Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results
of operations for the quarter ended March 31, 2010. Total revenues
for the first quarter of 2010 were $2.09 billion, up 36 percent
compared to total revenues of $1.53 billion for the first quarter
of 2009. Net income for the first quarter of 2010 was $854.9
million, or $0.92 per diluted share, compared to net income for the
first quarter of 2009 of $589.1 million, or $0.63 per diluted
share. Non-GAAP net income for the first quarter of 2010, which
excludes after-tax acquisition-related expenses, restructuring
expenses and stock-based compensation expenses, was $914.8 million,
or $0.99 per diluted share. Non-GAAP net income for the first
quarter of 2009, which excludes after-tax stock-based compensation
expenses, was $619.4 million, or $0.66 per diluted share.
Product Sales
Product sales increased 24 percent to $1.79 billion for the
first quarter of 2010, compared to $1.45 billion in the first
quarter of 2009. This increase in sales was driven primarily by
Gilead’s antiviral franchise, including the strong growth in sales
of Atripla® (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir
disoproxil fumarate 300 mg) and continued growth in sales of
Truvada® (emtricitabine/tenofovir disoproxil fumarate), as well as
the addition of Ranexa® (ranolazine) to Gilead’s commercial
portfolio. Product sales were reduced by $29.4 million in the first
quarter of 2010 due to the impact of healthcare reform legislation
in the United States.
Antiviral Franchise
Antiviral product sales increased 19 percent to $1.60 billion in
the first quarter of 2010, up from $1.34 billion for the same
quarter of 2009. The increase was driven primarily by sales volume
growth of Atripla and Truvada.
Sales of Atripla for the treatment of HIV infection increased 36
percent to $692.9 million for the first quarter of 2010, up from
$509.9 million in the first quarter of 2009, driven primarily by
sales volume growth in the United States and Europe.
Sales of Truvada for the treatment of HIV infection increased 11
percent to $657.8 million for the first quarter of 2010, up from
$590.4 million in the first quarter of 2009, driven primarily by
sales volume growth in the United States and Europe.
Sales of Viread® (tenofovir disoproxil fumarate) for the
treatment of HIV infection and chronic hepatitis B increased 13
percent to $180.7 million for the first quarter of 2010, up from
$160.6 million in the first quarter of 2009, driven primarily by
sales volume growth of Viread in a majority of our markets.
Letairis
Sales of Letairis® (ambrisentan) for the treatment of pulmonary
arterial hypertension (PAH) increased 40 percent to $55.5 million
for the first quarter of 2010, up from $39.6 million for the first
quarter of 2009, driven primarily by sales volume growth in the
United States.
Ranexa
Sales of Ranexa for the treatment of chronic angina were $51.2
million for the first quarter of 2010. There were no Ranexa sales
in the first quarter of 2009 as Gilead acquired CV Therapeutics,
Inc. on April 15, 2009.
Other Products
Sales of AmBisome® (amphotericin B liposome for injection) for
the treatment of severe fungal infections, Hepsera® (adefovir
dipivoxil) for the treatment of chronic hepatitis B, Emtriva®
(emtricitabine) for the treatment of HIV infection and other
products were $150.0 million for the first quarter of 2010 compared
to $147.2 million for the first quarter of 2009. Sales of Cayston®
(aztreonam for inhalation solution) as a treatment for the
improvement of respiratory symptoms in cystic fibrosis patients
with Pseudomonas aeruginosa (P. aeruginosa), included in other
products, were $2.9 million during the first quarter of 2010
subsequent to the marketing approval granted by the U.S. Food and
Drug Administration (FDA) in February 2010.
Royalty, Contract and Other
Revenues
Royalty, contract and other revenues resulting primarily from
collaborations with corporate partners were $297.8 million in the
first quarter of 2010, up from $82.9 million in the first quarter
of 2009. This increase was driven primarily by higher Tamiflu®
(oseltamivir phosphate) royalties from F. Hoffmann-La Roche Ltd of
$246.3 million in the first quarter of 2010, compared to Tamiflu
royalties of $33.2 million in the first quarter of 2009, resulting
from increased sales related to influenza pandemic planning
initiatives worldwide.
Research and
Development
Research and development (R&D) expenses in the first quarter
of 2010 were $218.7 million, compared to $188.8 million for the
first quarter of 2009. Non-GAAP R&D expenses for the first
quarter of 2010, which exclude restructuring and stock-based
compensation expenses, were $196.5 million compared to $171.8
million for the first quarter of 2009, which exclude stock-based
compensation expenses. This increase was driven primarily by higher
headcount and expenses to support the growth of Gilead’s R&D
activities.
