Gilead Sciences Announces First Quarter 2008 Financial Results
Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of
operations for the quarter ended March 31, 2008. Total revenues for
the first quarter of 2008 were $1.26 billion, up 22 percent compared
to total revenues of $1.03 billion for the first quarter of 2007. Net
income for the first quarter of 2008 was $496.1 million, or $0.51 per
diluted share, including after-tax stock-based compensation expense of
$26.0 million. Excluding after-tax stock-based compensation expense
non-GAAP net income for the first quarter of 2008 was $522.1 million
or $0.54 per diluted share, compared to non-GAAP net income of $447.6
million, or $0.46 per diluted share, for the first quarter of 2007
which excluded after-tax stock-based compensation expense of $40.2
million.
Product Sales
Product sales were a record $1.14 billion for the first quarter of
2008, compared to $840.2 million in the first quarter of 2007, a 36
percent increase. This growth was driven primarily by Gilead´s HIV
product franchise, including the continued strong uptake of Atripla(R)
(efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate
300 mg) in the United States as well as the strong growth of
Truvada(R) (emtricitabine and tenofovir disoproxil fumarate) in the
United States and Europe.
HIV Franchise
HIV product sales were $964.7 million in the first quarter of
2008, a 37 percent increase from $705.1 million for the same period in
2007. The increases were driven primarily by the sales volume growth
of Atripla and Truvada.
-- Truvada
Truvada sales were $479.4 million for the first quarter of 2008
an increase of 39 percent from $345.9 million in the first quarter of
2007. The increase in Truvada sales in the first quarter of 2008
compared to the same period of 2007 was driven primarily by strong
sales volume growth in the United States and Europe as well as a
favorable foreign currency exchange environment.
-- Atripla
Atripla sales were $324.2 million in the first quarter of 2008, an
increase of 70 percent from $190.2 million in the first quarter of
2007. The increased sales in the first quarter of 2008 compared to the
same period in 2007 were driven primarily by the continued strong
uptake in the United States, while recent product launches in certain
European countries and Canada also contributed to total Atripla
product sales.
-- Viread
Sales of Viread(R) (tenofovir disoproxil fumarate) were $152.7
million in the first quarter of 2008, a five percent decrease from
$160.7 million in the first quarter of 2007. The decrease in Viread
sales in the first quarter of 2008 compared to the same period of 2007
was driven primarily by lower sales volumes especially in the United
States and Europe, partially offset by a favorable foreign currency
exchange environment.
Hepsera for Chronic Hepatitis B
Hepsera(R) (adefovir dipivoxil) sales were $83.0 million for the
first quarter of 2008, a 16 percent increase from $71.3 million in the
first quarter of 2007. The increase in Hepsera sales in the first
quarter of 2008 compared to the same period of 2007 was driven
primarily by sales volume growth in certain European markets and a
favorable foreign currency exchange environment.
AmBisome for Severe Fungal Infections
Sales of AmBisome(R) (amphotericin B) liposome for injection for
the first quarter of 2008 were $71.0 million, an increase of 15
percent from $61.5 million for the first quarter of 2007. The increase
in sales of AmBisome in the first quarter of 2008 compared to the same
period of 2007 was driven primarily by a favorable foreign currency
exchange environment as well as sales volume growth in various
European and international regions.
Royalty, Contract and Other Revenues
For the first quarter of 2008, royalty, contract and other
revenues resulting primarily from collaborations with corporate
partners were $116.8 million, a decrease of 38 percent from $188.2
million in the first quarter of 2007. The decrease in royalty
contract and other revenues during the first quarter of 2008 compared
to the same period of 2007 was driven primarily by lower Tamiflu(R)
(oseltamivir phosphate) royalties from F. Hoffmann-La Roche Ltd
(Roche) of $93.4 million in the first quarter of 2008 compared to
Tamiflu royalties of $167.9 million in the first quarter of 2007.
