The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Business Wire

Gilead Sciences Announces Third Quarter 2011 Financial Results

<p class='bwalignc'> <i><b>- Product Sales of $2.07 Billion, Up 11 Percent over Third Quarter 2010 -</b></i> </p> <p class='bwalignc'> <i><b>- Non-GAAP EPS of $1.02, Up 14 Percent over Third Quarter 2010 -</b></i> </p> <p class='bwalignc'> <i><b>- Completed May 2010 $5 Billion Share Repurchase Program -</b></i> </p>

Thursday, October 27, 2011

Gilead Sciences Announces Third Quarter 2011 Financial Results16:05 EDT Thursday, October 27, 2011 FOSTER CITY, Calif. (Business Wire) -- Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the quarter ended September 30, 2011. Total revenues for the third quarter of 2011 were $2.12 billion, up 9 percent compared to total revenues of $1.94 billion for the third quarter of 2010. Net income for the third quarter of 2011 was $741.1 million, or $0.95 per diluted share, compared to net income for the third quarter of 2010 of $704.9 million, or $0.83 per diluted share. Non-GAAP net income for the third quarter of 2011, which excludes after-tax acquisition-related, restructuring and stock-based compensation expenses, was $795.2 million, or $1.02 per diluted share, compared to non-GAAP net income for the third quarter of 2010 of $759.7 million, or $0.90 per diluted share. Product Sales Product sales increased 11 percent to $2.07 billion for the third quarter of 2011, compared to $1.87 billion in the third quarter of 2010. This increase in sales was driven primarily by Gilead's antiviral franchise, due to strong growth in sales of Atripla® (efavirenz 600 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) and Truvada® (emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg). Antiviral Franchise Antiviral product sales increased 9 percent to $1.79 billion in the third quarter of 2011, up from $1.65 billion for the same quarter of 2010. Atripla Sales of Atripla for the treatment of HIV infection increased 7 percent to $794.7 million for the third quarter of 2011, up from $742.7 million in the third quarter of 2010, driven primarily by sales volume growth in Europe and the United States. Truvada Sales of Truvada for the treatment of HIV infection increased 11 percent to $744.7 million for the third quarter of 2011, up from $668.7 million in the third quarter of 2010, driven primarily by sales volume growth in Europe and the United States. Viread Sales of Viread® (tenofovir disoproxil fumarate) for the treatment of HIV infection and chronic hepatitis B increased 5 percent to $192.9 million for the third quarter of 2011, up from $184.3 million in the third quarter of 2010. Sales increases in Europe and the United States were partially offset by lower sales in Latin America. Complera Sales of our newest product, Complera® (emtricitabine 200 mg/rilpilvirine 25 mg/tenofovir disoproxil fumarate 300 mg) for the treatment of HIV infection, were $19.0 million for the third quarter of 2011. On August 10, 2011, the U.S. Food and Drug Administration (FDA) approved Complera, a new once-daily, complete single-tablet HIV treatment regimen for treatment-naïve adults. Letairis Sales of Letairis® (ambrisentan) for the treatment of pulmonary arterial hypertension increased 31 percent to $79.0 million for the third quarter of 2011, up from $60.4 million for the third quarter of 2010, driven primarily by sales volume growth. Ranexa Sales of Ranexa® (ranolazine) for the treatment of chronic angina increased 36 percent to $82.0 million for the third quarter of 2011, up from $60.3 million for the third quarter of 2010, driven primarily by sales volume growth. Other Products Sales of other products were $153.6 million for the third quarter of 2011 compared to $149.1 million for the third quarter of 2010 and included AmBisome® (amphotericin B) liposome for injection for the treatment of severe fungal infections, Hepsera® (adefovir dipivoxil) for the treatment of chronic hepatitis B, Emtriva® (emtricitabine) for the treatment of HIV infection and Cayston® (aztreonam for inhalation solution) for the improvement of respiratory symptoms in cystic fibrosis patients with Pseudomonas aeruginosa (P. aeruginosa). Sales of Cayston were $23.6 million for the third quarter of 2011, up from $14.7 million in the same quarter of 2010 driven by sales volume growth in the United States. Royalty, Contract and Other Revenues Royalty, contract and other revenues from collaborations were $55.8 million in the third quarter of 2011, down 