Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results
of operations for the quarter ended June 30, 2011. Total revenues
for the second quarter of 2011 were $2.14 billion, up 11 percent
compared to total revenues of $1.93 billion for the second quarter
of 2010. Net income for the second quarter of 2011 was $746.2
million, or $0.93 per diluted share, compared to net income for the
second quarter of 2010 of $712.1 million, or $0.79 per diluted
share. Non-GAAP net income for the second quarter of 2011, which
excludes after-tax acquisition-related, restructuring and
stock-based compensation expenses, was $797.7 million, or $1.00 per
diluted share, compared to non-GAAP net income for the second
quarter of 2010 of $760.7 million, or $0.85 per diluted share.
Product Sales
Product sales increased 13 percent to $2.04 billion for the
second quarter of 2011, compared to $1.81 billion in the second
quarter of 2010. This increase in sales was driven primarily by
Gilead’s antiviral franchise, due to strong growth in sales of
Atripla® (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir
disoproxil fumarate 300 mg) and Truvada® (emtricitabine 200
mg/tenofovir disoproxil fumarate 300 mg).
Antiviral Franchise
Antiviral product sales increased 11 percent to $1.76 billion in
the second quarter of 2011, up from $1.59 billion for the same
quarter of 2010.
Sales of Atripla for the treatment of HIV infection increased 15
percent to $822.0 million for the second quarter of 2011, up from
$715.8 million in the second quarter of 2010, 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 $711.3 million for the second quarter of 2011, up from
$641.7 million in the second quarter of 2010, driven primarily by
sales volume growth in Europe and the United States.
Sales of Viread® (tenofovir disoproxil fumarate) for the
treatment of HIV infection and chronic hepatitis B increased 5
percent to $185.7 million for the second quarter of 2011, up from
$176.2 million in the second quarter of 2010, due primarily to
sales volume growth in Europe and the United States partially
offset by lower sales in Latin America.
Letairis
Sales of Letairis® (ambrisentan) for the treatment of pulmonary
arterial hypertension increased 22 percent to $73.6 million for the
second quarter of 2011, up from $60.3 million for the second
quarter of 2010, driven primarily by sales volume growth.
Ranexa
Sales of Ranexa® (ranolazine) for the treatment of chronic
angina increased 42 percent to $86.1 million for the second quarter
of 2011, up from $60.5 million for the second quarter of 2010,
driven primarily by sales volume growth.
Other Products
Sales of other products were $160.9 million for the second
quarter of 2011 compared to $151.6 million for the second quarter
of 2010 and included 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
Cayston® (aztreonam for inhalation solution) for the improvement of
respiratory symptoms in cystic fibrosis patients with Pseudomonas
aeruginosa (P. aeruginosa). The increase in sales of other products
was due primarily to sales volume growth of AmBisome in Europe and
Latin America and Cayston in the United States. Sales of Cayston
were $21.5 million for the second quarter of 2011, up from $10.5
million in the same quarter of 2010.
Royalty, Contract and Other
Revenues
Royalty, contract and other revenues from collaborations were
$97.7 million in the second quarter of 2011, down 19 percent from
$121.2 million in the second quarter of 2010. This decrease was due
to lower Tamiflu royalties from F. Hoffmann-La Roche Ltd of $50.6
million in the second quarter of 2011, compared to Tamiflu
royalties of $83.8 million in the second quarter of 2010 as
pandemic planning initiatives worldwide have declined.
Research and Development
Research and development (R&D) expenses in the second
quarter of 2011 were $282.4 million, compared to $231.1 million for
the second quarter of 2010. Non-GAAP R&D expenses for the
second quarter of 2011, which exclude acquisition-related,
restructuring and stock-based compensation expenses, were $262.6
million, compared to $207.4 million for the second quarter of 2010.
The increase in non-GAAP R&D expenses was due primarily to
increased clinical activities and expenses associated with
acquisitions, collaborations and the ongoing growth of Gilead’s
business.
