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CONTACTS:
Investors
 
 
Media
 
Robin Washington
 
 
Amy Flood
 
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Sung Lee
 
 
 
 
(650) 524-7792
 
 
 
 
 
 
 
 
For Immediate Release

GILEAD SCIENCES ANNOUNCES THIRD QUARTER 2019 FINANCIAL RESULTS

- Product Sales of $5.5 billion -
- GAAP Loss of $0.92 per share -
- Non-GAAP Diluted EPS of $1.75 per share -
- Revised Full Year 2019 Guidance -

Foster City, CA, October 24, 2019 - Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the third quarter ended September 30, 2019. The financial results that follow represent a year-over-year comparison of the third quarter of 2019 to the third quarter of 2018. Total revenues were $5.6 billion for the third quarter of 2019 compared to $5.6 billion for the same period in 2018. Net loss for the third quarter of 2019 was $1.2 billion, or $0.92 per diluted share, compared to net income of $2.1 billion or $1.60 per diluted share for the same period in 2018. The net loss for the third quarter of 2019 includes up-front collaboration and licensing expenses of $3.92 billion, or $2.40 per share, related to Gilead’s global research and development collaboration agreement with Galapagos NV (Galapagos). Non-GAAP net income was $2.2 billion or $1.75 per diluted share for the third quarter of 2019 compared to $2.4 billion or $1.84 per diluted share for the same period in 2018.
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(In millions, except per share amounts)
 
2019
 
2018
 
2019
 
2018
Product sales
 
$
5,516

 
$
5,455

 
$
16,323

 
$
15,996

Royalty, contract and other revenues
 
88

 
141

 
247

 
336

Total revenues
 
$
5,604

 
$
5,596

 
$
16,570

 
$
16,332

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Gilead
 
$
(1,165
)
 
$
2,097

 
$
2,690

 
$
5,452

Non-GAAP net income
 
$
2,224

 
$
2,403

 
$
6,813

 
$
6,855

 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share
 
$
(0.92
)
 
$
1.60

 
$
2.10

 
$
4.15

Non-GAAP diluted earnings per share
 
$
1.75

 
$
1.84

 
$
5.33

 
$
5.22


___________________________________
Note: Non-GAAP financial information excludes acquisition-related, up-front collaboration and licensing, stock-based compensation and other expenses, fair value adjustments of equity securities and discrete tax charges or benefits associated with changes in tax related laws and guidelines. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 7 through 9.


- more -

Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 USA
www.gilead.com
phone (650) 574-3000 facsimile (650) 578-9264
 

October 24, 2019
 
2
 
 
 

Product Sales
Total product sales for the third quarter of 2019 were $5.5 billion compared to $5.5 billion for the same period in 2018. For the third quarter of 2019, product sales in the United States, Europe and other locations were $4.2 billion, $804 million and $513 million, respectively. For the third quarter of 2018, product sales in the United States, Europe and other locations were $4.1 billion, $873 million and $451 million, respectively.
•
HIV product sales were $4.2 billion for the third quarter of 2019 compared to $3.7 billion for the same period in 2018. The increase was primarily driven by higher sales volume as a result of the continued uptake of Biktarvy® (bictegravir 50 mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg).
•
Chronic hepatitis C virus (HCV) product sales were $674 million for the third quarter of 2019 compared to $902 million for the same period in 2018. The decline was primarily due to competitive dynamics.
•
Yescarta® (axicabtagene ciloleucel) generated $118 million in sales during the third quarter of 2019 compared to $75 million for the same period in 2018. The increase was driven by a higher number of therapies provided to patients and the continued expansion in Europe.
•
Other product sales, which include products from chronic hepatitis B virus (HBV), cardiovascular, oncology and other categories inclusive of Vemlidy® (tenofovir alafenamide 25 mg), Viread® (tenofovir disoproxil fumarate 300 mg), Letairis® (ambrisentan 5 mg and 10 mg), Ranexa® (ranolazine 500 mg and 1000 mg), Zydelig® (idelalisib 150 mg), AmBisome® (amphotericin B liposome for injection 50 mg/vial) and Cayston® (aztreonam for inhalation solution 75 mg/vial), were $522 million for the third quarter of 2019 compared to $751 million for the same period in 2018. The decrease was primarily due to the expected declines in Ranexa and Letairis sales after generic entries in 2019.
Operating Expenses
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(In millions)
 
