April 30, 2002
Gilead Sciences Announces First Quarter 2002 Financial Results; Product Revenues Include $27.2 Million in Viread Sales
The net loss for the first quarter of 2002 was $3.8 million, or $0.02 per share. This compares to a net loss in the first quarter of 2001 of $21.7 million, or $0.11 per share, including the cumulative effect of a change in accounting principle related to the company's adoption of Statement of Financial Accounting Standards Nos. 133 and 138.
Net revenues from product sales were primarily derived from sales of AmBisome(R) (amphotericin B) liposome for injection, accounting for 56 percent of product sales for the first quarter of 2002. AmBisome sales for the first quarter of 2002 were $39.8 million, a decrease of 5 percent compared to the first quarter of 2001. Excluding the impact of the decline in foreign currencies relative to the U.S. Dollar, AmBisome sales decreased by 1 percent for the first quarter of 2002 over the comparable quarter of 2001. Sales of Viread(TM) (tenofovir disoproxil fumarate) for human immunodeficiency virus (HIV) were $27.2 million in the first quarter of 2002, or 38 percent of product sales. In addition, Gilead recorded other product sales of $3.8 million during the first quarter of 2002, compared to $3.2 million in the first quarter of 2001.
"We are very pleased with Viread sales results during the quarter," said John C. Martin, Ph.D., president and chief executive officer of Gilead Sciences. "In its first full quarter on the market, prescription trends for Viread were strong, reflecting the successful launch in the United States, bolstered by the rapid approval and initial launches in the European Union. Based on NDC Health prescription data, over the first 25 weeks of launch, the uptake for Viread in the United States is tracking better than or equal to recent launches of other HIV antiviral drugs in the nucleoside reverse transcriptase inhibitor class."
For the first quarter of 2002, royalty and contract revenues resulting from collaborations with corporate partners totaled $7.7 million. These revenues include contract revenues for the manufacturing agreement with OSI Pharmaceuticals, Inc., royalties on sales of AmBisome in the United States by Gilead's co-promotion partner Fujisawa Healthcare, royalties on sales of Tamiflu(R) (oseltamivir phosphate) by Hoffmann-La Roche and royalties on product sales of Vistide(R) (cidofovir injection) outside the United States by Pharmacia Corporation.
Research and development (R&D) expenses for the first quarter of 2002 were $33.6 million, compared to $51.1 million for the same quarter in 2001. The substantially lower spending during the first quarter of 2002 was attributable in part to the recognition in the first quarter 2001 of $10.6 million of a $13.0 million up-front payment to Cubist Pharmaceuticals related to the European licensing agreement for daptomycin signed in January 2001. In addition, Gilead's expenses associated with the Viread clinical program have decreased, and oncology expenses have been largely eliminated due to the divestiture of this program to OSI Pharmaceuticals in December 2001.
Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2002, were $39.8 million, compared to $21.9 million for the same quarter of 2001. The significant increase in expenses is primarily due to Gilead's increased global marketing efforts and the expansion of Gilead's U.S. and European sales forces to support the commercial launch of Viread for HIV.
Net interest income for the first quarter of 2002 was $2.1 million, compared to $3.8 million for the same quarter in 2001. This decrease is attributable to the significant decline in interest rates over the past year.
The income tax benefit for the first quarter of 2002 was $1.0 million, compared to income tax expense of $0.5 million for the first quarter 2001. The benefit reported in 2002 is due to a $1.3 million credit recognized because of recently enacted tax law changes.
As of March 31, 2002, the company had cash, cash equivalents and marketable securities of $564.7 million, compared to $582.9 million at December 31, 2001.
On January 30, Gilead announced that its Board of Directors approved a two-for-one stock split of the company's outstanding common stock. The split, the company's second in two years, increased the total number of shares outstanding from approximately 96,688,000 to 193,376,000. The stock began trading at the post-split price on March 8, 2002.
On March 29, the company announced that Dr. John Milligan was promoted to senior vice president and chief financial officer. In his new post, Dr. Milligan will be responsible for corporate development, communications, information technology and finance. Former chief financial officer Sharon Surrey-Barbari will remain with the company through the middle of the year to assist in the transition.
On April 29, Gilead and GlaxoSmithKline (GSK) announced the signing of a licensing agreement for the rights to commercialize adefovir dipivoxil for the treatment of chronic hepatitis B in Asia, Latin America and other territories. Under the agreement, Gilead will retain rights to adefovir dipivoxil in the United States, Canada, Eastern and Western Europe, Australia and New Zealand. GSK will receive exclusive rights to adefovir dipivoxil solely for the treatment of hepatitis B in all countries outside of the Gilead territories, the most significant of which are China, Korea, Japan and Taiwan. GSK paid Gilead an up-front licensing fee of $10 million, and Gilead is entitled to receive additional cash payments of up to $30 million upon achievement of certain milestones. GSK will be responsible for all development and commercialization activities in these territories and will pay Gilead an undisclosed royalty on net sales of adefovir dipivoxil.
