Gilead Sciences Announces First Quarter 2014 Financial Results

  Gilead Sciences Announces First Quarter 2014 Financial Results

                      - Product Sales of $4.87 billion -

                      - Sovaldi Sales of $2.27 billion -

                     - Non-GAAP EPS of $1.48 per share -

                    - Reiterates Full Year 2014 Guidance -

Business Wire

FOSTER CITY, Calif. -- April 22, 2014

Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations
for the quarter ended March 31, 2014. Total revenues for the first quarter of
2014 increased to $5.00 billion from $2.53 billion for the first quarter of
2013. Product sales increased to $4.87 billion for the first quarter of 2014
compared to $2.39 billion for the first quarter of 2013. Net income for the
first quarter of 2014 was $2.23 billion, or $1.33 per diluted share compared
to $722.2 million, or $0.43 per diluted share for the first quarter of 2013.
Non-GAAP net income for the first quarter of 2014, which excludes
acquisition-related, restructuring and stock-based compensation expenses, was
$2.49 billion, or $1.48 per diluted share compared to $801.9 million, or $0.48
per diluted share for the first quarter of 2013.

                                           
                                             Three Months Ended
                                             March 31,
(In thousands, except per share amounts)    2014             2013
Product sales                                $  4,870,974     $  2,393,568
Royalty, contract and other revenues         127,982          138,067
Total revenues                               $   4,998,956    $   2,531,635
                                                               
Net income attributable to Gilead            $   2,227,410     $   722,186
Non-GAAP net income attributable to Gilead   $   2,487,809     $   801,943
                                                               
Diluted EPS                                  $   1.33          $   0.43
Non-GAAP diluted EPS                         $   1.48          $   0.48
                                                                   

Product Sales

Compared to the first quarter of 2013, U.S. product sales for the first
quarter of 2014 increased to $3.63 billion from $1.40 billion and Europe
product sales increased to $1.02 billion from $818.3 million.

Antiviral Product Sales

Antiviral product sales increased to $4.51 billion for the first quarter of
2014, up from $2.06 billion for the first quarter of 2013 largely due to sales
of Sovaldi^® (sofosbuvir 400 mg), which launched in December 2013, and
increases in sales of Stribild^® (elvitegravir 150 mg/cobicistat 150
mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg)and
Complera/Eviplera^® (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir
disoproxil fumarate 300 mg). This increase was partially offset by a decrease
in wholesaler and sub-wholesaler inventories in the United States associated
primarily with our HIV products, which also impacted antiviral product sales
in the first quarter of 2014 compared to the fourth quarter of 2013.

                                                                   
                                    Three Months Ended
                                    March 31,
(In thousands, except               2014            2013             % Change
percentages)
Antiviral product sales             $  4,508,497    $  2,061,078    119    %
Sovaldi                             2,274,349        —                —      %
Atripla                             779,594          877,073          (11  ) %
Truvada                             759,700          700,242          8      %
Complera/Eviplera                   250,733          148,189          69     %
Stribild                            215,271          92,148           134    %
Viread                              210,625          210,332          —      %
                                                                             

Cardiovascular Product Sales

Cardiovascular product sales increased to $234.5 million for the first quarter
of 2014, up from $214.4 million for the first quarter of 2013 primarily driven
by strong Ranexa^® (ranolazine) sales.

                                                            
                                     Three Months Ended
                                     March 31,
(In thousands, except percentages)   2014        2013         % Change
Cardiovascular product sales         $ 234,503    $ 214,393    9    %
Letairis                             122,885      118,107      4    %
Ranexa                               111,618      96,286       16   %
                                                                    

Operating Expenses and Other

During the first quarter of 2014, compared to the same period in 2013:

  *Non-GAAP research and development (R&D) expenses increased due to the
    progression of Gilead's clinical studies, particularly in oncology and
    HIV.
  *Non-GAAP selling, general and administrative (SG&A) expenses increased to
    support the expansion of Gilead's business, particularly in hepatitis C
    virus (HCV) and in preparation for the anticipated launch of idelalisib.

                                                      
                                                        Three Months Ended
                                                        March 31,
(In thousands)                                          2014        2013
Non-GAAP research and development expenses              $ 557,805    $ 459,976
Non-GAAP selling, general and administrative expenses   $ 500,105    $ 333,064

Note: Non-GAAP R&D and SG&A expenses exclude the impact of
acquisition-related, restructuring and stock-based compensation expenses.

Cash, Cash Equivalents and Marketable Securities

As of March31, 2014, Gilead had $6.86 billion of cash, cash equivalents and
marketable securities compared to $2.57 billion as of December31, 2013. This
increase was primarily due to the issuance of senior unsecured notes in March
2014 for a total aggregate principal amount of $4.00 billion. These proceeds
will be for general corporate purposes, which may include the repayment of
debt and related payments, working capital and the repurchase of outstanding
common stock under the authorized share repurchase program. During the first
three months of 2013, Gilead generated $1.57 billion in operating cash flow.