Selling, General and
Administrative
Selling, general and administrative (SG&A) expenses in the
second quarter of 2011 were $304.3 million, compared to $248.0
million for the second quarter of 2010. Non-GAAP SG&A expenses
for the second quarter of 2011, which exclude acquisition-related,
restructuring and stock-based compensation expenses, were $276.4
million, compared to $223.5 million for the second quarter of 2010.
The increase in non-GAAP SG&A expenses was driven primarily by
the impact of the pharmaceutical excise tax resulting from U.S.
healthcare reform and increased expenses associated with the
ongoing growth of Gilead’s business.
Net Foreign Currency Exchange
Impact
The net foreign currency exchange impact on second quarter 2011
revenues and pre-tax earnings, which includes revenues and expenses
generated from outside the United States, was a favorable $27.3
million and $9.7 million, respectively, compared to the second
quarter of 2010.
Cash, Cash Equivalents and Marketable
Securities
As of June 30, 2011, Gilead had cash, cash equivalents and
marketable securities of $5.50 billion compared to $5.32 billion as
of December 31, 2010. Gilead generated $1.76 billion of operating
cash flow for the first six months of 2011 including $943.3 million
in the second quarter of 2011.
Corporate Highlights
In April, Gilead announced the appointment of Muzammil M.
Mansuri, PhD, to Senior Vice President, Research and Development
Strategy and Corporate Development.
In May, Gilead announced that it had extended its funding
support for the Gilead Sciences Research Centre at the Institute of
Organic Chemistry and Biochemistry (IOCB) of the Academy of
Sciences of the Czech Republic for an additional five years. Gilead
will provide a $1.15 million annual donation to IOCB in order to
continue to fund the Research Centre’s operations and ongoing
research efforts. Gilead has the first option to license inventions
that result from the Research Centre’s scientific programs and drug
discovery efforts.
Under the company's $5.00 billion stock repurchase program
authorized in May 2010, Gilead has repurchased approximately $4.29
billion in common stock through June 30, 2011. Total purchase
activity was $723.9 million in common stock for the second quarter
of 2011.
Product and Pipeline
Update
Antiviral Franchise
In June, Gilead announced that it had entered into a license
agreement with Tibotec Pharmaceuticals (Tibotec) for the
development and commercialization of a new fixed-dose
antiretroviral combination product containing Gilead’s
investigational agent cobicistat and Tibotec’s protease inhibitor
Prezista® (darunavir). In addition, the companies are also
negotiating terms for the development and commercialization of a
future single-tablet regimen (STR) combining Prezista with Emtriva
and the investigational agents GS 7340 and cobicistat. The
agreement to develop the fixed-dose combination of cobicistat and
Prezista is contingent upon the signing of the agreement to develop
the Emtriva, GS 7340, cobicistat and Prezista STR.
Respiratory Franchise
In April, Gilead and MicroDose Therapeutx (MicroDose) announced
that the companies had entered into an exclusive worldwide license
and collaboration agreement for the development and
commercialization of MDT-637, MicroDose’s inhalable small molecule
antiviral fusion inhibitor for the treatment of respiratory
syncytial virus.
Conference Call
At 5:00 p.m. Eastern Time today, Gilead’s management will host a
conference call and a simultaneous webcast to discuss results from
its second quarter 2011 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 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
1-800-299-7089 (U.S.) or 1-617-801-9714 (international) and dial
the participant passcode 36874698 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 July 29, 2011.
To access the phone replay, please call 1-888-286-8010 (U.S.) or
1-617-801-6888 (international) and dial the participant passcode
45716316.
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 Asia Pacific.