2019
 
2018
 
2019
 
2018
Research and development expenses (R&D)
 
$
4,990

 
$
939

 
$
7,207

 
$
3,068

Non-GAAP R&D expenses
 
$
954

 
$
844

 
$
2,741

 
$
2,579

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses (SG&A)
 
$
1,052

 
$
948

 
$
3,177

 
$
2,925

Non-GAAP SG&A expenses
 
$
967

 
$
852

 
$
2,944

 
$
2,576

During the third quarter of 2019, compared to the same period in 2018:
•
R&D expenses increased primarily due to up-front collaboration and licensing expenses of $3.92 billion related to Gilead’s global research and development collaboration agreement with Galapagos. Furthermore, R&D expenses and non-GAAP R&D expenses increased primarily due to increased investment in Gilead’s oncology programs, HIV programs and research projects.
•
SG&A expenses and non-GAAP SG&A expenses increased primarily due to higher promotional expenses in the United States and expenses associated with the expansion of Gilead’s business in Japan and China.
Cash, Cash Equivalents and Marketable Debt Securities
As of September 30, 2019, Gilead had $25.1 billion of cash, cash equivalents and marketable debt securities, compared to $31.5 billion as of December 31, 2018. During the third quarter of 2019, Gilead generated $2.6 billion in operating cash flow, paid $5.05 billion in connection with the global research and development collaboration agreement and stock purchase agreement with Galapagos, repaid $1.5 billion of debt, paid cash dividends of $804 million and utilized $223 million on stock repurchases. The $5.05 billion paid to Galapagos was classified as cash flows from investing activities and included a $1.1 billion equity investment.

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October 24, 2019
 
3
 
 
 

Revised Full Year 2019 Guidance
Gilead revised its full year 2019 guidance, initially provided on February 4, 2019 and revised on July 30, 2019.
(In millions, except percentages and per share amounts)
 
Initially Provided
February 4, 2019
Reiterated
May 2, 2019
 
Updated
July 30, 2019
 
Updated
October 24, 2019
Product Sales
 
$21,300 - $21,800
 
$21,600 - $22,100
 
$21,800 - $22,100
Non-GAAP
 
 
 
 
 
 
Product Gross Margin
 
85% - 87%
 
85% - 87%
 
85% - 87%
R&D Expenses
 
$3,600 - $3,800
 
$3,600 - $3,800
 
$3,700 - $3,800
SG&A Expenses
 
$3,900 - $4,100
 
$3,900 - $4,100
 
$4,000 - $4,100
Effective Tax Rate
 
20.0% - 21.0%
 
20.0% - 21.0%
 
20.0% - 21.0%
Diluted EPS Impact of Acquisition-related, Up-front Collaboration and Licensing, Stock-based Compensation and Other Expenses
 