Research and Development
Research and development (R&D) expenses in the first quarter of
2008 were $155.3 million compared to $130.1 million for the same
quarter in 2007. Non-GAAP R&D expenses, which exclude stock-based
compensation expense, for the first quarter of 2008 were $138.4
million, compared to $109.0 million for the same quarter in 2007.
Non-GAAP R&D expenses for the first quarter of 2008 were higher
primarily as a result of increased clinical study 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 first
quarter of 2008 were $195.0 million compared to $166.6 million for the
same quarter in 2007. Non-GAAP SG&A expenses, which exclude
stock-based compensation expense, for the first quarter of 2008 were
$177.4 million, compared to $132.9 million for the same quarter in
2007. Non-GAAP SG&A expenses for the first quarter of 2008 were higher
primarily as a result of increased marketing, promotional and other
expenses, as well as higher headcount related to the growth in
Gilead´s business.
Net Foreign Currency Exchange Impact
Including the impact of Gilead´s hedging activities, the net
foreign currency exchange impact on first quarter 2008 revenues and
pre-tax earnings, which includes revenues and expenses generated from
outside the United States, was a favorable $37.0 million and $19.6
million, respectively, compared to the same period in 2007.
Cash, Cash Equivalents and Marketable Securities
As of March 31, 2008, Gilead had cash, cash equivalents and
marketable securities of $2.59 billion compared to $2.72 billion as of
December 31, 2007. For the first quarter of 2008, Gilead generated
$577.1 million of operating cash flows, which was offset by Gilead´s
repurchases of $815.8 million of its common stock under its share
repurchase program.
Corporate Highlights
In February 2008, Gilead announced that it had entered into an
agreement with Goldman, Sachs & Co. to repurchase $500.0 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, and as of March 31, 2008, Gilead
had approximately $2.15 billion remaining under this share repurchase
program.
In March 2008, Gilead announced the appointment of John J. Toole
MD, PhD to the position of Senior Vice President, Corporate
Development. Dr. Toole joined Gilead in 1990 and most recently held
the role of Senior Vice President, Clinical Research.
Product and Pipeline Highlights
Antiviral Franchise
In March 2008, Gilead announced that the Committee for Medicinal
Products for Human Use of the European Medicines Agency (EMEA) issued
a positive opinion on Gilead´s application to extend the indication
for Viread to include the treatment of chronic hepatitis B (HBV) in
adults. In addition, Gilead has since received approval of Viread for
HBV in Turkey and New Zealand.
Respiratory Franchise
In March 2008, Gilead announced the submission of a Marketing
Authorisation Application (MAA) for marketing approval of aztreonam
lysine 75 mg powder for nebulizer solution in the European Union. The
MAA is currently under review by the EMEA under the centralized
licensing procedure, which, if finalized, provides one marketing
authorization in all member states of the European Union. Also in
March 2008, Gilead received notice of acceptance and priority review
for a New Drug Submission seeking marketing authorization of aztreonam
lysine 75 mg powder for nebulizer solution from Health Canada.
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 2008. During this call/webcast, Gilead´s management will
discuss the company´s first 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 1-866-203-3436 (U.S.) or 1-617-213-8849
(international) and dial the participant passcode 85227835 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 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 78926353.
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, net income per diluted share, R&D expenses
and SG&A expenses are presented excluding the 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 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 HIV franchise, Hepsera and
AmBisome; 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 develop its respiratory and cardiovascular
franchises; initiating and completing clinical trials may take longer
or cost more than expected; 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 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, Emtriva, AmBisome and Hepsera are registered
trademarks and Letairis is a trademark 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).