Full Year 2014 Guidance

Gilead reiterates its full year 2014 guidance, initially provided on February
4, 2014, which excludes the impact of Sovaldi product sales:

                                                           
                                                             Provided
(In millions, except percentages and per share amounts)
                                                             February 4, 2014
Net Product Sales                                            $11,300 - $11,500
Non-GAAP*
Product Gross Margin                                         75% - 77%
R&D                                                          $2,200 - $2,300
SG&A                                                         $2,100 - $2,200
Effective Tax Rate                                           28% - 29%
                                                             
Diluted EPS Impact of Acquisition-Related, Restructuring     $0.63 - $0.66
and Stock-Based Compensation Expenses

* Non-GAAP product gross margin, expenses and effective tax rate exclude the
impact of acquisition-related, restructuring and stock-based compensation
expenses, where applicable.

Product & Pipeline Updates Announced by Gilead During the First Quarter of
2014 Include:

Antiviral Program

  *The European Commission granted marketing authorization for Sovaldi in
    combination with other antiviral agents ribavirin and pegylated interferon
    alpha in all 28 countries of the European Union.
  *Submitted a New Drug Application (NDA) to the U.S. Food and Drug
    Administration (FDA) for a once-daily fixed-dose combination of the NS5A
    inhibitor ledipasvir (LDV) 90 mg and the nucleotide analog polymerase
    inhibitor sofosbuvir (SOF) 400 mg for the treatment of chronic hepatitis C
    genotype 1 infection in adults for eight or 12 weeks, depending on prior
    treatment history and whether they have cirrhosis. The FDA has assigned
    LDV/SOF a Breakthrough Therapy designation, which is granted to
    investigational medicines that may offer major advances in treatment over
    existing options. The FDA has set a target review date under the
    Prescription Drug User Fee Act (PDUFA) of October 10, 2014.
  *Announced that the company’s Marketing Authorisation Application for
    LDV/SOF has been fully validated and is now under assessment by the
    European Medicines Agency. The application was submitted on February 27,
    2014.

Oncology Program

  *Announced FDA acceptance for review of the company’s NDA for idelalisib, a
    targeted, oral inhibitor of PI3K delta, for the treatment of relapsed
    chronic lymphocytic leukemia with priority review and a target review date
    under PDUFA of August 6, 2014 and for the treatment of refractory indolent
    non-Hodgkin’s lymphoma with a standard review and a target review date
    under PDUFA of September 11, 2014.

Conference Call

At 4:15 p.m. Eastern Time today, Gilead's management will host a conference
call and a simultaneous webcast to discuss results from its first quarter 2014
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
1-844-795-1482 (U.S.) or 1-931-229-4695 (international) and dial the
conference ID 17493454 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 24, 2014. To access the phone replay, please call
1-855-859-2056 (U.S.) or 1-404-537-3406 (international) and dial the
conference ID 17493454.

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 transform and simplify care for people with
life-threatening illnesses around the word. Headquartered in Foster City,
California, Gilead has operations in North and South America, Europe and
Asia-Pacific.

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 table 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 2014 financial results;
Gilead's ability to sustain growth in revenues for its antiviral,
cardiovascular and respiratory 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 sofosbuvir,
including in combination with other product candidates such as LDV; 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; Gilead's ability to receive regulatory
approvals in a timely manner or at all, for new and current products,
including the fixed-dose combination of LDV/SOF and idelalisib; Gilead's
ability to successfully commercialize its products, including Sovaldi,
Stribild, Vitekta and Tybost; the risk that estimates of patients with HCV or
anticipated patient demand may not be accurate; Gilead's ability to
successfully develop its respiratory, cardiovascular and oncology/inflammation
programs; safety and efficacy data from clinical studies may not warrant
further development of Gilead's product candidates; 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; 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, 2013 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^®,
SOVALDI^®, STRIBILD^®, COMPLERA^®, EVIPLERA^®, TRUVADA^®, VIREAD^®, EMTRIVA^®,
 TYBOST^®, HEPSERA^®, VITEKTA^®, LETAIRIS^®, RANEXA^®, CAYSTON^®, AMBISOME^®,
                    VISTIDE^®, VOLIBRIS^®, and RAPISCAN^®.

