Gilead Sciences Announces Fourth Quarter and Full Year 2006 Financial Results.- Record Full Year Total Revenues of $3.03 Billion, Up 49 Percent over 2005 - - Record Full Year Product Sales of $2.59 Billion, Up 43 Percent over 2005 - - Fourth Quarter Net Loss Per Share of $(3.62); Fourth Quarter Non-GAAP Net Income Per Share of $0.78, excluding Purchased In-Process Research and Development Charge - FOSTER CITY, Calif. -- Gilead Sciences, Inc. (Nasdaq:GILD) announced today its results of operations for the fourth quarter and full year of 2006. Total revenues for the fourth quarter of 2006 were $899.2 million, up 48 percent compared to total revenues of $609.3 million for the fourth quarter of 2005, while full year total revenues exceeded $3 billion for the first time. Net loss for the fourth quarter of 2006 was $1.67 billion, or $(3.62) per share, which included an acquisition-related charge of $2.04 billion for purchased in-process research and development (IPR&D) and after-tax stock-based compensation expense of $24.9 million reflecting the impact of the adoption of the Financial Accounting Standards Board's Statement No. 123 (revised 2004), "Share Based Payment" (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R) on January 1, 2006. Net income for the fourth quarter of 2005 was $281.6 million, or $0.59 per diluted share. Non-GAAP net income for the fourth quarter of 2006 was $372.8 million, or $0.78 per diluted share, which excluded the impact of the purchased IPR&D charges. Non-GAAP net income for the fourth quarter of 2005 was $256.5 million, or $0.54 per diluted share, which excluded the tax benefit realized from the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign earnings under the American Jobs Creation Act. Product Sales Product sales were a record $768.1 million for the fourth quarter of 2006, up 56 percent over the same period in 2005, marking more than three years of consecutive quarterly product sales growth. For 2006, product sales were $2.59 billion compared to $1.81 billion in 2005, a 43 percent increase. This growth continued to be driven primarily by Gilead's HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. product franchise, including the strong uptake of Atripla(TM) (efavirenz efavirenz /ef·a·vi·renz/ (ef´ah-vi?renz) an antiretroviral, inhibiting reverse transcriptase; used in the treatment of HIV infection. e·fa·vir·enz n. 600 mg/ emtricitabine 200 mg/ tenofovir disoproxil fumarate tenofovir disoproxil fumarate Viread Pharmacologic class: Nucleoside analog reverse transcriptase inhibitor Therapeutic class: Antiretroviral Pregnancy risk category B 300 mg) following its launch in July 2006 in the United States, and continued strong performance of Truvada([R]) (emtricitabine and tenofovir disoproxil fumarate emtricitabine and tenofovir disoproxil fumarateTruvada Pharmacologic class: Nucleoside/nucleotide reverse-transcriptase inhibitor combination Therapeutic class: Antiretroviral Pregnancy risk category B ) and Viread([R]) (tenofovir disoproxil fumarate), as well as Hepsera([R])(adefovir dipivoxil adefovir dipivoxil Hepsera Pharmacologic class: Nucleotide reverse transcriptase inhibitor Therapeutic class: Antiviral Pregnancy risk category C FDA Boxed Warning).HIV Franchise HIV product sales were $642.4 million in the fourth quarter of 2006, a 67 percent increase from $384.8 million for the same period in 2005. For 2006, HIV product sales were $2.13 billion, an increase of 52 percent when compared to 2005. * Truvada Truvada sales were $337.1 million for the fourth quarter of 2006, a 76 percent increase from $191.1 million in the fourth quarter of 2005. For 2006, Truvada sales were $1.19 billion, more than double the Truvada sales of $567.8 million in 2005. Truvada sales accounted for 52 percent of Gilead's total HIV product sales in the fourth quarter of 2006 and 56 percent for the full year, reflecting its strong position as the NRTI Noun 1. NRTI - an antiviral drug used against HIV; is incorporated into the DNA of the virus and stops the building process; results in incomplete DNA that cannot create a new virus; often used in combination with other drugs backbone of choice in the United States, as well as rapid and significant uptake in key European territories during 2006. * Viread Viread sales were $159.5 million in the fourth quarter of 2006, a 13 percent decrease from $182.4 million in the fourth quarter of 2005. For 2006, Viread sales were $689.4 million compared to $778.8 million for 2005, a decrease of 11 percent. The decrease in the quarter and