$1.40 - $1.50
 
$3.90 - $4.00
 
$3.90 - $4.00
Corporate Highlights, Including the Announcement of:
•
Appointment of Andrew Dickinson as Chief Financial Officer, effective November 1, 2019.
•
Appointment of Merdad Parsey as Chief Medical Officer, effective November 1, 2019.
•
Launch of RADIAN Initiative to meaningfully address new HIV infections and deaths from AIDS-related illnesses in Eastern Europe and Central Asia, in collaboration with the Elton John AIDS Foundation. 
•
Closing of the global research and development collaboration agreement with Galapagos announced in July 2019.
•
Collaboration with Renown Institute for Health Innovation (Renown) to collect and analyze genetic and electronic health data to enhance the understanding of nonalcoholic steatohepatitis (NASH) and potentially inform development of treatment options for the disease.
Product and Pipeline Updates, Including the Announcement of:
•
Presentation of Week 52 data from the Phase 3 FINCH 1 and FINCH 3 trials of filgotinib, an investigational, oral, selective JAK1 inhibitor, for the treatment of moderately-to-severely active rheumatoid arthritis (RA), which are consistent with and support the efficacy, safety and tolerability profiles demonstrated in the week 12 and 24 analyses presented earlier this year.
•
Submission of the new drug application for filgotinib for the treatment of adults with RA to the Japanese Ministry of Health, Labor and Welfare (MHLW).
•
Presentation of data at the IDWeek 2019 conference, which included:
◦
Results from the DISCOVER trial evaluating Descovy® (emtricitabine 200 mg/tenofovir alafenamide 25 mg) for HIV pre-exposure prophylaxis (PrEP), which showed significant improvements in key measures of bone and renal safety parameters in a subset of study participants who switched from Truvada for PrEP® (emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) to Descovy for PrEP™.
◦
A release of the latest data demonstrating that major metropolitan areas in the United States with the highest use of PrEP experienced the greatest decreases in new HIV diagnoses.
•
Approval of a PrEP indication for Descovy by the U.S. Food and Drug Administration (FDA). Descovy for PrEP is indicated to reduce the risk of sexually acquired HIV-1 infection in adults and adolescents weighing at least 35 kg who are HIV-negative and at-risk for sexually acquired HIV, excluding individuals at-risk from receptive vaginal sex.

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October 24, 2019
 
4
 
 
 

•
European Medicines Agency’s (EMA) validation of the marketing authorization application for filgotinib for the treatment of adults with RA; the application is now under evaluation by the agency.
•
Approval of Biktarvy by the China National Medical Products Administration for the treatment of HIV-1 infection in adults without present or past evidence of viral resistance to the integrase inhibitor class, emtricitabine or tenofovir.
•
Plans to bolster cell therapy manufacturing capabilities with a new 67,000-square-foot viral vector facility in Oceanside, California. The new site builds on existing state-of-the-art manufacturing capabilities to deliver innovative cell therapies for people with cancer, including Yescarta, and investigational T-cell receptor and tumor neoantigen targeting cell therapies.
Non-GAAP Financial Information
The information presented in this document has been prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise noted as non-GAAP. Management believes non-GAAP information is useful for investors, when considered in conjunction with Gilead’s GAAP financial information, 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. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 7 through 9.
Conference Call
The live webcast of the call can be accessed at Gilead’s Investors page at http://investors.gilead.com/. Please connect to the website at least 15 minutes prior to the start of the call to allow adequate time for any software download that may be required to listen to the webcast. Alternatively, please call 877-359-9508 (U.S.) or 224-357-2393 (international) and dial the conference ID 6094972 to access the call. Telephone replay will be available approximately two hours after the call through 8:00 p.m. Eastern Time, October 26, 2019. To access the replay, please call 855-859-2056 (U.S.) or 404-537-3406 (international) and dial the conference ID 6094972. The webcast will be archived on www.gilead.com for one year.
About Gilead Sciences
Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. The company strives to transform and simplify care for people with life-threatening illnesses around the world. Gilead has operations in more than 35 countries worldwide, with headquarters in Foster City, California.
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 2019 financial results; Gilead’s ability to sustain growth in revenues for its antiviral and other programs; the risk that private and public payers may be reluctant to provide, or continue to provide, coverage or reimbursement for new products; austerity measures in European countries that may increase the amount of discount required on Gilead’s products; an increase in discounts, chargebacks and rebates due to ongoing contracts and future negotiations with commercial and government payers; a larger than anticipated shift in payer mix to more highly discounted payer segments and geographic regions and decreases in treatment duration; availability of funding for state AIDS Drug Assistance Programs (ADAPs); continued fluctuations in ADAP purchases driven by federal and state grant cycles as well as purchases by retail pharmacies and other non-

