- Product Sales of $7.7 billion -
- GAAP Diluted EPS of $2.53 per share
-
- Non-GAAP Diluted EPS of $3.03 per share
-
- Reiterates Full Year 2016 Guidance
-
Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results
of operations for the first quarter ended March 31, 2016. The
financial results that follow represent a year-over-year comparison
of first quarter 2016 to the first quarter 2015. Total revenues
were $7.8 billion in 2016 compared to $7.6 billion in 2015. Net
income was $3.6 billion or $2.53 per diluted share in 2016 compared
to $4.3 billion or $2.76 per diluted share in 2015. Non-GAAP net
income, which excludes acquisition-related, up-front collaboration,
stock-based compensation and other expenses, was $4.3 billion or
$3.03 per diluted share in 2016 compared to $4.6 billion or $2.94
per diluted share in 2015.
Three Months Ended March 31, (In millions,
except per share amounts) 2016 2015
Product sales $ 7,681 $ 7,405 Royalty, contract and other revenues
113 189 Total revenues $ 7,794 $ 7,594 Net
income attributable to Gilead $ 3,566 $ 4,333 Non-GAAP net income
attributable to Gilead $ 4,274 $ 4,604 Diluted EPS $ 2.53 $
2.76 Non-GAAP diluted EPS $ 3.03 $ 2.94
Product Sales
Total product sales for the first quarter of 2016 were $7.7
billion compared to $7.4 billion for the same period in 2015.
Product sales for the first quarter of 2016 were $4.4 billion in
the U.S., $1.6 billion in Europe, $1.1 billion in Japan and $571
million in other international locations. Product sales for the
first quarter of 2015 were $5.2 billion in the U.S., $1.8 billion
in Europe and $364 million in other international locations.
Antiviral Product Sales
Antiviral product sales, which include products in our HIV and
liver disease areas, were $7.2 billion for the first quarter of
2016 compared to $7.0 billion for the same period in 2015.
- In the U.S., antiviral product sales
were $4.0 billion for the first quarter of 2016 compared to $4.9
billion in 2015, primarily due to a decline in sales of Harvoni®
(ledipasvir 90 mg/sofosbuvir 400 mg), partially offset by increases
in sales of Sovaldi® (sofosbuvir 400 mg), Truvada® (emtricitabine
and tenofovir disoproxil fumarate) and Genvoya® (elvitegravir 150
mg/cobicistat 150 mg/emtricitabine 200 mg/tenofovir alafenamide 10
mg). Genvoya was launched in the U.S. in November 2015.
- In Europe, antiviral product sales were
$1.6 billion for the first quarter of 2016 compared to $1.7 billion
in 2015, primarily due to a decline in sales of Sovaldi.
- In Japan, antiviral product sales were
$1.1 billion. Sovaldi and Harvoni were launched in Japan in May and
September 2015, respectively.
Other Product Sales
Other product sales, which include Letairis® (ambrisentan),
Ranexa® (ranolazine) and AmBisome® (amphotericin B liposome for
injection), were $498 million for the first quarter of 2016
compared to $417 million for the same period in 2015.
Cost of Goods Sold
Non-GAAP* cost of goods sold increased to $983 million for the
first quarter of 2016 compared to $674 million for the same period
in 2015, primarily due to a $200 million litigation charge related
to our sofosbuvir based product sales.
Operating Expenses
Three Months Ended March 31, (In
millions) 2016 2015 Non-GAAP* research and
development expenses (R&D) $ 769 $ 651 Non-GAAP* selling,
general and administrative expenses (SG&A) $ 638 $ 600
* Non-GAAP Cost of Goods Sold, R&D and SG&A expenses
exclude acquisition-related, up-front collaboration, stock-based
compensation and other expenses
During the first quarter of 2016, compared to the same period in
2015:
- Non-GAAP research and development
expenses increased primarily due to the progression of Gilead's
clinical studies.
- Non-GAAP selling, general and
administrative expenses increased primarily due to higher costs to
support Gilead's geographic expansion of its business, partially
offset by a decrease in our Branded Prescription Drug fee
expense.
Cash, Cash Equivalents and Marketable
Securities
As of March 31, 2016, Gilead had $21.3 billion of cash, cash
equivalents and marketable securities compared to $26.2 billion as
of December 31, 2015. During the first quarter of 2016, we utilized
$8.0 billion on stock repurchases and made an upfront license fee
payment of $300 million and an equity investment of $425 million
related to our license and collaboration agreement with Galapagos
NV. Cash flow from operating activities was $3.9 billion for the
quarter.
