January 27, 2009
Gilead Sciences Announces Record Fourth Quarter and Full Year 2008 Financial Results
- Full Year Total Revenues of $5.34 Billion, Up 26 Percent over 2007 -
- Full Year Product Sales of $5.08 Billion, Up 36 Percent over 2007 -
- Fourth Quarter EPS of $0.60 per Share -
- Fourth Quarter Non-GAAP EPS of $0.63 per Share -
FOSTER CITY, Calif.--(BUSINESS WIRE)--Jan. 27, 2009--Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of
operations for the fourth quarter and full year of 2008. Total revenues
for the fourth quarter of 2008 were $1.43 billion, up 30
percent compared to total revenues of $1.09 billion for the
fourth quarter of 2007. Full year 2008 total revenues were $5.34
billion, up 26 percent compared to full year total revenues of $4.23
billion for 2007. Net income for the fourth quarter of 2008 was $568.2
million, or $0.60 per diluted share, including after-tax stock-based
compensation expense of $30.3 million. Non-GAAP net income for the
fourth quarter of 2008, which excludes after-tax stock-based
compensation expense, was $598.5 million, or $0.63 per diluted share,
compared to non-GAAP net income for the fourth quarter of 2007, which
excludes after-tax stock-based compensation expense of $25.1 million, of
$426.8 million, or $0.44 per diluted share. As more fully described
under the discussion of "Income Taxes," we recorded certain income tax
benefits in the fourth quarter of 2008 that had the effect of increasing
earnings by $0.04 per diluted share.
Product Sales
Product sales increased 35 percent to a record $1.39 billion for the
fourth quarter of 2008, compared to $1.03 billion in the fourth quarter
of 2007. For 2008, product sales increased 36 percent to $5.08 billion
when compared to 2007. This was driven primarily by Gilead's antiviral
franchise, including the strong growth in sales of Atripla(R) (efavirenz
600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg), as
well as the continued growth in sales of Truvada(R)
(emtricitabine and tenofovir disoproxil fumarate).
Antiviral Franchise
Antiviral product sales increased 35 percent to $1.27 billion in the
fourth quarter of 2008 from $941.1 million for the same period in 2007.
For 2008, antiviral product sales increased 36 percent to $4.67 billion
when compared to 2007. The increases were driven primarily by the sales
volume growth of Atripla and Truvada, as well as a favorable foreign
currency exchange impact.
-- Truvada
Truvada sales increased 25 percent to $562.1 million for the fourth
quarter of 2008 from $448.8 million in the fourth quarter of 2007. For
2008, Truvada sales increased 33 percent to $2.11 billion from $1.59
billion in 2007. The increase in Truvada sales in the fourth quarter and
full year of 2008 compared to the same periods of 2007 was driven
primarily by sales volume growth in the United States and Europe and a
favorable foreign currency exchange impact.
-- Atripla
Atripla sales increased 79 percent to $465.5 million for the fourth
quarter of 2008 from $259.7 million in the fourth quarter of 2007. For
2008, Atripla sales increased 74 percent to $1.57 billion from $903.4
million in 2007. The increase in Atripla sales in the fourth quarter and
full year of 2008 compared to the same periods of 2007 was driven
primarily by the continued uptake in the United States, as well as
launches of the product in most European countries.
-- Other Antiviral Products
Other antiviral product sales, including Viread(R) (tenofovir
disoproxil fumarate), Hepsera(R) (adefovir dipivoxil) and
Emtriva(R) (emtricitabine), increased five percent to $245.3
million for the fourth quarter of 2008 from $232.5 million in the fourth
quarter of 2007. For 2008, these other antiviral product sales increased
five percent to $993.3 million from $947.4 million in 2007.
AmBisome
Sales of AmBisome(R) (amphotericin B) liposome for injection
for severe fungal infections increased 12 percent to $76.0 million for
the fourth quarter of 2008 from $67.8 million for the fourth quarter of
2007. For 2008, AmBisome sales increased by 10 percent to $289.7 million
from $262.6 million in 2007. The increase in sales of AmBisome in the
fourth quarter of 2008 compared to the same period of 2007 was driven
primarily by sales volume growth in certain European markets. The
increase in sales of AmBisome for the full year of 2008 compared to the
same period of 2007 was driven primarily by a favorable foreign currency
exchange impact and sales volume growth in certain European markets.
Letairis
Sales of Letairis(R) (ambrisentan) for the treatment of
pulmonary arterial hypertension increased two-fold to $36.2 million for
the fourth quarter of 2008 from $14.8 million for the fourth quarter of
2007. For 2008, Letairis sales increased five-fold to $112.9 million
from $21.0 million in 2007. The increase in sales of Letairis in the
fourth quarter and full year of 2008 compared to the same periods of
2007 was driven primarily by sales volume growth in the United States as
Letairis was launched in June 2007.
