Press Releases
October 26, 2000
Gilead Sciences Announces Third Quarter 2000 Financial Results
Total Revenues Increased 17% Over Third Quarter 1999
Foster City, CA -- October 26, 2000
Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the third quarter ended September 30, 2000. For the third quarter, Gilead recorded revenues from net product sales of $37.4 million, royalty revenues of $3.6 million and contract revenues of $4.1 million, for total revenues of $45.1 million. This represents a 17 percent increase over the same quarter in 1999. Total revenues of $38.4 million for the third quarter of 1999 included net product sales of $34.6 million, royalty revenues of $2.5 million and contract revenues of $1.2 million.
The net loss for the three months ended September 30, 2000, was $17.6 million, or $0.38 per share. This compares to a net loss of $30.4 million, or $0.70 per share, for the corresponding 1999 quarter.
“Gilead continues to achieve strong growth in revenues from its marketed products,” said John C. Martin, Ph.D., President and Chief Executive Officer, Gilead Sciences. “This quarter, we saw total product revenue growth of eight percent year-over-year, fueled primarily by strong sales of AmBisome. Gilead’s commitment to the accelerated development of our product pipeline is exemplified by the continued momentum in our late-stage clinical programs for tenofovir DF for HIV and adefovir dipivoxil for HBV.”
Net revenues of $37.4 million from product sales were primarily derived from sales of AmBisome® (amphotericin B) liposome for injection, which accounted for 94 percent of the third quarter product sales. AmBisome sales for the third quarter of 2000 were $35.0 million, a 10 percent increase in sales of this product over the same period in 1999. Excluding the decline in foreign currency exchange rates, AmBisome sales grew by 23 percent for the third quarter of 2000 over the comparable quarter in 1999. Product sales revenue for the third quarter of 2000 also included sales of DaunoXome® (daunorubicin citrate liposome injection) of $1.1 million and sales of VISTIDE® (cidofovir injection) of $1.3 million.
For the third quarter of 2000, royalty revenues resulting from collaborations with corporate partners were $3.6 million. Royalty revenues were booked as follows: royalties of $3.1 million on sales of AmBisome in the United States by Gilead’s co-promotion partner, Fujisawa Healthcare; royalties of $0.2 million on product sales of Tamiflu™ (oseltamivir phosphate) by F. Hoffmann-La Roche Ltd; and royalties of $0.3 million on product sales of VISTIDE outside the United States by Pharmacia Corporation.
Gilead recorded contract revenues from corporate partners for research and development projects of $4.1 million in the third quarter of 2000. This revenue includes a $2.0 million milestone payment received from F. Hoffmann-La Roche Ltd for its August 2000 filing with the Japanese Ministry for Health and Welfare (MHW) for regulatory approval of Tamiflu for the treatment and prophylaxis of influenza A and B virus infection in adults.
Research and development (R&D) expenses for the third quarters of 2000 and 1999 were $35.1 million and $27.7 million, respectively. Major development projects in 2000 include Phase III clinical programs for both tenofovir DF for HIV and adefovir dipivoxil for hepatitis B virus (HBV). Higher spending was associated with the accelerated development and advanced nature of these programs, and represents a 27 percent increase over R&D expenses in the second quarter 2000.
Selling, general and administrative (SG&A) expenses for the three months ended September 30, 2000, were $21.5 million, compared with $34.6 million for the same quarter of 1999. SG&A expenses in the third quarter of 1999 included $15.1 million of merger-related expenses. Excluding the merger related expenses, third quarter 1999 SG&A expenses were $19.5 million.
Net interest income for the third quarter of 2000 was $3.8 million, compared with $2.2 million for the corresponding quarter in 1999. The increase in net interest income was due primarily to the conversion of Gilead’s outstanding debentures to common stock in August 2000 and higher interest rates on our investment portfolio.
Additionally, the company reported equity in the loss of its unconsolidated affiliate of $0.2 million and $1.2 million for the three months ended September 30, 2000 and 1999, respectively. These losses are derived from Gilead’s 49 percent interest in Proligo L.L.C., a manufacturing joint venture between Gilead and SKW Americas, Inc.
Gilead also reported its results of operations for the nine months ended September 30, 2000. The company recorded net revenues from product sales of $111.7 million and aggregate contract and royalty revenues of $28.6 million, for total revenues of $140.3 million, and net interest income of $9.1 million. This compares to revenues from product sales of $100.6 million and aggregate contract and royalty revenues of $19.6 million, for total revenues of $120.2 million, and net interest income of $7.6 million for the nine months ended September 30, 1999. The net loss for the nine months ended September 30, 2000 was $27.5 million, or $0.61 per share, compared to a net loss of $57.5 million, or $1.36 per share for the same nine-month period in 1999.
As of September 30, 2000, the Company had cash, cash equivalents and marketable securities of $293.2 million, compared to $294.4 million on December 31, 1999.
