Gilead Sciences Announces Second Quarter 2000 Financial Results

Total Revenues Increased 15% Over Second Quarter 1999

Foster City, CA -- July 27, 2000

Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the second quarter ended June 30, 2000. For the second quarter, Gilead recorded revenues from net product sales of $38.0 million, royalty revenues of $7.7 million and contract revenues of $4.3 million, for total revenues of $50.0 million, a 15 percent increase over the same quarter in 1999. Total revenues of $43.5 million for the second quarter of 1999 included net product sales of $34.0 million, royalty revenues of $2.8 million and contract revenues of $6.8 million.

The net loss for the three months ended June 30, 2000 was $4.2 million, or $0.09 per share. This compares to a net loss of $11.7 million, or $0.28 per share, for the same quarter in 1999.

Net revenues from product sales were primarily derived from sales of AmBisome® ((amphotericin B) liposome for injection), which accounted for 94 percent of product sales for the second quarter of 2000. AmBisome sales for the second quarter of 2000 were $35.9 million, a 14 percent increase in sales of this product over the same period in 1999. In addition, Gilead recorded product sales from sales of DaunoXome® (daunorubicin citrate liposome injection) of $1.1 million and from VISTIDE® (cidofovir injection) of $1.1 million during the second quarter of 2000.

Royalty revenues in the second quarter of 2000 resulting from collaborations with corporate partners include royalties of $3.5 million on product sales of AmBisome in the United States by Gilead’s co-promotion partner Fujisawa Healthcare, royalties of $3.7 million on product sales of Tamiflu™ (oseltamivir phosphate) by F. Hoffmann-La Roche Ltd, and royalties of $0.5 million on product sales of VISTIDE outside the United States by Pharmacia & Upjohn.

Gilead recorded contract revenues from corporate partners for research and development projects of $4.3 million in the second quarter of 2000. This revenue includes a $2.0 million milestone payment received from F. Hoffmann-La Roche Ltd for the May 2000 filing of a supplemental New Drug Application to the U.S. Food and Drug Administration for Tamiflu for the prevention of influenza in adults and adolescents 13 years and older.

Research and development expenses for both the second quarter of 2000 and the second quarter of 1999 were $27.3 million. Major development projects in 2000 include tenofovir disoproxil fumarate for HIV and adefovir dipivoxil for HBV, both in Phase III clinical development. Higher spending for these programs was offset by significantly lower expenses in 2000 for the development of adefovir dipivoxil for HIV, a program Gilead discontinued in the fourth quarter of 1999, and by reduced research activities at Gilead’s Boulder, Colorado facility. Selling, general and administrative (SG&A) expenses for the three months ended June 30, 2000 were $19.8 million, compared with $21.6 million for the same quarter of 1999. SG&A expenses in the second quarter of 1999 included approximately $1.6 million of merger-related expenses. Also contributing to the decrease in SG&A in 2000 was the cost savings realized from the elimination of duplicate administrative positions subsequent to the merger in July 1999.

Net interest income for the second quarter of 2000 was $2.8 million, compared with $2.6 million for the same quarter in 1999.

The Company also reported equity in the loss of its unconsolidated affiliate of $0.7 million and $1.5 million for the three months ended June 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 six months ended June 30, 2000. The Company recorded net revenues from product sales of $74.3 million and aggregate contract and royalty revenues of $20.9 million, for total revenues of $95.2 million and net interest income of $5.2 million. This compares to revenues from product sales of $66.0 million and aggregate contract and royalty revenues of $15.8 million, for total revenues of $81.8 million and net interest income of $5.4 million for the six months ended June 30, 1999. The net loss for the six months ended June 30, 2000 was $9.9 million, or $0.22 per share, compared to a net loss of $27.2 million, or $0.65 per share for the six months ended June 30, 1999.

As of June 30, 2000, the Company had cash, cash equivalents and marketable securities of $295.5 million, compared to $294.4 million on December 31, 1999.

All amounts prior to the completion of the merger with NeXstar Pharmaceuticals in July 1999 have been restated under the pooling-of-interests method of accounting to include the balances and results of operations of NeXstar. Certain prior period amounts have been reclassified to conform to the current presentation.

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.

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(See attached tables)

AmBisome, VISTIDE and DaunoXome are registered trademarks of Gilead Sciences, Inc. Tamiflu is a trademark of Hoffmann-La Roche.

For more information on Gilead Sciences, please visit our Web site at www.gilead.com or call the Gilead Corporate Communications Department at 1-800-GILEAD-5 (1-800-445-3235).

 

Three months ended

 

Six months ended

 

June 30,

 

June 30,

 

2000

 

1999

 

2000

 

1999

 

(unaudited)

 

(unaudited)

Revenues:

             

Product sales, net

$ 37,994

 

$ 33,982

 

$ 74,334

 

$ 66,030

Royalty revenues, net

7,680

 

2,793

 

15,722

 

4,881

Contract revenues

4,305

 

6,762

 

5,145

 

10,902

Net revenues

49,979

43,537

95,201

81,813

Cost of products sold

8,684

 

7,088

 

16,631

 

14,487

Gross profit

41,295

 

36,449

 

78,570

 

67,326

Operating expenses:

             

Research and development

27,251

 

27,253

 

53,308

 

52,142

Selling, general and administrative

19,829

 

21,559

 

37,988

 

44,099

Total operating expenses

47,080

 

48,812

 

91,296

 

96,241

Loss from operations

(5,785)

 

(12,363)

 

(12,726)

 

(28,915)

Interest income

4,360

 

4,230

 

8,305

 

8,671

Interest expense

(1,518)

 

(1,646)

 

(3,055)

 

(3,316)

Loss before provision for income taxes and equity in loss of unconsolidated affiliate

(2,943)

 


(9,779)

 

(7,476)

 


(23,560)

Provision for income taxes

525

 

424

 

832

 

506

Equity in loss of unconsolidated affiliate

718

 

1,488

 

1,639

 

3,101

Net loss

$ (4,186)

 

$ (11,691)

 

$ (9,947)

 

$ (27,167)

Basic and diluted net loss per common share

$ (.09)

 

$ (.28)

 

$ (.22)

 

$ (.65)

Common shares used in the calculation of

             

basic and diluted net loss per share

44,591

 

42,115

 

44,466

 

41,936

Note: Certain prior period amounts have been reclassified to conform to the current presentation.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30,

 

December 31,

 

2000

 

1999

Assets
Cash, cash equivalents and
marketable securities

$ 295,547

 

$ 294,394

Other current assets

75,900

 

77,587

Total current assets

371,447

 

371,981

Property, plant and equipment, net

51,771

 

51,398

Other noncurrent assets

13,319

 

13,429

$ 436,537

 

$ 436,808

Liabilities and stockholders' equity

     

Current liabilities

$ 44,630

 

$ 47,877

Long-term obligations

89,700

 

91,639

Stockholders' equity

302,207

 

297,292

$ 436,537

 

$ 436,808

Note: Derived from audited financial statements at that date.