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.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)
                                               
                                                Three Months Ended
                                                 March 31,
                                                 2014           2013
Revenues:
Product sales                                    $ 4,870,974     $ 2,393,568
Royalty, contract and other revenues             127,982        138,067     
Total revenues                                   4,998,956      2,531,635   
Costs and expenses:
Cost of goods sold                               813,205         634,448
Research and development                         594,978         497,632
Selling, general and administrative              548,123        374,296     
Total costs and expenses                         1,956,306      1,506,376   
Income from operations                           3,042,650       1,025,259
Interest expense                                 (76,269     )   (81,787     )
Other income (expense), net                      (17,912     )   (3,324      )
Income before provision for income taxes         2,948,469       940,148
Provision for income taxes                       725,882        222,438     
Net income                                       2,222,587       717,710
Net loss attributable to noncontrolling          4,823          4,476       
interest
Net income attributable to Gilead                $ 2,227,410    $ 722,186   
Net income per share attributable to Gilead      $ 1.45         $ 0.47      
common stockholders - basic
Net income per share attributable to Gilead      $ 1.33         $ 0.43      
common stockholders - diluted
Shares used in per share calculation - basic     1,536,525      1,521,372   
Shares used in per share calculation - diluted   1,679,871      1,665,060   
                                                                             

GILEAD SCIENCES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(unaudited)

(in thousands, except percentages and per share amounts)
                                                   
                                                     Three Months Ended
                                                     March 31,
                                                     2014         2013
Cost of goods sold reconciliation:
GAAP cost of goods sold                              $ 813,205     $ 634,448
Stock-based compensation expenses                    (2,642    )   (1,841    )
Acquisition related-amortization of purchased        (199,230  )   (21,264   )
intangibles
Non-GAAP cost of goods sold                          $ 611,333    $ 611,343 
                                                                   
Product gross margin reconciliation:
GAAP product gross margin                            83.3      %   73.5      %
Stock-based compensation expenses                    0.1       %   0.1       %
Acquisition related-amortization of purchased        4.1       %   0.9       %
intangibles
Non-GAAP product gross margin^(1)                    87.4      %   74.5      %
                                                                   
Research and development expenses reconciliation:
GAAP research and development expenses               $ 594,978     $ 497,632
Stock-based compensation expenses                    (34,350   )   (26,875   )
Restructuring expenses                               (145      )   (4,757    )
Acquisition related-contingent consideration         (2,678    )   (6,024    )
remeasurement
Non-GAAP research and development expenses           $ 557,805    $ 459,976 
                                                                   
Selling, general and administrative expenses
reconciliation:
GAAP selling, general and administrative expenses    $ 548,123     $ 374,296
Stock-based compensation expenses                    (45,233   )   (33,051   )
Restructuring expenses                               (3        )   (744      )
Acquisition related-transaction costs                (448      )   (7,156    )
Acquisition related-amortization of purchased        (2,334    )   (281      )
intangibles
Non-GAAP selling, general and administrative         $ 500,105    $ 333,064 
expenses
                                                                   
Operating margin reconciliation:
GAAP operating margin                                60.9      %   40.5      %
Stock-based compensation expenses                    1.6       %   2.4       %
Restructuring expenses                               0.0       %   0.2       %
Acquisition related-transaction costs                0.0       %   0.3       %
Acquisition related-amortization of purchased        4.0       %   0.9       %
intangibles
Acquisition related-contingent consideration         0.1       %   0.2       %
remeasurement
Non-GAAP operating margin^(1)                        66.6      %   44.5      %
                                                                   
Other income (expense) reconciliation:
GAAP other income (expense), net                     $ (17,912 )   $ (3,324  )
Acquisition related-transaction costs                (1,853    )   —         
Non-GAAP other income (expense), net                 $ (19,765 )   $ (3,324  )
                                                                             

GILEAD SCIENCES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - (Continued)

(unaudited)

(in thousands, except percentages and per share amounts)
                                               
                                                 Three Months Ended
                                                 March 31,
                                                 2014            2013
Effective tax rate reconciliation:
GAAP effective tax rate                          24.6        %    23.7      %
Restructuring expenses                           —           %    (0.1      )%
Acquisition related-amortization of purchased    (1.4        )%   —         %
intangibles
Acquisition related-contingent consideration     —           %    (0.1      )%
remeasurement
Non-GAAP effective tax rate^(1)                  23.2        %    23.5      %
                                                                  
Net income attributable to Gilead
reconciliation:
GAAP net income attributable to Gilead, net of   $ 2,227,410      $ 722,186
tax
Stock-based compensation expenses                63,136           45,380
Restructuring expenses                           148              5,368
Acquisition related-transaction costs            (975        )    7,156
Acquisition related-amortization of purchased    195,412          15,829
intangibles
Acquisition related-contingent consideration     2,678           6,024     
remeasurement
Non-GAAP net income attributable to Gilead,      $ 2,487,809     $ 801,943 
net of tax
                                                                  
