- Product Sales of $5.6 billion -
- Diluted EPS of $1.47 per share - - Non-GAAP Diluted
EPS of $1.82 per share - - Revised Full Year 2019 Guidance
-
Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results
of operations for the second quarter ended June 30, 2019. The
financial results that follow represent a year-over-year comparison
of the second quarter of 2019 to the second quarter of 2018. Total
revenues were $5.7 billion in 2019 compared to $5.6 billion in
2018. Net income was $1.9 billion or $1.47 per diluted share in
2019 compared to $1.8 billion or $1.39 per diluted share in 2018.
Non-GAAP net income was $2.3 billion or $1.82 per diluted share in
2019 compared to $2.5 billion or $1.91 per diluted share in
2018.
“I am very pleased with Gilead’s performance and our ability
to continue to reach patients around the world with our medicines.
I am also very excited about the progress we are making to
strengthen our pipeline, including the recently announced Galapagos
collaboration, to bring forward our next generation of products,”
said Daniel O’Day, Chairman and Chief Executive Officer, Gilead
Sciences. “We saw strong revenue growth quarter-over-quarter,
primarily driven by our HIV medicines and the rapid adoption of
Biktarvy. Based on this momentum and our confidence in the outlook
for the coming months, we are raising our full-year product sales
guidance for 2019.”
Three Months Ended
Six Months Ended
June 30,
June 30,
(In millions, except per share
amounts)
2019
2018
2019
2018
Product sales
$
5,607
$
5,540
$
10,807
$
10,541
Royalty, contract and other revenues
78
108
159
195
Total revenues
$
5,685
$
5,648
$
10,966
$
10,736
Net income attributable to Gilead
$
1,880
$
1,817
$
3,855
$
3,355
Non-GAAP net income
$
2,331
$
2,494
$
4,589
$
4,452
Diluted earnings per share
$
1.47
$
1.39
$
3.01
$
2.55
Non-GAAP diluted earnings per share
$
1.82
$
1.91
$
3.58
$
3.39
___________________________________
Note: Non-GAAP financial information excludes
acquisition-related, up-front collaboration and licensing,
stock-based compensation and other expenses, fair value adjustments
of equity securities and discrete tax charges or benefits
associated with changes in tax related laws and guidelines. A
reconciliation between GAAP and non-GAAP financial information is
provided in the tables on pages 9 through 11.
Product Sales
Total product sales for the second quarter of 2019 were $5.6
billion compared to $5.5 billion for the same period in 2018. For
the second quarter of 2019, product sales in the United States,
Europe and other locations were $4.1 billion, $1.0 billion and $512
million, respectively. For the second quarter of 2018, product
sales in the United States, Europe and other locations were $4.1
billion, $1.0 billion and $466 million, respectively. Product sales
in Europe for the second quarter of 2019 benefited from
approximately $160 million of adjustments for statutory rebates
related primarily to HCV and HIV sales made in prior years.
- HIV product sales were $4.0 billion for the second
quarter of 2019 compared to $3.7 billion for the same period in
2018. The increase was primarily driven by higher sales volume as a
result of the continued uptake of Biktarvy® (bictegravir 50
mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg).
- Chronic hepatitis C virus (HCV) product sales were $842
million for the second quarter of 2019 compared to $1.0 billion for
the same period in 2018. The decline was primarily due to
competitive dynamics, including a decline in U.S. Medicare prices,
and lower patient starts.
- Yescarta® (axicabtagene ciloleucel) generated $120
million in sales during the second quarter of 2019 compared to $68
million for the same period in 2018. The increase was driven by an
increase in the number of therapies provided to patients.
- Other product sales, which include products from chronic
hepatitis B virus (HBV), cardiovascular, oncology and other
categories inclusive of Vemlidy® (tenofovir alafenamide 25 mg),
Viread® (tenofovir disoproxil fumarate 300 mg), Letairis®
(ambrisentan 5 mg and 10 mg), Ranexa® (ranolazine 500 mg and 1000
mg), Zydelig® (idelalisib 150 mg), AmBisome® (amphotericin B
liposome for injection 50 mg/vial) and Cayston® (aztreonam for
inhalation solution 75 mg/vial), were $604 million for the second
quarter of 2019 compared to $807 million for the same period in
2018. The decrease was primarily due to the expected declines in
Ranexa and Letairis sales after generic entries in 2019.
