||
| GAAP selling, general and administrative expenses | $ | 374,296 | $ | 443,121 | ||||
| Stock-based compensation expenses | (33,051 | ) | (121,944 | ) | ||||
| Restructuring expenses | (744 | ) | (3,156 | ) | ||||
| Acquisition related-transaction costs | (7,156 | ) | (10,280 | ) | ||||
| Acquisition related-amortization of purchased intangibles | (281 | ) | — | |||||
| Non-GAAP selling, general and administrative expenses | $ | 333,064 | $ | 307,741 | ||||
| Operating margin reconciliation: | ||||||||
| GAAP operating margin | 40.5 | % | 35.1 | % | ||||
| Stock-based compensation expenses | 2.4 | % | 10.6 | % | ||||
| Restructuring expenses | 0.2 | % | 0.4 | % | ||||
| Acquisition related-transaction costs | 0.3 | % | 0.5 | % | ||||
| Acquisition related-amortization of purchased intangibles | 0.9 | % | 0.7 | % | ||||
| Acquisition related-contingent consideration remeasurement | 0.2 | % | 0.1 | % | ||||
| Non-GAAP operating margin(1) | 44.5 | % | 47.3 | % | ||||
| Interest expense reconciliation: | ||||||||
| GAAP interest expense | $ | (81,787 | ) | $ | (97,270 | ) | ||
| Acquisition related-transaction costs | — | 7,333 | ||||||
| Non-GAAP interest expense | $ | (81,787 | ) | $ | (89,937 | ) | ||
| Net income attributable to Gilead reconciliation: | ||||||||
| GAAP net income attributable to Gilead, net of tax | $ | 722,186 | $ | 441,956 | ||||
| Stock-based compensation expenses | 45,380 | 229,604 | ||||||
| Restructuring expenses | 5,368 | 6,346 | ||||||
| Acquisition related-transaction costs | 7,156 | 12,891 | ||||||
| Acquisition related-amortization of purchased intangibles | 15,829 | 11,590 | ||||||
| Acquisition related-contingent consideration remeasurement | 6,024 | 2,002 | ||||||
| Non-GAAP net income attributable to Gilead, net of tax | $ | 801,943 | $ | 704,389 | ||||
|
Diluted earnings per share(2) reconciliation: |
||||||||
| GAAP diluted earnings per share | $ | 0.43 | $ | 0.28 | ||||
| Stock-based compensation expenses | 0.03 | 0.15 | ||||||
| Restructuring expenses | 0.00 | 0.00 | ||||||
| Acquisition related-transaction costs | 0.00 | 0.01 | ||||||
| Acquisition related-amortization of purchased intangibles | 0.01 | 0.01 | ||||||
| Acquisition related-contingent consideration remeasurement | 0.00 | 0.00 | ||||||
| Non-GAAP diluted earnings per share(1) | $ | 0.48 | $ | 0.45 | ||||
| Shares used in per share calculation (diluted)(2)reconciliation: | ||||||||
| GAAP shares used in per share calculation (diluted) | 1,665,060 | 1,554,776 | ||||||
| Share impact of current stock-based compensation rules | (1,716 | ) | (4,076 | ) | ||||
| Non-GAAP shares used in per share calculation (diluted) | 1,663,344 | 1,550,700 | ||||||
| Non-GAAP adjustment summary: | ||||||||
| Cost of goods sold adjustments | $ | 23,105 | $ | 17,937 | ||||
| Research and development expenses adjustments | 37,656 | 126,873 | ||||||
| Selling, general and administrative expenses adjustments | 41,232 | 135,380 | ||||||
| Interest expense adjustments | — | 7,333 | ||||||
| Total non-GAAP adjustments before tax | 101,993 | 287,523 | ||||||
| Income tax effect | (22,236 | ) | (25,090 | ) | ||||
| Total non-GAAP adjustments after tax | $ | 79,757 | $ | 262,433 | ||||
| (1) Amounts may not sum due to rounding. |
