Gilead Sciences Announces First Quarter 2007 Financial Results
Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of
operations for the quarter ended March 31, 2007. Total revenues for
the first quarter of 2007 were $1.03 billion, up 48 percent compared
to total revenues of $692.9 million for the first quarter of 2006. Net
income for the first quarter of 2007 was $407.4 million, or $0.85 per
diluted share, which included after-tax stock-based compensation
expense of $40.2 million. Excluding after-tax stock-based compensation
expense, non-GAAP net income for the first quarter of 2007 was $447.6
million, or $0.93 per diluted share, compared to non-GAAP net income
of $286.2 million, or $0.59 per diluted share, for the first quarter
of 2006.
Product Sales
Product sales were a record $840.2 million for the first quarter
of 2007, compared to $559.4 million in the first quarter of 2006, a 50
percent increase. This growth was driven primarily by Gilead's HIV
product franchise, including the strong uptake of Atripla(TM)
(efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate
300 mg) following its launch in July 2006 in the United States as well
as strong growth of Truvada(R) (emtricitabine and tenofovir disoproxil
fumarate) in Europe. Hepsera(R) (adefovir dipivoxil) and AmBisome(R)
(amphotericin B) liposome for injection also experienced solid sales
growth compared to the same quarter last year.
HIV Franchise
HIV product sales were $705.1 million in the first quarter of
2007, a 56 percent increase from $450.7 million for the same period in
2006.
-- Truvada
Truvada sales were $345.9 million for the first quarter of 2007,
an increase of 39 percent from $248.9 million in the first quarter of
2006. Truvada sales accounted for approximately 49 percent of total
HIV product sales and approximately 41 percent of Gilead's total
product sales in the first quarter of 2007.
-- Atripla
Atripla sales were $190.2 million in the first quarter of 2007, a
sequential increase of 38 percent from $137.4 million in the fourth
quarter of 2006. Sales of Atripla commenced in the United States in
the third quarter of 2006.
-- Viread
Sales of Viread(R) (tenofovir disoproxil fumarate) were $160.7
million in the first quarter of 2007, a 16 percent decrease from
$191.8 million in the first quarter of 2006.
-- Emtriva
Emtriva(R) (emtricitabine) sales were $8.3 million for the first
quarter of 2007, a decrease of 16 percent from $10.0 million in the
first quarter of 2006.
Hepsera for Chronic Hepatitis B
Hepsera sales totaled $71.3 million for the first quarter of 2007,
a 35 percent increase from $52.7 million in the first quarter of 2006.
AmBisome for Severe Fungal Infections
Sales of AmBisome for the first quarter of 2007 were $61.5
million, an increase of 14 percent from $53.8 million for the first
quarter of 2006, primarily driven by sales volume growth across major
European territories, as well as a favorable foreign currency exchange
impact.
Royalty, Contract and Other Revenues
For the first quarter of 2007, royalty, contract and other
revenues resulting primarily from collaborations with corporate
partners totaled $188.2 million, an increase of $54.7 million from the
first quarter of 2006. The increase in the first quarter of 2007 was
driven primarily by the recognition of Tamiflu(R) (oseltamivir
phosphate) royalties from F. Hoffmann-La Roche Ltd (Roche) of $167.9
million compared to Tamiflu royalties of $115.3 million recognized in
the first quarter of 2006. This increase was due to the significantly
higher Tamiflu sales recorded by Roche during the fourth quarter of
2006 compared to the same period in 2005.
"As Gilead enters its twentieth year, our business has never been
stronger than today," said John F. Milligan, PhD, Chief Operating
Officer and Chief Financial Officer (CFO) of Gilead. "We are very
pleased with the solid results, including revenues of over $1 billion,
driven by the continued strong uptake of Atripla, robust worldwide
sales of Truvada and strong performance of our other products, as well
as continued expense management. As we prepare for future new product
launches and advance key pipeline programs, we recognize that our
operating expenses will need to grow to support these efforts. We
remain dedicated to managing our expense growth in order to maintain
robust operating cash flow."
Research and Development
Research and development (R&D) expenses in the first quarter of
2007 were $130.1 million compared to $88.4 million for the same
quarter in 2006. Non-GAAP R&D expenses, which exclude stock-based
compensation expense, for the first quarter of 2007 were $109.0
million, compared to $76.5 million for the same quarter in 2006.
Non-GAAP R&D expenses for the first quarter of 2007 were higher
primarily from increased compensation and benefits related to higher
headcount, and increased contract service and clinical study expenses
relating to clinical, product development and research activities in
our HIV, hepatitis, respiratory and cardiopulmonary programs.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses in the first
quarter of 2007 were $166.6 million compared to $142.5 million for the
same quarter in 2006. SG&A expenses in the first quarter of 2006
included the write-off of certain capital assets related to
renovations at our corporate headquarters. Non-GAAP SG&A expenses,
which exclude stock-based compensation expense, for the first quarter
of 2007 were $132.9 million, compared to $128.0 million for the same
quarter in 2006. Non-GAAP SG&A expenses for the first quarter of 2007
were higher primarily from increased compensation and benefits related
to higher headcount.