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GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three months ended
March 31
-----------------------
2008
2007
----------- ----------
Revenues:
Product sales
$1,141,306 $ 840,225
Royalty, contract and other revenues
116,846
188,205
----------- -----------
Total revenues
1,258,152
1,028,430
Costs and expenses:
Cost of goods sold (1)
239,848
171,638
Research and development (1)
155,301
130,090
Selling, general and administrative (1)
194,957
166,558
----------- -----------
Total costs and expenses
590,106
468,286
----------- -----------
Income from operations
668,046
560,144
Interest and other income, net
22,700
23,104
Interest expense
(3,105)
(4,547)
Minority interest
1,875
2,153
----------- -----------
Income before provision for income taxes
689,516
580,854
Provision for income taxes (1)
193,389
173,447
----------- -----------
Net income
$ 496,127 $ 407,407
=========== ===========
Net income per share - basic
$
0.53 $
0.44
=========== ===========
Net income per share - diluted
$
0.51 $
0.42
=========== ===========
Shares used in per share calculation - basic
928,104
926,940
=========== ===========
Shares used in per share calculation - diluted
966,554
962,716
=========== ===========
---
Notes:
(1) The following is the stock-based compensation expense included in
the respective captions of the condensed consolidated statements
of operations above:
Three months ended
March 31
-----------------------
2008
2007
----------- ----------
Stock-based compensation expense:
Cost of goods sold
$
1,694 $
2,530
Research and development
16,895
21,108
Selling, general and administrative
17,547
33,656
Income tax effect
(10,135)
(17,108)
----------- -----------
Total stock-based compensation expense
net of tax
$
26,001 $
40,186
=========== ===========
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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 are presented
excluding the impact of after-tax 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
March 31
-------------------
2008
2007
--------- ---------
Net income (GAAP)
$ 496,127 $ 407,407
Stock-based compensation expense, net of tax
26,001
40,186
--------- ---------
Net income (Non-GAAP)
$ 522,128 $ 447,593
========= =========
Shares used in per share calculation - diluted
(GAAP)
966,554
962,716
Dilutive securities
2,121
1,921
--------- ---------
Shares used in per share calculation - diluted
(Non-GAAP)
968,675
964,637
========= =========
Net income per share - diluted (GAAP)
$
0.51 $
0.42
========= =========
Net income per share - diluted (Non-GAAP)
$
0.54 $
0.46
========= =========
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GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31
December 31
2008
2007
----------- ------------
(unaudited)
(Note 1)
Cash, cash equivalents and marketable
securities
$ 2,589,004 $ 2,722,422
Other current assets
2,034,062
1,856,314
Property, plant and equipment, net
455,759
447,696
Other noncurrent assets
800,178
808,284
----------- ------------
Total assets
$ 5,879,003 $ 5,834,716
=========== ============
Current liabilities
$
939,005 $
736,275
Long-term liabilities and minority interest
1,610,516
1,638,451
Stockholders´ equity
3,329,482
3,459,990
----------- ------------
Total liabilities and stockholders´
equity
$ 5,879,003 $ 5,834,716
=========== ============
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
---------------------
2008
2007
---------- ----------
HIV products:
Truvada - U.S.
$ 238,532 $ 186,788
Truvada - Europe
218,339
145,207
Truvada - Other International
22,514
13,943
---------- ----------
479,385
345,938
========== ==========
Atripla - U.S.
306,485
189,810
Atripla - Europe
14,195
-
Atripla - Other International
3,537
373
---------- ----------
324,217
190,183
========== ==========
Viread - U.S.
63,068
67,556
Viread - Europe
65,716
71,914
Viread - Other International
23,883
21,208
---------- ----------
152,667
160,678
========== ==========
Emtriva - U.S.
3,838
3,455
Emtriva - Europe
2,581
3,874
Emtriva - Other International
1,970
994
---------- ----------
8,389
8,323
========== ==========
Total HIV products - U.S.
611,923
447,609
Total HIV products - Europe
300,831
220,995
Total HIV products - Other International
51,904
36,518
---------- ----------
964,658
705,122
========== ==========
Hepsera - U.S.
31,275
29,769
Hepsera - Europe
41,335
33,290
Hepsera - Other International
10,412
8,285
---------- ----------
83,022
71,344
========== ==========
AmBisome
71,028
61,502
Letairis
20,337
-
Other products
2,261
2,257
---------- ----------
93,626
63,759
========== ==========
---------- ----------
Total product sales
$1,141,306 $ 840,225
========== ==========
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