Operating Expenses
Three Months Ended
Six Months Ended
June 30,
June 30,
(In millions)
2019
2018
2019
2018
Research and development expenses
(R&D)
$
1,160
$
1,192
$
2,217
$
2,129
Non-GAAP R&D expenses
$
916
$
921
$
1,787
$
1,735
Selling, general and administrative
expenses (SG&A)
$
1,095
$
980
$
2,125
$
1,977
Non-GAAP SG&A expenses
$
1,015
$
840
$
1,977
$
1,724
During the second quarter of 2019, compared to the same period
in 2018:
- R&D expenses decreased slightly, primarily due to the 2018
impacts of Gilead’s purchase of a U.S. Food and Drug Administration
(FDA) Priority Review Voucher and stock-based compensation expense
following the acquisition of Kite Pharma, Inc., largely offset by
higher investments in 2019 to support Gilead’s cell therapy
programs.
- Non-GAAP R&D expenses decreased slightly, primarily due to
the 2018 impact of Gilead’s purchase of an FDA Priority Review
Voucher, largely offset by higher investments in 2019 to support
Gilead’s cell therapy programs.
- SG&A expenses increased primarily due to higher promotional
expenses in the United States and expenses associated with the
expansion of Gilead’s business in Japan and China, partially offset
by lower stock-based compensation expense. Stock-based compensation
expense was higher for the second quarter of 2018 following the
acquisition of Kite Pharma, Inc.
- Non-GAAP SG&A expenses increased primarily due to higher
promotional expenses in the United States and expenses associated
with the expansion of Gilead’s business in Japan and China.
Effective Tax Rate
The effective tax rate and non-GAAP effective tax rate in the
second quarter of 2019 were 22.2% and 21.5%, respectively, compared
to 12.8% and 13.4% for the same period in 2018, respectively. The
increases were primarily due to the 2018 impact of a favorable
settlement of a tax examination.
Cash, Cash Equivalents and Marketable
Debt Securities
As of June 30, 2019, Gilead had $30.2 billion of cash, cash
equivalents and marketable debt securities, compared to $31.5
billion as of December 31, 2018. During the second quarter of 2019,
Gilead generated $2.2 billion in operating cash flow, repaid $500
million of debt, paid cash dividends of $800 million and utilized
$588 million on stock repurchases.
Revised Full Year 2019
Guidance
Gilead revised its full year 2019 guidance, initially provided
on February 4, 2019. The updated guidance for product sales
reflects favorable demand trends observed in the first half of 2019
across Gilead’s product portfolio, the adjustments for statutory
rebates related to Europe sales made in prior years, a greater
impact from generic versions of Letairis in the second half of 2019
and the full year impact from generic products containing tenofovir
disoproxil fumarate in certain European countries. The guidance for diluted EPS impact of
acquisition-related, up-front collaboration and licensing,
stock-based compensation and other expense was updated as a result
of the collaboration agreement with Galapagos NV
(Galapagos).
(In millions, except percentages and
per share amounts)
Initially Provided February 4,
2019 Reiterated May 2, 2019
Updated July 30, 2019
Product Sales
$21,300 - $21,800
$21,600 - $22,100
Non-GAAP
Product Gross Margin
85% - 87%
85% - 87%
R&D Expenses
$3,600 - $3,800
$3,600 - $3,800
SG&A Expenses
$3,900 - $4,100
$3,900 - $4,100
Effective Tax Rate
20.0% - 21.0%
20.0% - 21.0%
Diluted EPS Impact of Acquisition-related,
Up-front Collaboration and Licensing, Stock-based Compensation and
Other Expenses
$1.40 - $1.50
$3.90 - $4.00
Corporate Highlights, Including the
Announcement of:
- A global research and
development collaboration with Galapagos under which Gilead will
make a $3.95 billion up-front payment and an equity investment of
approximately $1.1 billion. Through this agreement, Gilead
will gain access to a proven drug discovery platform and an
innovative portfolio of compounds, including six molecules
currently in clinical trials, and more than 20 preclinical
programs.
- Collaboration and/or licensing agreements with Novartis AG
(Novartis), Carna Biosciences Inc. (Carna), Nurix Therapeutics,
Inc. (Nurix), Humanigen, Inc. (Humanigen), Goldfinch Bio, Inc.
(Goldfinch), Insitro, Inc. (Insitro), and Novo Nordisk A/S (Novo
Nordisk).