Selling, General and
Administrative
Selling, general and administrative (SG&A) expenses in the
first quarter of 2010 were $265.6 million, compared to $204.0
million for the first quarter of 2009. Non-GAAP SG&A expenses
for the first quarter of 2010, which exclude restructuring and
stock-based compensation expenses, were $229.1 million, compared to
$183.1 million for the same quarter in 2009, which exclude
stock-based compensation expenses. This increase was driven
primarily by higher headcount and expenses to support Gilead’s
expanding commercial activities.
Net Foreign Currency Exchange
Impact
The net foreign currency exchange impact on first quarter 2010
revenues and pre-tax earnings, which includes revenues and expenses
generated from outside the United States, was a favorable $1.7
million and $11.0 million, respectively, compared to the first
quarter of 2009, and an unfavorable $22.7 million and $17.2
million, respectively, compared to the fourth quarter of 2009.
Cash, Cash Equivalents and
Marketable Securities
As of March 31, 2010, Gilead had cash, cash equivalents and
marketable securities of $4.62 billion compared to $3.90 billion as
of December 31, 2009. Gilead generated $670.6 million of
operating cash flow in the first quarter of 2010.
Corporate
Highlights
In January, Gilead announced that Per Wold-Olsen had been
appointed to its Board of Directors. Mr. Wold-Olsen spent more than
30 years with the global research-based pharmaceutical company
Merck & Co., Inc., most recently serving as President of the
company’s Human Health Intercontinental Division.
On January 29, Gilead announced that its Board of Directors had
authorized the repurchase of up to $1.00 billion of its common
stock through January 2011. As of March 31, 2010, Gilead had
approximately $837.5 million remaining for share repurchases under
this program.
Product and Pipeline
Update
Antiviral Franchise
In January, Gilead released results from a Phase II clinical
trial of its investigational fixed-dose single-tablet (Quad)
regimen of elvitegravir, cobicistat (formerly GS 9350) and Truvada
for the treatment of HIV infection in antiretroviral
treatment-naïve adults. In addition, Gilead released results from a
Phase II clinical trial evaluating the safety and efficacy of
cobicistat-boosted atazanavir compared to ritonavir-boosted
atazanavir, each in combination with Truvada, also in HIV-infected
antiretroviral treatment-naïve adults. In February, the full
results from both of these studies were presented at the 17th
Conference on Retroviruses and Opportunistic Infections in San
Francisco.
Respiratory Franchise
In February, Gilead announced that the FDA granted marketing
approval for Cayston as a treatment for the improvement of
respiratory symptoms in cystic fibrosis patients with P.
aeruginosa.
Conference Call
At 4:30 p.m. Eastern Time today, Gilead’s management will host a
conference call and a simultaneous webcast to discuss its first
quarter 2010 results as well as provide a general business update.
To access the webcast live via the internet, please connect to the
company’s website at www.gilead.com at least 15 minutes prior to
the conference call to ensure adequate time for any software
download that may be needed to hear the webcast. Alternatively,
please call 1-800-591-6944 (U.S.) or 1-617-614-4910 (international)
and dial the participant passcode 12529537 to access the call.
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 April 23, 2010.
To access the phone replay, please call 1-888-286-8010 (U.S.) or
1-617-801-6888 (international) and dial the participant passcode
56078089.
About Gilead
Gilead Sciences is a biopharmaceutical company that discovers,
develops and commercializes innovative therapeutics in areas of
unmet medical need. Gilead’s mission is to advance the care of
patients suffering from life-threatening diseases worldwide.
Headquartered in Foster City, California, Gilead has operations in
North America, Europe and Australia.
Non-GAAP Financial
Information
Gilead has presented certain financial information in accordance
with GAAP and also on a non-GAAP basis for the first quarter of
2010 and 2009. 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 U.S. GAAP. A reconciliation between GAAP and
non-GAAP financial information is provided in the table on page
6.