Royalty, Contract and Other Revenues
For the fourth quarter of 2008, royalty, contract and other revenues
resulting primarily from collaborations with corporate partners were
$40.4 million, a decrease of 41 percent from $68.8 million in the fourth
quarter of 2007. The decrease during the fourth quarter was driven
primarily by lower Tamiflu(R) (oseltamivir phosphate) royalties
from F. Hoffmann-La Roche Ltd (Roche) of $16.0 million in the fourth
quarter of 2008, compared to Tamiflu royalties of $46.1 million in the
fourth quarter of 2007. For 2008, royalty, contract and other revenues
were $251.0 million, a decrease of 49 percent from $496.9 million in
2007. The decrease during 2008 compared to 2007 was driven primarily by
Tamiflu royalties from Roche of $155.5 million in 2008, compared to
Tamiflu royalties of $414.5 million in 2007. The decrease in Tamiflu
royalties in the fourth quarter and full year of 2008 compared to the
same periods of 2007 was due primarily to decreased Roche sales related
to pandemic planning initiatives worldwide.
Research and Development
Research and development (R&D) expenses in the fourth quarter of 2008
were $201.9 million compared to $184.6 million for the same quarter in
2007. Non-GAAP R&D expenses, which exclude stock-based compensation
expense, for the fourth quarter of 2008 were $185.3 million, compared to
$168.7 million for the same quarter in 2007. For 2008, R&D expenses were
$721.8 million compared to $591.0 million for 2007. Non-GAAP R&D
expenses, which exclude stock-based compensation expense, for 2008 were
$655.2 million, compared to $518.9 million for 2007. Non-GAAP R&D
expenses for the fourth quarter and full year of 2008 were higher
primarily as a result of increased clinical study activity as well as
higher headcount related to the growth in Gilead's business, partially
offset by a net decrease in payments incurred related to its
collaborations.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses in the fourth
quarter of 2008 were $193.7 million compared to $180.0 million for the
same quarter in 2007. Non-GAAP SG&A expenses, which exclude stock-based
compensation expense, for the fourth quarter of 2008 were $174.7
million, compared to $165.4 million for the same quarter in 2007. For
2008, SG&A expenses were $797.3 million compared to $705.7 million for
2007. Non-GAAP SG&A expenses, which exclude stock-based compensation
expense, for 2008 were $720.8 million, compared to $604.4 million for
2007. Non-GAAP SG&A expenses for the fourth quarter were higher
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. For the full year of 2008, non-GAAP SG&A expenses
were higher compared to 2007 primarily as a result of increased
compensation and benefits and infrastructure and technology costs, as
well as increased marketing and promotional expenses to support Gilead's
expanding commercial activities.
Income Taxes
The full year 2008 effective tax rate was 26.5 percent compared to 28.9
percent for 2007. The decrease in the 2008 effective tax rate was driven
primarily by various fourth quarter 2008 items, including the resolution
of certain tax audits with taxing authorities and the extension of the
federal research and development tax credit. As a result of these items,
the fourth quarter 2008 tax rate was 22.1 percent. The income tax
benefits recorded in the fourth quarter of 2008 had the effect of
increasing GAAP and non-GAAP earnings by $0.04 per diluted share.
Net Foreign Currency Exchange Impact
The net foreign currency exchange impact on fourth quarter 2008 revenues
and pre-tax earnings, which includes revenues and expenses generated
from outside the United States, was a favorable $4.6 million and $12.6
million, respectively, compared to the same period in 2007. The impact
on full year 2008 revenues and pre-tax earnings was a favorable $148.2
million and $92.6 million, respectively, compared to 2007.
Cash, Cash Equivalents and Marketable
Securities
As of December 31, 2008, Gilead had cash, cash equivalents and
marketable securities of $3.24 billion compared to $2.72 billion as of
December 31, 2007. For the year, Gilead generated $2.20 billion of
operating cash flows including $646.1 million in the fourth quarter.
Corporate Highlights
In October 2008, Gilead entered into an agreement to repurchase $750.0
million of its common stock under an accelerated share repurchase
program. Gilead repurchased these shares under the $3.0 billion share
repurchase program announced in October 2007. In 2008, Gilead
repurchased and retired 39.2 million shares of its common stock for an
aggregate purchase price of $1.97 billion. As of December 31, 2008, the
remaining authorized amount of stock repurchases that may be made under
this stock repurchase program which expires in December 2010 was $998.1
million.