23 percent from $72.1 million in the third quarter of 2010. This decrease was due to an 89 percent decrease in Tamiflu royalties from F. Hoffmann-La Roche Ltd to $3.7 million in the third quarter of 2011 from $34.5 million in the third quarter of 2010, as pandemic planning initiatives worldwide have declined. Research and Development Research and development (R&D) expenses in the third quarter of 2011 were $290.1 million, compared to $230.4 million for the third quarter of 2010. Non-GAAP R&D expenses for the third quarter of 2011, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $269.3 million, compared to $203.2 million for the third quarter of 2010. The increase in non-GAAP R&D expenses was due primarily to increased clinical activities and expenses associated with acquisitions and collaborations. Selling, General and Administrative Selling, general and administrative (SG&A) expenses in the third quarter of 2011 were $295.9 million, compared to $250.6 million for the third quarter of 2010. Non-GAAP SG&A expenses for the third quarter of 2011, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $265.1 million, compared to $220.6 million for the third quarter of 2010. The increase in non-GAAP SG&A expenses was driven primarily by the impact of the pharmaceutical excise tax resulting from U.S. healthcare reform, expansion of commercial activities and legal expenses. Net Foreign Currency Exchange Impact The net foreign currency exchange impact on third quarter 2011 revenues and pre-tax earnings, which includes revenues and expenses generated from outside the United States, was a favorable $19.9 million and $2.6 million, respectively, compared to the third quarter of 2010. Cash, Cash Equivalents and Marketable Securities As of September 30, 2011, Gilead had cash, cash equivalents and marketable securities of $5.48 billion compared to $5.32 billion as of December 31, 2010. Gilead generated $2.66 billion of operating cash flow during the first nine months of 2011 including $897.1 million generated in the third quarter of 2011. Share Repurchase Update During the quarter, Gilead repurchased and retired a total of $883.6 million or 22.4 million shares of common stock. The company has completed its May 2010 $5.00 billion share repurchase program, which retired a total of 135.5 million common shares at an average price of $36.89 per share, and commenced its January 2011 three-year $5.00 billion share repurchase program. Since January 2010, Gilead repurchased and retired $6.18 billion or 164.2 million common shares or 18 percent of the company's common stock outstanding at December 31, 2009. Corporate Highlights In July, Gilead announced an expansion of its access initiatives for its antiretrovirals in resource-limited countries. The company established new licensing terms with four India-based drug manufacturers – Hetero Drugs Ltd., Matrix Laboratories Ltd., Ranbaxy Laboratories Ltd. and Strides Arcolab Ltd. – for three of its late-stage HIV pipeline products. In addition, Gilead became the first pharmaceutical company to enter a licensing agreement with the Medicines Patent Pool Foundation. In August, Gilead announced the purchase of a clinical biologics manufacturing facility and certain process development assets located in Oceanside, California from Genentech, a member of the Roche Group. This transaction was completed in September 2011. Initially, Gilead will use the facility for the process development and manufacture of its investigational monoclonal antibody candidates. Also in August, Gilead announced that it had resolved all outstanding issues raised in a Warning Letter issued by the U.S. FDA in September 2010 related to its San Dimas, California manufacturing facility. Product and Pipeline UpdateAntiviral Franchise In July, Gilead announced Phase 3 clinical trial results from the pivotal Study 145 showing that its investigational antiretroviral elvitegravir, a novel oral integrase inhibitor being evaluated for the treatment of HIV-1 infection, was non-inferior to the integrase inhibitor raltegravir after 48 weeks of therapy in treatment-experienced patients. The data were presented at the 6th International AIDS Society Conference on HIV Pathogenesis, Treatment and Prevention (IAS 2011) in Rome, Italy. In August, Gilead announced that the FDA had approved Complera, a complete single-tablet regimen for the treatment of HIV-1 infection in treatment-naïve adults. Also in August, Gilead announced that a Phase 3 clinical trial (Study 102) of its