Press Releases
October 16, 2008
Gilead Sciences Announces Third Quarter 2008 Financial Results
FOSTER CITY, Calif.--(BUSINESS WIRE)--
Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the quarter ended September 30, 2008. Total revenues for the third quarter of 2008 were $1.37 billion, up 30 percent compared to total revenues of $1.06 billion for the third quarter of 2007. Net income for the third quarter of 2008 was $504.0 million, or $0.52 per diluted share, including after-tax stock-based compensation expense of $30.1 million. Non-GAAP net income for the third quarter of 2008, which excludes after-tax stock-based compensation expense, was $534.1 million, or $0.55 per diluted share. Non-GAAP net income for the third quarter of 2007, which excluded after-tax stock-based compensation expense of $31.8 million, was $430.1 million, or $0.45 per diluted share.
Product Sales
Product sales increased 39 percent to a record $1.34 billion for the third quarter of 2008, compared to $961.9 million in the third quarter of 2007. This growth was driven primarily by Gilead's antiviral franchise, including the strong growth of Atripla(R) (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg) sales as well as the continued growth of Truvada(R) (emtricitabine and tenofovir disoproxil fumarate) sales.
Antiviral Franchise
Antiviral product sales increased 39 percent to $1.23 billion in the third quarter from $885.0 million for the same period in 2007. The increase was driven primarily by the sales volume growth of Atripla and Truvada, as well as a favorable foreign currency exchange impact.
-- Truvada
Truvada sales increased 34 percent to $549.1 million for the third quarter of 2008 from $409.1 million in the third quarter of 2007, driven primarily by sales volume growth in the United States and Europe, and a favorable foreign currency exchange impact.
-- Atripla
Atripla sales increased 77 percent to $427.6 million for the third quarter of 2008 from $241.1 million in the third quarter of 2007, driven primarily by the continued uptake in the United States, as well as launches in certain European countries.
-- Viread
Viread(R) (tenofovir disoproxil fumarate) sales increased five percent to $156.0 million for the third quarter of 2008 from $149.1 million in the third quarter of 2007.
-- Hepsera
Sales of Hepsera(R) (adefovir dipivoxil) for chronic hepatitis B increased 15 percent to $91.2 million for the third quarter of 2008 from $79.3 million in the third quarter of 2007, driven primarily by a favorable foreign currency exchange impact and sales volume growth in North America and certain European markets.
AmBisome
Sales of AmBisome(R) (amphotericin B) liposome for injection for severe fungal infections increased six percent to $72.9 million for the third quarter of 2008 from $68.5 million for the third quarter of 2007. The increase in AmBisome sales was driven primarily by a favorable foreign currency exchange impact.
Royalty, Contract and Other Revenues
Royalty, contract and other revenues resulting primarily from collaborations with corporate partners were $32.8 million, a decrease of 66 percent from $96.9 million in the third quarter of 2007. This decrease was driven primarily by lower Tamiflu(R) (oseltamivir phosphate) royalties from F. Hoffmann-La Roche Ltd of $8.6 million in the third quarter of 2008 compared to Tamiflu royalties of $77.4 million in the third quarter of 2007. This change was due to decreased sales related to pandemic planning initiatives worldwide.
Research and Development
Research and development (R&D) expenses in the third quarter of 2008 were $188.1 million compared to $140.4 million for the same quarter in 2007. Non-GAAP R&D expenses, which exclude stock-based compensation expense, were $170.4 million, compared to $122.0 million for the same quarter in 2007 as a result of increased clinical study activity, research and related expenses as well as higher headcount related to the growth in Gilead's business.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses in the third quarter of 2008 were $189.2 million compared to $173.0 million for the same quarter in 2007. Non-GAAP SG&A expenses, which exclude stock-based compensation expense, were $167.9 million, compared to $148.4 million for the same quarter in 2007 primarily as a result of increased compensation and benefits as well as infrastructure and technology costs to support the continued growth in Gilead's business.
Net Foreign Currency Exchange Impact
The net foreign currency exchange impact on third quarter 2008 revenues and pre-tax earnings, which includes revenues and expenses generated from outside the United States, was a favorable $58.8 million and $36.7 million, respectively, compared to the same period in 2007.
Cash, Cash Equivalents and Marketable Securities
As of September 30, 2008, Gilead had cash, cash equivalents and marketable securities of $3.26 billion compared to $2.72 billion as of December 31, 2007. For the first nine months of 2008, Gilead generated $1.56 billion of operating cash flows including $555.2 million in the third quarter.
