Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of
operations for the quarter ended September 30, 2007. Total revenues
for the third quarter of 2007 were $1.06 billion, up 41 percent
compared to total revenues of $748.7 million for the third quarter of
2006. Net income for the third quarter of 2007 was $398.3 million, or
$0.42 per diluted share, including after-tax stock-based compensation
expense of $31.8 million. Excluding after-tax stock-based compensation
expense, non-GAAP net income for the third quarter of 2007 was $430.1
million, or $0.45 per diluted share, compared to non-GAAP net income
of $329.0 million, or $0.34 per diluted share, for the third quarter
of 2006, which excluded after-tax stock-based compensation expense of
$25.6 million and purchased in-process research and development
(IPR&D) of $355.6 million.
Product Sales
Product sales were a record $961.9 million for the third quarter
of 2007, compared to $670.1 million in the third quarter of 2006, a 44
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
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 $805.8 million in the third quarter of
2007, a 45 percent increase from $557.3 million for the same period in
2006, driven primarily by the sales volume growth in Truvada and
Atripla.
-- Truvada
Truvada sales were $409.1 million for the third quarter of 2007,
an increase of 32 percent from $309.0 million in the third quarter of
2006. Truvada sales accounted for approximately 51 percent of our
total HIV product sales and approximately 43 percent of Gilead's total
product sales in the third quarter of 2007.
-- Atripla
Atripla sales were $241.1 million in the third quarter of 2007, an
increase of 14 percent from $212.4 million in the second quarter of
2007 and more than triple the $68.4 million recorded in the third
quarter of 2006, when sales of Atripla first commenced in the United
States.
-- Viread
Sales of Viread(R) (tenofovir disoproxil fumarate) were $149.1
million in the third quarter of 2007, a 13 percent decrease from
$170.6 million in the third quarter of 2006.
-- Emtriva
Emtriva(R) (emtricitabine) sales were $6.5 million for the third
quarter of 2007, a decrease of 30 percent from $9.3 million in the
third quarter of 2006.
Hepsera for Chronic Hepatitis B
Hepsera sales were $79.3 million for the third quarter of 2007, a
44 percent increase from $55.1 million in the third quarter of 2006,
driven primarily by sales volume growth in the United States and
Europe.
AmBisome for Severe Fungal Infections
Sales of AmBisome for the third quarter of 2007 were $68.5
million, an increase of 24 percent from $55.3 million for the third
quarter of 2006, driven primarily by sales volume growth across
European territories and Australia as well as a favorable foreign
currency exchange impact.
Royalty, Contract and Other Revenues
For the third quarter of 2007, royalty, contract and other
revenues resulting primarily from collaborations with corporate
partners were $96.9 million, an increase of 23 percent from $78.7
million in the third quarter of 2006. The increase was driven
primarily by the recognition of Tamiflu(R) (oseltamivir phosphate)
royalties from F. Hoffmann-La Roche Ltd (Roche) of $77.4 million,
compared to Tamiflu royalties of $62.7 million recognized in the third
quarter of 2006, due to the higher Tamiflu sales recorded by Roche
during the second quarter of 2007 compared to the same period in 2006.
Research and Development
Research and development (R&D) expenses in the third quarter of
2007 were $140.4 million compared to $93.3 million for the same
quarter in 2006. Non-GAAP R&D expenses, which exclude stock-based
compensation expense, for the third quarter of 2007 were $122.0
million, compared to $80.0 million for the same quarter in 2006.
Non-GAAP R&D expenses for the third quarter of 2007 were higher
primarily as a result of increased compensation and benefits related
to higher headcount, as well as increased clinical study expenses
related to Gilead's respiratory and cardiovascular franchises, which
were acquired in the latter part of 2006.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses in the third
quarter of 2007 were $173.0 million compared to $132.5 million for the
same quarter in 2006. Non-GAAP SG&A expenses, which exclude
stock-based compensation expense, for the third quarter of 2007 were
$148.4 million, compared to $116.6 million for the same quarter in
2006. Non-GAAP SG&A expenses for the third quarter of 2007 were higher
primarily as a result of increased compensation and benefits related
to increased headcount, increased marketing and promotional expenses
as well as other consulting and support services expenses related to
our cardiovascular franchise.
Net Foreign Exchange Impact on Pre-Tax Earnings
The net foreign exchange impact on third quarter 2007 pre-tax
earnings, including revenues and expenses generated from outside the
United States and impact of our hedging activities, was a favorable
$17.4 million compared to the same quarter in 2006, due primarily to
the stronger Euro relative to the U.S. dollar.
Cash, Cash Equivalents and Marketable Securities
As of September 30, 2007, Gilead had cash, cash equivalents and
marketable securities of $2.22 billion compared to $1.39 billion as of
December 31, 2006. The increase in cash, cash equivalents and
marketable securities was primarily attributable to $1.25 billion of
operating cash flows generated during the first nine months of 2007,
partially offset by the Gilead's repurchase of $454.9 million of its
common stock under its stock repurchase program during the second
quarter of 2007.
