Press Releases
January 30, 2003
Gilead Sciences Announces Fourth Quarter and Full Year 2002 Financial Results; Full Year Product Sales of $424 Million, Up 122 Percent over 2001; Net Income of $72 Million for 2002
FOSTER CITY, Calif.--(BUSINESS WIRE)--Jan. 30, 2003--Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of operations for the fourth quarter ended December 31, 2002. Total revenues for the fourth quarter were $145.0 million, up 95 percent, compared to total revenues of $74.3 million for the fourth quarter of 2001. Net income for the fourth quarter 2002 was $35.5 million, or $0.17 per diluted share. This compares to net income in the fourth quarter 2001 of $131.6 million, or $0.62 per share, which included a one-time non-operating gain of $157.8 million from the sale of oncology assets and related technology to OSI Pharmaceuticals (OSI).
Gilead achieved positive operating cash flow for both the fourth quarter and the full year 2002. Operating cash flow for the quarter was $35.5 million, driven by higher earnings and improved collections compared with cash used in operations of $34.2 million for the same period last year. Operating cash flow for the year was $74.4 million, compared with cash used in operations of $127.0 million for the full year 2001.
Net revenues from product sales totaled $139.2 million, up 133 percent from the fourth quarter 2001. This growth was primarily driven by higher revenues from Viread(R) (tenofovir disoproxil fumarate) and AmBisome(R) (amphotericin B) liposome for injection. Sales of Viread were $85.0 million in the fourth quarter of 2002, up from $13.2 million in the fourth quarter of 2001 and $68.9 million in the third quarter of 2002. AmBisome sales for the fourth quarter of 2002 were $49.6 million, an increase of 16 percent compared to the fourth quarter of 2001. Excluding the impact of foreign currencies relative to the U.S. dollar, AmBisome sales grew 7 percent for the fourth quarter of 2002 over the comparable quarter of 2001.
"Delivering on its promise, Gilead achieved profitability on an operating basis for the fourth quarter and full year 2002, driven by the solid financial performance of Viread and AmBisome," said John C. Martin, PhD, president and chief executive officer of Gilead Sciences. "This is a testament to the need for novel anti-infectives with unique profiles, and Gilead's commitment to deliver returns to its investors."
For the fourth quarter of 2002, royalty and contract revenues resulting from collaborations with corporate partners totaled $5.8 million. These revenues primarily relate to royalties on sales of AmBisome in the United States by Gilead's co-promotion partner Fujisawa Healthcare.
Research and development expenses for the fourth quarter of 2002 were $35.0 million, compared to $44.6 million for the same quarter in 2001. The lower expenses during the fourth quarter of 2002 is primarily attributable to lower clinical spending for Viread and the divestiture of Gilead's oncology portfolio to OSI in December 2001.
Selling, general and administrative expenses for the three months ended December 31, 2002 were $57.6 million, compared to $41.5 million for the same quarter of 2001. The significant increase in expenses is primarily due to increased global marketing efforts and the expansion of Gilead's U.S. and European sales forces to support the commercial launches of Viread and Hepsera(TM) (adefovir dipivoxil).
Gilead also reported its results of operations for the year ended December 31, 2002. The company recorded net revenues from product sales of $423.9 million and aggregate contract and royalty revenues of $42.9 million. Sales of Viread for the year ended December 31, 2002 were $225.8 million, or 53 percent of product sales. AmBisome sales for the year ended December 31, 2002 were $185.7 million, a 13 percent increase over the year ended December 31, 2001. Excluding the impact of foreign currencies relative to the U.S. dollar, AmBisome sales grew 9 percent for the year ended December 31, 2002 over the comparable period of 2001. Net revenues of $466.8 million for the year ended December 31, 2002 compare to net revenues of $233.8 million in 2001. Net revenues for 2001 included product sales of $191.0 million and aggregate contract and royalty revenues of $42.8 million.
Net income for the year ended December 31, 2002 was $72.1 million, or $0.35 per diluted share, which includes a one-time non-operating loss of $16.0 million realized upon the July 2002 sale of Gilead's shares in OSI. This compares to net income of $52.3 million, or $0.26 per diluted share, for the year ended December 31, 2001, which includes the gain of $157.8 million from the sale of oncology assets and related technology to OSI.
Research and development expenses for the year ended December 31, 2002 and 2001 were $134.8 million and $185.6 million, respectively. The substantially lower expenses during 2002 were attributable to lower Viread clinical trial costs, the divestiture of Gilead's oncology portfolio to OSI in December 2001, and upfront licensing payments in 2001.
Selling, general and administrative expenses for the year ended December 31, 2002 were $181.3 million compared to $125.1 million for the same period in 2001. The significant increase in expenses is primarily due to increased global marketing efforts and the expansion of Gilead's U.S. and European sales forces to support the commercial launches of Viread and Hepsera.