Share Repurchase Program
Gilead intends to enter into an agreement to repurchase $750.0 million of its common stock on an accelerated basis. These shares will be purchased under the $3.0 billion share repurchase program announced on October 22, 2007. The commencement of this repurchase program is contingent on market conditions and on Gilead not possessing material non-public information on the commencement date.
Corporate Highlights
In July 2008, Gilead announced that Richard J. Whitley, MD was appointed to Gilead's Board of Directors, increasing the number of Directors to 11. Dr. Whitley is Professor of Pediatrics, Microbiology, Medicine and Neurosurgery at the University of Alabama at Birmingham.
In September 2008, Gilead announced that Seigo Izumo, MD joined the company as Senior Vice President, Cardiovascular Therapeutics. Dr. Izumo oversees Gilead's growing cardiovascular franchise and serves as a member of Gilead's executive committee.
Product and Pipeline Highlights
Antiviral Franchise
In July 2008, Gilead announced that it had begun enrolling patients in a Phase III clinical trial of its investigational antiretroviral agent elvitegravir (GS 9137), a novel oral integrase inhibitor that is being evaluated for the treatment of HIV. The study will enroll 700 treatment-experienced HIV-infected patients, at approximately 125 sites in the United States and Puerto Rico.
In August 2008, Gilead and Merck & Co., Inc. (Merck) announced that the companies had entered into an agreement through which Gilead assumed the lead role for distribution of Atripla for the treatment of HIV in 12 countries located primarily in Latin America and the Asia-Pacific region. There are now 138 countries covered under agreements between Gilead and Merck or Bristol-Myers Squibb Company.
Also in August 2008, Gilead announced that the U.S. Food and Drug Administration (FDA) had granted marketing approval for Viread for the treatment of chronic hepatitis B. Viread was approved for the treatment of chronic hepatitis B in Canada in September 2008 and in the European Union, Turkey, Australia and New Zealand earlier this year.
Respiratory Franchise
In September 2008, Gilead announced that it had received a complete response letter from the FDA for its New Drug Application for aztreonam lysine for inhalation, an investigational therapy in development for people with cystic fibrosis who have Pseudomonas aeruginosa. The agency stated that they could not approve the application in its current form and an additional clinical study has been requested.
Conference Call
At 4:30 p.m. Eastern Time today, Gilead will host a conference call with a simultaneous webcast to discuss the results of its third quarter of 2008. During this call/webcast, Gilead's management will discuss the company's third quarter of 2008 results and provide a general business update. The webcast will be available live via the internet by accessing Gilead's website at www.gilead.com. To access the webcast, 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 1-866-831-6270 (U.S.) or 1-617-213-8858 (international) and dial the participant passcode 48487372 to access the call.
A replay of the webcast will be archived on the company's website for one year, and a phone replay will be available approximately two hours following the call through October 19, 2008. To access the phone replay, please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international) and dial the participant passcode 67732439.
About Gilead
Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. Gilead's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Australia.
Non-GAAP Financial Information
Non-GAAP net income and net income per diluted share for the three months ended September 30, 2008 and 2007, and nine months ended September 30, 2007, are presented excluding the after-tax impact of stock-based compensation expense and the related methodology for computing dilutive securities for net income per diluted share purposes. Non-GAAP net income and net income per diluted share for the nine months ended September 30, 2008 are presented excluding the after-tax impact of the purchased in-process research and development expense incurred in connection with the acquisition of all of Navitas Assets, LLC's assets related to its cicletanine business, as well as the after-tax impact of stock-based compensation expense and the related methodology for computing dilutive securities for net income per diluted share purposes. Non-GAAP R&D expenses and SG&A expenses for the 2008 and 2007 periods are presented excluding the impact of stock-based compensation expense. Management believes this non-GAAP information is useful for investors, taken in conjunction with Gilead's GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the company's operating results as reported under United States generally accepted accounting principles.
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. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: Gilead's ability to sustain growth in revenues for its antiviral and cardiovascular franchises; unpredictable variability of Tamiflu royalties and the strong relationship between this royalty revenue and global pandemic planning and supply; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current products; Gilead's ability to successfully commercialize any products that receive regulatory approvals; Gilead's ability to successfully develop its respiratory and cardiovascular franchises; initiating and completing clinical trials may take longer or cost more than expected; fluctuations in the foreign exchange rate of the U.S. dollar that may reduce or eliminate the favorable foreign currency exchange impact on Gilead's future revenues and pre-tax earnings; Gilead's ability to commence the accelerated stock repurchase program when intended, or at all, depends upon market conditions and whether, at the time of commencement, Gilead possesses material, non-public information that would make it illegal for Gilead to commence the program as intended; and other risks identified from time to time in Gilead's reports filed with the U.S. Securities and Exchange Commission. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "might," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words to be uncertain and forward-looking.
