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Net income for the fourth quarter 2001 was $131.6 million, or $1.25 per diluted share. This compares to a net loss in the fourth quarter 2000 of $18.4 million, or $0.20 per share.
During the fourth quarter 2001, Gilead completed the sale of its oncology assets and related technology to OSI Pharmaceuticals, Inc. and recorded a gain of $154.5 million, net of income tax expense of $3.3 million. Excluding the effects of this transaction, Gilead would have lost $22.9 million, or $0.24 per share, in the fourth quarter of 2001.
Net revenues from product sales were primarily derived from sales of AmBisome(R) (amphotericin B) liposome for injection, accounting for 71 percent of product sales for the fourth quarter of 2001. AmBisome sales for the fourth quarter of 2001 were $42.6 million, an increase of 20 percent compared to the fourth quarter of 2000. Sales of Viread(TM) (tenofovir disoproxil fumarate) for human immunodeficiency virus (HIV) were $13.2 million in the fourth quarter of 2001, or 22 percent of product sales. In addition, Gilead recorded other product sales of $3.8 million during the fourth quarter of 2001, compared to $2.3 million in the fourth quarter of 2000.
For the fourth quarter of 2001, royalty and contract revenues resulting from collaborations with corporate partners totaled $14.7 million. These revenues include contract revenues for the licensing of the SELEX(TM) (Systemic Evolution of Ligands through EXponential Enrichment) process patent estate, royalties on product sales of AmBisome in the United States by Gilead's co-promotion partner Fujisawa Healthcare, royalties on sales of Tamiflu(TM) (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 expenses for the fourth quarter of 2001 were $44.6 million, compared to $43.3 million for the same quarter in 2000. The slightly higher spending during the fourth quarter of 2001 is attributable to increased spending in the Phase III clinical program for adefovir dipivoxil for HBV and a $1.2 million clinical milestone payment to Cubist Pharmaceuticals, Inc. ("Cubist") under the European licensing agreement for Cidecin(R) (daptomycin for injection).
Selling, general and administrative expenses for the fourth quarter of 2001 were $41.5 million, compared to $23.1 million for the same quarter of 2000. The 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 fourth quarter 2001 was $1.9 million, compared to $4.2 million for the same quarter in 2000. This decrease is attributable to a full quarter of interest expense associated with the company's $250 million convertible debt securities issued in December 2000.
Gilead also reported its results of operations for the year ended December 31, 2001. The company recorded net revenues from product sales of $191.0 million and aggregate contract and royalty revenues of $42.8 million. Accounting for 86 percent of product sales, AmBisome sales for the year ended December 31, 2001 were $164.5 million, a 17 percent increase over the year ended December 31, 2000. Excluding the impact of the decline in foreign currencies relative to the U.S. dollar, AmBisome sales grew by 20 percent in 2001 versus 2000. Net revenues of $233.8 million for the year ended December 31, 2001 compare to net revenues of $195.6 million in 2000. Net revenues for the full year 2000 included product sales of $149.7 million and aggregate contract and royalty revenues of $45.8 million.
Net income for the year ended December 31, 2001, including the cumulative effect of a change in accounting principle related to the company's adoption of Statement of Financial Accounting Standards No. 133, was $52.3 million, or $0.52 per diluted share. This compares to a net loss of $56.8 million, or $0.62 per share, for the year ended December 31, 2000, including the cumulative effect of the adoption of Staff Accounting Bulletin 101 of $13.7 million, or $0.15 per share.
During 2001, Gilead sold its 49 percent interest in Proligo L.L.C. ("Proligo") for $14.3 million in cash. The proceeds, net of Gilead's investment in Proligo, are reflected as an $8.8 million gain on the sale of unconsolidated affiliate. Excluding the effects of this transaction and the fourth quarter sale of its oncology assets described above, Gilead would have lost $111.0 million, or $1.17 per share, for the year.
Research and development expenses for the years ended December 31, 2001 and 2000 were $185.6 million and $132.3 million, respectively. The higher spending in 2001 was attributable in part to the recognition of $10.6 million of a $13.0 million up-front payment and $5.5 million of clinical milestone payments to Cubist. In addition, Gilead's expenses associated with the Phase III clinical trials and expanded access programs for Viread for HIV and the Phase III clinical programs for adefovir dipivoxil for HBV increased significantly during the year.
Selling, general and administrative expenses for the year ended December 31, 2001 were $125.1 million compared to $82.0 million for 2000. The additional spending is primarily due to Gilead's increased global marketing efforts and the U.S. and European sales force expansion, as previously described.
Net interest income for the year ended December 31, 2001 was $11.6 million, compared to $13.3 million for 2000.
The company also reported equity in the loss of its unconsolidated affiliate (Proligo) of $2.1 million and $2.9 million for the year ended December 31, 2001 and 2000, respectively.
As of December 31, 2001, the company had cash, cash equivalents and marketable securities of $582.9 million, compared to $512.9 million at December 31, 2000.
In a separate announcement released yesterday, Gilead's Board of Directors approved a two-for-one stock split payable to shareholders of record as of February 14, 2002. All share and per share data in this press release do not reflect this two-for-one stock split.
Corporate Highlights
In addition, in the fourth quarter Gilead announced that it out-licensed its previously unlicensed intellectual property rights under the SELEX process patent estate to Cambridge, Massachusetts-based Archemix Corporation. Gilead received $9.0 million in cash in 2001 and is entitled to receive an additional $8.5 million in 2002 under the terms of the contract. Additionally, Gilead received warrants in Archemix.