Third Quarter Highlights
“Gilead continues to realize its potential by pursuing programs to expand the indications and foreign market approvals for our currently marketed treatments. Additionally we are working diligently to advance our late-stage development products tenofovir DF for HIV and adefovir dipivoxil for HBV toward New Drug Application filings with the FDA and European regulatory authorities,” said Dr. Martin. “Every clinical research achievement strengthens our goal of serving patients with unmet medical needs while building long-term value for shareholders.”
AmBisome® (amphotericin B) liposome for injection
During the first week of the third quarter, Gilead announced it had received FDA approval of AmBisome for the treatment of cryptococcal meningitis in AIDS patients. The approval gave AmBisome the distinction of being the first lipid agent to receive an indication for cryptococcal meningitis in HIV-infected patients and expanded the product’s existing indications.
AmBisome was also featured in ten presentations in September at the 40th Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC) in Toronto, Canada. One presentation was given by Shuam Sundar, M.D., Professor of Medicine at the Institute of Medical Sciences at Banaras Hindu University in Varanasis, India. Dr. Sundar reported results of an open-label study demonstrating the safety and efficacy of a single dose of AmBisome when used to treat visceral leishmaniasis. The study of 230 patients found that following treatment with AmBisome, 97 percent of patients were parasite-free 30 days after treatment and 90 percent remained parasite-free six months post-treatment.
A second presentation detailed a study examining AmBisome’s pharmacoeconomic benefits versus Abelcet® (amphotericin B) lipid complex in the treatment of persistently febrile neutropenic patients with presumed fungal infection. Richard Greenberg, M.D., Professor of Medicine at the University of Kentucky, reported AmBisome 3 mg/kg/day proved to be more cost-effective than Abelcet 5 mg/kg/day due to a significant reduction in treatment-related nephrotoxicity in patients taking AmBisome. Researchers concluded that nephrotoxicity is associated with higher hospital costs and increases the likelihood of renal dialysis.
Tamiflu™ (oseltamivir phosphate)
Tamiflu was also the subject of several posters and presentations at this year’s ICAAC meeting. Gilead’s marketing partner, Hoffmann-La Roche Inc. (Roche), announced new data showing Tamiflu’s benefits are significantly improved when taken earlier in the course of disease. In addition, data from a study of influenza-infected children greater than one year of age demonstrated that treatment with Tamiflu significantly reduced the duration of influenza illness by 37 percent and reduced the severity of influenza symptoms by nearly 30 percent. The incidence of secondary complications (such as bronchitis, pneumonia, otitis media or sinusitis) requiring antibiotics was also greatly reduced in the Tamiflu treatment group.
Earlier in the third quarter, Roche announced it had submitted Tamiflu to the Japanese Ministry for Health and Welfare for regulatory approval for influenza A and B virus infection in adults, both as treatment and prophylaxis. This application was granted expedited review. Tamiflu is already approved for marketing in 26 countries worldwide, including the United States, Canada, Switzerland, and in many Latin American countries.
Tenofovir disoproxil fumarate (tenofovir DF)
Tenofovir DF was featured at ICAAC in a presentation of final data from Gilead’s 48-week Phase II dose-ranging clinical trial (Study 902). Robert Schooley, M.D., Professor and Division Head, Department of Infectious Diseases, University of Colorado, presented data that showed tenofovir DF was associated with significant and sustained antiviral activity in heavily treatment-experienced HIV patients. Through 48 weeks, there was no difference in the rate of grade 3 or 4 laboratory abnormalities or clinical adverse events among the three dosage arms of tenofovir DF and the discontinuation rate in the study was similar across all treatment arms.
In October, at the 5th International Conference on Drug Therapy in HIV Infection in Glasgow, Scotland, Gilead presented data from a prospective virology sub-study of Study 902 which demonstrate that the addition of tenofovir DF resulted in a significant reduction in HIV RNA in treatment-experienced patients with common viral mutations associated with thymidine analog (AZT/d4T) and/or 3TC drug resistance. Additionally, patients treated with tenofovir DF for 48 weeks did not develop viral mutations that led to virological failure.
Conference Call
Gilead will host a conference call today, October 26, 2000, at 4:30 p.m. ET. The dial-in number for the call is 888-849-9221 domestic; 212-896-6158 international. The replay of this call will be available from 7:00 p.m. October 26, 2000 until 7:00 p.m. on October 29, 2000. The dial-in number for the replay is 800-633-8284 domestic, 858-812-6440 international; the password is 16526100. Gilead will also be webcasting the conference call; this feature will be available on our website at www.gilead.com. The information provided on the teleconference and on the webcast is only accurate at the time of the call, and Gilead will take no responsibility for providing updated information.