Full Year 2016 Guidance
Gilead reiterates its full year 2016 guidance, initially
provided on February 2, 2016:
(In millions, except percentages and per share amounts)
Provided
February 2, 2016
Net Product Sales $30,000 - $31,000 Non-GAAP* Product
Gross Margin 88% - 90% R&D expenses $3,200 - $3,500 SG&A
expenses $3,300 - $3,600 Effective Tax Rate 18.0% - 20.0% Diluted
EPS Impact Related to Acquisition, Up-front Collaboration,
Stock-based Compensation and Other Expenses $1.10 - $1.16
* Non-GAAP Product Gross Margin, R&D and SG&A expenses
and effective tax rate exclude acquisition-related, up-front
collaboration, stock-based compensation and other expenses.
Corporate Highlights
- Announced that Chairman and Chief
Executive Officer (CEO) John C. Martin, PhD assumed the role of
Executive Chairman of the company. John F. Milligan, PhD, formerly
President and Chief Operating Officer, was promoted to President
and CEO, effective March 10, 2016, and appointed to the company’s
Board of Directors.
- Announced that Gilead will provide
grants for up to three years to academic institutions, nonprofit
organizations and community groups engaged in HIV cure activities.
The unrestricted grants are awarded to organizations with a track
record of excellence in results-driven research.
- Announced that the Board of Directors
approved the repurchase of an additional $12 billion of the
company’s common stock which commenced upon completion of the
company’s existing $15 billion repurchase program authorized in
January 2015.
Product & Pipeline Updates
announced by Gilead during the First Quarter of 2016
include:
- Announced that U.S. Food and Drug
Administration (FDA) approved Odefsey® (emtricitabine 200
mg/rilpivirine 25 mg/tenofovir alafenamide 25 mg or R/F/TAF) for
the treatment of HIV-1 infection in certain patients. Emtricitabine
and tenofovir alafenamide are from Gilead while rilpivirine is from
Janssen Sciences Ireland UC, one of the Janssen Pharmaceutical
Companies of Johnson & Johnson. Odefsey is Gilead’s second
TAF-based regimen to receive FDA approval and represents the
smallest pill of any single-tablet regimen available today for the
treatment of HIV.
- Announced that the Committee for
Medicinal Products for Human Use, the scientific committee of the
European Medicines Agency (EMA), adopted a positive opinion on the
company’s Marketing Authorization Application (MAA) for two doses
of Descovy® (emtricitabine 200 mg/tenofovir alafenamide 25 mg,
F/TAF), an investigational fixed-dose combination for the treatment
of HIV-1 infection in adults and adolescents (ages 12 years
and older with body weight at least 35 kg) in combination with
other HIV antiretroviral agents.
- Presented data at the 2016 Conference
on Retroviruses and Opportunistic Infections, which included the
announcement of:
- 48-week results from a Phase 3 study
(Study 1089) evaluating the safety and efficacy of switching
virologically suppressed HIV-1 infected adult patients from
regimens containing Truvada to regimens containing the
investigational fixed-dose combination of emtricitabine and F/TAF.
At Week 48, the F/TAF-based regimens were found to be statistically
non-inferior to the emtricitabine and tenofovir disoproxil fumarate
(F/TDF) -based regimens, based on percentages of patients with
HIV-1 RNA levels less than 50 copies/mL. The study also
demonstrated statistically significant improvements in renal and
bone laboratory parameters among patients receiving F/TAF-based
regimens.
- Results from a preclinical study
conducted in collaboration with researchers at Beth Israel
Deaconess Medical Center evaluating a proprietary investigational
oral toll-like receptor 7 (TLR7) agonist, GS-9620, and a related
molecular analogue, GS-986, as part of an HIV eradication strategy.
Data from the study conducted in simian immunodeficiency virus
(SIV)-infected virally suppressed rhesus macaques on antiretroviral
therapy (ART) demonstrate that TLR7 agonist treatment induced
transient plasma SIV RNA blips and reduced SIV DNA. In addition,
TLR7 agonist treatment resulted in subsequent prolonged virus
suppression in some of the macaques after stopping ART.
