July 24, 2002
Gilead Sciences Announces Second Quarter 2002 Financial Results; Strong Viread Sales Push Total Revenues Past $100 Million, Lead to Profitability
Net income for the second quarter 2002 was $19.7 million, or $0.10 per diluted share. This compares to a net loss in the second quarter 2001 of $32.4 million, or $0.17 per share.
Net revenues from product sales were primarily derived from sales of AmBisome(R) (amphotericin B) liposome for injection and Viread(R) (tenofovir disoproxil fumarate). AmBisome sales for the second quarter of 2002 were $47.7 million, an increase of 23 percent compared to the second quarter of 2001. Excluding the impact of foreign currencies relative to the U.S. dollar, AmBisome sales grew 17 percent for the second quarter of 2002 over the comparable quarter of 2001. Sales of Viread were $44.7 million in the second quarter of 2002, or 48 percent of product sales.
"We are very pleased to report total revenues in excess of $100 million for the quarter. Strong revenues, driven by increasing sales of Viread, and controlled expense growth demonstrate significant progress toward achieving our goal of profitability for the year," said John C. Martin, Ph.D., President and Chief Executive Officer of Gilead Sciences. "We continue to remain focused on a successful Viread rollout in the European Union and on preparing for the potential product launch of adefovir dipivoxil for chronic hepatitis B in the United States prior to year-end."
For the second quarter of 2002, royalty and contract revenues resulting from collaborations with corporate partners totaled $15.6 million. These revenues include 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, royalties on product sales of Vistide(R) (cidofovir injection) outside the United States by Pharmacia Corporation and milestone revenue recognized upon European approval of Tamiflu.
Research and development expenses for the second quarter of 2002 were $30.9 million, compared to $44.1 million for the same quarter in 2001. The lower spending during the second quarter of 2002 is primarily attributable to the decrease in expenses associated with the Viread clinical program and the divestiture of Gilead's oncology portfolio to OSI Pharmaceuticals in December 2001.
Selling, general and administrative expenses for the three months ended June 30, 2002 were $41.6 million, compared to $29.7 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.
Gilead also reported its results of operations for the six months ended June 30, 2002. The company recorded net revenues from product sales of $164.5 million and aggregate contract and royalty revenues of $23.3 million. AmBisome sales for the six months ended June 30, 2002 were $87.5 million, an 8 percent increase over the six months ended June 30, 2001. Sales of Viread for the six months ended June 30, 2002 were $71.9 million, or 44 percent of product sales. Net revenues of $187.8 million in the six months ended June 30, 2002 compare to net revenues of $108.5 million in the first six months of 2001. Net revenues for the first six months of 2001 included product sales of $86.6 million and aggregate contract and royalty revenues of $21.9 million.
Net income for the six months ended June 30, 2002 was $15.9 million, or $0.08 per diluted share. This compares to a net loss of $54.1 million, or $0.28 per share for the six months ended June 30, 2001.
Research and development expenses for the six months ended June 30, 2002 and 2001 were $64.4 million and $95.2 million, respectively. The substantially lower spending during the first six months 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 have decreased compared to the first six months in 2001 due to a decrease in expenses associated with the Viread clinical program and the divestiture of Gilead's oncology portfolio to OSI Pharmaceuticals in December 2001.
Selling, general and administrative expenses for the six months ended June 30, 2002 were $81.4 million compared to $51.6 million for 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.
As of June 30, 2002, the company had cash, cash equivalents and marketable securities of $559.5 million, compared to $582.9 million at December 31, 2001.
In late April, 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. 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 the licensed territories and will pay Gilead a royalty on net sales of adefovir dipivoxil.
On June 10, Gilead announced that it had entered into a collaboration agreement with Anadys Pharmaceuticals to discover novel antiviral compounds. As part of the agreement, Anadys will design, configure and run uHTS-ATLAS(TM) screens against a viral target selected by Gilead. Specific financial terms were not disclosed.
In July, Gilead sold its shares of OSI Common Stock for a one-time loss of approximately $16 million. The loss will be recognized in the third quarter of 2002. These shares were partial compensation for the sale of Gilead's oncology assets to OSI Pharmaceuticals in December 2001.
Products and Pipeline Highlights
"The second quarter marked continued progress toward the achievement of corporate and scientific milestones at Gilead. The U.S. Food & Drug Administration has granted the adefovir dipivoxil New Drug Application priority review and set the date of August 6 for the Antiviral Advisory Committee Hearing," commented Dr. Martin. "In addition, the compelling data we presented at the International AIDS Conference in Barcelona supports the use of Viread in treatment-naive patients."
Viread(R) (tenofovir disoproxil fumarate) for HIV
During the second quarter 2002, Viread established pricing and launched in several additional countries in Europe. Viread is now commercially available in the United States, United Kingdom, Ireland, France, Germany, Portugal and Spain. Pricing negotiations continue in other European countries and approval is pending in Australia and Canada, where Viread is available to patients in need through early access programs.
