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|Gilead Sciences Announces First Quarter 2012 Financial Results|
- Non-GAAP EPS of $0.91, Up 5 Percent over First Quarter 2011 -
FOSTER CITY, Calif., Apr 26, 2012 (BUSINESS WIRE) --Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the quarter ended March 31, 2012. Total revenues for the first quarter of 2012 increased 19 percent to $2.28 billion, from $1.93 billion for the first quarter of 2011. Net income for the first quarter of 2012 was $442.0 million, or $0.57 per diluted share compared to $651.1 million, or $0.80 per diluted share for the first quarter of 2011. Net income for the first quarter of 2012 included acquisition-related compensation expense of $193.9 million, or $0.25 per diluted share for the acceleration of unvested stock options in connection with the Pharmasset Inc. (Pharmasset) acquisition. Non-GAAP net income for the first quarter of 2012, which excludes acquisition-related, restructuring and stock-based compensation expenses, was $704.4 million, or $0.91 per diluted share compared to $702.8 million, or $0.87 per diluted share for the first quarter of 2011.
Acquisition of Pharmasset
On January 17, 2012, Gilead completed the acquisition of Pharmasset for $11.1 billion in cash, which was recorded in the first quarter of 2012 as in-process research and development of $10.7 billion, goodwill of $74.8 million, net assets and liabilities assumed of $63.6 million and stock-based compensation expense of $193.9 million.
Product sales increased 19 percent to $2.21 billion for the first quarter of 2012 compared to $1.86 billion for the first quarter of 2011. This increase in product sales was driven primarily by Gilead's antiviral franchise, resulting from increased sales of Atripla(R) (efavirenz 600 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) and Truvada(R) (emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg), and the launch of Complera(R)/Eviplera(R) (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir disoproxil fumarate 300 mg) in the second half of 2011.
Antiviral product sales increased 18 percent to $1.93 billion for the first quarter of 2012, up from $1.63 billion for the same quarter of 2011, reflecting sales growth of 24 percent in the U.S. and 7 percent in Europe. In the U.S., antiviral product sales for the first quarter of 2012 reflect the benefit of fiscal year-end purchases by certain state AIDS Drug Assistance Programs (ADAPs).
Sales of Letairis(R) (ambrisentan) increased 40 percent to $87.3 million for the first quarter of 2012, up from $62.2 million for the first quarter of 2011.
Sales of Ranexa(R) (ranolazine) increased 22 percent to $83.2 million for the first quarter of 2012, up from $68.3 million for the first quarter of 2011.
Sales of other products were $112.0 million for the first quarter of 2012 compared to $102.4 million for the first quarter of 2011 and included AmBisome(R) (amphotericin B) liposome for injection and Cayston(R) (aztreonam for inhalation solution).
Royalty, Contract and Other Revenues
Royalty, contract and other revenues from collaborations were $74.1 million for the first quarter of 2012, up 19 percent from $62.5 million for the first quarter of 2011, due primarily to an increase in other royalty revenues, which included higher royalties from GlaxoSmithKline Inc. for Volibris(R) (ambrisentan) and Japan Tobacco for Truvada, partially offset by lower Tamiflu royalties from F. Hoffmann-La Roche Ltd.
Research and Development
Research and development (R&D) expenses for the first quarter of 2012 were $458.2 million compared to $254.4 million for the first quarter of 2011. R&D expenses for the first quarter of 2012 included $100.1 million of the $193.9 million acquisition-related stock-based compensation expense. Non-GAAP R&D expenses for the first quarter of 2012, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $331.3 million compared to $237.5 million for the first quarter of 2011. The increase in non-GAAP R&D expenses was due primarily to increased clinical activities, particularly in liver disease, and expenses associated with the continued advancements of Gilead's product pipeline.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses in the first quarter of 2012 were $443.1 million compared to $295.6 million for the first quarter of 2011. SG&A expenses for the first quarter of 2012 included $93.8 million of the $193.9 million acquisition-related stock-based compensation expense. Non-GAAP SG&A expenses for the first quarter of 2012, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $307.7 million compared to $263.1 million for the first quarter of 2011. The increase in non-GAAP SG&A expenses was due primarily to increased expenses to support the ongoing growth of Gilead's business and an increase in the pharmaceutical excise tax.
Interest Expense and Other Income (Expense), Net
Interest expense for the first quarter of 2012 was $97.3 million compared to $41.2 million for the first quarter of 2011. The increase was due primarily to the additional debt Gilead issued in connection with its acquisition of Pharmasset. Other income (expense), net for the first quarter of 2012 was a net expense of $34.1 million compared to net income of $13.8 million in the first quarter of 2011. The change was due primarily to a $40.1 million loss resulting from the Greek government's debt restructuring.
