Press Releases
July 31, 2003
Gilead Sciences Announces Second Quarter 2003 Financial Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--July 31, 2003--Gilead Sciences, Inc. (Nasdaq:GILD)
-- Record Viread Sales of $167 Million
-- Total Revenues of $239 Million, Up 118 Percent over Second
Quarter 2002
-- EPS of $0.46 Per Share
Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of operations for the second quarter ended June 30, 2003. Total revenues for the second quarter were $238.9 million, up 118 percent, compared to total revenues of $109.4 million for the second quarter of 2002. Net income for the second quarter 2003 was $100.4 million, or $0.46 per diluted share, compared to net income of $19.7 million, or $0.10 per diluted share, for the second quarter of 2002.
Operating cash flow for the quarter improved to $59.4 million, compared with $1.2 million for the same period last year.
Net revenues from product sales totaled $230.7 million, up 146 percent from the second quarter of 2002. This growth primarily was driven by higher revenues from Viread(R) (tenofovir disoproxil fumarate). Sales of Viread were $167.0 million in the second quarter of 2003, up from $44.7 million in the second quarter of 2002 and $107.3 million in the first quarter of 2003. Viread sales growth was primarily driven by higher prescription volume, a significant increase in U.S. wholesaler inventories and a favorable European currency environment compared to the same quarter last year. Gilead estimates that increased stocking by U.S. wholesalers accounted for $25-30 million of Viread sales in the second quarter. AmBisome(R) (amphotericin B) liposome for injection sales for the second quarter of 2003 were $51.2 million, an increase of 7 percent compared to the second quarter of 2002. Reported AmBisome sales in the second quarter of 2003 were $7.0 million higher due to the favorable currency environment compared to the same quarter last year. On a volume basis, AmBisome sales decreased by 4 percent in Europe compared to the second quarter 2002. Sales of Hepsera (R)(adefovir dipivoxil 10 mg) totaled $12.4 million for the second quarter of 2003, up from $5.8 million in the first quarter of 2003.
"We are very pleased to report another quarter of significant increases in product revenues. This strong growth was fueled primarily by increasing sales of Viread in all marketed territories and Hepsera's uptake in the United States and introduction in Europe," said John C. Martin, PhD, President and Chief Executive Officer of Gilead Sciences. "We are focused on continuing this sales momentum and increasing our market share through robust clinical data and label expansions in key territories, as well as launching Emtriva(TM) (emtricitabine) for HIV."
For the second quarter of 2003, royalty and contract revenues resulting from collaborations with corporate partners totaled $8.2 million, compared to $15.6 million in the second quarter of 2002. The second quarter of 2002 included $8.0 million of milestone revenue recognized upon European approval of Tamiflu(R) (oseltamivir phosphate). These revenues primarily relate to royalties on sales of AmBisome in the United States by Gilead's co-promotion partner Fujisawa Healthcare and royalties on sales of Tamiflu by F. Hoffmann-La Roche.
Research and development (R&D) expenses for the second quarter of 2003 were $38.8 million, compared to $30.9 million for the same quarter in 2002. The higher expenses during the second quarter of 2003 are primarily attributable to the clinical trials associated with the development of Emtriva and other drug candidates from the Triangle Pharmaceuticals acquisition in January 2003.
Selling, general and administrative (SG&A) expenses for the three months ended June 30, 2003 were $60.2 million, compared to $41.6 million for the same quarter of 2002. The 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.
The net foreign exchange impact on earnings, including revenue and expenses generated from outside the United States, as well as hedging activity for the second quarter of 2003, was a favorable $8.9 million, due primarily to a strengthening Euro relative to the U.S. dollar.