Corporate Highlights
On December 4, 2002, Gilead announced an agreement to acquire Triangle Pharmaceuticals, Inc. The transaction, structured as a two-step acquisition, was comprised of a cash tender offer for all of the outstanding Triangle common stock at $6.00 per share, followed by a cash merger in which Gilead acquired all remaining outstanding Triangle common stock at $6.00 per share. The transaction was completed on January 23, 2003.
In December 2002, the company sold $345 million of convertible notes, including the fully exercised over-allotment of $45 million, to qualified institutional buyers through a Rule 144A offering. Gilead expects to use the proceeds from the offering for general corporate purposes, including the acquisition of Triangle Pharmaceuticals, Inc., potential future product or company acquisitions, capital expenditures and working capital.
Products and Pipeline Highlights
"The fourth quarter marked a period of significant progress for Gilead, underscored by the continued uptake of Viread and the introduction of Hepsera to the U.S. market," said Dr. Martin. "Importantly, our acquisition of Triangle Pharmaceuticals significantly expanded our pipeline and increased our opportunity for continued growth. We believe that we are uniquely positioned to take full advantage of the value that the Triangle product portfolio has to offer, especially through the potential co-formulation of Viread and emtricitabine (FTC)."
Viread for HIV/AIDS
During the fourth quarter of 2002, Gilead established pricing for Viread and launched the drug in additional territories, including Austria and Australia. In January, Gilead launched Viread in Italy.
In late October 2002, the Bill & Melinda Gates Foundation announced that it awarded Family Health International (FHI) a $6.5 million grant to conduct a multinational clinical trial evaluating Viread as a method of HIV prevention in resource-poor countries with high HIV incidence. Gilead will be supplying Viread for the study, which is designed to evaluate the safety and efficacy of the drug as a method of reducing the risk of HIV infection in sexually active women who are regularly exposed to the virus.
In December 2002, Gilead announced that it would provide every country in Africa and 15 additional countries in other parts of the world classified as "least developed" by the United Nations access to Viread at no profit pricing. The program, which is expected to be operational by mid-2003, will provide Viread at a reduced price that represents only the cost of manufacturing and distributing the drug and administering the program. Gilead also will participate in the "Development of Antiretroviral Therapies" (DART) study, a clinical trial sponsored by United Kingdom's Medical Research Council designed to evaluate antiretroviral management strategies in resource-limited parts of the world.
Hepsera for Chronic Hepatitis B
In early November 2002, Gilead took part in the 53rd Annual Meeting of the American Association for the Study of Liver Diseases (AASLD) in Boston, Massachusetts. During the meeting the company presented 48-week results from a clinical trial (Study 461) evaluating the antiviral activity and safety of Hepsera in patients with lamivudine-resistant virus.
Also in November 2002, the company announced that the European Union's Committee for Proprietary Medicinal Products (CPMP), the scientific committee of the European Medicines Evaluation Agency (EMEA), recommended granting Marketing Authorisation for Hepsera for the treatment of chronic hepatitis B in all 15 member states of the European Union. On the basis of the CPMP's recommendation, the European Commission will consider granting final Marketing Authorisation, which is anticipated to occur by mid-2003.
Emtricitabine (FTC) for HIV/AIDS
Emtricitabine, Triangle's lead product prior to the company's acquisition by Gilead, was accepted for review in January 2003 by the European Union's EMEA. Emtricitabine is a one pill, once daily nucleoside analogue for the treatment of HIV infection and also is currently under review by the U.S. Food and Drug Administration (FDA), with a PDUFA (Prescription Drug User Fee Act) action date of July 3, 2003.
Conference Call
To access the live call or the seven-day archive via the internet, log on to www.gilead.com. Please connect to the company's website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to view the webcast. Alternatively, please call 1-800-967-7134 (U.S.) or 1-719-457-2625 (international) to access the call. Telephone replay is available approximately two hours after the call through 8:30 p.m. Eastern Time, February 2, 2003. To access, please call 888-203-1112 (U.S.) or 719-457-0820 (international). The conference ID number is 182919.
About Gilead Sciences
Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes therapeutics to advance the care of patients suffering from life-threatening diseases worldwide. The company has six marketed products and focuses its research and clinical programs on anti-infectives. Headquartered in Foster City, CA, Gilead has operations 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 that can affect Gilead's future financial results, including those relating to: revenues, research and development expenses, and selling, general and administrative expenses, the efficacy of any marketed or pipeline development products, the ability to file for or obtain marketing approval for Gilead's pipeline development products, synergies associated with the acquisition of Triangle 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 and maintain revenue growth, in particular our ability to sustain the uptake and revenues for Viread; our ability to control the timing and amount of spending in our research and clinical programs; our ability to successfully integrate Triangle into our operations and develop a co-formulated product, 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 affect our future prospects such as the risk that we may not continue to observe the safety, tolerability and efficacy data for Viread, Hepsera and emtricitabine that we are observing today; the risk that we may not obtain European marketing approval for Hepsera or U.S and European marketing approval for emtricitabine and may not be able to promptly launch these products in these territories following any such approvals; 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, 2001, filed in March 2002. 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.