Cash, Cash Equivalents and Marketable Securities
As of March 31, 2007, Gilead had cash, cash equivalents and
marketable securities of $1.86 billion compared to $1.39 billion as of
December 31, 2006. The increase in cash, cash equivalents and
marketable securities was primarily attributable to $490.5 million of
operating cash flows generated during the quarter, partially offset by
our repayment of the remaining principal under our term loan of $99.0
million.
Corporate Highlights
In January 2007, Gilead announced that Carla A. Hills was
appointed to the company's Board of Directors, increasing the number
of directors to 10. Mrs. Hills is the Chair and Chief Executive
Officer (CEO) of Hills & Company, International Consultants, a firm
providing advice to U.S. businesses on investment, trade and risk
assessment issues abroad, particularly in emerging markets. From 1989
to 1993, she served as U.S. Trade Representative, and was the
principal advisor on international trade to President George H. W.
Bush. Mrs. Hills was a Cabinet member under President Gerald R. Ford
as well, serving as Secretary of the Department of Housing and Urban
Development. She also served as Assistant Attorney General, Civil
Division, U.S. Department of Defense.
In March 2007, Gilead announced the appointment of Norbert W.
Bischofberger, PhD to the position of Executive Vice President,
Research and Development and Chief Scientific Officer, and John F.
Milligan, PhD to the position of Chief Operating Officer, with
continued responsibilities as CFO until a new CFO is identified.
Product and Pipeline Highlights
"We are pleased with the significant progress seen in our pipeline
products during the first quarter," said John C. Martin, PhD,
President and CEO of Gilead. "We presented positive data from the
Phase II study of elvitegravir, our novel HIV integrase inhibitor also
known as GS 9137, and based on these results, we are currently in
discussions with the U.S. Food and Drug Administration (FDA) about the
Phase III registrational program for this compound. In addition, the
FDA granted a priority review for the New Drug Application (NDA) for
ambrisentan for pulmonary arterial hypertension (PAH). Our commercial
efforts are ramping up to expeditiously bring this product to market,
and pending FDA approval, to provide patients with PAH a new,
once-daily treatment option."
HIV/AIDS Franchise
In February 2007, Gilead announced the completion of a 24-week
Phase II dose-ranging trial of GS 9137 (elvitegravir) and stated that
the clinical study met its primary endpoint of non-inferiority in
viral load reduction in HIV-positive patients. In early March, data
from this study were presented at the 14th Conference on Retroviruses
and Opportunistic Infections by Andrew Zolopa, M.D., Associate
Professor, Stanford School of Medicine.
Hepatitis Franchise
In February 2007, Gilead and Achillion Pharmaceuticals, Inc.
(Achillion) announced results from a Phase Ib/II trial evaluating GS
9132 (also known as ACH-806), a novel NS4A antagonist, in patients
infected with hepatitis C virus. Preliminary data demonstrated
positive antiviral activity of GS 9132, but an unsuitable safety
profile led to the discontinuation of the clinical program. The two
companies will continue to explore other NS4A antagonists discovered
by Achillion with Gilead taking the lead on future preclinical and
clinical development work once an appropriate candidate is identified.
Respiratory and Cardiopulmonary Franchise
In February 2007, Gilead announced that the FDA accepted for
filing and granted priority review to the company's NDA seeking
marketing approval of ambrisentan (5 mg and 10 mg) for a once-daily
treatment of PAH. The FDA has established a target review date, under
the Prescription Drug User Fee Act, of June 18, 2007.
In March 2007, Gilead announced that GlaxoSmithKline's Marketing
Authorisation Application for ambrisentan for the treatment of PAH was
validated by the European Medicines Agency following a review by the
Committee for Medicinal Products for Human Use.
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 first
quarter of 2007. During this call/webcast, Gilead's management will be
discussing the company's first quarter 2007 results and providing 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 1-866-510-0712 (U.S.) or 1-617-597-5380
(international) and dial the participant passcode 30443590 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 April 21, 2007. To access the phone
replay, please call 1-888-286-8010 (U.S.) or 1-617-801-6888
(international) and dial the participant passcode 71136594.
About Gilead
Gilead Sciences is a biopharmaceutical company that discovers,
develops and commercializes innovative therapeutics in areas of unmet
medical need. The company'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, net income per diluted share, R&D expenses
and SG&A expenses 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
GAAP.