- Senior leadership changes, including: the appointment of
Christi L. Shaw as Chief Executive Officer of Kite, a Gilead
Company; the appointment of Johanna Mercier as Chief Commercial
Officer; the departures of John G. McHutchison, A.O., M.D., Chief
Scientific Officer and Head of Research and Development, Gregg H.
Alton, Chief Patient Officer, and Katie L. Watson, Executive Vice
President, Human Resources; and the planned retirement of Robin L.
Washington from her role as Executive Vice President and Chief
Financial Officer effective March 1, 2020.
- Louisiana’s launch of an innovative payment model for HCV
treatment with Gilead’s separate subsidiary, Asegua Therapeutics
LLC, aiming to eliminate the disease.
- The donation of TruvadaforPrEP® (emtricitabine 200 mg and
tenofovir disoproxil fumarate 300 mg) to the U.S. Centers for
Disease Control and Prevention (CDC) in support of national efforts
to help prevent HIV and end the epidemic. Gilead will provide to
CDC up to 2.4 million bottles of Truvada® (emtricitabine 200 mg and
tenofovir disoproxil fumarate 300 mg) annually for uninsured
Americans at risk for HIV. The donation, which extends until 2030,
will transition to Descovy® (emtricitabine 200 mg and tenofovir
alafenamide 25 mg), if it is approved for use as prevention.
- Plans for a new facility in Frederick County, Maryland, to
significantly expand Kite’s ability to manufacture Yescarta, Kite’s
first commercially available CAR T cancer therapy, and a variety of
investigational cell therapies.
Product and Pipeline Updates, Including
the Announcement of:
HIV and Liver Diseases Programs
- The presentation of data at the 10th International AIDS Society
Conference on HIV Science, which included:
- Results from a sub-analysis of the DISCOVER trial evaluating an
investigational use of Descovy for HIV pre-exposure prophylaxis
(PrEP), which demonstrated that Descovy reached intracellular drug
concentration levels above the estimated protective threshold
significantly more quickly than Truvada and that these drug
concentration levels persist longer than Truvada.
- Results from two studies of investigational toll-like receptor
(TLR7) agonists as part of an HIV cure research program. The Phase
1 and preclinical study results demonstrate that TLR7 agonists have
a potential role to play in scalable strategies for achieving
sustained viral remission in humans.
- Results from two Phase 3 trials demonstrating the effectiveness
of Biktarvy for the treatment of HIV in women and in virologically
suppressed patients with known resistance.
- Results from a Phase 1b study of GS-6207, an investigational,
novel, selective capsid inhibitor, in people living with HIV. The
Phase 1b data demonstrated the first proof of concept that HIV
capsid inhibition can lead to significant declines in viral load in
vivo and that resistance to GS-6207 in vitro did not lead to
resistance to other classes of drugs used in the treatment of
HIV.
- Data from STELLAR-3, a Phase 3 study evaluating the safety and
efficacy of selonsertib, an investigational, once daily, oral
inhibitor of apoptosis signal-regulating kinase 1 (ASK1), for
patients with bridging fibrosis (F3) due to NASH, did not meet the
pre-specified week 48 primary endpoint of a ≥ 1-stage histologic
improvement in fibrosis without worsening of NASH.
- The presentation of data at the International Liver Congress™
2019, which included:
- Safety and efficacy data on Vemlidy in patients with HBV
previously treated with tenofovir disoproxil fumarate and data on
Epclusa® (sofosbuvir 400mg/velpatasvir 100mg) and Harvoni®
(ledipasvir 90mg/sofosbuvir 400mg) in difficult-to-cure HCV patient
populations.
- Results from Gilead’s clinical research program in NASH,
including a combination study of the investigational, selective,
non-steroidal farnesoid X receptor agonist cilofexor (GS-9674) and
the acetyl-CoA carboxylase inhibitor firsocostat (GS-0976). The
data support Gilead’s efforts to develop combination therapies to
target different aspects of NASH, evaluate the utility of
noninvasive tests for the identification of patients living with
the disease and advance overall understanding of the complexities
and burden of NASH.
- The launch of five new global grant programs to continue to
support investigator-sponsored research in HCV and HBV, HCV and HIV
co-infection, NASH and primary sclerosing cholangitis.
- The submission of a supplemental new drug application to FDA
for Descovy for PrEP to reduce the risk of sexually acquired HIV-1
infection among individuals who are HIV-negative and at risk for
HIV. A priority review voucher was submitted with the filing,
leading to an anticipated review time of six months.