Products and Pipeline Highlights
"The first quarter of fiscal 2002 was defined by the successful achievement of many corporate, commercial and scientific milestones. We received European approval of Viread in February, rapidly launching the product in the United Kingdom, Germany and France," commented Dr. Martin. "In addition, we announced positive data from several studies, which further validate the utility of Viread in various patient populations. Also during the quarter we submitted marketing applications for adefovir dipivoxil for chronic hepatitis B in both the United States and European Union, and initiated Phase I studies of GS 7340, a novel amidate prodrug of tenofovir for the potential treatment of HIV."
Viread(TM) (tenofovir disoproxil fumarate) for HIV
In early February, Gilead received authorization from the European Commission (EC) to market Viread for the treatment of HIV infection in the 15 member states of the European Union (EU). Viread is approved in Europe for use in combination with other antiretroviral agents for the treatment of HIV infection in patients who are experiencing early virological failure.
At the 9th Conference on Retroviruses and Opportunistic Infections in Seattle in late February, Gilead released promising data from several studies of Viread, including:
-- 48-week results from a Phase III clinical trial (Study 907), a double-blind, placebo-controlled clinical trial of Viread added to a stable background regimen of antiretroviral agents in 550 treatment-experienced patients. The results demonstrated that highly treatment-experienced HIV-infected patients who received Viread in addition to their existing antiretroviral regimen (n=368) achieved a significant HIV RNA reduction of 0.57 log10 copies/mL through 24 weeks, which was confirmed through 48 weeks. -- 21-day results from Study 917, an open-label viral dynamics study designed to assess the anti-HIV activity of Viread as monotherapy in antiretroviral-naive patients infected with HIV. Data from this study demonstrated that antiretroviral-naive patients experienced a mean decrease of 1.5 log10 copies/mL in HIV RNA when treated with Viread once daily as monotherapy for 21 days. -- 24-week and 12-week results from two studies of Viread in patients co-infected with HIV and chronic hepatitis B. Study results showed that treatment with Viread was associated with a significant reduction in serum HBV DNA levels compared to placebo through 24 weeks of treatment and through 12 weeks in a second open-label study.
In clinical studies of Viread to date, the most common adverse
events in patients receiving Viread were mild to moderate
gastrointestinal events, such as nausea, diarrhea, vomiting and
Tamiflu(R) (oseltamivir phosphate) for Influenza A and B
At the end of the first quarter, Roche and Gilead announced that the European Committee for Proprietary Medicinal Products recommended granting Tamiflu(R) (oseltamivir phosphate) marketing authorization in the EU for the treatment of influenza in adults and children and the prevention of influenza in adolescents and adults. Tamiflu is approved in 44 countries worldwide, including the United States and Japan.
Adefovir Dipivoxil for Chronic Hepatitis B
In early March, Gilead announced the initiation of an Early Access Program to provide its investigational agent adefovir dipivoxil 10 mg to people with chronic hepatitis B resistant to the currently available antiviral treatment lamivudine. The program is open in the United States, Canada, United Kingdom and Spain, and will follow in Australia and other countries in Europe as local regulatory approvals are obtained. A similar program opened in France in July 2001.
In late March, Gilead announced the submission of a New Drug Application (NDA) to the U.S. FDA for marketing approval of adefovir dipivoxil for the treatment of patients with chronic hepatitis B, including treatment-naive and treatment-experienced patients. Gilead submitted a request for a priority, or six-month, review of the adefovir dipivoxil NDA.
Also in late March, Gilead announced the submission of a Marketing Authorisation Application (MAA) to the EMEA for adefovir dipivoxil. The MAA will be reviewed under the centralized licensing procedure, which, if approval is granted, provides a marketing license valid in the 15 member states of the European Community.