- Announced that the company’s Type II
variation application for once-daily Truvada in combination with
safer sex practices to reduce the risk of sexually acquired HIV-1
infection among uninfected adults at high risk, a strategy known as
pre-exposure prophylaxis or PrEP, was fully validated and under
evaluation by the EMA.
- Announced that the company’s MAA for
TAF 25 mg, an investigational, once-daily treatment for adults with
chronic hepatitis B virus (HBV) infection, was fully validated and
under assessment by the EMA. The company also submitted a new drug
application (NDA) to FDA for TAF 25 mg for the treatment for adults
with chronic HBV infection.
- Announced that FDA approved two
supplemental indications for Harvoni for use in chronic hepatitis C
patients with advanced liver disease. Harvoni in combination with
ribavirin for 12 weeks was approved for use in chronic hepatitis C
virus (HCV) genotype 1- or 4-infected liver transplant recipients
without cirrhosis or with compensated cirrhosis (Child-Pugh A), and
for HCV genotype 1-infected patients with decompensated cirrhosis
(Child-Pugh B or C), including those who have undergone liver
transplantation. Harvoni is approved for use in HCV genotypes 1, 4,
5 and 6, HCV/HIV-1 coinfection, HCV genotype 1 and 4 liver
transplant recipients, and genotype 1-infected patients with
decompensated cirrhosis.
- Announced that FDA granted priority
review to the company’s NDA for an investigational once-daily
fixed-dose combination of sofosbuvir and velpatasvir (SOF/VEL), for
the treatment of chronic genotype 1-6 HCV infection. FDA has set a
target action date under the Prescription Drug User Fee Act of June
28, 2016.
Conference Call
At 4:30 p.m. Eastern Time today, Gilead's management will host a
conference call and a simultaneous webcast to discuss results from
its first quarter 2016 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/investors 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
1-877-359-9508 (U.S.) or 1-224-357-2393 (international) and dial
the conference ID 76639018 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 30, 2016.
To access the phone replay, please call 1-855-859-2056 (U.S.) or
1-404-537-3406 (international) and dial the conference ID
76639018.
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. Gilead has
operations in more than 30 countries worldwide, with headquarters
in Foster City, California.
Non-GAAP Financial
Information
Gilead has presented certain financial information in accordance
with U.S. generally accepted accounting principles (GAAP) and also
on a non-GAAP basis. Management believes this non-GAAP information
is useful for investors, when considered 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 GAAP. A reconciliation between GAAP and non-GAAP
financial information is provided in the tables on pages 7 and
8.
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 2016
financial results; Gilead's ability to sustain growth in revenues
for its antiviral and other programs; availability of funding for
state AIDS Drug Assistance Programs (ADAPs); continued fluctuations
in ADAP purchases driven by federal and state grant cycles which
may not mirror patient demand and may cause fluctuations in
Gilead's earnings; the possibility of unfavorable results from
clinical trials involving investigational compounds, including
GS-9620 and GS-986; Gilead's ability to initiate clinical trials in
its currently anticipated timeframes; 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;
Gilead's ability to receive regulatory approvals in a timely manner
or at all, for new and current products, including SOF/VEL and TAF
for the treatment of chronic HBV; Gilead's ability to successfully
commercialize its products, including Genvoya, Odefsey and Descovy;
the risk that physicians and patients may not see advantages of
these products over other therapies and may therefore be reluctant
to prescribe the products; the risk that estimates of patients with
HCV or anticipated patient demand may not be accurate; the risk
that private and public payers may be reluctant to provide, or
continue to provide, coverage or reimbursement for new products,
including Sovaldi and Harvoni; Gilead's ability to successfully
develop its oncology, inflammation, cardiovascular and respiratory
programs; safety and efficacy data from clinical studies may not
warrant further development of Gilead's product candidates; the
potential for pricing pressure from additional competitive HCV
launches or austerity measures in European countries and Japan that
may increase the amount of discount required on Gilead's products;
Gilead's ability to complete its share repurchase program due to
changes in its stock price, corporate or other market conditions;
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; and other risks
identified from time to time in Gilead's reports filed with the
U.S. Securities and Exchange Commission (SEC). 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 press releases, Annual Report on Form
10-K for the year ended December 31, 2015 and other subsequent
disclosure documents filed with the SEC. 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.