Inflammation Program
- The intent to submit a new drug application to FDA for
filgotinib this year, an investigational, oral, selective JAK1
inhibitor, as a treatment for rheumatoid arthritis (RA).
- The presentation of data at the Annual European Congress of
Rheumatology 2019, which included data on filgotinib. Among the
abstracts presented were 24-week, interim results from the ongoing
FINCH 1 and FINCH 3 Phase 3 studies evaluating filgotinib in adults
with RA.
Cell Therapy Program
- The presentation of data at the 2019 American Society of
Clinical Oncology Annual Meeting, which included:
- Results from a safety management analysis of early use of
steroids from the ZUMA-1 trial of Yescarta in adult patients with
diffuse large B-cell lymphoma (DLBCL).
- Results from a sub-population analysis from the ZUMA-1 trial of
Yescarta in adult patients with DLBCL.
- Results from the completed Phase 1 of the ZUMA-3 study
evaluating KTE-X19, an investigational CD19 CAR T cell therapy.
ZUMA-3 is a single-arm Phase 1/2 study in adult patients with
relapsed or refractory acute lymphoblastic leukemia.
Non-GAAP Financial
Information
The information presented in this document has been prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), unless otherwise noted as non-GAAP. Management believes
non-GAAP information is useful for investors, when considered in
conjunction with Gilead’s GAAP financial information, 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. Non-GAAP measures may be
defined and calculated differently by other companies in the same
industry. A reconciliation between GAAP and non-GAAP financial
information is provided in the tables on pages 9 through 11.
Conference Call
The live webcast of the call can be accessed at Gilead’s
Investors page at http://investors.gilead.com/. Please connect to
the website at least 15 minutes prior to the start of the call to
allow adequate time for any software download that may be required
to listen to the webcast. Alternatively, please call 877-359-9508
(U.S.) or 224-357-2393 (international) and dial the conference ID
8696029 to access the call. Telephone replay will be available
approximately two hours after the call through 8:00 p.m. Eastern
Time, August 1, 2019. To access the replay, please call
855-859-2056 (U.S.) or 404-537-3406 (international) and dial the
conference ID 8696029. The webcast will be archived on www.gilead.com for one year.
About Gilead Sciences
Gilead Sciences, Inc. is a research-based biopharmaceutical
company that discovers, develops and commercializes innovative
medicines in areas of unmet medical need. The company strives to
transform and simplify care for people with life-threatening
illnesses around the world. Gilead has operations in more than 35
countries worldwide, with headquarters in Foster City,
California.
Forward-Looking
Statement
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 2019
financial results; Gilead’s ability to sustain growth in revenues
for its antiviral and other programs; the risk that private and
public payers may be reluctant to provide, or continue to provide,
coverage or reimbursement for new products; austerity measures in
European countries that may increase the amount of discount
required on Gilead’s products; an increase in discounts,
chargebacks and rebates due to ongoing contracts and future
negotiations with commercial and government payers; a larger than
anticipated shift in payer mix to more highly discounted payer
segments and geographic regions and decreases in treatment
duration; availability of funding for state AIDS Drug Assistance
Programs (ADAPs); continued fluctuations in ADAP purchases driven
by federal and state grant cycles as well as purchases by retail
pharmacies and other non-wholesaler locations with whom Gilead has
no inventory management agreements may not mirror patient demand
and may cause fluctuations in Gilead’s earnings; market share and
price erosion caused by the introduction of generic versions of our
products; an uncertain global macroeconomic environment; potential
amendments to the Affordable Care Act or other government action
that could have the effect of lowering prices or reducing the
number of insured patients; Gilead’s ability to initiate clinical
trials in its currently anticipated timeframes; the levels of
inventory held by wholesalers and retailers which may cause
fluctuations in Gilead’s earnings; Gilead’s ability to realize the
potential benefits of collaborations or licensing arrangements,
including with Galapagos, Novartis, Carna, Nurix, Humanigen,
Goldfinch, Insitro and Novo Nordisk; Gilead’s ability to submit new
drug applications for new product candidates in the timelines
currently anticipated, including a new drug application to FDA for
filgotinib for the treatment of rheumatoid arthritis; Gilead’s
ability to receive regulatory approvals in a timely manner or at
all, for new and current products, including FDA approval for
Descovy for PrEP; Gilead’s ability to successfully commercialize
its products, including Yescarta; the risk that physicians and
patients may not see advantages of these products over other
therapies and may therefore be reluctant to prescribe the products;
safety and efficacy data from clinical studies may not warrant
further development of Gilead’s product candidates, including
filgotinib, selonsertib, GS-9674, GS-0976 and KTE-X19; Gilead’s
ability to pay dividends or complete its share repurchase program
due to changes in its stock price, corporate or other market
conditions; 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; and other
risks identified from time to time in Gilead’s reports filed with
the U.S. Securities and Exchange Commission (the SEC). 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. There may be other factors of which
Gilead is not currently aware that may affect matters discussed in
the forward-looking statements and may also cause actual results to
differ significantly from these estimates. Further, results for the
quarter ended June 30, 2019 are not necessarily indicative of
operating results for any future periods. 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 press releases,
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019
and other subsequent disclosure documents filed with the SEC.