Product and Pipeline Highlights
Antiviral Franchise
In July 2007, Gilead announced the presentation of 144-week data
from an ongoing clinical trial, Study 934, comparing a once-daily
regimen of Truvada and Sustiva(R) (efavirenz) to a twice-daily regimen
of Combivir(R) (lamivudine/zidovudine) with Sustiva once daily in
treatment-naive adults with HIV. These data were presented in July
2007 at the 4th International AIDS Society Conference on HIV
Pathogenesis, Treatment and Prevention in Sydney, Australia by Jose
Arribas, MD, of the University Hospital La Paz, Madrid, Spain (Poster
#WEPEB029).
Cardiovascular Franchise
In September 2007, Gilead announced that data from a Phase IIb
study (DAR-201) of darusentan, an investigational treatment for
resistant hypertension, were published in the October 2007 edition of
the Journal of Clinical Hypertension. In this study, darusentan was
evaluated as an add-on antihypertensive treatment in patients who had
not achieved goal blood pressure while being treated with full doses
of three or more antihypertensive medications, including a diuretic.
Preliminary data from this study were previously presented at the 55th
Annual Scientific Session of the American College of Cardiology
Conference in Atlanta, Georgia.
Respiratory Franchise
In August 2007, Gilead entered into an exclusive licensing and
co-development agreement for P-680, an epithelial sodium channel
(ENaC) inhibitor discovered by privately-held Parion Sciences, Inc.
The agreement grants Gilead worldwide commercialization rights to
P-680 for the treatment of pulmonary diseases, including cystic
fibrosis (CF), chronic obstructive pulmonary disease and non-CF
bronchiectasis. In addition, under the agreement, the companies will
collaborate on a research program to identify other promising ENaC
blocker-based drug candidates utilizing Parion's proprietary
ENaC-based chemistry platform.
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 2007. During this call/webcast, Gilead's management will be
discussing the company's third 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 1-800-435-1398 (U.S.) or 1-617-614-4078
(international) and dial the participant passcode 63822863 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 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 65873786.
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 for the 2007 periods are presented excluding the
impact of stock-based compensation expense and the related methodology
for deriving dilutive securities. Non-GAAP net income, net income per
diluted share, R&D expenses and SG&A expenses for the 2006 periods are
presented excluding the impact of stock-based compensation expense and
the related methodology for deriving dilutive securities, as well as
the impact of the IPR&D charge incurred in connection with the
acquisition of Corus Pharma, Inc. 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, 2006, its Quarterly Reports on Form 10-Q for
the first and second quarters of 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.
Viread, Emtriva, Truvada, AmBisome and Hepsera are registered
trademarks of Gilead Sciences, Inc.
Atripla is a registered trademark of Bristol-Myers Squibb & Gilead
Sciences, LLC.
Sustiva is a registered trademark of Bristol-Myers Squibb Pharma
Company.
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 Nine Months Ended
September 30, September 30,
--------------------- -----------------------
2007 2006 2007 2006
----------- --------- ----------- -----------
Revenues:
Product sales $ 961,931 $670,060 $2,707,214 $1,820,104
Royalty, contract
and other revenues 96,872 78,673 428,108 306,809
----------- --------- ----------- -----------
Total revenues 1,058,803 748,733 3,135,322 2,126,913
----------- --------- ----------- -----------
Costs and expenses:
Cost of goods sold
(1) 198,460 109,791 553,229 278,031
Research and
development (1) 140,357 93,305 406,378 272,241
Selling, general and
administrative (1) 172,956 132,529 525,693 426,567
Purchased in-process
research and
development (2) - 355,568 - 355,568
-------------------------------- --------- ----------- -----------
Total costs and expenses 511,773 691,193 1,485,300 1,332,407
----------- --------- ----------- -----------
Income from operations 547,030 57,540 1,650,022 794,506
Interest and other
income, net 29,502 36,197 80,295 102,082
Interest expense (2,989) (6,081) (10,243) (15,012)
Minority interest in
joint venture 2,478 1,640 7,032 3,878
----------- --------- ----------- -----------
Income before provision
for income taxes 576,021 89,296 1,727,106 885,454
Provision for income
taxes (1) 177,702 141,460 513,450 409,764
----------- --------- ----------- -----------
Net income (loss) $ 398,319 $(52,164) $1,213,656 $ 475,690
=========== ========= =========== ===========
Net income (loss) per
share - basic $ 0.43 $ (0.06) $ 1.31 $ 0.52
=========== ========= =========== ===========
Net income (loss) per
share - diluted $ 0.42 $ (0.06) $ 1.26 $ 0.49
=========== ========= =========== ===========
Shares used in per share
calculation - basic 926,963 914,866 928,519 917,546
=========== ========= =========== ===========
Shares used in per share
calculation - diluted 959,043 914,866 962,804 956,202
=========== ========= =========== ===========
----
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 Nine Months Ended
September 30, September 30,
--------------------- -----------------------
2007 2006 2007 2006
----------- --------- ----------- -----------
Stock-based
compensation
expense:
Cost of goods
sold $ 3,138 $ 2,524 $ 8,350 $ 8,236
Research and
development 18,360 13,267 56,129 38,108
Selling, general
and
administrative 24,563 15,954 86,683 51,800
Income tax effect (14,284) (6,165) (44,939) (21,340)
----------- --------- ----------- -----------
Total stock-
based
compensation
expense, net
of tax $ 31,777 $ 25,580 $ 106,223 $ 76,804
=========== ========= =========== ===========
(2) For the three and nine months ended September 30, 2006, Gilead
incurred $355.6 million of purchased in-process research and
development as a result of the acquisition of Corus Pharma, Inc.
in August 2006.