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October 24, 2019
 
5
 
 
 

wholesaler locations with whom Gilead has no inventory management agreements may not mirror patient demand and may cause fluctuations in Gilead’s earnings; market share and price erosion caused by the introduction of generic versions of our products; an uncertain global macroeconomic environment; potential amendments to the Affordable Care Act or other government action that could have the effect of lowering prices or reducing the number of insured patients; Gilead’s ability to initiate clinical trials in its currently anticipated timeframes; the levels of inventory held by wholesalers and retailers which may cause fluctuations in Gilead’s earnings; Gilead’s ability to realize the potential benefits of collaborations or licensing arrangements, including with Galapagos and Renown; Gilead’s ability to submit new drug applications for new product candidates in the timelines currently anticipated, including a new drug application to FDA for filgotinib for the treatment of RA; Gilead’s ability to receive regulatory approvals in a timely manner or at all, for new and current products, including EMA and MHLW approvals for filgotinib; Gilead’s ability to successfully commercialize its products, including Yescarta and Biktarvy in China; the risk that physicians and patients may not see advantages of these products over other therapies and may therefore be reluctant to prescribe the products; safety and efficacy data from clinical studies may not warrant further development of Gilead’s product candidates, including filgotinib; Gilead’s ability to pay dividends or complete its share repurchase program due to changes in its stock price, corporate or other market conditions; 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 (the 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. There may be other factors of which Gilead is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ significantly from these estimates. Further, results for the quarter ended September 30, 2019 are not necessarily indicative of operating results for any future periods. 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, Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 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 or supplement any such forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements.
# # #
Gilead owns or has rights to various trademarks, copyrights and trade names used in its business, including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®, ATRIPLA®, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, DESCOVY FOR PREP™, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPSERA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, TRUVADA®, TRUVADA FOR PREP®, TYBOST®, VEMLIDY®, VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®.
LEXISCAN® is a registered trademark of Astellas U.S. LLC. MACUGEN® is a registered trademark of Eyetech, Inc. SYMTUZA® is a registered trademark of Janssen Sciences Ireland UC. TAMIFLU® is a registered trademark of 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).

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October 24, 2019
 
6
 
 
 

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions, except per share amounts)

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
 Revenues:
 
 
 
 
 
 
 
 
 Product sales
 
$
5,516

 
$
5,455

 
$
16,323

 
$
15,996

 Royalty, contract and other revenues
 
88

 
141

 
247

 
336

 Total revenues
 
5,604

 
5,596

 
16,570

 
16,332

 Costs and expenses:
 
 
 
 
 
 
 
 
 Cost of goods sold
 
1,035

 
1,086

 
2,992

 
3,283

 Research and development expenses
 
4,990

 
939

 
7,207

 
3,068

 Selling, general and administrative expenses
 
1,052

 
948

 
3,177

 
2,925

 Total costs and expenses
 
7,077

 
2,973

 
13,376

 
9,276

 Income (loss) from operations
 
(1,473
)
 
2,623

 
3,194

 
7,056

 Interest expense
 
(250
)
 
(264
)
 
(752
)
 
(820
)
 Other income (expense), net
 
222

 
305

 
817

 
547

 Income (loss) before provision (benefit) for income taxes
 
(1,501
)
 
2,664

 
3,259

 
6,783

 Provision (benefit) for income taxes
 
(333
)
 
565

 
584

 
1,326

 Net income (loss)
 
(1,168
)
 
2,099

 
2,675

 
5,457

 Net income (loss) attributable to noncontrolling interest
 
(3
)
 
2

 
(15
)
 
5

 Net income (loss) attributable to Gilead
 
$
(1,165
)
 
$
2,097

 
$
2,690

 
$
5,452

 
 
 
 
 
 
 
 
 
 Net income (loss) per share attributable to Gilead common stockholders - basic
 
$
(0.92
)
 
$
1.62

 
$
2.12

 
$
4.19

 Shares used in per share calculation - basic
 
1,267

 
1,296

 
1,271

 
1,302

 Net income (loss) per share attributable to Gilead common stockholders - diluted
 
$
(0.92
)
 