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 or supplement any such forward-looking statements other than
as required by law. Any forward-looking statements speak only as of
the date hereof or as of the dates indicated in the statements.
Gilead owns or has rights to various
trademarks, copyrights and trade names used in its business,
including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®,
ATRIPLA®, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, EMTRIVA®,
EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPSERA®, LETAIRIS®,
ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, TRUVADA®, TRUVADAFORPREP®,
TYBOST®, VEMLIDY®, VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®.
LEXISCAN® is a registered trademark of Astellas
U.S. LLC. MACUGEN® is a registered trademark of Eyetech, Inc.
SYMTUZA® is a registered trademark of Janssen Sciences Ireland UC.
TAMIFLU® is a registered trademark of Hoffmann-La Roche 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 millions, except per share
amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenues:
Product sales
$
5,607
$
5,540
$
10,807
$
10,541
Royalty, contract and other revenues
78
108
159
195
Total revenues
5,685
5,648
10,966
10,736
Costs and expenses:
Cost of goods sold
1,000
1,196
1,957
2,197
Research and development expenses
1,160
1,192
2,217
2,129
Selling, general and administrative
expenses
1,095
980
2,125
1,977
Total costs and expenses
3,255
3,368
6,299
6,303
Income from operations
2,430
2,280
4,667
4,433
Interest expense
(248
)
(266
)
(502
)
(556
)
Other income (expense), net
228
72
595
242
Income before provision for income
taxes
2,410
2,086
4,760
4,119
Provision for income taxes
535
267
917
761
Net income
1,875
1,819
3,843
3,358
Net income (loss) attributable to
noncontrolling interest
(5
)
2
(12
)
3
Net income attributable to Gilead
$
1,880
$
1,817
$
3,855
$
3,355
Net income per share attributable to
Gilead common stockholders - basic
$
1.48
$
1.40
$
3.03
$
2.58
Shares used in per share calculation -
basic
1,270
1,298
1,273
1,302
Net income per share attributable to
Gilead common stockholders - diluted
$
1.47
$
1.39
$
3.01
$
2.55
Shares used in per share calculation -
diluted
1,277
1,308
1,280
1,314
Cash dividends declared per share
$
0.63
$
0.57
$
1.26
$
1.14
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in millions, except
percentages and per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Cost of goods sold
reconciliation:
GAAP cost of goods sold
$
1,000
$
1,196
$
1,957
$
2,197
Acquisition-related – amortization of
purchased intangibles
(273
)
(300
)
(556
)
(601
)
Stock-based compensation expenses(1)
(13
)
(21
)
(27
)
(34
)
Non-GAAP cost of goods sold
$
714
$
875
$
1,374
$
1,562
Product gross margin
reconciliation:
GAAP product gross margin
82.2
%
78.4
%
81.9
%
79.2
%
Acquisition-related – amortization of
purchased intangibles
4.9
%
5.4
%
5.1
%
5.7
%
Stock-based compensation expenses
0.2
%
0.4
%
0.2
%
0.3
%
Non-GAAP product gross margin(4)
87.3
%
84.2
%
87.3
%
85.2
%
Research and development expenses
reconciliation:
GAAP research and development expenses
$
1,160
$
1,192
$
2,217
$
2,129
Up-front collaboration and licensing
expenses
(165
)
(160
)
(291
)
(160
)
Acquisition-related – other costs
—
(9
)
—
(25
)
Stock-based compensation expenses(1)
(80
)
(102
)
(141
)
(205
)
Other(2)
1
—
2
(4
)
Non-GAAP research and development
expenses
$
916
$
921
$
1,787
$
1,735
Selling, general and administrative