full year product sales was driven primarily by patients switching from a Viread-containing regimen to one containing Truvada in countries where Truvada is available, partially offset by sales volume increases in Latin America. * Atripla Atripla sales were $137.4 million in the fourth quarter of 2006, an increase of 101 percent from $68.4 million in the third quarter of 2006, the quarter in which the product was launched. * Emtriva Emtriva([R])(emtricitabine) sales were $8.5 million for the fourth quarter of 2006, a decrease of 24 percent from $11.2 million in the fourth quarter of 2005. For 2006, Emtriva sales were $36.4 million, a decrease of 23 percent from $47.5 million in 2005. Emtriva sales volume has decreased primarily from patients switching from an Emtriva-containing regimen to one containing Truvada in countries where Truvada is available. AmBisome for Severe Fungal Infections Sales of AmBisome([R])(amphotericin B amphotericin B (ăm'fətĕr`ĭsĭn), antibiotic that halts the growth of several disease-causing fungi. Discovered in 1956, it is produced by bacteria of the genus Streptomyces. ) liposome liposome (lī`pəsōm', lĭp`ə–), microscopic, fluid-filled pouch whose walls are made of layers of phospholipids identical to the phospholipids that make up cell membranes. for injection for the fourth quarter of 2006 were $58.3 million, an increase of five percent from $55.6 million for the fourth quarter of 2005. For 2006, AmBisome sales were $223.0 million, an increase of one percent from $220.8 million for 2005. Hepsera for Chronic Hepatitis Chronic hepatitis Long lasting inflammation of the liver due to viruses or other causes. Mentioned in: Tube Compression of the Esophagus and Stomach chronic hepatitis B Hepsera sales were $65.9 million for the fourth quarter of 2006, a 29 percent increase from $51.2 million for the fourth quarter of 2005. For 2006, Hepsera sales were $230.5 million, an increase of 24 percent compared to $186.5 million in 2005. The increase in sales in the fourth quarter and full year of 2006 compared to the same periods of 2005 was primarily driven by strong volume growth in Europe. Royalty, Contract and Other Revenue For the fourth quarter of 2006, royalty, contract and other revenue resulting primarily from collaborations with corporate partners totaled $131.1 million, an increase of 13 percent, compared to $115.8 million in the fourth quarter of 2005. For 2006, royalty, contract and other revenue was $437.9 million, approximately twice the $219.1 million recognized in 2005. The increase in revenue during the fourth quarter and full year of 2006 compared to the same periods of 2005 was driven primarily by the recognition of Tamiflu([R]) (oseltamivir phosphate oseltamivir phosphate Tamiflu Pharmacologic class: Viral neuroaminidase inhibitor Therapeutic class: Antiviral Pregnancy risk category C Action) royalties from F. Hoffmann-La Roche Ltd (Roche) of $113.2 million and $364.6 million, respectively. Higher royalties were recognized from Roche for the fourth quarter and full year of 2006 as compared to the same periods of 2005 primarily due to the higher Tamiflu sales recorded by Roche, as well as the elimination of a contractual cost of goods adjustment that had historically reduced the amount of Tamiflu royalties recognized by Gilead."We are pleased to have achieved a very solid fourth quarter in 2006, including total revenues of almost $900 million," said John F. Milligan, PhD, Executive Vice President and Chief Financial Officer of Gilead. "Our total revenues for the full year 2006 have exceeded $3 billion, up 49 percent from 2005. This revenue growth is a result of continued strong uptake of Atripla, robust U.S. and international sales of Truvada, the solid performance of both Hepsera and AmBisome in increasingly competitive markets, and considerable growth in royalties recognized from worldwide Tamiflu sales. Significant total revenues coupled with our diligent focus on managing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. have resulted in a record $1.2 billion in operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the year." Research and Development Research and development (R&D) expenses for the fourth quarter of 2006 were $111.6 million, which included stock-based compensation expense of $14.1 million, compared to R&D expenses of $68.8 million for the same quarter in 2005. R&D expenses for 2006 were $383.9 million, which included stock-based compensation expense of $52.2 million, compared to R&D expenses of $277.7 million for 2005. The higher R&D