Non-GAAP Financial
Information
Gilead has presented certain financial information in accordance
with GAAP and also on a non-GAAP basis for the three and six months
ended June 30, 2011 and 2010. 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 achieve its anticipated full year 2011
financial results, including the possibility that its full year
2011 guidance may be revised at a later date; Gilead’s ability to
sustain growth in revenues for its antiviral, cardiovascular and
respiratory franchises; unpredictable variability of Tamiflu
royalties and the strong relationship between this royalty revenue
and global pandemic planning and supply; the availability of
funding for state ADAPs and their ability to purchase at levels to
support the number of patients that rely on ADAPs; the levels of
inventory held by wholesalers and retailers which may cause
fluctuations in Gilead’s earnings; Gilead’s ability to submit NDAs
for new product candidates in the timelines currently anticipated;
Gilead’s ability to receive regulatory approvals in a timely manner
or at all, for new and current products, including cobicistat and
GS 7340; Gilead’s ability to successfully commercialize its
products; Gilead’s ability to successfully develop its respiratory,
cardiovascular and oncology franchises; safety and efficacy data
from clinical studies may not warrant further development of
Gilead’s product candidates, including the clinical studies
evaluating cobicistat and GS 7340; initiating and completing
clinical trials may take longer or cost more than expected,
including the clinical studies evaluating cobicistat and GS 7340;
the potential for additional austerity measures in European
countries that may increase the amount of discount required on
Gilead’s products; fluctuations in the foreign exchange rate of the
U.S. dollar that may cause an unfavorable foreign currency exchange
impact on Gilead’s future revenues and pre-tax earnings; Gilead’s
ability to complete the current $5.00 billion share repurchase
program and commence purchases under the additional $5.00 billion
share repurchase program due to changes in its stock price,
corporate or other market conditions; risks that the funding of the
Gilead Sciences Research Center at IOCB will not lead to the
discovery of any potential product candidates; risks that Gilead
will not sign an agreement to develop the Emtriva, GS 7340,
cobicistat and Prezista STR and as a result, the parties will not
develop the fixed-dose combination of cobicistat and Prezista;
risks that the development and commercialization of cobicistat and
Prezista will not be successful; risks that the collaboration with
MicroDose will not lead to the commercialization of MDT-637; 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, 2010 and other subsequent
disclosure documents filed with the Securities and Exchange
Commission and press releases. 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.
Prezista is a registered trademark of Tibotec,
Inc.
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 Six Months Ended June 30, June 30, 2011
2010 2011 2010
Revenues: Product sales $ 2,039,588 $ 1,806,061 $ 3,903,166 $
3,594,124 Royalty, contract and other revenues 97,665
121,163 160,181 418,953
Total revenues 2,137,253 1,927,224
4,063,347 4,013,077 Costs and expenses:
Cost of goods sold 533,863 455,525 1,007,974 895,955 Research and
development 282,403 231,066 536,849 449,730 Selling, general and
administrative 304,269 248,006
599,837 513,624 Total costs and expenses
1,120,535 934,597 2,144,660
1,859,309 Income from operations 1,016,718
992,627 1,918,687 2,153,768 Interest and other income, net 11,978
18,285 25,810 33,930 Interest expense (46,107 )
(17,764 ) (87,323 ) (34,719 ) Income before provision