investigational fixed-dose, single-tablet “Quad” regimen of elvitegravir, cobicistat, emtricitabine and tenofovir disoproxil fumarate, being evaluated for HIV-1 infection in treatment-naïve patients, met its primary objective of non-inferiority at week 48 as compared to Atripla. In September, Gilead announced that the second pivotal Phase 3 clinical trial (Study 103) of the “Quad” in treatment-naïve HIV-1 infected patients met its primary objective of non-inferiority at week 48 as compared to ritonavir-boosted atazanavir plus Truvada. Upon this announcement, Gilead updated its timelines for filing for U.S. regulatory approval to take place prior to the end of this year. Also in September, Gilead announced that the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the European Medicines Agency, had adopted a positive opinion on the company's Marketing Authorisation Application for the once-daily single-tablet regimen, Eviplera®, launched first as Complera in the United States and is a combination of Gilead's Truvada and Tibotec Pharmaceuticals' non-nucleoside reverse transcriptase inhibitor Edurant® (rilpivirine (as hydrochloride)) for the treatment of HIV-1 infection in antiretroviral-naïve adults with a viral load less than or equal to 100,000 HIV-1 RNA copies/mL. Conference Call At 5:00 p.m. Eastern Time today, Gilead's management will host a conference call and a simultaneous webcast to discuss results from its third quarter 2011 as well as provide a general business update. To access the webcast live via the internet, please connect to the company's website at www.gilead.com 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 1-866-730-5765 (U.S.) or 1-857-350-1589 (international) and dial the participant passcode 52967950 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 30, 2011. To access the phone replay, please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international) and dial the participant passcode 50031971. 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 Asia Pacific. Non-GAAP Financial Information Gilead has presented certain financial information in accordance with GAAP and also on a non-GAAP basis for the third quarter of 2011 and 2010. 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 Gilead's operating results as reported under U.S. GAAP. A reconciliation between GAAP and non-GAAP financial information is provided in the table on page 7. 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 achieve its anticipated full year 2011 financial results, including the possibility that its full year 2011 guidance may be revised at a later date; Gilead's ability to sustain growth in revenues for its antiviral, cardiovascular and respiratory franchises; unpredictable variability of Tamiflu royalties and the strong relationship between this royalty revenue and global pandemic planning and supply; the availability of funding for state AIDS Drug Assistance Programs (ADAPs) and their ability to purchase at levels to support the number of patients that rely on ADAPs; the levels of inventory held by wholesalers and retailers which may cause fluctuations in Gilead's earnings; Gilead's ability to submit New Drug Applications for new product candidates in the timelines currently anticipated, including for elvitegravir and cobicistat; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current products, including the Quad; Gilead's ability to successfully commercialize its products, including the risk that physicians may not see advantages of Complera over other therapies and may therefore be reluctant to prescribe the product; Gilead's ability to successfully develop its respiratory, cardiovascular and oncology franchises; safety and efficacy data from clinical studies may not warrant further development of Gilead's product candidates; initiating and completing clinical trials may take longer or cost more than expected; the potential for additional austerity measures in European countries that may increase the amount of discount required on Gilead's products; fluctuations in the foreign exchange rate of the U.S. dollar that may cause an unfavorable foreign currency exchange impact on Gilead's future revenues and pre-tax earnings; Gilead's ability to complete the $5.00 billion share repurchase program due to changes in its 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 and other subsequent disclosure documents filed with the Securities and Exchange Commission and press releases. 