Gilead Sciences Announces Fourth Quarter and Full Year 2010 Financial Results

- Full Year Total Revenues of $7.95 Billion, Up 13 Percent over 2009 -

- Full Year Product Sales of $7.39 Billion, Up 14 Percent over 2009 -

- Fourth Quarter Non-GAAP EPS of $0.95 per Share, Up 2 Percent over Fourth Quarter 2009 -

- Full Year Non-GAAP EPS of $3.69 per Share, Up 21 Percent over 2009 -

FOSTER CITY, Calif.--(BUSINESS WIRE)--Jan 25, 2011 - Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of operations for the fourth quarter and full year of 2010. Total revenues for the fourth quarter of 2010 were $2.00 billion compared to total revenues of $2.03 billion for the fourth quarter of 2009. Net income for the fourth quarter of 2010 was $629.4 million, or $0.76 per diluted share, compared to net income for the fourth quarter of 2009 of $802.2 million, or $0.87 per diluted share. Non-GAAP net income for the fourth quarter of 2010, which excludes after-tax acquisition-related expenses, restructuring expenses and stock-based compensation expenses, was $779.3 million, or $0.95 per diluted share, compared to non-GAAP net income for the fourth quarter of 2009 of $864.4 million, or $0.93 per diluted share.

Full year 2010 total revenues were $7.95 billion, up 13 percent compared to total revenues of $7.01 billion for 2009. 2010 net income was $2.90 billion, or $3.32 per diluted share, compared to 2009 net income of $2.64 billion, or $2.82 per diluted share. 2010 non-GAAP net income, which excludes after-tax acquisition-related expenses, restructuring expenses and stock-based compensation expenses, was $3.21 billion, or $3.69 per diluted share, compared to 2009 non-GAAP net income of $2.86 billion, or $3.06 per diluted share.

Product Sales

Product sales increased 7 percent to $1.93 billion for the fourth quarter of 2010, compared to $1.80 billion in the fourth quarter of 2009. For 2010, product sales increased 14 percent to $7.39 billion when compared to $6.47 billion in 2009.

Antiviral Franchise

Antiviral product sales increased 5 percent to $1.70 billion in the fourth quarter of 2010, up from $1.62 billion for the same quarter of 2009. For 2010, antiviral product sales increased 12 percent to $6.54 billion from $5.84 billion in 2009.

 

  • Atripla

Sales of Atripla® (efavirenz 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate 300 mg) for the treatment of HIV infection increased 11 percent to $775.2 million for the fourth quarter of 2010, up from $697.8 million in the fourth quarter of 2009. For 2010, Atripla sales increased 23 percent to $2.93 billion from $2.38 billion in 2009. The increase in Atripla sales in the fourth quarter and full year of 2010 compared to the same periods of 2009 was driven primarily by sales volume growth in the United States and Europe.

 

  • Truvada

Sales of Truvada® (emtricitabine/tenofovir disoproxil fumarate) for the treatment of HIV infection increased to $681.7 million for the fourth quarter of 2010, compared to Truvada sales of $670.7 million in the fourth quarter of 2009. For 2010, Truvada sales increased 6 percent to $2.65 billion from $2.49 billion in 2009. The increase in Truvada sales in the fourth quarter and full year of 2010 compared to the same periods of 2009 was driven primarily by sales volume growth in the United States and Europe.

 

  • Viread

Sales of Viread® (tenofovir disoproxil fumarate) for the treatment of HIV infection and chronic hepatitis B increased 7 percent to $191.1 million for the fourth quarter of 2010, up from $178.3 million in the fourth quarter of 2009. For 2010, Viread sales increased 10 percent to $732.2 million from $667.5 million in 2009. The increase in Viread sales in the fourth quarter and full year of 2010 compared to the same periods of 2009 was driven primarily by sales volume growth in the United States, Europe and Latin America.

Letairis

Sales of Letairis® (ambrisentan) for the treatment of pulmonary arterial hypertension increased 23 percent to $64.0 million for the fourth quarter of 2010, up from $52.2 million in the fourth quarter of 2009. For 2010, Letairis sales increased 31 percent to $240.3 million from $183.9 million in 2009. The increase in Letairis sales in the fourth quarter and full year of 2010 compared to the same periods of 2009 was driven primarily by sales volume growth.

Ranexa

Sales of Ranexa® (ranolazine) for the treatment of chronic angina increased 47 percent to $67.8 million for the fourth quarter of 2010, up from $46.0 million in the fourth quarter of 2009. For 2010, Ranexa sales increased to $239.8 million from $131.1 million for the period of 2009 subsequent to Gilead's acquisition of CV Therapeutics, Inc. on April 15, 2009. The increase in Ranexa sales in the fourth quarter and full year of 2010 compared to the same periods of 2009 was driven primarily by sales volume growth.

Other Products

Sales of other products were $150.4 million for the fourth quarter of 2010, compared to $159.5 million in the fourth quarter of 2009 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). For 2010, sales of other products decreased to $601.1 million from $615.0 million in 2009. Sales of Cayston were $19.4 million and $47.5 million for the fourth quarter and full year of 2010, respectively.