Gilead also reported its results of operations for the six months ended June 30, 2003. The company recorded net revenues from product sales of $386.6 million and aggregate contract and royalty revenues of $17.3 million. Sales of Viread for the six months ended June 30, 2003 were $274.3 million, or 71 percent of product sales, up from $71.9 million, or 44 percent of product sales in the six months ended June 30, 2002. AmBisome sales for the six months ended June 30, 2003 were $92.2 million, a 5 percent increase over the six months ended June 30, 2002. Reported AmBisome sales in the first six months of 2003 were $13.2 million higher due to the favorable currency environment compared to the same period last year. On a volume basis, AmBisome sales decreased by 7 percent in Europe compared to the first six months of 2002. Net revenues of $404.0 million in the six months ended June 30, 2003 compare to net revenues of $187.8 million in the first six months of 2002, an increase of 115 percent. Net revenues for the first six months of 2002 included product sales of $164.5 million and aggregate contract and royalty revenues of $23.3 million.
Net loss for the six months ended June 30, 2003 was $337.7 million, or $1.69 per share, including a charge of $488.6 million for in-process research and development associated with the acquisition of Triangle in January 2003. This compares to net income of $15.9 million, or $0.08 per diluted share for the six months ended June 30, 2002. Excluding this in-process research and development charge, non-GAAP earnings would have been $150.9 million or $0.70 per diluted share for the six months ended June 30, 2003, which includes the impact of dilutive stock options and convertible debt.
Research and development expenses for the six months ended June 30, 2003 and 2002 were $79.9 million and $64.4 million, respectively. The higher expenses during the first six months of 2003 are primarily attributable to the clinical trials associated with the development of Emtriva and other drug candidates from the Triangle acquisition.
Selling, general and administrative expenses for the six months ended June 30, 2003 were $107.8 million compared to $81.4 million for 2002. 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 launches of Viread and Hepsera.
As of June 30, 2003, the company had cash, cash equivalents and marketable securities of $681.4 million, compared to $942.4 million at December 31, 2002. The decrease in cash, cash equivalents, and marketable securities is attributable to the completion of the acquisition of Triangle in January 2003.
Corporate Highlights
In June, Gilead announced that the company is ending its licensing agreement with Bukwang Pharm. Ind. Co., Ltd for the development and commercialization of clevudine. Formerly known as L-FMAU, clevudine is an investigational pyrimidine nucleoside analogue currently in Phase I/II development for the treatment of chronic hepatitis B. The termination will be effective August 6, 2003.
In July, Gilead announced that the registration statement relating to the Company's 2% Convertible Subordinated Notes and the common stock into which the notes are convertible was declared effective by the Securities and Exchange Commission on July 9, 2003.
Products and Pipeline Highlights
"The recent FDA approval of Emtriva for the treatment of HIV is a significant achievement for Gilead, marking our second once-daily antiretroviral for HIV and our third antiviral to receive FDA approval in less than two years," said Dr. Martin. "In parallel with our successful efforts to gain approval of this product, we have made significant progress in co-formulating Emtriva with Viread, which could serve as a convenient and effective backbone for a once-daily treatment regimen in the fight against HIV. In addition, this past quarter saw continued progress on the Viread front as the European Commission approved the expansion of the drug's indication in all 15 member states of the European Union to include treatment-naive patients."
Viread for HIV/AIDS
In early April, the company announced details of the Gilead Access Program, which makes Viread available at no profit in every country in Africa and in 15 additional countries classified as "least developed" by the United Nations.
In late May, Gilead announced that the European Commission granted Marketing Authorisation to expand the indication of Viread to include the product's use in antiretroviral-naive HIV infected patients in all 15 member states of the European Union. With the extension of this indication, Viread is now approved in Europe for broad use in combination with other antiretrovirals for the treatment of HIV-1 infected adults over 18 years of age, including patients initiating antiretroviral therapy as well as previously treated patients.
In June, Gilead announced 96-week data from an ongoing clinical trial in treatment-naive patients confirming the low rate of resistance from previously reported studies in treatment-experienced patients. The data are from Study 903, an ongoing three-year randomized, double-blind trial, which is being conducted in the United States, Europe and South America and were presented by Michael Miller, PhD, Director of Clinical Virology at Gilead Sciences, at the 12th International HIV Drug Resistance Workshop in Los Cabos, Mexico.