Product and Pipeline Highlights
Antiviral Franchise
In November 2008, Gilead announced two-year (96-week) data from two
Phase III pivotal clinical trials, Studies 102 and 103, evaluating the
safety and efficacy of once-daily Viread among adult patients with
chronic hepatitis B. These data were presented during oral sessions at
the annual meeting of the American Association for the Study of Liver
Diseases in San Francisco.
In December 2008, Gilead announced the publication of the detailed one
year (48-week) data from Studies 102 and 103 in the December 4, 2008
issue of The New England Journal of Medicine.
Cardiovascular Franchise
In October 2008, Gilead announced results of a two-year (104-week),
open-label, uncontrolled, extension study (ARIES-E) of Letairis in
patients with pulmonary arterial hypertension (WHO Group 1). Data from
this study were presented at the annual meeting of the American College
of Chest Physicians in Philadelphia.
Conference Call
At 4:30 p.m. Eastern Time today, Gilead will host a conference call and
a simultaneous webcast to discuss the results of its fourth quarter and
full year of 2008. During this call/webcast, Gilead's management will
discuss the Company's fourth quarter and full year 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 1-800-901-5247 (U.S.) or 1-617-786-4501 (international) and
dial the participant passcode 74401137 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 January 31, 2009. To access the phone replay,
please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international) and
dial the participant passcode 89437661.
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 December 31, 2008 and 2007, and the year ended December 31,
2007, are presented excluding the after-tax impact of stock-based
compensation expense and adjusted for the application of APB 25 in
computing non-GAAP dilutive securities. Non-GAAP net income and net
income per diluted share for the year ended December 31, 2008 are
presented excluding the after-tax impact of the purchased in-process
research and development expense incurred in connection with the
acquisition of Navitas Assets, LLC's assets related to its cicletanine
business and the after-tax impact of stock-based compensation expense,
and adjusted for the application of APB 25 in computing non-GAAP
dilutive securities. Non-GAAP R&D expenses and SG&A expenses for the
fourth quarter and full year of 2008 and 2007 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; our ability to consummate additional purchases
under our share repurchase program due to changes in our stock price,
corporate or other market conditions; and other risks identified from
time to time in Gilead's reports filed with the U.S. Securities and
Exchange Commission. In addition, Gilead makes estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosures. Gilead bases its estimates on
historical experience and on various other market-specific and other
relevant assumptions that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ significantly
from these estimates. 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 Reports on Form 10-Q for the
first, second and third 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 Year Ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Product sales $ 1,387,772 $ 1,025,895 $ 5,084,796 $ 3,733,109
Royalty,
contract and 40,433 68,828 250,954 496,936
other revenues
Total revenues 1,428,205 1,094,723 5,335,750 4,230,045
Costs and expenses:
Cost of goods 321,531 215,542 1,127,246 768,771
sold (1)
Research and 201,863 184,648 721,768 591,026
development (1)
Selling, general
and 193,665 180,048 797,344 705,741
administrative
(1)
Purchased
in-process - - 10,851 -
research and
development (2)
Total costs and 717,059 580,238 2,657,209 2,065,538
expenses
Income from 711,146 514,485 2,678,541 2,164,507
operations
Interest and other 19,038 29,528 59,401 109,823
income, net
Interest expense (2,871 ) (2,857 ) (12,101 ) (13,100 )
Minority interest 2,369 2,076 8,564 9,108
Income before
provision for income 729,682 543,232 2,734,405 2,270,338
taxes
Provision for income 161,488 141,590 723,251 655,040
taxes (1)
Net income $ 568,194 $ 401,642 $ 2,011,154 $ 1,615,298
Net income per share $ 0.62 $ 0.43 $ 2.18 $ 1.74
- basic
Net income per share $ 0.60 $ 0.41 $ 2.10 $ 1.68
- diluted
Shares used in per
share calculation - 911,168 930,981 920,693 929,133
basic
Shares used in per
share calculation - 942,837 969,274 958,825 964,356
diluted
Notes:
The following is the stock-based compensation expense included in the