expenses reconciliation:
GAAP selling, general and administrative
expenses
$
1,095
$
980
$
2,125
$
1,977
Acquisition-related – other costs
—
(9
)
—
(15
)
Stock-based compensation expenses(1)
(81
)
(129
)
(149
)
(233
)
Other(2)
1
(2
)
1
(5
)
Non-GAAP selling, general and
administrative expenses
$
1,015
$
840
$
1,977
$
1,724
Operating margin
reconciliation:
GAAP operating margin
42.7
%
40.4
%
42.6
%
41.3
%
Up-front collaboration and licensing
expenses
2.9
%
2.8
%
2.7
%
1.5
%
Acquisition-related – amortization of
purchased intangibles
4.8
%
5.3
%
5.1
%
5.6
%
Acquisition-related – other costs
—
%
0.3
%
—
%
0.4
%
Stock-based compensation expenses
3.1
%
4.5
%
2.9
%
4.4
%
Other(2)
—
%
—
%
—
%
0.1
%
Non-GAAP operating margin(4)
53.5
%
53.3
%
53.1
%
53.2
%
Other income (expense), net
reconciliation:
GAAP other income (expense), net
$
228
$
72
$
595
$
242
Unrealized (gains) losses from equity
securities, net
(57
)
64
(254
)
19
Non-GAAP other income (expense), net
$
171
$
136
$
341
$
261
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except
percentages and per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Effective tax rate
reconciliation:
GAAP effective tax rate
22.2
%
12.8
%
19.3
%
18.5
%
Up-front collaboration and licensing
expenses
—
%
0.7
%
0.2
%
0.1
%
Acquisition-related – amortization of
purchased intangibles
(1.5
)%
(0.8
)%
(1.2
)%
(1.5
)%
Acquisition-related – other costs
—
%
0.1
%
—
%
—
%
Stock-based compensation expenses(1)
—
%
0.7
%
0.1
%
0.5
%
Unrealized (gains) losses from equity
securities, net
0.8
%
(0.4
)%
1.1
%
(0.1
)%
Tax Reform adjustments(3)
—
%
0.5
%
—
%
0.2
%
Non-GAAP effective tax rate(4)
21.5
%
13.4
%
19.2
%
17.8
%
Net income attributable to Gilead
reconciliation:
GAAP net income attributable to Gilead
$
1,880
$
1,817
$
3,855
$
3,355
Up-front collaboration and licensing
expenses
128
125
226
125
Acquisition-related – amortization of
purchased intangibles
252
281
512
562
Acquisition-related – other costs
—
14
—
32
Stock-based compensation expenses(1)
135
202
252
362
Unrealized (gains) losses from equity
securities, net
(63
)
63
(254
)
18
Tax Reform adjustments(3)
—
(10
)
—
(10
)
Other(2)
(1
)
2
(2
)
8
Non-GAAP net income attributable to
Gilead
$
2,331
$
2,494
$
4,589
$
4,452
Diluted earnings per share
reconciliation:
GAAP diluted earnings per share
$
1.47
$
1.39
$
3.01
$
2.55
Up-front collaboration and licensing
expenses
0.10
0.10
0.18
0.10
Acquisition-related – amortization of
purchased intangibles
0.20
0.21
0.40
0.43
Acquisition-related – other costs
—
0.01
—
0.02
Stock-based compensation expenses(1)
0.11
0.15
0.20
0.28
Unrealized (gains) losses from equity
securities, net
(0.05
)
0.05
(0.20
)
0.01
Tax Reform adjustments(3)
—
(0.01
)
—
(0.01
)
Other(2)
—
—
—
0.01
Non-GAAP diluted earnings per share(4)
$
1.82
$
1.91
$
3.58
$
3.39
Non-GAAP adjustment summary:
Cost of goods sold adjustments
$
286
$
321
$
583
$
635
Research and development expenses
adjustments
244
271
430
394
Selling, general and administrative
expenses adjustments
80
140
148
253
Other income (expense), net
adjustments
(57
)
64
(254
)
19
Total non-GAAP adjustments before tax
553
796
907
1,301
Income tax effect
(102
)
(109
)
(173
)
(194
)
Tax Reform adjustments(3)
—
(10
)
—
(10
)
Total non-GAAP adjustments after tax
$
451
$
677
$
734
$
1,097
Notes:
(1)
The decreases were primarily due to
stock-based compensation expenses incurred in 2018 following
Gilead’s acquisition of Kite Pharma, Inc.