In April, Gilead took part in the 37th Annual Meeting of the European Association for the Study of the Liver (EASL) in Madrid, Spain. During this meeting, twenty abstracts were presented describing the antiviral activity, safety and resistance profile of adefovir dipivoxil in a variety of chronic hepatitis B patient populations. Highlights from the conference included:
-- Forty-eight week data from a Phase III clinical trial (Study 438) of adefovir dipivoxil. The study results demonstrated that 48 weeks of treatment with adefovir dipivoxil significantly improved liver histology and reduced serum HBV DNA in patients infected with the precore mutant strain of the virus. -- Ninety-two week data from a single-center, open-label clinical trial (Study 460i) of adefovir dipivoxil in patients with lamivudine-resistant HBV and co-infected with HIV. The data from this trial demonstrated that adefovir dipivoxil was associated with significant, sustained reductions in levels of HBV DNA through 92 weeks. -- Sixteen-week data from a trial (Study 461) of adefovir dipivoxil in patients with lamivudine-resistant HBV. The results demonstrated that treatment with adefovir dipivoxil as monotherapy or in combination with lamivudine was associated with significant reductions in both serum HBV DNA and alanine transaminase (ALT, a measure of liver damage) levels through 16 weeks in patients infected with lamivudine-resistant HBV.
In the studies described above, the most common adverse events
reported were pharyngitis, headache, asthenia and abdominal pain.
GS 7340 for HIV
At the 9th Conference on Retroviruses and Opportunistic Infections in late February, Gilead described preclinical data from a new oral prodrug of tenofovir (GS 7340) demonstrating the ability of this agent to selectively target lymphatic tissue. Tenofovir is the parent compound of Viread, or tenofovir disoproxil fumarate. Gilead has recently initiated Phase I/II testing of GS 7340.
Gilead will host a conference call today, April 30, 2002, at 4:30 p.m. Eastern. 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 hear the webcast. Alternatively, please call 877/356-5659 (U.S.) or 706/634-2143 (international). Telephone replay is available approximately one hour after the call through 7:00 p.m. Eastern, Sunday, May 5, 2002. To access, please call 800/642-1687 (U.S.) or 706/645-9291 (international). The conference ID number is 3624046. 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.
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 five marketed products and focuses its research and clinical programs on anti-infectives, including antivirals, antifungals and antibacterials. Headquartered in Foster City, CA, Gilead has operations in the United States, Europe and Australia.
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, 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, 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; 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 and adefovir that we are observing today; the risk that we may not receive priority review and obtain marketing approval for adefovir; 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.
Note to Editors: AmBisome and Vistide are registered trademarks, and Viread is a trademark of Gilead Sciences, Inc. Tamiflu is a trademark of F. Hoffmann-La Roche Ltd.
For more information on Gilead Sciences, please visit www.gilead.com or call the Gilead Corporate Communications Department at 800/GILEAD-5 (800/445-3235).
GILEAD SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three months ended March 31, ---------------------- 2002 2001 --------- --------- (unaudited) Revenues: Product sales, net $ 70,711 $ 45,064 Royalty revenue, net 5,377 6,182 Contract revenue 2,328 6,590 --------- --------- Net revenues 78,416 57,836 Cost of goods sold 12,042 10,581 --------- --------- Gross profit 66,374 47,255 Operating expenses: Research and development 33,554 51,146 Selling, general and administrative 39,763 21,911 --------- --------- Total operating expenses 73,317 73,057 --------- --------- Loss from operations (6,943) (25,802) Interest income 5,611 7,383 Interest expense (3,482) (3,533) --------- --------- Loss before (benefit from) provision for income taxes, equity in loss of unconsolidated affiliate and cumulative effect of change in accounting principle (4,814) (21,952) (Benefit from) provision for income taxes (964) 470 Equity in loss of unconsolidated affiliate -- 390 --------- --------- Loss before cumulative effect of change in accounting principle (3,850) (22,812) Cumulative effect of change in accounting principle (note 1) -- 1,089 --------- --------- Net loss $ (3,850) $ (21,723) ========= ========= Basic and diluted amounts per common share (note 2): Loss before cumulative effect of change in accounting principle $ (0.02) $ (0.12) Cumulative effect of change in accounting principle -- 0.01 --------- --------- Net loss $ (0.02) $ (0.11) ========= ========= Common shares used in the calculation of basic and diluted amounts per share (note 2) 193,800 188,699 ========= ========= Notes: (1) 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. (2) The net 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. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 2002 2001 ----------- ------------ (unaudited) (note 1) Assets Cash, cash equivalents and marketable securities $564,669 $582,851 Other current assets 135,975 124,908 ----------- ------------ Total current assets 700,644 707,759 Property, plant and equipment, net 62,851 62,828 Other noncurrent assets 24,242 24,199 ----------- ------------ $787,737 $794,786 =========== ============ Liabilities and stockholders' equity Current liabilities $ 69,082 $ 80,117 Long-term obligations 261,711 262,232 Stockholders' equity 456,944 452,437 ----------- ------------ $787,737 $794,786 =========== ============ Notes: (1) Derived from audited financial statements at that date.
CONTACT: Gilead Sciences, Inc. John Milligan, 650/522-5756 Susan Hubbard, 650/522-5715
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