Gilead owns or has rights to various
trademarks, copyrights and trade names used in our business,
including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®,
CAYSTON®, COMPLERA®, DESCOVY®, EMTRIVA®, EVIPLERA®, GENVOYA®,
HARVONI®, HEPSERA®, LETAIRIS®, ODEFSEY®, RANEXA®, RAPISCAN®,
SOVALDI®, STRIBILD®, TRUVADA®, TYBOST®, VIREAD®, VITEKTA®,
VOLIBRIS®, and ZYDELIG®.
ATRIPLA® is a registered trademark belonging to Bristol-Myers
Squibb & Gilead Sciences, LLC. LEXISCAN® is a registered
trademark belonging to Astellas U.S. LLC. MACUGEN® is a registered
trademark belonging to Eyetech, Inc. SUSTIVA® is a registered
trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU® is a
registered trademark belonging to Hoffmann-La Roche Inc.
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 millions, except per share
amounts)
Three Months Ended March 31, 2016
2015 Revenues: Product sales $ 7,681 $ 7,405 Royalty,
contract and other revenues 113 189 Total revenues
7,794 7,594 Costs and expenses: Cost of goods sold
1,193 882 Research and development expenses 1,265 696 Selling,
general and administrative expenses 685 645 Total
costs and expenses 3,143 2,223 Income from operations
4,651 5,371 Interest expense (230 ) (153 ) Other income (expense),
net 81 21 Income before provision for income taxes
4,502 5,239 Provision for income taxes 935 907 Net
income 3,567 4,332 Net income (loss) attributable to noncontrolling
interest 1 (1 ) Net income attributable to Gilead $ 3,566
$ 4,333 Net income per share attributable to Gilead
common stockholders - basic $ 2.58 $ 2.91 Shares used in per share
calculation - basic 1,383 1,488 Net income per share attributable
to Gilead common stockholders - diluted $ 2.53 $ 2.76 Shares used
in per share calculation - diluted 1,412 1,569 Cash dividends
declared per share $ 0.43 $ —
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
(unaudited)
(in millions, except percentages and
per share amounts)
Three Months Ended March 31, 2016
2015 Cost of goods sold reconciliation: GAAP
cost of goods sold $ 1,193 $ 882 Acquisition related-amortization
of purchased intangibles (210 ) (206 ) Stock-based compensation
expenses (3 ) (3 ) Other(1) 3 1 Non-GAAP cost of
goods sold $ 983 $ 674
Product gross margin
reconciliation: GAAP product gross margin 84.5
%
88.1 % Acquisition related-amortization of purchased intangibles
2.7
%
2.8 % Non-GAAP product gross margin(2) 87.2
%
90.9 %
Research and development expenses
reconciliation: GAAP research and development expenses $ 1,265
$ 696 Up-front collaboration expenses (368 ) — Acquisition
related-IPR&D impairment (114 ) — Stock-based compensation
expenses (41 ) (42 ) Other(1) 27 (3 ) Non-GAAP research and
development expenses $ 769 $ 651
Selling,
general and administrative expenses reconciliation: GAAP
selling, general and administrative expenses $ 685 $ 645
Stock-based compensation expenses (44 ) (47 ) Other(1) (3 ) 2
Non-GAAP selling, general and administrative expenses $ 638
$ 600
Operating margin reconciliation:
GAAP operating margin 59.7
%
70.7 % Up-front collaboration expenses 4.7
%
— % Acquisition related-amortization of purchased intangibles 2.7
%
2.7 % Acquisition related-IPR&D impairment 1.5
%
— % Stock-based compensation expenses 1.1
%
1.2 % Other(1) (0.3 )% — % Non-GAAP operating margin(2) 69.3
%
74.7 % Notes: (1) Amounts related to consolidation of a
contract manufacturer, contingent consideration and/or other
individually insignificant amounts
(2) Amounts may not sum due to
rounding
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except percentages and
per share amounts)
Three Months Ended March 31, 2016
2015 Effective tax rate reconciliation: GAAP
effective tax rate 20.8
%
17.3
%
Up-front collaboration expenses (1.5
)%
—
%
Acquisition related-amortization of purchased intangibles (0.7 )%
(0.4
)%
Other (1) 0.1
%
—
%
Non-GAAP effective tax rate(2) 18.7
%
16.9
%
Net income attributable to Gilead reconciliation:
GAAP net income attributable to Gilead $ 3,566 $ 4,333 Up-front
collaboration expenses 368 — Acquisition related-amortization of