Products and Pipeline Highlights
Viread(TM) (tenofovir disoproxil fumarate) for HIV
Earlier in the month of October, Gilead announced that the European Union's Committee for Proprietary Medicinal Products (CPMP) recommended granting of the Marketing Authorisation for Viread in the European Union's 15 member states. On the basis of the safety and efficacy data submitted for Viread, the committee has recommended the granting of a Marketing Authorisation under exceptional circumstances. The CPMP's recommended indication is for Viread in combination with other antiretroviral agents in HIV-infected patients over 18 years of age experiencing early virological failure. The European Medicines Evaluation Agency (EMEA) typically follows the recommendation of the CPMP but is not required to do so. Gilead anticipates the EMEA's authorization will be granted in early 2002. Regulatory filings for the drug also have been completed in Australia and Canada and additional regulatory filings are planned in other countries in the coming months.
Adefovir Dipivoxil for Chronic HBV Infection
First, preliminary results from a Phase III clinical trial (Study 461) evaluating the efficacy and safety of adefovir dipivoxil 10 mg once daily in patients with lamivudine-resistant chronic hepatitis B virus (HBV) infection and compensated liver disease were announced. After 16 weeks, patients receiving adefovir dipivoxil 10 mg monotherapy experienced a decrease in HBV DNA of 2.46 log10 copies/mL (n=20) versus a decrease of 2.45 log10 copies/mL (n=20) in patients receiving both adefovir and lamivudine. The most common adverse events reported were asthenia (weakness), abdominal pain and pharyngitis, and the frequency and type of adverse events were similar among all treatment arms.
Next, data from a clinical study (Study 435) of adefovir dipivoxil 10 mg once daily in post-liver transplant patients with lamivudine-resistant chronic HBV infection showed that treatment with adefovir dipivoxil 10 mg once daily for 48 weeks resulted in a statistically significant decrease in HBV DNA of 4.6 log10 copies/mL (n=28). The most commonly reported adverse events were asthenia, headache, abdominal pain, and pruritus (itching). Drug discontinuation due to adverse events was uncommon. These data were presented at the 52nd Annual Meeting of the American Association for the Study of Liver Diseases (AASLD) in Dallas.
Also presented at AASLD were 48-week results from the first of two Phase III clinical trials (Study 437) demonstrating that adefovir dipivoxil 10 mg significantly improved liver histology in 53 percent of patients treated (n=168), compared to 25 percent of placebo-treated patients (n=161) (p less than 0.001). Reductions in HBV DNA also were observed. Patients in the adefovir dipivoxil 10 mg arm had a median reduction in HBV DNA from baseline of 3.52 log10 copies/mL (n=152), compared to a reduction of 0.55 log10 copies/mL in patients receiving placebo (n=148, p less than 0.001). This equates to a 99.97 percent reduction in circulating virus in patients on adefovir dipivoxil 10 mg treatment. The drug discontinuation rates were similar between the treatment and placebo arms of the study, as were the incidence of grade 3 and 4 laboratory abnormalities and clinical adverse events. The most common adverse events reported were pharyngitis, headache, asthenia, and abdominal pain. Preliminary results from this study were previously announced in June 2001. Adefovir dipivoxil 10 mg is an experimental compound that has not been determined to be safe or efficacious by the FDA.
Conference Call
Gilead Sciences
Forward-looking Statements
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.
Cidecin is a registered trademark of Cubist Pharmaceuticals, Inc.
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three months ended Year ended
December 31, December 31,
--------------------- ---------------------
2001 2000 2001 2000
--------- --------- --------- ---------
(unaudited) (note 1)
Revenues:
Product sales, net $ 59,634 $ 37,972 $ 190,970 $ 149,709
Royalty revenue, net 5,987 5,260 22,969 24,591
Contract revenue 8,558 9,093 16,352 18,315
Contract revenue
- SAB 101 152 150 3,478 2,940
--------- --------- --------- ---------
Net revenues 74,331 52,475 233,769 195,555
Cost of goods sold 13,178 7,498 43,764 33,512
--------- --------- --------- ---------
Gross profit 61,153 44,977 190,005 162,043
Operating expenses:
Research and
development 44,601 43,315 185,553 132,339
Selling, general
and administrative 41,476 23,103 125,141 82,022
--------- --------- --------- ---------
Total operating
expenses 86,077 66,418 310,694 214,361
--------- --------- --------- ---------
Loss from operations (24,924) (21,441) (120,689) (52,318)
Gain on sale of
oncology assets 157,771 -- 157,771 --
Gain on sale of
unconsolidated
affiliate -- -- 8,754 --
Interest income 5,396 4,888 25,591 17,634
Interest expense (3,498) (706) (13,980) (4,365)
--------- --------- --------- ---------
Income/(loss) before
provision for income
taxes, equity in loss
of unconsolidated
affiliate and
cumulative effect of
changuncement released yesterday, Gilead's Board of
Directors approved a two-for-one stock split payable to
shareholders of record as of February 14, 2002. All share and per
share data in this press release do not reflect this two-for-one
stock split.
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2001 2000
-------- --------
(note 1) (note 1)
Assets
Cash, cash equivalents and marketable
securities $582,851 $512,878
Other current assets 124,908 80,920
-------- --------
Total current assets 707,759 593,798
Property, plant and equipment, net 62,828 55,174
Other noncurrent assets 24,199 29,127
-------- --------
$794,786 $678,099
======== ========
Liabilities and stockholders' equity
Current liabilities $ 80,117 $ 58,238
Long-term obligations 262,232 268,737
Stockholders' equity 452,437 351,124
-------- --------
$794,786 $678,099
======== ========
Note:
(1) Derived from audited financial statements at that date.
CONTACT: Gilead Sciences, Inc., Foster City
Sharon Surrey-Barbari, 650/522-5798
Susan Hubbard, 650/522-5715
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