Royalty, Contract and Other Revenues

Royalty, contract and other revenues resulting primarily from collaborations with corporate partners were $68.4 million in the fourth quarter of 2010, down from $228.0 million in the fourth quarter of 2009. The decrease was due primarily to lower Tamiflu® (oseltamivir phosphate) royalties from F. Hoffmann-La Roche Ltd of $21.9 million in the fourth quarter of 2010, compared to Tamiflu royalties of $194.1 million in the fourth quarter of 2009. For 2010, royalty, contract and other revenues increased 3 percent to $559.5 million from $542.1 million in 2009 due primarily to an increase in other royalty revenues.

Research and Development

Research and development (R&D) expenses in the fourth quarter of 2010 were $392.8 million, compared to $239.6 million for the fourth quarter of 2009, due primarily to acquisition-related in-process R&D impairment. Non-GAAP R&D expenses for the fourth quarter of 2010, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $231.8 million, compared to $211.3 million for the fourth quarter of 2009. The increase in non-GAAP R&D expenses was driven primarily by higher expenses to support the growth of Gilead's R&D activities including clinical studies in HIV and HCV. For 2010, R&D expenses were $1.07 billion compared to $939.9 million for 2009. Non-GAAP R&D expenses for 2010, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $838.8 million, consistent with $831.3 million for 2009.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses in the fourth quarter of 2010 were $280.2 million, compared to $253.9 million for the fourth quarter of 2009. Non-GAAP SG&A expenses for the fourth quarter of 2010, which exclude restructuring and stock-based compensation expenses, were $239.3 million, compared to $223.4 million for the fourth quarter of 2009. For 2010, SG&A expenses were $1.04 billion compared to $946.7 million for 2009. Non-GAAP SG&A expenses for 2010, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $912.6 million, compared to $820.1 million for 2009. The increase in non-GAAP SG&A expenses was driven primarily by higher headcount and expenses to support Gilead's expanding commercial activities.

Income Taxes

The effective tax rate for 2010 was 26.2 percent compared to 25.0 percent for 2009. The increase in the 2010 effective tax rate was primarily due to decreased earnings in lower tax jurisdictions and the resolution of certain tax audits with tax authorities in 2009, partially offset by lower state taxes. The fourth quarter 2010 tax rate was 21.7 percent compared to 24.6 percent for the fourth quarter of 2009. The decrease in the fourth quarter 2010 tax rate was due primarily to the extension of the federal research tax credit, the effect of acquisition-related in-process R&D impairment and lower state taxes.

Net Foreign Currency Exchange Impact

The net foreign currency exchange impact on fourth quarter 2010 revenues and pre-tax earnings, which includes revenues and expenses generated from outside the United States, was an unfavorable $33.2 million and $32.4 million, respectively, compared to the fourth quarter of 2009. The net foreign currency exchange impact on full year 2010 revenues and pre-tax earnings was an unfavorable $93.7 million and $79.8 million, respectively, compared to 2009.

Cash, Cash Equivalents and Marketable Securities

As of December 31, 2010, Gilead had cash, cash equivalents and marketable securities of $5.32 billion compared to $3.90 billion as of December 31, 2009. Gilead generated $2.83 billion of operating cash flow in 2010 including $724.8 million in the fourth quarter of 2010.

Corporate Highlights

On January 20, 2011, the Board of Directors of Gilead authorized an additional three-year, $5.0 billion stock repurchase program for future repurchases of its outstanding shares of common stock which will commence upon the completion of its existing program authorized in May 2010. Gilead intends to use the additional authorization to repurchase its shares from time to time to offset the dilution created by shares issued under employee stock plans and to repurchase shares opportunistically.

Under the company's previously authorized $5.0 billion stock repurchase program, Gilead has repurchased approximately $3.02 billion in common stock through December 31, 2010. Total purchase activity was $615.4 million in common stock for the fourth quarter of 2010. Total purchase activity for the year was $4.02 billion in common stock, representing 109.9 million repurchased shares or approximately 12 percent of Gilead's total common shares outstanding at December 31, 2009.

In December, Gilead announced an agreement to acquire Arresto Biosciences, Inc. (Arresto) for $225 million and potential future payments based on achievement of certain sales levels. Arresto is a privately-held, development-stage biotechnology company focused on medicines to treat fibrotic diseases and cancer. This transaction closed on January 14, 2011, at which time Arresto became a wholly-owned subsidiary of Gilead.

Product and Pipeline Update

Antiviral Franchise

In October, Gilead announced positive data from the open-label phase of two pivotal Phase III clinical trials (Studies 102 and 103) evaluating the four-year efficacy of Viread for the treatment of chronic hepatitis B infection. The results were presented at the 61st annual meeting of the American Association for the Study of Liver Diseases (AASLD) in Boston.

Also at the AASLD conference, Gilead presented positive data from a Phase IIa study of its investigational compounds GS 9190, an oral polymerase inhibitor, and GS 9256, an oral protease inhibitor, used in conjunction with current standard of care therapies for the treatment of chronic hepatitis C infection.