(2)
Amounts represent restructuring,
contingent consideration and/or other individually insignificant
amounts
(3)
Amounts represent measurement period
adjustments relating to the enactment of the 2017 Tax Cuts and Jobs
Act (Tax Reform)
(4)
Amounts may not sum due to rounding
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO
NON-GAAP 2019 FULL YEAR GUIDANCE
(unaudited)
(in millions, except
percentages and per share amounts)
Initially Provided February 4,
2019 Reiterated May 2, 2019
Updated July 30, 2019
Projected product gross margin GAAP to
non-GAAP reconciliation:
GAAP projected product gross margin
80% - 81%
80% - 81%
Acquisition-related expenses
5% - 6%
5% - 6%
Non-GAAP projected product gross
margin(1)
85% - 87%
85% - 87%
Projected research and development
expenses GAAP to non-GAAP reconciliation:
GAAP projected research and development
expenses(2)
$4,195 - $4,480
$8,290 - $8,595
Stock-based compensation expenses
(345) - (380)
(290) - (325)
Up-front collaboration and licensing
expenses(2)
(250) - (300)
(4,400) - (4,470)
Non-GAAP projected research and
development expenses
$3,600 - $3,800
$3,600 - $3,800
Projected selling, general and
administrative expenses GAAP to non-GAAP reconciliation:
GAAP projected selling, general and
administrative expenses
$4,255 - $4,490
$4,205 - $4,440
Stock-based compensation expenses
(355) - (390)
(305) - (340)
Non-GAAP projected selling, general and
administrative expenses
$3,900 - $4,100
$3,900 - $4,100
Projected effective tax rate GAAP to
non-GAAP reconciliation:
GAAP projected effective tax rate(3)
21.5% - 22.5%
21.5% - 22.5%
Tax rate effect of adjustments noted
above(3)
(1.5%) - (1.5%)
(1.5%) - (1.5%)
Non-GAAP projected effective tax rate
20.0% - 21.0%
20.0% - 21.0%
Projected diluted EPS impact of
acquisition-related, up-front collaboration and licensing,
stock-based compensation and other expenses(2)(3):
Acquisition-related expenses / up-front
collaboration and licensing expenses(2)
$0.93 - $0.97
$3.47 - $3.51
Stock-based compensation expenses
$0.47 - $0.53
$0.43 - $0.49
Projected diluted EPS impact of
acquisition-related, up-front collaboration and licensing,
stock-based compensation and other expenses(2)(3)
$1.40 - $1.50
$3.90 - $4.00
____________________ Notes:
(1)
Total stock-based compensation expenses
have a less than one percent impact on non-GAAP projected product
gross margin
(2)
Updates made primarily for the
collaboration with Galapagos, which is expected to close late in
the third quarter of 2019, subject to a number of closing
conditions, including antitrust clearances required by the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder and receipt of
merger control approval from the Austrian Federal Competition
Authority.
(3)
Excludes fair value adjustments of equity
securities and the associated income tax effect, as Gilead is
unable to project future fair value adjustments, and other discrete
tax charges or benefits
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions)
June 30,
December 31,
2019
2018
Cash, cash equivalents and marketable
securities
$
30,234
$
31,512
Accounts receivable, net
3,396
3,327
Inventories
884
814
Property, plant and equipment, net
4,249
4,006
Intangible assets, net
15,152
15,738
Goodwill
4,117
4,117
Other assets
5,178
4,161
Total assets
$
63,210
$
63,675
Current liabilities
$
8,961
$
10,605
Long-term liabilities
31,498
31,536
Stockholders’ equity(1)
22,751
21,534
Total liabilities and stockholders’
equity
$
63,210
$
63,675
____________________ Note:
(1)
As of June 30, 2019, there were 1,267
million shares of common stock issued and outstanding
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Atripla – U.S.
$
122
$
274
$
255
$
502
Atripla – Europe
26
39
42
90
Atripla – Other International
4
36
26
71
152
349
323
663
Biktarvy – U.S.
1,023
183
1,762
218
Biktarvy – Europe
73
2
121
2
Biktarvy – Other International
20
—
26
—
1,116
185
1,909
220
Complera / Eviplera – U.S.
42
82
86
149
Complera / Eviplera – Europe
72
103
134
212
Complera / Eviplera – Other
International
9
14
18
28
123
199
238
389
Descovy – U.S.