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, Complera, Emtriva, AmBisome, Letairis, Cayston, and Ranexa 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, 2011 2010 2011 2010 Revenues: Product sales $ 2,065,859 $ 1,865,559 $ 5,969,025 $ 5,459,683 Royalty, contract and other revenues   55,801     72,097     215,982     491,050   Total revenues   2,121,660     1,937,656     6,185,007     5,950,733   Costs and expenses: Cost of goods sold 531,989 477,584 1,539,963 1,373,539 Research and development 290,066 230,440 826,915 680,170 Selling, general and administrative   295,927     250,559     895,764     764,183   Total costs and expenses   1,117,982     958,583     3,262,642     2,817,892   Income from operations 1,003,678 979,073 2,922,365 3,132,841 Interest and other income, net 14,406 15,593 40,216 49,523 Interest expense   (43,097 )   (33,620 )   (130,420 )   (68,339 ) Income before provision for income taxes 974,987 961,046 2,832,161 3,114,025 Provision for income taxes   237,449     258,883     704,861     850,641   Net income 737,538 702,163 2,127,300 2,263,384 Net loss attributable to noncontrolling interest   3,586     2,713     11,192     8,454   Net income attributable to Gilead $ 741,124   $ 704,876   $ 2,138,492   $ 2,271,838   Net income per share attributable to Gilead common stockholders - basic $ 0.97   $ 0.85   $ 2.72   $ 2.61   Net income per share attributable to Gilead common stockholders - diluted $ 0.95   $ 0.83   $ 2.66   $ 2.55   Shares used in per share calculation - basic   767,033     833,006     787,272     871,887   Shares used in per share calculation - diluted   781,312     847,228     802,762     890,216     GILEAD SCIENCES, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION(unaudited)(in thousands, except percentages and per share amounts)           Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010 Cost of goods sold reconciliation: GAAP cost of goods sold $ 531,989 $ 477,584 $ 1,539,963 $ 1,373,539 Acquisition-related amortization of inventory mark-up - - - (7,020 ) Acquisition-related amortization of purchased intangibles (17,407 ) (14,981 ) (52,222 ) (44,946 ) Stock-based compensation expenses   (2,234 )   (2,728 )   (7,765 )   (8,548 ) Non-GAAP cost of goods sold $ 512,348   $ 459,875   $ 1,479,976   $ 1,313,025     Product gross margin reconciliation: GAAP product gross margin 74.3 %   74.4 % 74.3 % 74.9 % Acquisition-related amortization of inventory mark-up - - - 0.1 % Acquisition-related amortization of purchased intangibles 0.8 % 0.8 % 0.9 % 0.8 % Stock-based compensation expenses   0.1 %   0.1 %   0.1 %   0.2 % Non-GAAP product gross margin (1)   75.3 %     75.4 %   75.3 %   76.0 %   Research and development expenses reconciliation: GAAP research and development expenses $ 290,066 $ 230,440 $ 826,915 $ 680,170 Acquisition-related transaction costs - - (446 ) - Acquisition-related remeasurement of contingent consideration (1,616 ) - (1,198 ) - Restructuring expenses (806 ) (6,315 ) (1,360 ) (10,545 ) Stock-based compensation expenses   (18,389 )   (20,946 )   (54,529 )   (62,536 ) Non-GAAP research and development expenses $ 269,255   $ 203,179   $ 769,382   $ 607,089     Selling, general and administrative expenses reconciliation: GAAP selling, general and administrative expenses $ 295,927 $ 250,559 $ 895,764 $ 764,183 Acquisition-related transaction costs (535 ) (387 ) (1,278 ) (387 ) Restructuring expenses (4,388 ) (1,413 ) (6,054 ) (14,903 ) Stock-based compensation expenses   (25,897 )   (28,128 )   (83,821 )   (75,606 ) Non-GAAP selling, general and administrative expenses $ 265,107   $ 220,631   $ 804,611   $ 673,287     Operating margin reconciliation: GAAP operating margin 47.3 % 50.5 % 47.2 % 52.6 % Acquisition-related transaction costs 0.0 % 0.0 % 0.0 % 0.0 % Acquisition-related amortization of inventory mark-up - - - 0.1 % Acquisition-related amortization of purchased intangibles 0.8 % 0.8 % 0.8 % 0.8 % Acquisition-related remeasurement of contingent consideration 0.1 % - 0.0 % - Restructuring expenses 0.2 % 0.4 % 0.1 % 0.4 % Stock-based compensation expenses   2.2 %   2.7 %   2.4 %   2.5 % Non-GAAP operating margin (1)   50.7 %   54.4 %   50.6 %   56.4 %   Net income attributable to Gilead reconciliation: GAAP net income attributable to Gilead $ 741,124 $ 704,876 $ 2,138,492 $ 2,271,838 Acquisition-related transaction costs 535 388 1,724 388 Acquisition-related amortization of inventory mark-up - - - 5,090 Acquisition-related amortization of purchased intangibles 13,172 10,951 39,225 32,680 Acquisition-related