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 sustain growth in revenues for its antiviral
and cardiovascular franchises; unpredictable variability of Tamiflu
royalties and the strong relationship between this royalty revenue
and global pandemic planning and supply; Gilead’s ability to
receive regulatory approvals in a timely manner or at all, for new
and current products, including its investigational fixed-dose
single-tablet (Quad) regimen of elvitegravir, cobicistat (formerly
GS 9350) and Truvada for the treatment of HIV infection and
cobicistat as a boosting agent for certain HIV medicines and other
antivirals; Gilead’s ability to successfully commercialize any
products that may receive regulatory approvals, including Cayston
as a treatment for the improvement of respiratory symptoms in
cystic fibrosis patients with P. aeruginosa; Gilead’s ability to
successfully develop its respiratory and cardiovascular franchises;
initiating and completing clinical trials may take longer or cost
more than expected, including in the clinical study evaluating the
Quad and cobicistat as a boosting agent; fluctuations in the
foreign exchange rate of the U.S. dollar that may reduce or
eliminate the favorable foreign currency exchange impact on
Gilead’s future revenues and pre-tax earnings; our ability to
consummate the $1.00 billion share repurchase program due to
changes in our stock price, corporate or other market conditions;
and other risks identified from time to time in Gilead’s reports
filed with the U.S. Securities and Exchange Commission. In
addition, Gilead makes estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and
related disclosures. Gilead bases its estimates on historical
experience and on various other market-specific and other relevant
assumptions that it believes to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ significantly from these estimates. You are urged to
consider statements that include the words “may,” “will,” “would,”
“could,” “should,” “might,” “believes,” “estimates,” “projects,”
“potential,” “expects,” “plans,” “anticipates,” “intends,”
“continues,” “forecast,” “designed,” “goal,” or the negative of
those words or other comparable words to be uncertain and
forward-looking. Gilead directs readers to its Annual Report on
Form 10-K for the year ended December 31, 2009, subsequent press
releases and other publicly filed SEC disclosure documents. Gilead
claims the protection of the Safe Harbor contained in the Private
Securities Litigation Reform Act of 1995 for forward-looking
statements. All forward-looking statements are based on information
currently available to Gilead, and Gilead assumes no obligation to
update any such forward-looking statements.
Truvada, Viread, Hepsera, Emtriva,
AmBisome, Letairis, Cayston and Ranexa are registered trademarks of
Gilead Sciences, Inc.
Atripla is a registered trademark of
Bristol-Myers Squibb & Gilead Sciences, LLC.
Tamiflu is a registered trademark of
F. Hoffmann-La Roche Ltd.
For more information on Gilead
Sciences, Inc., please visit www.gilead.com or call the Gilead
Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235).
GILEAD SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (unaudited) (in thousands, except per share amounts)
Three Months Ended March 31, 2010 2009
Revenues: Product sales $ 1,788,063 $ 1,447,580 Royalty, contract
and other revenues 297,790 82,880 Total
revenues 2,085,853 1,530,460 Costs and
expenses: Cost of goods sold 440,430 329,414 Research and
development 218,664 188,779 Selling, general and administrative
265,618 203,951 Total costs and
expenses 924,712 722,144 Income from
operations 1,161,141 808,316 Interest and other income, net 15,645
4,159 Interest expense (16,955 ) (16,671 ) Income
before provision for income taxes 1,159,831 795,804 Provision for
income taxes 307,737 209,227 Net income
852,094 586,577 Net loss attributable to noncontrolling interest
2,807 2,535 Net income attributable to
Gilead $ 854,901 $ 589,112 Net income per share
attributable to Gilead common stockholders - basic $ 0.95 $
0.65 Net income per share attributable to Gilead common
stockholders - diluted $ 0.92 $ 0.63 Shares used in
per share calculation - basic 901,606 909,780
Shares used in per share calculation - diluted
928,368 942,479
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, 2010 2009
Cost of goods sold reconciliation:
GAAP cost of goods sold $ 440,430 $ 329,414 Acquisition-related
amortization of inventory mark-up (4,978 ) - Acquisition-related