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, which could cause actual results to differ
materially. These risks and uncertainties include: our ability to
sustain the uptake and revenues for our HIV franchise, Hespera and
AmBisome, unpredictable variability of Tamiflu royalties and the
strong relationship between this revenue and global pandemic planning
and supply, our ability to receive regulatory approvals, in a timely
manner or at all, for new and current products, including Truvada,
Atripla and ambrisentan; our ability to successfully develop our
respiratory and cardiopulmonary franchise; future clinical studies of
GS 9137 may not warrant further development of this compound and
initiating and completing clinical trials may take longer or cost more
than expected; our ability to identify a lead candidate for
development with Achillion for the treatment of HCV infection, 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, 2006, 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.
Viread, Emtriva, Truvada, AmBisome and Hepsera are registered
trademarks of Gilead Sciences, Inc.
Atripla is a 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).
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GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three months ended
March 31,
-----------------------
2007 2006
----------- ----------
Revenues:
Product sales $ 840,225 $ 559,353
Royalty, contract and other revenues 188,205 133,525
----------- -----------
Total revenues 1,028,430 692,878
Costs and expenses:
Cost of goods sold (1) 171,638 90,357
Research and development (1) 130,090 88,400
Selling, general and administrative (1) 166,558 142,469
----------- -----------
Total costs and expenses 468,286 321,226
----------- -----------
Income from operations 560,144 371,652
Interest and other income, net 23,104 28,525
Interest expense (4,547) (3,724)
Minority interest in joint venture 2,153 994
----------- -----------
Income before provision for income taxes 580,854 397,447
Provision for income taxes (1) 173,447 134,743
----------- -----------
Net income $ 407,407 $ 262,704
=========== ===========
Net income per share - basic $ 0.88 $ 0.57
=========== ===========
Net income per share - diluted $ 0.85 $ 0.55
=========== ===========
Shares used in per share calculation - basic 463,470 461,425
=========== ===========
Shares used in per share calculation - diluted 481,358 481,802
=========== ===========
----
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
March 31,
-----------------------
2007 2006
----------- ----------
Stock-based compensation expense:
Cost of goods sold $ 2,530 $ 3,187
Research and development expenses 21,108 11,949
Selling, general and administrative
expenses 33,656 14,496
Income tax effect (17,108) (6,129)
----------- -----------
Total stock-based compensation
expense, net of tax $ 40,186 $ 23,503
=========== ===========
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GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(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 are presented excluding
the impact of after-tax 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 GAAP.
Three months ended
March 31,
---------------------
2007 2006
---------- ----------
Net income (GAAP) $ 407,407 $ 262,704
Stock-based compensation expense, net of tax 40,186 23,503
---------- ----------
Net income (Non-GAAP) $ 447,593 $ 286,207
========== ==========
Shares used in per share calculation - diluted
(GAAP) 481,358 481,802
Dilutive securities 960 985
---------- ----------
Shares used in per share calculation - diluted
(Non-GAAP) 482,318 482,787
========== ==========
Net income per share - diluted (GAAP) $ 0.85 $ 0.55
========== ==========
Net income per share - diluted (Non-GAAP) $ 0.93 $ 0.59
========== ==========
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GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2007 2006
------------ ------------
(unaudited) (Note 1)
Cash, cash equivalents and marketable
securities $ 1,860,458 $ 1,389,566
Other current assets 1,514,823 1,492,355
Property, plant and equipment, net 377,067 361,299
Other noncurrent assets 863,031 842,761
------------ ------------
Total assets $ 4,615,379 $ 4,085,981
============ ============
Current liabilities $ 710,486 $ 764,276
Long-term liabilities and minority interest 1,522,214 1,505,987
Stockholders' equity 2,382,679 1,815,718
------------ ------------
Total liabilities and stockholders'
equity $ 4,615,379 $ 4,085,981
============ ============
Note:
(1) Derived from audited consolidated financial statements at that
date.
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GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in thousands)
Three months ended
March 31,
-----------------------
2007 2006
----------- -----------
HIV products:
Truvada - U.S. $ 186,788 $ 179,790
Truvada - Europe 145,207 65,298
Truvada - Other International 13,943 3,858
----------- -----------
345,938 248,946
Atripla - U.S. 189,810 -
Atripla - Europe - -
Atripla - Other International 373 -
----------- -----------
190,183 -
Viread - U.S. 67,556 75,842
Viread - Europe 71,914 87,720
Viread - Other International 21,208 28,213
----------- -----------
160,678 191,775
Emtriva - U.S. 3,455 4,006
Emtriva - Europe 3,874 5,338
Emtriva - Other International 994 618
----------- -----------
8,323 9,962
Total HIV products - U.S. 447,609 259,638
Total HIV products - Europe 220,995 158,356
Total HIV products - Other International 36,518 32,689
----------- -----------
705,122 450,683
Hepsera - U.S. 29,769 22,388
Hepsera - Europe 33,290 25,140
Hepsera - Other International 8,285 5,127
----------- -----------
71,344 52,655
AmBisome 61,502 53,800
Other products 2,257 2,215
Total product sales $ 840,225 $ 559,353
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