Diluted earnings per share reconciliation:
GAAP diluted earnings per share                  $ 1.33           $ 0.43
Stock-based compensation expenses                0.04             0.03
Restructuring expenses                           0.00             0.00
Acquisition related-transaction costs            (0.00       )    0.00
Acquisition related-amortization of purchased    0.12             0.01
intangibles
Acquisition related-contingent consideration     0.00            0.00      
remeasurement
Non-GAAP diluted earnings per share^(1)          $ 1.48          $ 0.48    
                                                                  
Shares used in per share calculation (diluted)
reconciliation:
GAAP shares used in per share calculation        1,679,871        1,665,060
(diluted)
Share impact of current stock-based              (911        )    (1,716    )
compensation rules
Non-GAAP shares used in per share calculation    1,678,960       1,663,344 
(diluted)
                                                                  
Non-GAAP adjustment summary:
Cost of goods sold adjustments                   $ 201,872        $ 23,105
Research and development expenses adjustments    37,173           37,656
Selling, general and administrative expenses     48,018           41,232
adjustments
Other income (expense) adjustments               (1,853      )    —         
Total non-GAAP adjustments before tax            285,210          101,993
Income tax effect                                (24,811     )    (22,236   )
Total non-GAAP adjustments after tax             $ 260,399       $ 79,757  
                                                                  
^(1) Amounts may not sum due to rounding.
                                                                  

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)
                                                             
                                               March 31,        December 31,
                                               2014             2013^(1)
                                               (unaudited)
Cash, cash equivalents and marketable          $ 6,858,901      $ 2,570,590
securities
Accounts receivable, net                       3,236,195        2,100,286
Inventories                                    2,140,228        2,055,788
Property, plant and equipment, net             1,303,029        1,166,181
Intangible assets, net                         11,707,830       11,900,106
Goodwill                                       1,171,561        1,169,023
Other assets                                   1,659,948       1,534,811    
Total assets                                   $ 28,077,692    $ 22,496,785 
                                                                
Current liabilities                            $ 5,914,776      $ 6,325,421
Long-term liabilities                          8,414,955        4,363,032
Equity component of currently redeemable       45,767           63,831
convertible notes
Stockholders’ equity^(2)                       13,702,194      11,744,501   
Total liabilities and stockholders’ equity     $ 28,077,692    $ 22,496,785 

^(1) Derived from the audited consolidated financial statements as of December
31, 2013.
^(2) As of March 31, 2014, there were 1,537,642 shares of common stock issued
and outstanding.


GILEAD SCIENCES, INC.

PRODUCT SALES SUMMARY

(unaudited)

(in thousands)
                                               
                                                 Three Months Ended
                                                 March 31,
                                                 2014           2013
Antiviral products:
Sovaldi – U.S.                                   $ 2,097,791     $ —
Sovaldi – Europe                                 163,691         —
Sovaldi – Other International                    12,867         —
                                                 2,274,349      —
                                                                 
Atripla – U.S.                                   489,929         553,826
Atripla – Europe                                 236,508         278,215
Atripla – Other International                    53,157         45,032
                                                 779,594        877,073
                                                                 
Truvada – U.S.                                   367,782         307,861
Truvada – Europe                                 323,186         332,027
Truvada – Other International                    68,732         60,354
                                                 759,700        700,242
                                                                 
Complera / Eviplera – U.S.                       130,426         103,297
Complera / Eviplera – Europe                     108,994         38,962
Complera / Eviplera – Other International        11,313         5,930
                                                 250,733        148,189
                                                                 
Stribild – U.S.                                  187,090         91,978
Stribild – Europe                                23,630          —
Stribild – Other International                   4,551          170
                                                 215,271        92,148
                                                                 
Viread – U.S.                                    81,053          82,628
Viread – Europe                                  84,065          88,206
Viread – Other International                     45,507         39,498
                                                 210,625        210,332
                                                                 
Hepsera – U.S.                                   2,230           12,950
Hepsera – Europe                                 7,718           11,223
Hepsera – Other International                    1,775          2,250
                                                 11,723         26,423
                                                                 
Emtriva – U.S.                                   4,817           4,529
Emtriva – Europe                                 1,560           1,751
Emtriva – Other International                    125            391
                                                 6,502          6,671
                                                                 
Total antiviral products – U.S.                  3,361,118       1,157,069
Total antiviral products – Europe                949,352         750,384
Total antiviral products – Other International   198,027        153,625
                                                 4,508,497      2,061,078
                                                                 
Letairis                                         122,885         118,107
Ranexa                                           111,618         96,286
AmBisome                                         92,093          85,275
Other products                                   35,881         32,822
                                                 362,477        332,490
                                                                 
Total product sales                              $ 4,870,974    $ 2,393,568

Contact:

Gilead Sciences, Inc.
Robin Washington, 650-522-5688 (Investors)
Patrick O'Brien, 650-522-1936 (Investors)
Amy Flood, 650-522-5643 (Media)
 
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