for income taxes 982,589 993,148 1,857,174 2,152,979 Provision for
income taxes 240,130 284,021
467,412 591,758 Net income 742,459 709,127
1,389,762 1,561,221 Net loss attributable to noncontrolling
interest 3,768 2,934 7,606
5,741 Net income attributable to Gilead $
746,227 $ 712,061 $ 1,397,368 $ 1,566,962
Net income per share attributable to
Gilead common stockholders - basic
$ 0.95 $ 0.81 $ 1.77 $ 1.76
Net income per share attributable to
Gilead common stockholders - diluted
$ 0.93 $ 0.79 $ 1.73 $ 1.71 Shares used
in per share calculation - basic 784,807
881,802 790,430 891,649 Shares
used in per share calculation - diluted 800,800
898,753 806,462 913,819
GILEAD SCIENCES, INC. RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION (unaudited) (in
thousands, except percentages and per share amounts)
Three Months Ended Six Months
Ended June 30, June 30, 2011 2010
2011 2010
Cost of goods sold
reconciliation: GAAP cost of goods sold $ 533,863 $ 455,525 $
1,007,974 $ 895,955 Acquisition-related amortization of inventory
mark-up - (2,042 ) - (7,020 ) Acquisition-related amortization of
purchased intangibles (17,408 ) (14,981 ) (34,815 ) (29,965 )
Stock-based compensation expenses (2,887 ) (2,967 )
(5,531 ) (5,820 ) Non-GAAP cost of goods sold $
513,568 $ 435,535 $ 967,628 $ 853,150
Product gross margin reconciliation: GAAP product
gross margin 73.9 %
74.8 % 74.2 % 75.1 % Acquisition-related amortization of inventory
mark-up - 0.1 % - 0.2 % Acquisition-related amortization of
purchased intangibles 0.9 % 0.8 % 0.9 % 0.8 % Stock-based
compensation expenses 0.1 % 0.2 % 0.1 %
0.2 % Non-GAAP product gross margin (1) 74.9 %
75.9 % 75.3 % 76.3 %
Research and
development expenses reconciliation: GAAP research and
development expenses $ 282,403 $ 231,066 $ 536,849 $ 449,730
Acquisition-related transaction costs - - (446 ) -
Acquisition-related remeasurement of contingent consideration 418 -
418 - Restructuring expenses (767 ) (2,130 ) (554 ) (4,230 )
Stock-based compensation expenses (19,420 ) (21,521 )
(36,140 ) (41,590 ) Non-GAAP research and development
expenses $ 262,634 $ 207,415 $ 500,127 $
403,910
Selling, general and administrative
expenses reconciliation: GAAP selling, general and
administrative expenses $ 304,269 $ 248,006 $ 599,837 $ 513,624
Acquisition-related transaction costs (365 ) - (743 ) -
Restructuring expenses 353 (906 ) (1,666 ) (13,490 ) Stock-based
compensation expenses (27,818 ) (23,559 )
(57,924 ) (47,478 ) Non-GAAP selling, general and
administrative expenses $ 276,439 $ 223,541 $ 539,504
$ 452,656
Operating margin
reconciliation: GAAP operating margin 47.6 % 51.5 % 47.2 % 53.7
% Acquisition-related transaction costs 0.0 % - 0.0 % -
Acquisition-related amortization of inventory mark-up - 0.1 % - 0.2
% Acquisition-related amortization of purchased intangibles 0.8 %
0.8 % 0.9 % 0.7 % Acquisition-related remeasurement of contingent
consideration 0.0 % 0.0 % 0.0 % - Restructuring expenses 0.0 % 0.2
% 0.1 % 0.4 % Stock-based compensation expenses 2.3 %
2.5 % 2.5 % 2.4 % Non-GAAP operating margin (1)
50.7 % 55.0 % 50.6 % 57.4 %
Net income attributable to Gilead reconciliation: GAAP net
income attributable to Gilead $ 746,227 $ 712,061 $ 1,397,368 $
1,566,962 Acquisition-related transaction costs 365 - 1,189 -
Acquisition-related amortization of inventory mark-up - 1,433 -
5,090 Acquisition-related amortization of purchased intangibles
13,170 10,721 26,053 21,729 Acquisition-related remeasurement of
contingent consideration (313 ) - (313 ) - Restructuring expenses
324 2,061 1,661 12,849 Stock-based compensation expenses
37,915 34,395 74,529
68,808 Non-GAAP net income attributable to Gilead $ 797,688
$ 760,671 $ 1,500,487 $ 1,675,438
Diluted earnings per share reconciliation: GAAP