In July, Gilead took part in the 14th International AIDS Conference in Barcelona, Spain. During this meeting, 18 Viread-related abstracts were presented. Highlights from the conference included:
-- Forty-eight week data from a Phase III clinical trial (Study 903) comparing Viread to stavudine (d4T) when used in combination with 3TC and efavirenz as a first-line regimen in treatment-naive HIV patients. Preliminary results from this study were previously announced on May 7. -- Genotypic and phenotypic analyses from a 48-week Phase II trial (Study 902) and a 48-week Phase III trial (Study 907) of Viread.
On May 21, the company announced the initiation of an NIH-sponsored collaborative Phase I clinical trial to evaluate the safety and acceptability of the experimental topical gel formulation of tenofovir, the active agent in Viread, as a potential prevention method for vaginal transmission of HIV. This Phase I study (HPTN 050) will enroll up to 96 women and their male sexual partners at three sites in the United States.
Tamiflu(R) (oseltamivir phosphate) for Influenza
In June, Roche and Gilead announced that they received approval from the European Commission to market Tamiflu for the treatment of influenza in adults and children and the prevention of influenza in adolescents and adults in the 15 member states of the European Union. The drug is expected to be available to patients in time for the 2002-2003 influenza season in Europe. Tamiflu is approved in 60 countries worldwide, including the United States and Japan.
Adefovir Dipivoxil for Chronic Hepatitis B
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, 20 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 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. -- Sixteen-week data from a trial (Study 461) of adefovir dipivoxil in patients with lamivudine-resistant HBV.
Gilead will host a conference call today, July 24, 2002, at 4:30 p.m. ET. 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 877-356-5659 (U.S./Canada) or 706-634-2143 (international) to access the call. Telephone replay is available approximately two hours after the call through 8:00 p.m. ET, July 27, 2002. To access, please call 800-642-1687 (U.S./Canada) or 706-645-9291 (international). The conference ID number is 4961146.
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 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 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, Viread and Vistide are registered trademarks of Gilead Sciences, Inc. Tamiflu is a registered 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 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 Six months ended June 30, June 30, 2002 2001 2002 2001 --------- --------- --------- --------- (unaudited) (unaudited) Revenues: Product sales, net $ 93,788 $ 41,565 $ 164,499 $ 86,629 Royalty revenue, net 6,737 6,376 12,114 12,558 Contract revenue 8,838 2,746 11,166 9,336 --------- --------- --------- --------- Net revenues 109,363 50,687 187,779 108,523 Cost of goods sold 17,718 10,797 29,760 21,378 --------- --------- --------- --------- Gross profit 91,645 39,890 158,019 87,145 Operating expenses: Research and development 30,851 44,078 64,405 95,224 Selling, general and administrative 41,600 29,707 81,363 51,618 --------- --------- --------- --------- Total operating expenses 72,451 73,785 145,768 146,842 --------- --------- --------- --------- Income (loss) from operations 19,194 (33,895) 12,251 (59,697) Interest income 4,610 6,507 10,221 13,890 Interest expense (3,455) (3,436) (6,937) (6,969) --------- --------- --------- --------- Income (loss) before provision for (benefit from) income taxes, equity in loss of unconsolidated affiliate and cumulative effect of change in accounting principle 20,349 (30,824) 15,535 (52,776) Provision for (benefit from) income taxes 638 323 (326) 793 Equity in loss of unconsolidated affiliate -- 1,240 -- 1,630 --------- --------- --------- --------- Income (loss) before cumulative effect of change in accounting principle 19,711 (32,387) 15,861 (55,199) Cumulative effect of change in accounting principle (note 1) -- -- -- 1,089 --------- --------- --------- --------- Net income (loss) $ 19,711 $ (32,387) $ 15,861 $ (54,110) ========= ========= ========= ========= Amounts per common share - basic: (note 2) Income (loss) before cumulative effect of change in accounting principle $ 0.10 $ (0.17) $ 0.08 $ (0.29) Cumulative effect of change in accounting principle -- -- -- 0.01 --------- --------- --------- --------- Net income (loss) per share - basic $ 0.10 $ (0.17) $ 0.08 $ (0.28) ========= ========= ========= ========= Shares used in per share calculation - basic 195,167 189,559 194,487 189,151 ========= ========= ========= ========= Amounts per common share - diluted: (note 2) Income (loss) before cumulative effect of change in accounting principle $ 0.10 $ (0.17) $ 0.08 $ (0.29) Cumulative effect of change in accounting principle -- -- -- 0.01 --------- --------- --------- --------- Net income (loss) per share - diluted $ 0.10 $ (0.17) $ 0.08 $ (0.28) ========= ========= ========= ========= Shares used in per share calculation - diluted 206,385 189,559 206,204 189,151 ========= ========= ========= ========= 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 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) June 30, December 31, 2002 2001 -------- -------- (unaudited) (note 1) Assets Cash, cash equivalents and marketable securities $559,488 $582,851 Other current assets 166,835 124,908 -------- -------- Total current assets 726,323 707,759 Property, plant and equipment, net 64,671 62,828 Other noncurrent assets 24,978 24,199 -------- -------- $815,972 $794,786 ======== ======== Liabilities and stockholders' equity Current liabilities $ 82,692 $ 80,117 Long-term obligations 257,244 262,232 Stockholders' equity 476,036 452,437 -------- -------- $815,972 $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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