$
1.60

 
$
2.10

 
$
4.15

 Shares used in per share calculation - diluted
 
1,267

 
1,307

 
1,278

 
1,313

 Cash dividends declared per share
 
$
0.63

 
$
0.57

 
$
1.89

 
$
1.71



October 24, 2019
 
7
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
Cost of goods sold reconciliation:
 
 
 
 
 
 
 
 
GAAP cost of goods sold
 
$
1,035

 
$
1,086

 
$
2,992

 
$
3,283

Acquisition-related – amortization of purchased intangibles
 
(266
)
 
(301
)
 
(822
)
 
(902
)
Stock-based compensation expenses(1)
 
(10
)
 
(15
)
 
(37
)
 
(49
)
Other(2)
 
—

 
1

 
—

 
1

Non-GAAP cost of goods sold
 
$
759

 
$
771

 
$
2,133

 
$
2,333

 
 
 
 
 
 
 
 
 
Product gross margin reconciliation:
 
 
 
 
 
 
 
 
GAAP product gross margin
 
81.2
 %
 
80.1
%
 
81.7
%
 
79.5
%
Acquisition-related – amortization of purchased intangibles
 
4.8
 %
 
5.5
%
 
5.0
%
 
5.6
%
Stock-based compensation expenses
 
0.2
 %
 
0.3
%
 
0.2
%
 
0.3
%
Non-GAAP product gross margin(5)
 
86.2
 %
 
85.9
%
 
86.9
%
 
85.4
%
 
 
 
 
 
 
 
 
 
Research and development expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP research and development expenses
 
$
4,990

 
$
939

 
$
7,207

 
$
3,068

Up-front collaboration and licensing expenses
 
(3,960
)
 
—

 
(4,251
)
 
(160
)
Acquisition-related – other costs
 
—

 
3

 
—

 
(22
)
Stock-based compensation expenses(1)
 
(74
)
 
(99
)
 
(215
)
 
(304
)
Other(2)
 
(2
)
 
1

 
—

 
(3
)
Non-GAAP research and development expenses
 
$
954

 
$
844

 
$
2,741

 
$
2,579

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP selling, general and administrative expenses
 
$
1,052

 
$
948

 
$
3,177

 
$
2,925

Acquisition-related – other costs
 
—

 
(8
)
 
—

 
(23
)
Stock-based compensation expenses(1)
 
(78
)
 
(84
)
 
(227
)
 
(317
)
Other(2)
 
(7
)
 
(4
)
 
(6
)
 
(9
)
Non-GAAP selling, general and administrative expenses
 
$
967

 
$
852

 
$
2,944

 
$
2,576

 
 
 
 
 
 
 
 
 
Operating margin reconciliation:
 
 
 
 
 
 
 
 
GAAP operating margin
 
(26.3
)%
 
46.9
%
 
19.3
%
 
43.2
%
Up-front collaboration and licensing expenses
 
70.7
 %
 
—
%
 
25.7
%
 
1.0
%
Acquisition-related – amortization of purchased intangibles
 
4.7
 %
 
5.4
%
 
5.0
%
 
5.5
%
Acquisition-related – other costs
 
—
 %
 
0.1
%
 
—
%
 
0.3
%
Stock-based compensation expenses
 
2.9
 %
 
3.5
%
 
2.9
%
 
4.1
%
Other(2)
 
0.2
 %
 
—
%
 
—
%
 
0.1
%
Non-GAAP operating margin(5)
 
52.2
 %
 
55.9
%
 
52.8
%
 
54.2
%
 
 
 
 
 
 
 
 
 
Other income (expense), net reconciliation:
 
 
 
 
 
 
 
 
GAAP other income (expense), net
 
$
222

 
$
305

 
$
817

 
$
547

Unrealized gains from equity securities, net
 
(58
)
 
(168
)
 
(312
)
 