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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 for the 2007
periods are presented excluding the impact of stock-based
compensation expense and the related methodology for deriving
dilutive securities. Non-GAAP net income and net income per diluted
share for the 2006 periods are presented excluding the impact of
stock-based compensation expense and the related methodology for
deriving dilutive securities, as well as the impact of the purchased
in-process research and development charge incurred in connection
with the acquisition of Corus Pharma, Inc. 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,
------------------- --------------------
2007 2006 2007 2006
-------- --------- ---------- --------
Net income (loss) (GAAP) $398,319 $(52,164) $1,213,656 $475,690
Purchased in-process research
and development - 355,568 - 355,568
Stock-based compensation
expense, net of tax 31,777 25,580 106,223 76,804
-------- --------- ---------- --------
Net income (Non-GAAP) $430,096 $328,984 $1,319,879 $908,062
======== ========= ========== ========
Shares used in per share
calculation - diluted (GAAP) 959,043 914,866 962,804 956,202
Dilutive securities 1,780 38,780 2,108 1,335
-------- --------- ---------- --------
Shares used in per share
calculation - diluted (Non-
GAAP) 960,823 953,646 964,912 957,537
======== ========= ========== ========
Net income (loss) per share -
diluted (GAAP) $ 0.42 $ (0.06) $ 1.26 $ 0.49
======== ========= ========== ========
Net income per share -
diluted (Non-GAAP) $ 0.45 $ 0.34 $ 1.37 $ 0.95
======== ========= ========== ========
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GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2007 2006
------------- ------------
(unaudited) (Note 1)
Cash, cash equivalents and marketable
securities $ 2,218,051 $ 1,389,566
Other current assets 1,778,278 1,492,355
Property, plant and equipment, net 441,797 361,299
Other noncurrent assets 879,449 842,761
------------- ------------
Total assets $ 5,317,575 $ 4,085,981
============= ============
Current liabilities $ 691,439 $ 764,276
Long-term liabilities and minority
interest 1,644,291 1,505,987
Stockholders' equity 2,981,845 1,815,718
------------- ------------
Total liabilities and stockholders'
equity $ 5,317,575 $ 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 Nine Months Ended
September 30, September 30,
------------------ ---------------------
2007 2006 2007 2006
--------- -------- ---------- ----------
HIV products:
Truvada - U.S. $ 206,681 $201,482 $ 579,725 $ 589,010
Truvada - Europe 183,523 100,544 502,154 253,633
Truvada - Other
International 18,880 7,007 58,503 14,592
--------- -------- ---------- ----------
409,084 309,033 1,140,382 857,235
========= ======== ========== ==========
Atripla - U.S. 240,217 68,373 641,706 68,373
Atripla - Europe - - - -
Atripla - Other
International 884 - 1,962 -
--------- -------- ---------- ----------
241,101 68,373 643,668 68,373
========= ======== ========== ==========
Viread - U.S. 63,488 71,795 194,841 222,439
Viread - Europe 62,944 71,931 199,892 240,251
Viread - Other International 22,676 26,898 69,950 67,151
--------- -------- ---------- ----------
149,108 170,624 464,683 529,841
========= ======== ========== ==========
Emtriva - U.S. 3,315 5,064 10,213 13,384
Emtriva - Europe 2,408 3,347 9,014 12,601
Emtriva - Other
International 738 861 5,161 1,914
--------- -------- ---------- ----------
6,461 9,272 24,388 27,899
========= ======== ========== ==========
Total HIV products - U.S. 513,701 346,714 1,426,485 893,206
Total HIV products - Europe 248,875 175,822 711,060 506,485
Total HIV products - Other
International 43,178 34,766 135,576 83,657
--------- -------- ---------- ----------
805,754 557,302 2,273,121 1,483,348
========= ======== ========== ==========
Hepsera - U.S. 32,387 23,426 94,647 69,615
Hepsera - Europe 36,087 25,012 103,004 77,242
Hepsera - Other International 10,799 6,675 28,139 17,755
--------- -------- ---------- ----------
79,273 55,113 225,790 164,612
========= ======== ========== ==========
AmBisome 68,508 55,313 194,764 164,740
Other products 8,396 2,332 13,539 7,404
--------- -------- ---------- ----------
76,904 57,645 208,303 172,144
========= ======== ========== ==========
Total product sales $ 961,931 $670,060 $2,707,214 $1,820,104
========= ======== ========== ==========
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