Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of
operations for the quarter ended June 30, 2012. Total revenues for the
second quarter of 2012 increased 13 percent to $2.41 billion, from $2.14
billion for the second quarter of 2011. Net income for the second
quarter of 2012 was $711.6 million, or $0.91 per diluted share compared
to $746.2 million, or $0.93 per diluted share for the second quarter of
2011. Non-GAAP net income for the second quarter of 2012, which excludes
acquisition-related, restructuring and stock-based compensation
expenses, was $767.3 million, or $0.99 per diluted share compared to
$797.7 million, or $1.00 per diluted share for the second quarter of
2011.
Product Sales
Product sales increased 14 percent to $2.32 billion for the second
quarter of 2012 compared to $2.04 billion for the second quarter of
2011. This increase in product sales was driven primarily by Gilead's
antiviral franchise, resulting from increased sales of Atripla® (efavirenz
600 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg),
Truvada® (emtricitabine 200 mg/tenofovir disoproxil fumarate
300 mg) and Complera®/Eviplera® (emtricitabine 200
mg/rilpivirine 25 mg/tenofovir disoproxil fumarate 300 mg) which was
launched in the U.S. in August 2011.
Antiviral Franchise
Antiviral product sales increased 14 percent to $2.01 billion for the
second quarter of 2012, up from $1.76 billion for the second quarter of
2011, reflecting sales growth of 21 percent in the U.S. and 3 percent in
Europe. In the U.S., antiviral product sales for the second quarter of
2012 reflect the benefit of purchases by certain state AIDS Drug
Assistance Programs (ADAPs) in excess of demand.
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Atripla
Sales of Atripla increased 10 percent to
$904.0 million for the second quarter of 2012, up from $822.0 million
for the second quarter of 2011, reflecting sales growth of 12 percent
in the U.S. and 5 percent in Europe.
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Truvada
Sales of Truvada increased 10 percent to
$785.9 million for the second quarter of 2012, up from $711.3 million
for the second quarter of 2011, reflecting sales growth of 18 percent
in the U.S. and 2 percent in Europe.
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Viread
Sales of Viread® (tenofovir
disoproxil fumarate) increased 16 percent to $215.4 million for the
second quarter of 2012, up from $185.7 million for the second quarter
of 2011, reflecting sales growth of 27 percent in the U.S. partially
offset by a decrease of 2 percent in Europe.
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Complera/Eviplera
Sales of Complera/Eviplera
increased 40 percent to $72.9 million during the second quarter of
2012 from $52.2 million for the first quarter of 2012. Complera was
approved in the U.S. in August 2011, and Eviplera was approved in the
European Union in November 2011.
Letairis
Sales of Letairis® (ambrisentan) increased 38 percent to
$101.6 million for the second quarter of 2012, up from $73.6 million for
the second quarter of 2011.
Ranexa
Sales of Ranexa® (ranolazine) increased 11 percent to $95.6
million for the second quarter of 2012, up from $86.1 million for the
second quarter of 2011.
Other Products
Sales of other products were $111.8 million for the second quarter of
2012 compared to $115.5 million for the second quarter of 2011 and
included AmBisome® (amphotericin B) liposome for injection
and Cayston® (aztreonam for inhalation solution).
Royalty, Contract and Other Revenues
Royalty, contract and other revenues were $83.9 million for the second
quarter of 2012, down 14 percent from $97.7 million for the second
quarter of 2011, due primarily to lower Tamiflu royalties from F.
Hoffmann-La Roche Ltd., partially offset by an increase in other royalty
revenues.
Research and Development
Research and development (R&D) expenses for the second quarter of 2012
were $396.2 million compared to $282.4 million for the second quarter of
2011. Non-GAAP R&D expenses for the second quarter of 2012, which
exclude acquisition-related, restructuring and stock-based compensation
expenses, were $371.4 million compared to $262.6 million for the second
quarter of 2011. The increase in non-GAAP R&D expenses was due primarily
to the continued advancement of Gilead's product pipeline, particularly
in the liver disease and oncology franchises.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses in the second
quarter of 2012 were $332.5 million compared to $304.3 million for the
second quarter of 2011. Non-GAAP SG&A expenses for the second quarter of
2012, which exclude acquisition-related, restructuring and stock-based
compensation expenses, were $298.7 million compared to $276.4 million
for the second 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.