expenses in the fourth quarter and full year of 2006 were primarily due to increased headcount, increased contract services and clinical study expenses from our clinical product development and research activities relating to our HIV and hepatitis programs and newly-acquired programs in respiratory and cardiopulmonary cardiopulmonary /car·dio·pul·mo·nary/ (kahr?de-o-pool´mah-nar-e) pertaining to the heart and lungs. car·di·o·pul·mo·nar·y adj. Of, relating to, or involving both the heart and the lungs. areas via the acquisitions of Corus Pharma, Inc. (Corus) and Myogen, Inc. (Myogen), as well as stock-based compensation expense from Gilead's adoption of SFAS 123R. These higher expenses were partially offset by lower milestone payments made to Japan Tobacco Inc. in 2006 compared to 2005 related to the licensing and development of Gilead's lead integrase inhibitor candidate, GS 9137, as well as a $15.0 million payment to Emory University (Emory) in 2005 in connection with the amendment of Gilead's license agreement with Emory related to the company's obligation to develop emtricitabine for the hepatitis B Hepatitis B Definition Hepatitis B is a potentially serious form of liver inflammation due to infection by the hepatitis B virus (HBV). It occurs in both rapidly developing (acute) and long-lasting (chronic) forms, and is one of the most common chronic indication. Selling, General and Administrative Selling, general and administrative (SG&A) expenses for the fourth quarter of 2006 were $147.1 million, which included stock-based compensation expense of $19.0 million, compared to SG&A expenses of $106.5 million for the same quarter in 2005. SG&A expenses for 2006 were $573.7 million, which included stock-based compensation expense of $70.8 million, compared to SG&A expenses of $381.3 million for 2005. The higher SG&A expenses in the fourth quarter and full year of 2006 were primarily due to increased headcount and expenses driven by our business growth, our acquisitions of Corus and Myogen, and other business development activities, as well as stock-based compensation expense from Gilead's adoption of SFAS 123R. Purchased In-Process Research and Development Gilead recorded total charges associated with purchased IPR&D of $2.04 billion and $2.39 billion for the fourth quarter and full year of 2006, respectively, related to the IPR&D programs acquired from Corus and Myogen. Cash, Cash Equivalents and Marketable Securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has As of December 31, 2006, Gilead had cash, cash equivalents and marketable securities of $1.39 billion. This compared to $2.31 billion as of December 31, 2005. The decrease in cash, cash equivalents and marketable securities of $921.5 million during the year was attributable primarily to $2.74 billion in net cash paid for the acquisitions of Myogen, Corus and Raylo Chemicals Inc. (Raylo), and $201.0 million paid toward principal on Gilead's term loan, partially offset by $1.22 billion of operating cash flows generated during the year and $587.6 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). generated from the issuance of convertible senior notes and related transactions. Other Balance Sheet Highlights As of December 31, 2006, inventories were $564.1 million, an increase of $347.2 million from December 31, 2005, primarily driven by the manufacture of Atripla inventory in 2006, including an increase in inventory of efavirenz, the active pharmaceutical ingredient in Sustiva([R]), which we purchased from Bristol-Myers Squibb (BMS BMS abbr. Bachelor of Marine Science ) at BMS' approximate market value of Sustiva. Corporate Highlights In November 2006, Gilead announced that it completed its acquisition of Raylo, a subsidiary of Germany-based specialty chemicals company Degussa AG, for a total purchase price of $133.3 million. Gilead intends to utilize this Edmonton, Alberta-based site for process research and scale-up of clinical development candidates, the manufacture of active pharmaceutical ingredients for both investigational and commercial products and chemical development activities to improve existing commercial manufacturing processes. Also in November 2006, Gilead announced that it completed its acquisition of Myogen for a total purchase price of $2.44 billion. Myogen's lead product candidate, ambrisentan, is an orally available endothelin receptor antagonist A endothelin receptor antagonist (ERA) is a drug which blocks endothelin receptors. Two main kinds of ERAs exist:
PAH abbr. para-aminohippuric acid PAH 1 Polycyclic aromatic hydrocarbon, see there 2. Pulmonary artery HTN ). In December 2006, Gilead, the International Partnership for Microbicides The International Partnership for Microbicides or IPM is a non-profit product development partnership (PDP) established in 2002 to prevent HIV transmission by accelerating the development and availability of a safe and effective microbicide for use by women in developing (IPM (1) (Impressions Per Minute) Generally refers to document scanners that scan both sides of the page at the same time. Thus, a scanner that scans at 100 ppm (pages per minute) can provide 200 ipm. See ppm and document scanner. ) and CONRAD Conrad, Latin king of Jerusalem Conrad, d. 1192, Latin king of Jerusalem (1192), marquis of Montferrat, a leading figure in the Third Crusade (see Crusades). He saved Tyre from the Saracens and became (1187) its lord. , a cooperating agency of USAID USAID United States Agency for International Development USAID Agencia de los Estados Unidos para el Desarrollo Internacional (Spanish) committed to improving reproductive health by expanding the contraceptive choices of women and men, announced an agreement under which Gilead granted to IPM and CONRAD the rights to develop, manufacture and, if proven efficacious, arrange for distribution in resource-limited countries of tenofovir as a topical microbicide topical microbicide Infectious disease A chemical that can be applied to the surface of the body to kill microorganisms to prevent infection with HIV. Product and Pipeline Highlights "Gilead continued to make significant progress in the fourth quarter, culminating another successful year for the company," said John C. Martin, PhD, President and Chief Executive Officer of Gilead. "We, along with our partners Bristol-Myers Squibb and Merck, filed for marketing approval of Atripla in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . We hope to bring this once-daily single tablet regimen to the doctors and patients with HIV who are working and living in Europe. Through the completion of two significant acquisitions, we also began developing our respiratory and cardiopulmonary franchise. In December, we completed the filing of a New Drug Application (NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any ) for marketing approval of ambrisentan for the once-daily treatment of pulmonary arterial hypertension and we continue to strive to provide solutions for patients suffering from life-threatening diseases." HIV/AIDS HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome Franchise In October 2006, Gilead, Bristol-Myers Squibb Company and Merck & Co., Inc. announced the submission of a Marketing Authorisation Application to the European Medicines Agency The European Medicines Agency (EMEA) is a European agency for the evaluation of medicinal products. Until 2004, the European Medicines Agency was known as The European Agency for the Evaluation of Medicinal Products. Roughly parallel to the U.S. seeking approval of Atripla in the European Union. In December 2006, Gilead announced the publication of 96-week data from an ongoing clinical trial, Study 934, in the Journal of Acquired Immune Deficiency Syndromes (JAIDS JAIDS Journal of Acquired Immune Deficiency Syndromes ). This study compares a once-daily regimen of Viread, Emtriva and Sustiva to a twice-daily regimen of Combivir([R]) (lamivudine/zidovudine) with Sustiva once daily. Respiratory and Cardiopulmonary Franchise In December 2006, Gilead completed the submission of a New Drug Application to the U.S. Food and Drug Administration for marketing approval of ambrisentan for the once-daily treatment of PAH. Also in December 2006, Gilead announced that its Phase III AIR-CF2 study of aztreonam lysine lysine (lī`sēn), organic compound, one of the 20 amino acids commonly found in animal proteins. Only the l-stereoisomer appears in mammalian protein. for inhalation for the treatment of people with cystic fibrosis cystic fibrosis (sĭs`tĭk fībrō`sĭs), inherited disorder of the exocrine glands (see gland), affecting children and young people; median survival is 25 years in females and 30 years in males. who have pulmonary Pseudomonas aeruginosa Pseudomonas aeruginosa A normal soil inhabitant and human saprophyte that may contaminate various solutions in a hospital, causing opportunistic infection in weakened Pts Clinical Infective endocarditis in IVDAs, RTIs, UTIs, bacteremia, meningitis, 'malignant' met its primary efficacy endpoint, the time to need for inhaled or intravenous antibiotics, which was assessed by