(1) respective captions of the condensed consolidated statements of income
above:
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Stock-based
compensation
expense:
Cost of goods $ 3,178 $ 2,874 $ 10,312 $ 11,224
sold
Research and 16,578 15,953 66,523 72,082
development
Selling, general
and 19,003 14,616 76,529 101,299
administrative
Income tax effect (8,451 ) (8,322 ) (40,565 ) (53,261 )
Total
stock-based
compensation $ 30,308 $ 25,121 $ 112,799 $ 131,344
expense, net
of tax
For the year ended December 31, 2008, Gilead incurred $10.9 million of
(2) 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 net income and diluted per share
amounts as reported in the attached press release. Non-GAAP net income and net
income per diluted share for three months ended December 31, 2008 and 2007, and
the year ended December 31, 2007, are presented excluding the after-tax impact
of stock-based compensation expense and adjusted for the application of APB 25
in computing non-GAAP dilutive securities. Non-GAAP net income and net income
per diluted share for the year ended December 31, 2008 are presented excluding
the after-tax impact of the purchased in-process research and development
expense incurred in connection with the acquisition of Navitas Assets, LLC's
assets related to its cicletanine business and the after-tax impact of
stock-based compensation expense, and adjusted for the application of APB 25 in
computing non-GAAP dilutive securities. 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 Year Ended
December 31, December 31,
2008 2007 2008 2007
Net income (GAAP) $ 568,194 $ 401,642 $ 2,011,154 $ 1,615,298
Stock-based compensation 30,308 25,121 112,799 131,344
expense, net of tax
Purchased in-process research
and development expense, net of - - 7,769 -
tax
Net income (Non-GAAP) $ 598,502 $ 426,763 $ 2,131,722 $ 1,746,642
Shares used in per share 942,837 969,274 958,825 964,356
calculation - diluted (GAAP)
Dilutive securities 683 2,227 1,686 2,123
Shares used in per share 943,520 971,501 960,511 966,479
calculation - diluted (Non-GAAP)
Net income per share - diluted $ 0.60 $ 0.41 $ 2.10 $ 1.68
(GAAP)
Net income per share - diluted $ 0.63 $ 0.44 $ 2.22 $ 1.81
(Non-GAAP)
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2008 2007
(unaudited) (Note 1)
Cash, cash equivalents and marketable securities $ 3,239,639 $ 2,722,422
Accounts receivable, net 1,023,397 795,127
Inventories 927,868 599,966
Property, plant and equipment, net 528,799 447,696
Other assets 1,298,871 1,269,505
Total assets $ 7,018,574 $ 5,834,716
Current liabilities $ 1,220,992 $ 736,275
Long-term liabilities and minority interest 1,645,095 1,638,451
Stockholders' equity 4,152,487 3,459,990
Total liabilities and stockholders' equity $ 7,018,574 $ 5,834,716
Note:
(1) Derived from audited consolidated financial statements at that date.
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(Note 1) (Note 1)
Antiviral products:
Truvada - U.S. $ 255,101 $ 209,984 $ 992,100 $ 789,709
Truvada - Europe 270,055 210,650 986,648 711,650
Truvada - Other 36,896 28,213 127,939 87,870
International
562,052 448,847 2,106,687 1,589,229
Atripla - U.S. 351,914 258,303 1,317,168 900,009
Atripla - Europe 103,027 276 225,754 276
Atripla - Other 10,573 1,134 29,533 3,096
International
465,514 259,713 1,572,455 903,381
Viread - U.S. 69,303 62,757 254,216 257,598
Viread - Europe 66,588 60,109 259,897 260,001
Viread - Other 25,990 25,620 107,074 95,570
International
161,881 148,486 621,187 613,169
Hepsera - U.S. 28,804 28,832 131,404 123,479
Hepsera - Europe 42,681 42,736 191,112 162,490
Hepsera - Other 4,934 5,364 18,507 16,753
International
76,419 76,932 341,023 302,722
Emtriva - U.S. 3,859 3,230 15,804 13,443
Emtriva - Europe 2,382 2,261 9,819 11,275
Emtriva - Other 728 1,614 5,457 6,775
International
6,969 7,105 31,080 31,493
Total Antiviral products - 708,981 563,106 2,710,692 2,084,238
U.S.
Total Antiviral products - 484,733 316,032 1,673,230 1,145,692
Europe
Total Antiviral products - 79,121 61,945 288,510 210,064
Other International
1,272,835 941,083 4,672,432 3,439,994
AmBisome 75,971 67,807 289,651 262,571
Letairis 36,176 14,754 112,855 21,020
Other products 2,790 2,251 9,858 9,524
114,937 84,812 412,364 293,115
Total product sales $ 1,387,772 $ 1,025,895 $ 5,084,796 $ 3,733,109
(1) Certain prior period amounts have been reclassified to conform to current
period presentation.
CONTACT: Gilead Sciences, Inc.
Investors
Robin Washington, 650-522-5688
Susan Hubbard, 650-522-5715
Media
Amy Flood, 650-522-5643
Source: Gilead Sciences, Inc.