Respiratory Franchise

In October, Gilead announced positive data from its head-to-head Phase III clinical trial of Cayston versus tobramycin inhalation solution in cystic fibrosis patients with P. aeruginosa. These data were presented at the 24th Annual North American Cystic Fibrosis Conference in Baltimore.

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 fourth quarter and full year of 2010 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 1-866-788-0542 (U.S.) or 1-857-350-1680 (international) and dial the participant passcode 29518282 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 January 28, 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 66339232.

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 fourth quarter and full year of 2010 and 2009. 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 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; Gilead's ability to submit NDAs 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 its fixed-dose combination of Truvada and TMC278 for the treatment of HIV infection; Gilead's ability to successfully commercialize its products, including the risk that physicians may not respond to new positive data about the use of Viread for the treatment of chronic hepatitis B infection or Cayston as a treatment for the improvement of respiratory symptoms in cystic fibrosis patients with P. aeruginosa; Gilead's ability to successfully develop its respiratory and cardiovascular franchises; safety and efficacy data from clinical studies may not warrant further development of Gilead's product candidates, including the clinical studies evaluating GS 9190 and GS 9256 for the treatment of hepatitis C; initiating and completing clinical trials may take longer or cost more than expected, including in the clinical studies evaluating GS 9190 and GS 9256 for the treatment of hepatitis; 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 $5.0 billion share repurchase programs due to changes in its stock price, corporate or other market conditions; risks and uncertainties related to Gilead's ability to successfully advance Arresto's pipeline programs; 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 third quarter of 2010 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, 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     Year Ended
      December 31,     December 31,
      2010   2009     2010   2009
Revenues:                  
  Product sales   $ 1,930,238     $ 1,804,398       $ 7,389,921     $ 6,469,311  
  Royalty, contract and other revenues     68,449       227,981         559,499       542,072  
Total revenues     1,998,687       2,032,379         7,949,420       7,011,383  
Costs and expenses:                  
  Cost of goods sold     496,337       473,399         1,869,876       1,595,558  
  Research and development     392,760       239,645         1,072,930       939,918  
  Selling, general and administrative     280,209       253,897         1,044,392       946,686  
Total costs and expenses     1,169,306       966,941         3,987,198       3,482,162  
Income from operations     829,381       1,065,438         3,962,222       3,529,221  
Interest and other income, net     10,764       11,299         60,287       42,397  
Interest expense     (40,622 )     (17,290 )       (108,961 )     (69,662 )
Income before provision for income taxes     799,523       1,059,447         3,913,548       3,501,956  
Provision for income taxes     173,158       260,054         1,023,799       876,364  
Net income     626,365       799,393         2,889,749       2,625,592  
Net loss attributable to noncontrolling interest     3,054       2,819         11,508       10,163  
Net income attributable to Gilead   $ 629,419     $ 802,212       $ 2,901,257     $ 2,635,755  
Net income per share attributable to Gilead common stockholders - basic

 

  $ 0.78     $ 0.89       $ 3.39     $ 2.91  
Net income per share attributable to Gilead common stockholders - diluted

 

  $ 0.76     $ 0.87       $ 3.32     $ 2.82  
Shares used in per share calculation - basic     809,097       899,829         856,060       904,604  
Shares used in per share calculation - diluted     824,076       926,913         873,396       934,109  
                   
GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in thousands, except percentages and per share amounts)
                   
      Three Months Ended   Year Ended
      December 31,   December 31,
      2010   2009   2010   2009
Cost of goods sold reconciliation:                
GAAP cost of goods sold   $ 496,337     $ 473,399     $ 1,869,876     $ 1,595,558  
  Acquisition-related amortization of inventory mark-up     -       (5,013 )     (7,020 )     (13,646 )
  Acquisition-related amortization of purchased intangibles     (14,981 )     (14,480 )     (59,927 )     (41,131 )
  Stock-based compensation expenses     (1,632 )     (2,373 )     (10,180 )     (10,859 )
Non-GAAP cost of goods sold   $ 479,724     $ 451,533     $ 1,792,749     $ 1,529,922  
                   
Product gross margin reconciliation:                
GAAP product gross margin     74.4 %  

 

  73.8 %     74.8 %     75.4 %
  Acquisition-related amortization of inventory mark-up     -       0.3 %     0.1 %     0.2 %
  Acquisition-related amortization of purchased intangibles     0.8 %     0.8 %     0.8 %     0.6 %
  Stock-based compensation expenses     0.1 %     0.1 %     0.1 %     0.2 %
Non-GAAP product gross margin (1)     75.3 %  

 

  75.0 %     75.8 %     76.4 %
                   
Research and development expenses reconciliation:                
GAAP research and development expenses   $ 392,760     $ 239,645     $ 1,072,930     $ 939,918  
  Acquisition-related IPR&D impairment     (136,000 )     -       (136,000 )     -  
  Restructuring expenses     (3,493 )     (8,687 )     (14,038 )     (25,718 )
  Stock-based compensation expenses     (21,512 )     (19,701 )     (84,048 )      

Posted: January 2011


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