Gilead directs readers to its Annual Report on Form 10-K for the year ended December 31, 2007, its Quarterly Report on Form 10-Q for the first and second quarters of 2008 and its subsequent current reports on Form 8-K. 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.
Truvada, Viread, Hepsera, AmBisome and Letairis are registered trademarks of Gilead Sciences, Inc.
Atripla is a registered trademark of Bristol-Myers Squibb & Gilead Sciences, LLC.
Tamiflu is a registered trademark of F. Hoffmann-La Roche Ltd.
For more information on Gilead Sciences, Inc., 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 INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Revenues:
Product sales $1,338,502 $ 961,931 $3,697,024 $2,707,214
Royalty, contract
and other
revenues 32,766 96,872 210,521 428,108
----------- ----------- ----------- -----------
Total revenues 1,371,268 1,058,803 3,907,545 3,135,322
----------- ----------- ----------- -----------
Costs and expenses:
Cost of goods sold
(1) 300,183 198,460 805,715 553,229
Research and
development (1) 188,062 140,357 519,905 406,378
Selling, general
and
administrative
(1) 189,189 172,956 603,679 525,693
Purchased in-
process research
and development
(2) - - 10,851 -
----------- ----------- ----------- -----------
Total costs and
expenses 677,434 511,773 1,940,150 1,485,300
----------- ----------- ----------- -----------
Income from operations 693,834 547,030 1,967,395 1,650,022
Interest and other
income, net 3,637 29,502 40,363 80,295
Interest expense (2,951) (2,989) (9,230) (10,243)
Minority interest 2,160 2,478 6,195 7,032
----------- ----------- ----------- -----------
Income before
provision for income
taxes 696,680 576,021 2,004,723 1,727,106
Provision for income
taxes (1) 192,675 177,702 561,763 513,450
----------- ----------- ----------- -----------
Net income $ 504,005 $ 398,319 $1,442,960 $1,213,656
=========== =========== =========== ===========
Net income per share -
basic $ 0.55 $ 0.43 $ 1.56 $ 1.31
=========== =========== =========== ===========
Net income per share -
diluted $ 0.52 $ 0.42 $ 1.50 $ 1.26
=========== =========== =========== ===========
Shares used in per
share calculation -
basic 920,807 926,963 923,894 928,519
=========== =========== =========== ===========
Shares used in per
share calculation -
diluted 960,585 959,043 964,267 962,804
=========== =========== =========== ===========
Notes:
(1) The following is the stock-based compensation expense included in
the respective captions of the condensed consolidated statements
of income above:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Stock-based
compensation expense:
Cost of goods sold $ 2,592 $ 3,138 $ 7,134 $ 8,350
Research and
development 17,680 18,360 49,945 56,129
Selling, general
and administrative 21,322 24,563 57,526 86,683
Income tax effect (11,513) (14,284) (32,114) (44,939)
----------- ----------- ----------- -----------
Total stock-based
compensation
expense, net of
tax $ 30,081 $ 31,777 $ 82,491 $ 106,223
=========== =========== =========== ===========
(2) For the nine months ended September 30, 2008, Gilead incurred
$10.9 million of purchased in-process research and development
expense as a result of the acquisition of all of Navitas Assets,
LLC's assets related to its cicletanine business.
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in thousands, except per share amounts)
Below is a reconciliation of Gilead's GAAP operating results and
diluted per share amounts as reported in the attached press release.