Net Foreign Currency Exchange Impact
The net foreign currency exchange impact on first quarter 2012 revenues and pre-tax earnings was an unfavorable $16.4 million and $16.2 million, respectively, compared to the first quarter of 2011.
Cash, Cash Equivalents and Marketable Securities
As of March 31, 2012, Gilead had cash, cash equivalents and marketable securities of $1.50 billion compared to $9.96 billion as of December 31, 2011. The decrease was due to the acquisition of Pharmasset. Gilead generated $453.0 million of operating cash flow during the first three months of 2012. Cash flows from operating activities included the impact from the $193.9 million acquisition-related stock-based compensation expense and other Pharmasset-related payments, the timing of vendor payments related to our ERP system implementation in the fourth quarter of 2011 and payments for R&D milestones.
Other Corporate Highlights
In January, Gilead announced that Roy D. Baynes, MD, PhD, joined the company as Senior Vice President, Oncology Therapeutics. Dr. Baynes reports to Norbert W. Bischofberger, PhD, Executive Vice President, Research and Development and Chief Scientific Officer and is responsible for Gilead's R&D efforts in oncology and inflammation.
Product and Pipeline Update
In January, the U.S. Food and Drug Administration (FDA) approved Viread in combination with other antiretroviral agents for the treatment of HIV-1 infection in pediatric patients ages 2-12. The FDA approved three lower-strength once-daily tablets of Viread in doses of 150 mg, 200 mg and 250 mg for children ages 6-12. The agency also approved an oral powder formulation of Viread for children ages 2-5.
Also in January, Gilead announced the initiation of a Phase 2 clinical trial evaluating GS-7340 for the treatment of HIV-1 infection in treatment-naïve adults. GS-7340 is a novel prodrug of tenofovir, the active agent in Viread. The Phase 2 study is evaluating GS-7340 as part of a once-daily, co-formulated single-tablet regimen that also contains Gilead's investigational boosting agent cobicistat, the investigational integrase inhibitor elvitegravir, and Emtriva. The GS-7340-containing single-tablet regimen is being compared to Gilead's Quad single-tablet regimen, which contains Viread, Emtriva, elvitegravir and cobicistat. Quad is currently under review for marketing approval by U.S. and European regulatory agencies.
In February, the FDA accepted Gilead's supplemental New Drug Application (sNDA) for once-daily Truvada for pre-exposure prophylaxis to reduce the risk of HIV-1 infection among uninfected adults. The sNDA was granted a six-month Priority Review with a target review date of June 15th under the Prescription Drug User Fee Act.
Also in February, Gilead announced that the majority of hepatitis C genotype 1 patients with a prior "null" response to an interferon-containing regimen enrolled in the ongoing ELECTRON study experienced viral relapse within four weeks of completing 12 weeks of treatment with GS-7977 plus ribavirin. These data were presented at the 19th Conference on Retroviruses and Opportunistic Infections (CROI 2012).
Lastly, in March, Gilead announced full Phase 3 clinical trial results from pivotal Studies 102 and 103 evaluating the Quad regimen versus Atripla among HIV-1 infected antiretroviral treatment-naïve adults. Study 102 demonstrated that Quad is non-inferior to Atripla after 48 weeks of therapy among HIV-1 infected treatment-naïve adults. Study 103 determined that Quad was non-inferior to a protease-based regimen of ritonavir-boosted atazanavir plus Truvada at 48 weeks of therapy also among HIV-1 infected treatment-naïve adults. Both data sets were presented at CROI 2012.
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 first quarter 2012 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 1-800-320-2978 (U.S.) or 1-617-614-4923 (international) and dial the participant passcode 47712406 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 29, 2012. To access the phone replay, please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international) and dial the participant passcode 71835738.
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 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 first quarter of 2012 and 2011. 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.
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 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 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 NDAs for new product candidates in the timelines currently anticipated, including GS-7977 for the treatment of HCV; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current products, including Quad or Truvada for PrEP to reduce the risk of HIV infection; Gilead's ability to successfully commercialize its products, including Complera/Eviplera and Viread for pediatric use; 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, including GS-7340 for the treatment of HIV-1 infection; 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 advance Pharmasset's product pipeline or develop an all-oral antiviral regimen for HCV; the effects of the Pharmasset acquisition on relationships with employees and the risk that anticipated synergies and benefits will not be realized; 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 Annual Report on Form 10-K for the year ended December 31, 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, Eviplera, Emtriva, AmBisome,
Letairis, Cayston, Ranexa and Volibris are
For more information on Gilead Sciences, Inc., please visit www.gilead.com
SOURCE: Gilead Sciences, Inc.
Gilead Sciences, Inc.
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