AmBisome and Viread are registered trademarks, and Hepsera is a trademark of Gilead Sciences, Inc.
For more information on Gilead Sciences, 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 OPERATIONS
(in thousands, except per share amounts)
Three months ended Year ended
December 31, December 31,
------------------- -------------------
2002 2001 2002 2001
--------- --------- --------- ---------
(unaudited) (unaudited)
Revenues:
Product sales, net $139,179 $59,634 $423,879 $190,970
Royalty revenue, net 3,910 5,987 20,406 22,969
Contract revenue 1,938 8,710 22,505 19,830
--------- --------- --------- ---------
Net revenues 145,027 74,331 466,790 233,769
Cost of goods sold 19,552 13,178 69,724 43,764
--------- --------- --------- ---------
Gross profit 125,475 61,153 397,066 190,005
Operating expenses:
Research and development 35,015 44,601 134,758 185,553
Selling, general and
administrative 57,621 41,476 181,301 125,141
--------- --------- --------- ---------
Total operating expenses 92,636 86,077 316,059 310,694
--------- --------- --------- ---------
Income (loss) from operations 32,839 (24,924) 81,007 (120,689)
Gain on sale of oncology
assets - 157,771 - 157,771
Gain on sale of unconsolidated
affiliate - - - 8,754
Loss on sale of marketable
securities (note 1) - - (16,048) -
Interest income 7,187 5,396 22,291 25,591
Interest expense (3,471) (3,498) (13,853) (13,980)
--------- --------- --------- ---------
Income before provision for
income taxes, equity in loss
of unconsolidated affiliate
and cumulative effect of
change in accounting
principle 36,555 134,745 73,397 57,447
Provision for income taxes 1,076 3,168 1,300 4,135
Equity in loss of
unconsolidated affiliate - - - 2,130
--------- --------- --------- ---------
Income before cumulative
effect of change in
accounting principle 35,479 131,577 72,097 51,182
Cumulative effect of change in
accounting principle (note 2) - - - 1,089
--------- --------- --------- ---------
Net income $35,479 $131,577 $72,097 $52,271
========= ========= ========= =========
Amounts per common share -
basic: (note 3)
Income before cumulative
effect of change in
accounting principle $ 0.18 $ 0.69 $ 0.37 $ 0.27
Cumulative effect of change in
accounting principle - - - 0.01
--------- --------- --------- ---------
Net income per share - basic $ 0.18 $ 0.69 $ 0.37 $ 0.28
========= ========= ========= =========
Shares used in per share
calculation - basic 196,987 192,030 195,543 190,245
========= ========= ========= =========
Amounts per common share -
diluted: (note 3)
Income before cumulative
effect of change in
accounting principle $ 0.17 $ 0.62 $ 0.35 $ 0.25
Cumulative effect of change in
accounting principle - - - 0.01
--------- --------- --------- ---------
Net income per share - diluted $ 0.17 $ 0.62 $ 0.35 $ 0.26
========= ========= ========= =========
Shares used in per share
calculation - diluted 207,392 215,956 206,477 202,321
========= ========= ========= =========
Notes:
(1) Represents a one-time non-operating loss from the July 2002 sale
of Gilead's shares in OSI Pharmaceuticals.
(2) Gilead adopted Statement of Financial Accounting Standards No. 133
(SFAS 133) Accounting for Derivative Instruments and Hedging
Activities effective January 1, 2001. This change was accounted for as
the cumulative effect of a change in accounting principle.
(3) The net income (loss) per share and number of shares used in the
per share calculation for all periods presented reflect the
two-for-one stock split effective March 8, 2002.
GILEAD SCIENCES, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2002 2001
------------ -------------
(note 1)
Assets
Cash, cash equivalents and marketable
securities $942,374 $582,851
Other current assets 241,386 124,908
------------ -------------
Total current assets 1,183,760 707,759
Property, plant and equipment, net 67,727 62,828
Other noncurrent assets 36,696 24,199
------------ -------------
$1,288,183 $794,786
============ =============
Liabilities and stockholders' equity
Current liabilities $104,892 $80,117
Long-term liabilities 611,950 262,232
Stockholders' equity 571,341 452,437
------------ -------------
$1,288,183 $794,786
============ =============
Notes:
(1) Derived from audited financial statements at that date.
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| CONTACT: | Gilead Sciences, Inc. |
|---|---|
| John Milligan, 650/522-5756 | |
| Susan Hubbard, 650/522-5715 | |