Emtriva for HIV/AIDS
On July 2, Gilead announced that the U.S. Food and Drug Administration (FDA) cleared for marketing Emtriva, a new 200 mg one-capsule, once-daily nucleoside reverse transcriptase inhibitor (NRTI) for the treatment of HIV infection in adults in combination with other antiretroviral medications. Emtriva was evaluated in clinical trials of both treatment-naive and treatment-experienced HIV patients and is Gilead Sciences' second once-daily antiretroviral for the treatment of HIV. The company is developing a fixed-dose co-formulation of Emtriva and Viread, which could potentially be available by early 2005.
Hepsera for Chronic Hepatitis B
In early April, Gilead presented positive 96-week results from a study of Hepsera in patients with hepatitis B "e" antigen-negative (HBeAg-negative, or precore mutant) chronic hepatitis B virus (HBV). These results were presented at the 11th International Symposium on Viral Hepatitis and Liver Disease (ISVHLD) in Sydney, Australia.
Following the marketing approval of Hepsera in the European Union in March of this year, Gilead has priced and launched the product in the United Kingdom, Germany, France, Ireland and Portugal.
Conference Call
At 4:30 p.m. today Gilead will webcast a conference call live on the company's Internet site to discuss its quarterly results and outlook. During the call, Gilead will be discussing additional financial and statistical information. That information can be found on the company's website at www.gilead.com, under "About Gilead," "Investors." To access the live webcast or the archive via the Internet, which will be available until the announcement of the next quarterly call, 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 1-800-967-7140 (U.S.) or 1-719-457-2629 (international) to access the call. Telephone replay is available approximately two hours after the call through 8:30 p.m. ET, August 3, 2003. To access, please call 1-888-203-1112 (U.S.) or 1-719-457-0820 (international). The conference ID number is 122140.
About Gilead
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 seven 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 and timing 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 generate additional positive clinical data and expand the labels for our existing products, our ability to control the timing and amount of spending in our research and clinical programs; our ability to develop and obtain regulatory approval of a co-formulated product by early 2005 or at all, our ability to accurately estimate inventory levels as we must make a great deal of assumptions and must rely on incomplete data to make these estimations; 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 Emtriva that we are observing today; the risk that we may not obtain European marketing approval for Emtriva 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, 2002, filed in March 2003. 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.
Viread, AmBisome and Hepsera are registered trademarks and Emtriva is a trademark of Gilead Sciences, Inc. Tamiflu is a registered trademark of F. Hoffmann-La Roche.
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 Six months ended
June 30, June 30,
------------------ --------------------
2003 2002 2003 2002
--------- -------- ---------- ---------
(unaudited) (unaudited)
Revenues:
Product sales $230,668 $93,788 $386,632 $164,499
Royalty revenue 7,035 6,737 14,419 12,114
Contract revenue 1,167 8,838 2,924 11,166
--------- -------- ---------- ---------
Total revenues 238,870 109,363 403,975 187,779
Cost of goods sold 32,106 17,718 53,478 29,760
--------- -------- ---------- ---------
Gross profit 206,764 91,645 350,497 158,019
Operating expenses:
Research and development 38,795 30,851 79,935 64,405
Selling, general and
administrative 60,197 41,600 107,788 81,363
In-process research and
development - - 488,599 -
--------- -------- ---------- ---------
Total operating expenses 98,992 72,451 676,322 145,768
--------- -------- ---------- ---------
Income (loss) from operations 107,772 19,194 (325,825) 12,251
Interest income 3,444 4,610 7,261 10,221
Interest expense (5,569) (3,455) (11,183) (6,937)
--------- -------- ---------- ---------
Income (loss) before provision
for (benefit from) income
taxes 105,647 20,349 (329,747) 15,535
Provision for (benefit from)
income taxes 5,275 638 7,935 (326)
--------- -------- ---------- ---------
Net income (loss) $100,372 $19,711 $(337,682) $15,861
========= ======== ========== =========
Net income (loss) per share -
basic $0.50 $0.10 $(1.69) $0.08
========= ======== ========== =========
Net income (loss) per share -
diluted(1) $0.46 $0.10 $(1.69) $0.08
========= ======== ========== =========
Shares used in per share
calculation - basic 200,236 195,167 199,288 194,487
========= ======== ========== =========
Shares used in per share
calculation - diluted(1) 230,340 206,385 199,288 206,204
========= ======== ========== =========
Notes:
(1) In accordance with Statement of Financial Accounting Standard No.