the onset of common symptoms predictive of a pulmonary exacerbation. Conference Call At 4:30 p.m. Eastern Time today, Gilead will webcast a conference call live on Gilead's website to discuss its fourth quarter 2006 results. During the call, Gilead will be discussing additional corporate, financial, statistical, product and pipeline information. That information can be found on Gilead's website at www.gilead.com under "Investors." To access the webcast via the internet, log on to www.gilead.com. Please connect to the company's website at least 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 1-800-901-5259 (U.S.) or 1-617-786-4514 (international) and dial the participant passcode 19934233 to access the call. Telephone replay is available approximately two hours after the call through February 2, 2007. To access, please call 1-888-286-8010 (U.S.) or 1-617-801-6888 (international) and dial the participant passcode 79206534. The webcast will be archived on www.gilead.com for one year. 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 worldwide. Headquartered in Foster City, California
Non-GAAP Financial Information Non-GAAP net income and net income per diluted share for 2006 periods are presented excluding the impact of the IPR&D charges incurred in connection with the acquisitions of Corus and Myogen. Non-GAAP net income and net income per diluted share for 2005 periods are presented excluding the tax benefit realized from the repatriation of foreign earnings under the American Jobs Creation Act. Management believes this non-GAAP information is useful for investors, taken in conjunction with Gilead's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial statements, because it facilitates the comparison of current and prior period operating results after eliminating the effect of expense components that are individually material in a particular period but were not present in the prior period; additionally, management uses such information internally for its operating, budgeting and financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against purposes. Non-GAAP financial information does not exclude stock-based compensation expense resulting from Gilead's adoption of SFAS 123R on January 1, 2006. Note 1 to the condensed consolidated statements of operations on page 6 of the attached press release continues to enable management and investors to understand the comparative impact of stock-based compensation expense on the various captions of the statements of operations in 2006. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the company's operating results as reported under GAAP. 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. These risks and uncertainties include: our ability to successfully integrate the products and employees of Corus, Myogen and Raylo with Gilead; our ability to effectively utilize the site purchased from Raylo to improve existing commercial manufacturing processes; our ability to receive regulatory approvals, in a timely manner or at all, for new and current products, including Truvada, Atripla and ambrisentan; our ability to successfully develop our respiratory and cardiopulmonary franchise; safety and efficacy data from clinical studies of aztreonam lysine for inhalation may not warrant further development of this compound and initiating and completing clinical trials may take longer or cost more than expected; and other risks identified from time to time in Gilead's reports filed with the U.S. Securities and Exchange Commission. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005, its Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. for the first, second and third quarters of 2006 and its current reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Gilead claims the protection of the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. 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. Viread, Emtriva, Truvada, AmBisome and Hepsera are registered trademarks of Gilead Sciences, Inc. Atripla is a trademark of Bristol-Myers Squibb & Gilead Sciences, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Tamiflu is a registered trademark of F. Hoffmann-La Roche Ltd. Sustiva is a registered trademark of Bristol-Myers Squibb Company. Combivir is a registered trademark of GlaxoSmithKline Inc. For more information on Gilead Sciences, please visit www.gilead.com or Call the Gilead Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235). [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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