purchased intangibles 204 201 Acquisition related-IPR&D
impairment 99 — Stock-based compensation expenses 64 69 Other(1)
(27 ) 1 Non-GAAP net income attributable to Gilead $ 4,274
$ 4,604
Diluted earnings per share
reconciliation: GAAP diluted earnings per share $ 2.53 $ 2.76
Up-front collaboration expenses 0.26 — Acquisition
related-amortization of purchased intangibles 0.14 0.13 Acquisition
related-IPR&D impairment 0.07 — Stock-based compensation
expenses 0.05 0.04 Other(1) (0.02 ) — Non-GAAP diluted
earnings per share(2) $ 3.03 $ 2.94
Shares
used in per share calculation (diluted) reconciliation: GAAP
shares used in per share calculation (diluted) 1,412 1,569 Share
impact of current stock-based compensation rules (1 ) (1 ) Non-GAAP
shares used in per share calculation (diluted) 1,411 1,568
Non-GAAP adjustment summary: Cost of goods
sold adjustments $ 210 $ 208 Research and development expenses
adjustments 496 45 Selling, general and administrative expenses
adjustments 47 45 Total non-GAAP adjustments before
tax 753 298 Income tax effect (45 ) (28 ) Other(1) — 1
Total non-GAAP adjustments after tax attributable to Gilead
$ 708 $ 271 Notes: (1) Amounts related to
consolidation of a contract manufacturer, contingent consideration
and/or other individually insignificant amounts
(2) Amounts may not sum due to
rounding
GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions)
March 31, December 31, 2016
2015(1) Cash, cash equivalents and marketable
securities $ 21,322 $ 26,208 Accounts receivable, net 6,163 5,854
Inventories 1,880 1,955 Property, plant and equipment, net 2,431
2,276 Intangible assets, net 9,923 10,247 Goodwill 1,172 1,172
Other assets 4,874 4,004 Total assets $ 47,765 $
51,716 Current liabilities $ 10,910 $ 9,890 Long-term
liabilities 22,836 22,711 Equity component of currently redeemable
convertible notes — 2 Stockholders’ equity(2) 14,019 19,113
Total liabilities and stockholders’ equity $ 47,765 $ 51,716
Notes:
(1) Derived from the audited consolidated
financial statements as of December 31, 2015. Certain amounts have
been reclassified to conform to current presentation.
(2) As of March 31, 2016, there were 1,348
million shares of common stock issued and outstanding.
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(Unaudited)
(in millions)
Three Months Ended March 31, 2016
2015 Antiviral products: Harvoni – U.S. $ 1,407 $
3,016 Harvoni – Europe 555 477 Harvoni – Japan 887 — Harvoni –
Other International 168 86 3,017 3,579 Sovaldi
– U.S. 645 421 Sovaldi – Europe 280 483 Sovaldi – Japan 202 —
Sovaldi – Other International 150 68 1,277 972
Truvada – U.S. 576 409 Truvada – Europe 251 301 Truvada – Other
International 71 61 898 771 Atripla – U.S. 489
494 Atripla – Europe 143 194 Atripla – Other International 43
46 675 734 Stribild – U.S. 376 282 Stribild –
Europe 81 61 Stribild – Other International 20 13 477
356 Complera / Eviplera – U.S. 222 163 Complera / Eviplera –
Europe 146 145 Complera / Eviplera – Other International 13
12 381 320 Viread – U.S. 123 100 Viread – Europe 76
80 Viread – Other International 73 54 272 234
Genvoya – U.S. 141 — Genvoya – Europe 16 — Genvoya – Other
International 1 — 158 — Other Antiviral – U.S.
21 14 Other Antiviral – Europe 6 7 Other Antiviral – Other
International 1 1 28 22 Total antiviral
products – U.S. 4,000 4,899 Total antiviral products – Europe 1,554
1,748 Total antiviral products – Japan 1,089 — Total antiviral
products – Other International 540 341 7,183 6,988
GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(Continued)
(Unaudited)
(in millions)
Three Months Ended March 31, 2016
2015 Total antiviral products sales $ 7,183 $
6,988 Other products: Letairis 175 151 Ranexa 144 117
AmBisome 86 85 Zydelig 49 26 Other 44 38 498 417
Total product sales $ 7,681 $ 7,405
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Gilead Sciences, Inc.InvestorsRobin Washington, 650-522-5688Sung
Lee, 650-524-7792Patrick O'Brien, 650-522-1936MediaAmy Flood, 650-522-5643
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