remeasurement of contingent consideration 1,213 - 900 - Restructuring expenses 3,908 5,639 5,569 18,488 Stock-based compensation expenses   35,221     37,812     109,750     106,620   Non-GAAP net income attributable to Gilead $ 795,173   $ 759,666   $ 2,295,660   $ 2,435,104     Diluted earnings per share reconciliation: GAAP diluted earnings per share $ 0.95 $ 0.83 $ 2.66 $ 2.55 Acquisition-related transaction costs 0.00 0.00 0.00 0.00 Acquisition-related amortization of inventory mark-up - - - 0.01 Acquisition-related amortization of purchased intangibles 0.02 0.01 0.05 0.04 Acquisition-related remeasurement of contingent consideration 0.00 - 0.00 - Restructuring expenses 0.01 0.01 0.01 0.02 Stock-based compensation expenses   0.05     0.04     0.14     0.12   Non-GAAP diluted earnings per share (1) $ 1.02   $ 0.90   $ 2.87   $ 2.74     Shares used in per share calculation (diluted) reconciliation: GAAP shares used in per share calculation (diluted) 781,312 847,228 802,762 890,216 Share impact of current stock-based compensation guidance   (2,096 )   (2,208 )   (2,007 )   (1,621 ) Non-GAAP shares used in per share calculation (diluted)   779,216     845,020     800,755     888,595     Non-GAAP adjustment summary: Cost of goods sold adjustments $ 19,641 $ 17,709 $ 59,987 $ 60,514 Research and development expenses adjustments 20,811 27,261 57,533 73,081 Selling, general and administrative expenses adjustments   30,820     29,928     91,153     90,896   Total non-GAAP adjustments before tax 71,272 74,898 208,673 224,491 Income tax effect   (17,223 )   (20,108 )   (51,505 )   (61,225 ) Total non-GAAP adjustments after tax $ 54,049   $ 54,790   $ 157,168   $ 163,266     Note: (1) Amounts may not sum due to rounding   GILEAD SCIENCES, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)       September 30, December 31, 2011 2010 (unaudited) (Note 1)     Cash, cash equivalents and marketable securities $ 5,482,116 $ 5,318,071 Accounts receivable, net 1,867,092 1,621,966 Inventories 1,337,751 1,203,809 Property, plant and equipment, net 761,190 701,235 Intangible assets 2,111,003 1,425,592 Other assets   1,080,746   1,321,957 Total assets $ 12,639,898 $ 11,592,630   Current liabilities $ 2,224,431 $ 2,464,950 Long-term liabilities 4,182,261 3,005,843 Stockholders' equity (Note 2)   6,233,206   6,121,837 Total liabilities and stockholders' equity $ 12,639,898 $ 11,592,630   Notes:   (1) Derived from audited consolidated financial statements at that date.   (2) As of September 30, 2011, there were 756,094 shares of common stock issued and outstanding.   GILEAD SCIENCES, INC.PRODUCT SALES SUMMARY (unaudited) (in thousands)           Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010   Antiviral products: Atripla – U.S. $ 501,576 $ 491,645 $ 1,474,580 $ 1,414,365 Atripla – Europe 254,957 222,727 775,167 661,424 Atripla – Other International   38,166   28,320   111,456   75,579   794,699   742,692   2,361,203   2,151,368   Truvada – U.S. 357,660 325,545 1,011,837 969,884 Truvada – Europe 319,149 292,028 940,312 867,929 Truvada – Other International   67,918   51,168   176,990   130,409   744,727   668,741   2,129,139   1,968,222   Viread – U.S. 87,712 82,431 240,420 239,225 Viread – Europe 82,927 72,489 245,062 216,636 Viread – Other International   22,248   29,343   61,517   85,260   192,887   184,263   546,999   541,121   Hepsera – U.S. 14,170 19,055 42,809 60,090 Hepsera – Europe 18,223 25,095 60,293 87,021 Hepsera – Other International   3,238   3,369   9,281   9,866   35,631   47,519   112,383   156,977   Complera - U.S. 19,044 - 19,044 - Complera - Europe - - - - Complera - Other   -   -   -   -   19,044   -   19,044   -   Emtriva – U.S. 4,666 3,966 12,482 12,345 Emtriva – Europe 1,772 1,657 5,162 5,216 Emtriva – Other International   1,229   1,073   3,331   3,036   7,667   6,696   20,975   20,597   Total Antiviral products – U.S. 984,828 922,642 2,801,172 2,695,909 Total Antiviral products – Europe 677,028 613,996 2,025,996 1,838,226 Total Antiviral products – Other International   132,799   113,273   362,575   304,150   1,794,655   1,649,911   5,189,743   4,838,285   AmBisome 82,241 75,132 249,372 230,355 Letairis 78,954 60,446 214,765 176,293 Ranexa 81,983 60,312 236,353 172,015 Other products   28,026   19,758   78,792   42,735   271,204   215,648   779,282   621,398   Total product sales $ 2,065,859 $ 1,865,559 $ 5,969,025 $ 5,459,683   Gilead Sciences, Inc.InvestorsRobin Washington, 650-522-5688Susan Hubbard, 650-522-5715MediaAmy Flood, 650-522-5643