amortization of purchased intangibles (14,984 ) - Stock-based
compensation expenses (2,853 ) (3,254 ) Non-GAAP cost
of goods sold $ 417,615 $ 326,160
Product
gross margin reconciliation: GAAP product gross margin 75.5 %
77.4 % Acquisition-related amortization of inventory mark-up 0.3 %
- Acquisition-related amortization of purchased intangibles 0.8 % -
Stock-based compensation expenses 0.2 % 0.2 %
Non-GAAP product gross margin (1) 76.7 % 77.6 %
Research and development expenses reconciliation:
GAAP research and development expenses $ 218,664 $ 188,779
Restructuring expenses (2,100 ) - Stock-based compensation expenses
(20,069 ) (16,955 ) Non-GAAP research and development
expenses $ 196,495 $ 171,824
Selling,
general and administrative expenses reconciliation: GAAP
selling, general and administrative expenses $ 265,618 $ 203,951
Restructuring expenses (12,584 ) - Stock-based compensation
expenses (23,919 ) (20,836 ) Non-GAAP selling,
general and administrative expenses $ 229,115 $ 183,115
Operating margin reconciliation: GAAP
operating margin 55.7 % 52.8 % Acquisition-related amortization of
inventory mark-up 0.2 % - Acquisition-related amortization of
purchased intangibles 0.7 % - Restructuring expenses 0.7 % -
Stock-based compensation expenses 2.2 % 2.7 %
Non-GAAP operating margin (1) 59.6 % 55.5 %
Net income attributable to Gilead reconciliation: GAAP net
income attributable to Gilead $ 854,901 $ 589,112
Acquisition-related amortization of inventory mark-up 3,657 -
Acquisition-related amortization of purchased intangibles 11,008 -
Restructuring expenses 10,788 - Stock-based compensation expenses
34,413 30,288 Non-GAAP net income
attributable to Gilead $ 914,767 $ 619,400
Diluted earnings per share reconciliation: GAAP diluted
earnings per share $ 0.92 $ 0.63 Acquisition-related amortization
of inventory mark-up 0.00 - Acquisition-related amortization of
purchased intangibles 0.01 - Restructuring expenses 0.01 -
Stock-based compensation expenses 0.04 0.03
Non-GAAP diluted earnings per share (1) $ 0.99 $ 0.66
Shares used in per share calculation (diluted)
reconciliation: GAAP shares used in per share calculation
(diluted) 928,368 942,479 Share impact of current stock-based
compensation guidance (703 ) 799 Non-GAAP
shares used in per share calculation (diluted) 927,665
943,278
Non-GAAP adjustment
summary: Cost of goods sold adjustments $ 22,815 $ 3,254
Research and development expenses adjustments 22,169 16,955
Selling, general and administrative expenses adjustments
36,503 20,836 Total non-GAAP adjustments
before tax 81,487 41,045
Income tax effect
(21,621 ) (10,757 ) Total non-GAAP adjustments after
tax $ 59,866 $ 30,288 Note: (1) Amounts may
not sum due to rounding
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
March 31, December 31, 2010 2009 (unaudited)
(Note 1) Cash, cash equivalents and marketable
securities $ 4,619,915 $ 3,904,846 Accounts receivable, net
1,491,332 1,389,534 Inventories 1,223,945 1,051,771 Property, plant
and equipment, net 695,601 699,970 Intangible assets 1,509,794
1,524,777 Other assets 1,155,411 1,127,661 Total
assets $ 10,695,998 $ 9,698,559 Current liabilities $
1,887,651 $ 1,871,631 Long-term liabilities 1,305,675 1,321,770
Stockholders’ equity 7,502,672 6,505,158 Total
liabilities and stockholders’ equity $ 10,695,998 $ 9,698,559
Notes: (1) Derived from audited consolidated
financial statements at that date.
GILEAD SCIENCES,
INC. PRODUCT SALES SUMMARY (unaudited) (in thousands)
Three Months Ended March 31, 2010 2009
Antiviral products: Atripla – U.S. $ 455,901 $ 374,132 Atripla –
Europe 217,548 124,779 Atripla – Other International 19,423
10,972 692,872 509,883 Truvada – U.S.
326,817 280,997 Truvada – Europe 297,528 278,440 Truvada – Other
International 33,454 30,916 657,799
590,353 Viread – U.S. 78,007 69,589 Viread – Europe 73,143
65,331 Viread – Other International 29,536 25,685
180,686 160,605 Hepsera – U.S. 21,565 25,652
Hepsera – Europe 33,375 38,917 Hepsera – Other International
3,184 8,145 58,124 72,714 - Emtriva – U.S.
4,244 3,630 Emtriva – Europe 1,875 2,354 Emtriva – Other
International 1,037 1,250 7,156 7,234 -
Total Antiviral products – U.S. 886,534 754,000 Total Antiviral
products – Europe 623,469 509,821 Total Antiviral products – Other
International 86,634 76,968 1,596,637
1,340,789 - AmBisome 77,049 64,271 Letairis 55,499 39,580 Ranexa
51,243 - Other products 7,635 2,940 191,426
106,791 - Total product sales $ 1,788,063 $ 1,447,580
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