246
311
479
585
Descovy – Europe
69
78
137
153
Descovy – Other International
43
14
84
26
358
403
700
764
Genvoya – U.S.
733
904
1,461
1,757
Genvoya – Europe
177
207
370
393
Genvoya – Other International
70
49
164
92
980
1,160
1,995
2,242
Odefsey – U.S.
266
303
548
582
Odefsey – Europe
111
77
217
135
Odefsey – Other International
10
5
19
10
387
385
784
727
Stribild – U.S.
78
144
145
277
Stribild – Europe
24
34
42
63
Stribild – Other International
6
9
17
21
108
187
204
361
Truvada – U.S.
657
649
1,208
1,156
Truvada – Europe
41
86
74
183
Truvada – Other International
20
30
42
78
718
765
1,324
1,417
Other HIV(1) – U.S.
9
11
20
20
Other HIV(1) – Europe
1
3
2
4
Other HIV(1) – Other International
5
5
10
8
15
19
32
32
Revenue share – Symtuza(2) – U.S.
55
—
97
—
Revenue share – Symtuza(2) – Europe
29
13
53
20
Revenue share – Symtuza(2) – Other
International
—
—
—
—
84
13
150
20
Total HIV – U.S.
3,231
2,861
6,061
5,246
Total HIV – Europe
623
642
1,192
1,255
Total HIV – Other International
187
162
406
334
4,041
3,665
7,659
6,835
AmBisome – U.S.
10
14
18
31
AmBisome – Europe
60
55
117
111
AmBisome – Other International
35
34
63
68
105
103
198
210
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY -
(Continued)
(unaudited)
(in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Ledipasvir/Sofosbuvir(3) – U.S.
$
86
$
230
$
203
$
464
Ledipasvir/Sofosbuvir(3) – Europe
22
22
49
78
Ledipasvir/Sofosbuvir(3) – Other
International
85
79
166
137
193
331
418
679
Letairis – U.S.
204
244
401
448
Ranexa – U.S.
19
208
174
403
Sofosbuvir/Velpatasvir(4) – U.S.
219
239
449
508
Sofosbuvir/Velpatasvir(4) –
Europe
156
168
310
366
Sofosbuvir/Velpatasvir(4) – Other
International
118
93
225
162
493
500
984
1,036
Vemlidy – U.S.
71
59
136
106
Vemlidy – Europe
5
3
9
6
Vemlidy – Other International
40
14
72
22
116
76
217
134
Viread – U.S.
9
16
21
23
Viread – Europe
28
32
42
62
Viread – Other International
38
34
84
94
75
82
147
179
Vosevi – U.S.
53
86
98
172
Vosevi – Europe
15
20
31
36
Vosevi – Other International
7
3
9
8
75
109
138
216
Yescarta – U.S.
99
68
189
108
Yescarta – Europe
21
—
27
—
Yescarta – Other International
—
—
—
—
120
68
216
108
Zydelig – U.S.
12
17
23
31
Zydelig – Europe
14
22
29
40
Zydelig – Other International
—
—
1
1
26
39
53
72
Other(5) – U.S.
41
27
77
56
Other(5) – Europe
97
41
117
56
Other(5) – Other International
2
47
8
109
140
115
202
221
Total product sales – U.S.
4,054
4,069
7,850
7,596
Total product sales – Europe
1,041
1,005
1,923
2,010
Total product sales – Other
International
512
466
1,034
935
$
5,607
$
5,540
$
10,807
$
10,541
____________________ Notes:
(1)
Includes Emtriva and Tybost
(2)
Represents Gilead’s revenue from
cobicistat (C), emtricitabine (FTC) and tenofovir alafenamide (TAF)
in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product
commercialized by Janssen Sciences Ireland UC
(3)
Amounts consist of sales of Harvoni and
the authorized generic version of Harvoni sold by Gilead’s separate
subsidiary, Asegua Therapeutics LLC
(4)
Amounts consist of sales of Epclusa and
the authorized generic version of Epclusa sold by Gilead’s separate
subsidiary, Asegua Therapeutics LLC
(5)
Includes Cayston, Hepsera and
Sovaldi. In Europe, the increase for both the three and six months
ended June 30, 2019 was primarily due to approximately $80 million
of favorable adjustments for statutory rebates related to sales of
Sovaldi made in prior years
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190730005933/en/
Investors Robin Washington (650) 522-5688 Sung Lee (650)
524-7792
Media Amy Flood (650) 522-5643
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