Non-GAAP net income and net income per diluted share for the three
months ended September 30, 2008 and 2007, and the nine months ended
September 30, 2007, are presented excluding the after-tax impact of
stock-based compensation expense and the related methodology for
computing dilutive securities for net income per diluted share
purposes. Non-GAAP net income and net income per diluted share for
the nine months ended September 30, 2008 is presented excluding the
after-tax impact of the purchased in-process research and development
expense incurred in connection with the acquisition of all of Navitas
Assets, LLC's assets related to its cicletanine business, as well as
the after-tax impact of stock-based compensation expense and the
related methodology for computing dilutive securities for net income
per diluted share purposes. Management believes this non-GAAP
information is useful for investors, taken in conjunction with
Gilead's GAAP financial statements, because management uses such
information internally for its operating, budgeting and financial
planning purposes. Non-GAAP information is not prepared under a
comprehensive set of accounting rules and should only be used to
supplement an understanding of the company's operating results as
reported under GAAP.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ---------------------
2008 2007 2008 2007
--------- -------- ---------- ----------
Net income (GAAP) $504,005 $398,319 $1,442,960 $1,213,656
Stock-based compensation
expense, net of tax 30,081 31,777 82,491 106,223
Purchased in-process research
and development expense, net
of tax - - 7,769 -
--------- -------- ---------- ----------
Net income (Non-GAAP) $534,086 $430,096 $1,533,220 $1,319,879
========= ======== ========== ==========
Shares used in per share
calculation - diluted (GAAP) 960,585 959,043 964,267 962,804
Dilutive securities 1,924 1,780 2,103 2,108
--------- -------- ---------- ----------
Shares used in per share
calculation - diluted (Non-
GAAP) 962,509 960,823 966,370 964,912
========= ======== ========== ==========
Net income per share -
diluted (GAAP) $ 0.52 $ 0.42 $ 1.50 $ 1.26
========= ======== ========== ==========
Net income per share -
diluted (Non-GAAP) $ 0.55 $ 0.45 $ 1.59 $ 1.37
========= ======== ========== ==========
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2008 2007
------------- ------------
(unaudited) (Note 1)
Cash, cash equivalents and marketable
securities $ 3,256,262 $2,722,422
Other current assets 2,407,389 1,856,314
Property, plant and equipment, net 512,281 447,696
Other noncurrent assets 798,196 808,284
------------- ------------
Total assets $ 6,974,128 $5,834,716
============= ============
Current liabilities $ 1,259,134 $ 736,275
Long-term liabilities and minority interest 1,549,084 1,638,451
Stockholders' equity 4,165,910 3,459,990
------------- ------------
Total liabilities and stockholders'
equity $ 6,974,128 $5,834,716
============= ============
Notes:
(1) Derived from audited consolidated financial statements at that
date.
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
2008 2007 2008 2007
---------- --------- ---------- ----------
(Note 1) (Note 1)
Antiviral products:
Truvada - U.S. $ 262,065 $ 206,681 $ 736,999 $ 579,725
Truvada - Europe 257,315 183,016 716,593 501,000
Truvada - Other
International 29,721 19,387 91,043 59,657
---------- --------- ---------- ----------
549,101 409,084 1,544,635 1,140,382
========== ========= ========== ==========
Atripla - U.S. 346,377 240,217 965,254 641,706
Atripla - Europe 71,028 - 122,727 -
Atripla - Other
International 10,218 884 18,960 1,962
---------- --------- ---------- ----------
427,623 241,101 1,106,941 643,668
========== ========= ========== ==========
Viread - U.S. 63,431 63,488 184,913 194,841
Viread - Europe 66,320 62,944 193,309 199,892
Viread - Other
International 26,207 22,676 81,084 69,950
---------- --------- ---------- ----------
155,958 149,108 459,306 464,683
========== ========= ========== ==========
Hepsera - U.S. 36,744 32,387 102,600 94,647
Hepsera - Europe 49,437 42,122 148,431 119,754
Hepsera - Other
International 5,036 4,764 13,573 11,389
---------- --------- ---------- ----------
91,217 79,273 264,604 225,790
========== ========= ========== ==========
Emtriva - U.S. 4,001 3,315 11,945 10,213
Emtriva - Europe 2,762 2,408 7,437 9,014
Emtriva - Other
International 871 738 4,729 5,161
---------- --------- ---------- ----------
7,634 6,461 24,111 24,388
========== ========= ========== ==========
Total Antiviral products -
U.S. 712,618 546,088 2,001,711 1,521,132
Total Antiviral products -
Europe 446,862 290,490 1,188,497 829,660
Total Antiviral products -
Other International 72,053 48,449 209,389 148,119
---------- --------- ---------- ----------
1,231,533 885,027 3,399,597 2,498,911
========== ========= ========== ==========
AmBisome 72,884 68,508 213,680 194,764
Letairis 31,656 6,153 76,679 6,266
Other products 2,429 2,243 7,068 7,273
---------- --------- ---------- ----------
106,969 76,904 297,427 208,303
========== ========= ========== ==========
Total product sales $1,338,502 $ 961,931 $3,697,024 $2,707,214
========== ========= ========== ==========
(1) Certain prior period amounts have been reclassified to conform to
current period presentation.
Source: Gilead Sciences, Inc.