128, using the If-Converted Method, interest expense related to
convertible debt of $4.6 million has been added back to net income for
purposes of calculating diluted net income per share for the quarter
ended June 30, 2003. The shares used in the calculation of net income
per diluted share for the quarter ended June 30, 2003 includes the
effect of 12.6 million stock options outstanding, the effect of the
$345.0 million 2% convertible senior debt, which converts to
approximately 7.3 million shares, and the effect of the $250.0 million
5% convertible subordinated debt, which converts to approximately 10.2
million shares. The diluted per share calculations of previous periods
did not include the effect of the convertible debt as it was
antidilutive.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, Dec. 31,
2003 2002
----------- -----------
(unaudited) (note 1)
Assets
Cash, cash equivalents and marketable
securities $681,443 $942,374
Other current assets 282,328 241,386
----------- -----------
Total current assets 963,771 1,183,760
Property, plant and equipment, net 70,760 67,727
Other noncurrent assets 40,331 36,696
----------- -----------
$1,074,862 $1,288,183
=========== ===========
Liabilities and stockholders' equity
Current liabilities $136,589 $104,892
Long-term obligations 611,267 611,950
Stockholders' equity 327,006 571,341
----------- -----------
$1,074,862 $1,288,183
=========== ===========
Notes:
(1) Derived from audited financial statements at that date.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
The non-GAAP financial information presented below is utilized by
Gilead management to help gain a better understanding of the
comparative operating performance of the Company. The Company believes
that the presentation of this non-GAAP financial table is useful in
excluding those unusual activities or transactions that are not
necessarily relevant to obtaining an understanding of the trends in
the results of the Company.
Six months Six months
ended ended
June 30, June 30,
2003 2002
-----------------------------------------
GAAP Adjustments Non-GAAP GAAP
(1)
---------- ----------- --------- --------
Revenues:
Product sales $386,632 $386,632 164,499
Royalty revenue 14,419 14,419 12,114
Contract revenue 2,924 2,924 11,166
---------- ----------- --------- --------
Total revenues 403,975 403,975 187,779
Cost of goods sold 53,478 53,478 29,760
---------- ----------- --------- --------
Gross profit 350,497 350,497 158,019
Operating expenses:
Research and development 79,935 79,935 64,405
Selling, general and
administrative 107,788 107,788 81,363
In-process research and
development 488,599 (488,599) -- --
---------- ----------- --------- --------
Total operating expenses 676,322 (488,599) 187,723 145,768
---------- ----------- --------- --------
Income (loss) from operations (325,825) 488,599 162,774 12,251
Interest income 7,261 7,261 10,221
Interest expense (11,183) (11,183) (6,937)
---------- ----------- --------- --------
Income (loss) before
provision for (benefit from)
income taxes (329,747) 488,599 158,852 15,535
Provision for (benefit from)
income taxes 7,935 7,935 (326)
---------- ----------- --------- --------
Net income (loss) $(337,682) $488,599 $150,917 $15,861
========== =========== ========= ========
Net income (loss) per share -
basic $(1.69) $0.76 $0.08
========== ========= ========
Net income (loss) per share -
diluted $(1.69) $0.70 $0.08
========== ========= ========
Shares used in per share
calculation - basic 199,288 199,288 194,487
========== ========= ========
Shares used in per share
calculation - diluted 199,288 228,257 206,204
========== ========= ========
Notes:
(1) The adjustment reflects the in-process research and development
charge from the acquisition of the net assets of Triangle
Pharmaceuticals, Inc. CONTACT: Gilead Sciences, Inc. John Milligan, 650-522-5756
Susan Hubbard, 650-522-5715
SOURCE: Gilead Sciences