| (2) The earnings per share calculation and the number of shares used in the per share calculation reflect the two-for-one stock split in the form of a stock dividend declared on December 10, 2012 which took effect on January 25, 2013. |
|
GILEAD SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) |
|||||||
|
March 31, |
December 31, | ||||||
| 2013 | 2012(1) | ||||||
| (unaudited) | |||||||
| Cash, cash equivalents and marketable securities | $ | 2,631,030 | $ | 2,582,086 | |||
| Accounts receivable, net | 1,945,189 | 1,751,388 | |||||
| Inventories | 1,799,618 | 1,744,982 | |||||
| Property, plant and equipment, net | 1,125,794 | 1,100,259 | |||||
| Intangible assets, net | 12,077,548 | 11,736,393 | |||||
| Goodwill | 1,188,157 | 1,060,919 | |||||
| Other assets | 1,444,332 | 1,263,811 | |||||
| Total assets | $ | 22,211,668 | $ | 21,239,838 | |||
| Current liabilities | $ | 4,290,215 | $ | 4,270,020 | |||
| Long-term liabilities | 7,528,980 | 7,418,949 | |||||
| Stockholders' equity(2) | 10,392,473 | 9,550,869 | |||||
| Total liabilities and stockholders' equity | $ | 22,211,668 | $ | 21,239,838 | |||
| (1) Derived from the audited consolidated financial statements as of December 31, 2012. |
| (2) As of March 31, 2013, there were 1,524,383 shares of common stock issued and outstanding. |
|
GILEAD SCIENCES, INC. PRODUCT SALES SUMMARY (unaudited) (in thousands) |
|||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2013 | 2012 | ||||||
| Antiviral products: | |||||||
| Atripla – U.S. | $ | 553,826 | $ | 562,044 | |||
| Atripla – Europe | 278,215 | 270,696 | |||||
| Atripla – Other International | 45,032 | 54,856 | |||||
| 877,073 | 887,596 | ||||||
| Truvada – U.S. | 307,861 | 373,326 | |||||
| Truvada – Europe | 332,027 | 321,876 | |||||
| Truvada – Other International | 60,354 | 63,061 | |||||
| 700,242 | 758,263 | ||||||
| Viread – U.S. | 82,628 | 81,656 | |||||
| Viread – Europe | 88,206 | 84,885 | |||||
| Viread – Other International | 39,498 | 25,152 | |||||
| 210,332 | 191,693 | ||||||
| Complera / Eviplera – U.S. | 103,297 | 48,639 | |||||
| Complera / Eviplera – Europe | 38,962 | 3,267 | |||||
| Complera / Eviplera – Other International | 5,930 | 274 | |||||
| 148,189 | 52,180 | ||||||
| Stribild – U.S. | 91,978 | — | |||||
| Stribild – Other International | 170 | — | |||||
| 92,148 | — | ||||||
| Hepsera – U.S. | 12,950 | 12,809 | |||||
| Hepsera – Europe | 11,223 | 13,965 | |||||
| Hepsera – Other International | 2,250 | 2,523 | |||||
| 26,423 | 29,297 | ||||||
| Emtriva – U.S. | 4,529 | 4,093 | |||||
| Emtriva – Europe | 1,751 | 1,811 | |||||
| Emtriva – Other International | 391 | 873 | |||||
| 6,671 | 6,777 | ||||||
| Total Antiviral products – U.S. | 1,157,069 | 1,082,567 | |||||
| Total Antiviral products – Europe | 750,384 | 696,500 | |||||
| Total Antiviral products – Other International | 153,625 | 146,739 | |||||
| 2,061,078 | 1,925,806 | ||||||
| Letairis | 118,107 | 87,288 | |||||
| Ranexa | 96,286 | 83,201 | |||||
| AmBisome | 85,275 | 84,764 | |||||
| Other products | 32,822 | 27,283 | |||||
| 332,490 | 282,536 | ||||||
| Total product sales | $ | 2,393,568 | $ | 2,208,342 | |||
Source:
Gilead Sciences, Inc.
Robin Washington, 650-522-5688 (Investors)
Patrick O'Brien, 650-522-1936 (Investors)
Amy Flood, 650-522-5643 (Media)