diluted earnings per share $ 0.93 $ 0.79 $ 1.73 $ 1.71
Acquisition-related transaction costs 0.00 - 0.00 -
Acquisition-related amortization of inventory mark-up - 0.00 - 0.01
Acquisition-related amortization of purchased intangibles 0.02 0.01
0.03 0.02 Acquisition-related remeasurement of contingent
consideration (0.00 ) - (0.00 ) - Restructuring expenses 0.00 0.00
0.00 0.01 Stock-based compensation expenses 0.05
0.04 0.09 0.08 Non-GAAP
diluted earnings per share (1) $ 1.00 $ 0.85 $ 1.87
$ 1.84
Shares used in per share calculation
(diluted) reconciliation: GAAP shares used in per share
calculation (diluted) 800,800 898,753 806,462 913,819 Share impact
of current stock-based compensation guidance (2,010 )
(1,555 ) (1,993 ) (1,262 ) Non-GAAP shares used in
per share calculation (diluted) 798,790
897,198 804,469 912,557
Non-GAAP adjustment summary: Cost of goods sold adjustments
$ 20,295 $ 19,990 $ 40,346 $ 42,805 Research and development
expenses adjustments 19,769 23,651 36,722 45,820 Selling, general
and administrative expenses adjustments 27,830
24,465 60,333 60,968 Total
non-GAAP adjustments before tax 67,894 68,106 137,401 149,593
Income tax effect (16,433 ) (19,496 ) (34,282
) (41,117 ) Total non-GAAP adjustments after tax $ 51,461
$ 48,610 $ 103,119 $ 108,476
Note: (1) Amounts may not sum due to rounding
GILEAD
SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) June 30, December 31, 2011
2010 (unaudited) (Note 1) Cash, cash equivalents and
marketable securities $ 5,499,312 $ 5,318,071 Accounts receivable,
net 1,938,645 1,621,966 Inventories 1,321,615 1,203,809 Property,
plant and equipment, net 721,884 701,235 Intangible assets
2,128,410 1,425,592 Other assets 1,084,274 1,321,957
Total assets $ 12,694,140 $ 11,592,630 Current liabilities $
2,310,841 $ 2,464,950 Long-term liabilities 4,171,968 3,005,843
Stockholders’ equity (Note 2) 6,211,331 6,121,837
Total liabilities and stockholders’ equity $ 12,694,140 $
11,592,630 Notes: (1) Derived from audited
consolidated financial statements at that date. (2) As of June 30,
2011, there were 776,405 shares of common stock issued and
outstanding.
GILEAD SCIENCES, INC. PRODUCT SALES
SUMMARY (unaudited) (in thousands)
Three Months Ended Six Months Ended June 30, June 30,
2011 2010 2011 2010 Antiviral products: Atripla – U.S. $
510,237 $ 466,819 $ 973,004 $ 922,720 Atripla – Europe 267,153
221,149 520,210 438,697 Atripla – Other International 44,602
27,836 73,290 47,259 821,992
715,804 1,566,504 1,408,676 Truvada – U.S.
334,064 317,522 654,177 644,339 Truvada – Europe 322,007 278,373
621,163 575,901 Truvada – Other International 55,230
45,787 109,072 79,241 711,301 641,682
1,384,412 1,299,481 Viread – U.S. 80,228
78,787 152,708 156,794 Viread – Europe 86,123 71,004 162,135
144,147 Viread – Other International 19,366 26,381
39,269 55,917 185,717 176,172
354,112 356,858 Hepsera – U.S. 14,765 19,470 28,639
41,035 Hepsera – Europe 20,582 28,551 42,070 61,926 Hepsera – Other
International 3,309 3,313 6,043 6,497
38,656 51,334 76,752 109,458
Emtriva – U.S. 3,914 4,135 7,816 8,379 Emtriva – Europe 1,705 1,684
3,390 3,559 Emtriva – Other International 1,113 926
2,102 1,963 6,732 6,745 13,308
13,901 Total Antiviral products – U.S. 943,208
886,733 1,816,344 1,773,267 Total Antiviral products – Europe
697,570 600,761 1,348,968 1,224,230 Total Antiviral products –
Other International 123,620 104,243 229,776
190,877 1,764,398 1,591,737 3,395,088
3,188,374 AmBisome 88,625 78,174 167,131 155,223
Letairis 73,637 60,348 135,811 115,847 Ranexa 86,077 60,460 154,370
111,703 Other products 26,851 15,342 50,766
22,977 275,190 214,324 508,078
405,750 Total product sales $ 2,039,588 $ 1,806,061 $
3,903,166 $ 3,594,124
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