Interest Expense and Other Income (Expense), Net
Interest expense for the second quarter of 2012 was $88.4 million
compared to $46.1 million for the second quarter of 2011. The increase
was due primarily to the additional debt issued in connection with the
acquisition of Pharmasset Inc. (Pharmasset) in the first quarter of
2012. Other income (expense), net for the second quarter of 2012 was a
net expense of $1.1 million compared to net income of $12.0 million in
the second quarter of 2011. The change was due primarily to decreased
interest income from lower cash, cash equivalents and marketable
securities.
Net Foreign Currency Exchange Impact
The net foreign currency exchange impact on second quarter 2012 product
sales and pre-tax earnings was an unfavorable $31.7 million and $17.4
million, respectively, compared to the second quarter of 2011.
Cash, Cash Equivalents and Marketable Securities
As of June 30, 2012, Gilead had $2.27 billion of cash, cash equivalents
and marketable securities compared to $9.96 billion as of December 31,
2011. The decrease was due to the acquisition of Pharmasset in the first
quarter of 2012. Gilead generated $1.74 billion of operating cash flow
during the first six months of 2012 including $1.29 billion generated in
the second quarter of 2012 driven by the collection of $460 million of
past due accounts receivable in Spain contributing to a 15 day reduction
in days sales outstanding.
Corporate Highlights
Antiviral Franchise
In April, Gilead announced interim data from the Phase 2 ATOMIC study
examining a 12-week course of treatment with the investigational
once-daily nucleotide GS-7977 plus pegylated interferon and ribavirin
(RBV) in treatment-naïve patients with genotype 1 chronic hepatitis C
virus (HCV) infection. The study found that 90 percent of patients
achieved a 12-week sustained virologic response (SVR12), defined as
maintaining undetectable viral load 12 weeks after the completion of
therapy. These findings were presented at the 47th Annual
Meeting of the European Association for the Study of the Liver (EASL) in
Barcelona, Spain.
Also in April, Gilead announced interim data from the Phase 2 ELECTRON
study examining GS-7977 plus RBV in treatment-naïve patients with
genotype 1 chronic HCV infection. Of the 25 patients who completed 12
weeks of treatment, 88 percent achieved a four-week sustained virologic
response (SVR4). Three patients experienced viral relapse. These
findings were presented at EASL.
Lastly in April, Gilead announced interim results from the Phase 2
QUANTUM study examining a 12-week duration of GS-7977 plus RBV in
treatment-naïve patients. Twenty-five patients were randomized to the
12-week treatment arm: 19 genotype 1 patients; four genotype 3 patients;
and two genotype 2 patients. At the four-week post-treatment time
period, data were available for 17 genotype 1 patients. Of these, 59
percent achieved SVR4 and 41 percent experienced viral relapse.
Additionally, seven of the patients who reached the eight-week
post-treatment time period, and who achieved SVR4, remained HCV RNA
undetectable.
In May, Gilead announced that the Antiviral Drugs Advisory Committee of
the U.S. Food and Drug Administration (FDA) voted to support approval of
once-daily oral Truvada to reduce the risk of HIV-1 infection among
uninfected adults, an HIV prevention strategy called pre-exposure
prophylaxis or PrEP. The Antiviral Drugs Advisory Committee also voted
13 to one in support of approval of Quad, a complete single tablet
regimen of elvitegravir, cobicistat, emtricitabine and tenofovir
disoproxil fumarate, for the treatment of HIV-1 infection in
treatment-naïve adults.
Also in May, Gilead announced that the Marketing Authorisation
Application (MAA) for cobicistat had been validated by the European
Medicines Agency (EMA). Cobicistat is Gilead's pharmacoenhancing or
"boosting" agent that increases blood levels of certain commercially
available protease inhibitors, including atazanavir and darunavir, in
order to enable once-daily dosing. In June, Gilead submitted a New Drug
Application (NDA) to the FDA for marketing approval of cobicistat.
In June, Gilead announced that its NDA and MAA for elvitegravir, an
integrase inhibitor for the treatment of HIV-1 infection in
treatment-experienced patients, had been submitted to the FDA and
validated by the EMA, respectively. Elvitegravir, a component of
Gilead's once-daily Quad single tablet regimen, is currently under U.S.
and European regulatory review for treatment-naïve adult patients.
Oncology Franchise
In May, Gilead announced that the first patient had been dosed in a
Phase 3 clinical trial evaluating the efficacy and safety of GS-1101 in
combination with rituximab in previously treated chronic lymphocytic
leukemia patients. GS-1101 is an investigational, first-in-class
specific inhibitor of the phosphoinositide-3 kinase delta isoform.
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