About Gilead
Gilead Sciences, Inc., headquartered in Foster City, CA, is an independent biopharmaceutical company that seeks to provide accelerated solutions for patients and the people who care for them. Gilead discovers, develops, manufactures and commercializes proprietary therapeutics for challenging infectious diseases (viral, fungal and bacterial infections) and cancer. Gilead maintains research, development or manufacturing facilities in Foster City, CA; Boulder, CO; San Dimas, CA; Cambridge, UK, and Dublin, Ireland, and sales and marketing organizations in the United States, Europe and Australia.
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. These statements include those regarding Gilead’s future financial results, including: revenues, research and development expenses, selling, general and administrative expenses, the efficacy of any marketed or pipeline development products, the ability to obtain marketing approval for Gilead’s marketed or pipeline development products, or the competitive positioning of its marketed or pipeline development products. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. These risks and uncertainties include those that can cause fluctuations in our financial results, such as our ability and the ability of our partners to successfully market our products; our ability to control the timing and amount of spending in our research and clinical programs; fluctuations in foreign currency against the U.S. dollar; our ability to achieve and the timing of milestones, as well as risk and uncertainties that effect our future prospects such as the risk that we may not continue to observe the safety, tolerability and efficacy data for our products and product candidates that we are observing today; other risks relating to the regulatory approval of our products and product candidates; and other risks identified from time to time in the Company’s reports filed with the U.S. Securities and Exchange Commission. The Company directs readers to its Annual Report on Form 10-K, for the year ended December 31, 1999, filed in March 2000, and its Quarterly Report on Form 10-Q 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. Additionally, Gilead does not take responsibility to update information contained in this press release or the conference call as it changes.
|
Three months ended |
Nine months ended | |||||||
|
September 30, |
September 30, | |||||||
|
2000 |
1999 |
2000 |
1999 | |||||
|
(unaudited) |
(unaudited) | |||||||
|
Revenues: |
||||||||
|
Product sales, net |
$ 37,403 |
$ 34,598 |
$ 111,737 |
$ 100,628 | ||||
|
Royalty revenues, net |
3,609 |
2,545 |
19,331 |
7,426 | ||||
|
Contract revenues |
4,077 |
1,247 |
9,222 |
12,149 | ||||
|
Net revenues |
45,089 |
38,390 |
140,290 |
120,203 | ||||
|
Cost of products sold |
9,383 |
7,258 |
26,014 |
21,745 | ||||
|
Gross profit |
35,706 |
31,132 |
114,276 |
98,458 | ||||
|
Operating expenses: |
||||||||
|
Research and development |
35,132 |
27,730 |
88,440 |
79,872 | ||||
|
Selling, general and administrative |
21,515 |
34,620 |
59,503 |
78,719 | ||||
|
Total operating expenses |
56,647 |
62,350 |
147,943 |
158,591 | ||||
|
Loss from operations |
(20,941) |
(31,218) |
(33,667) |
(60,133) | ||||
|
Interest income |
4,441 |
3,866 |
12,746 |
12,537 | ||||
|
Interest expense |
(604) |
(1,623) |
(3,659) |
(4,939) | ||||
|
Loss before provision for income taxes and equity in loss of unconsolidated affiliate |
(17,104) |
|
(24,580) |
| ||||
|
Provision for income taxes |
214 |
220 |
1,046 |
726 | ||||
|
Equity in loss of unconsolidated affiliate |
246 |
1,170 |
1,885 |
4,271 | ||||
|
Net loss |
$ (17,564) |
$ (30,365) |
$ (27,511) |
$ (57,532) | ||||
|
Basic and diluted net loss per common share |
$ (.38) |
$ (.70) |
$ (.61) |
$ (1.36) | ||||
|
Common shares used in the calculation of |
||||||||
|
basic and diluted net loss per share |
46,089 |
43,467 |
45,007 |
42,446 | ||||
Note: Certain prior period amounts have been reclassified to conform to the current presentation.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
September 30, |
December 31, | ||
|
2000 |
1999 | ||
|
(unaudited) |
(note) |
||
| Assets Cash, cash equivalents and marketable securities |
$ 293,199 |
$ 294,394 | |
|
Other current assets |
76,641 |
77,587 | |
|
Total current assets |
369,840 |
371,981 | |
|
Property, plant and equipment, net |
54,093 |
51,398 | |
|
Other noncurrent assets |
11,982 |
13,429 | |
|
$ 435,915 |
$ 436,808 | ||
|
Liabilities and stockholders' equity |
|||
|
Current liabilities |
$ 50,632 |
$ 47,877 | |
|
Long-term obligations |
9,183 |
91,639 | |
|
Stockholders' equity |
376,100 |
297,292 | |
|
$ 435,915 |
$ 436,808 | ||
|
Note: Derived from audited financial statements at that date. | |||
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AmBisome, VISTIDE and DaunoXome are registered trademarks of Gilead Sciences, Inc.
Tamiflu is a trademark of Hoffmann-La Roche.