(149
)
Non-GAAP other income (expense), net
 
$
164

 
$
137

 
$
505

 
$
398



October 24, 2019
 
8
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
Effective tax rate reconciliation:
 
 
 
 
 
 
 
 
GAAP effective tax rate
 
22.2
 %
 
21.2
 %
 
17.9
 %
 
19.5
 %
Up-front collaboration and licensing expenses
 
0.6
 %
 
—
 %
 
2.6
 %
 
0.1
 %
Acquisition-related – amortization of purchased intangibles
 
(1.6
)%
 
(1.5
)%
 
(1.3
)%
 
(1.5
)%
Stock-based compensation expenses(1)
 
(0.4
)%
 
(1.0
)%
 
(0.2
)%
 
(0.1
)%
Unrealized gains from equity securities, net
 
0.9
 %
 
1.3
 %
 
1.0
 %
 
0.4
 %
Tax Reform adjustments(3)
 
—
 %
 
—
 %
 
—
 %
 
0.1
 %
Non-GAAP effective tax rate(5)
 
21.7
 %
 
19.9
 %
 
20.1
 %
 
18.5
 %
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Gilead reconciliation:
 
 
 
 
 
 
 
 
GAAP net income (loss) attributable to Gilead
 
$
(1,165
)
 
$
2,097

 
$
2,690

 
$
5,452

Up-front collaboration and licensing expenses
 
3,068

 
—

 
3,294

 
125

Acquisition-related – amortization of purchased intangibles
 
247

 
281

 
759

 
843

Acquisition-related – other costs
 
—

 
4

 
—

 
36

Stock-based compensation expenses(1)
 
133

 
184

 
385

 
546

Unrealized gains from equity securities, net
 
(66
)
 
(164
)
 
(320
)
 
(146
)
Tax Reform adjustments(3)
 
—

 
—

 
—

 
(10
)
Other(2)
 
7

 
1

 
5

 
9

Non-GAAP net income attributable to Gilead
 
$
2,224

 
$
2,403

 
$
6,813

 
$
6,855

 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share reconciliation:
 
 
 
 
 
 
 
 
GAAP diluted earnings (loss) per share(4)
 
$
(0.92
)
 
$
1.60

 
$
2.10

 
$
4.15

Up-front collaboration and licensing expenses
 
2.41

 
—

 
2.58

 
0.10

Acquisition-related – amortization of purchased intangibles
 
0.19

 
0.21

 
0.59

 
0.64

Acquisition-related – other costs
 
—

 
—

 
—

 
0.03

Stock-based compensation expenses(1)
 
0.10

 
0.14

 
0.30

 
0.42

Unrealized gains from equity securities, net
 
(0.05
)
 
(0.13
)
 
(0.25
)
 
(0.11
)
Tax Reform adjustments(3)
 
—

 
—

 
—

 
(0.01
)
Other(2)
 
0.01

 
—

 
—

 
0.01

Non-GAAP diluted earnings per share(5)
 
$
1.75

 
$
1.84

 
$
5.33

 
$
5.22

 
 
 
 
 
 
 
 
 
Non-GAAP adjustment summary:
 
 
 
 
 
 
 
 
Cost of goods sold adjustments
 
$
276

 
$
315

 
$
859

 
$
950

Research and development expenses adjustments
 
4,036

 
95

 
4,466

 
489

Selling, general and administrative expenses adjustments
 
85

 
96

 
233

 
349

Other income (expense), net adjustments
 
(58
)
 
(168
)
 
(312
)
 
(149
)
Total non-GAAP adjustments before tax
 
4,339

 
338

 
5,246

 
1,639

Income tax effect
 
(950
)
 
(32
)
 
(1,123
)
 
(226
)
Tax Reform adjustments(3)
 
—

 
—

 
—

 
(10
)
Total non-GAAP adjustments after tax
 
$
3,389

 
$
306

 
$
4,123

 
$
1,403

____________________
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)    The decreases were primarily due to stock-based compensation expenses incurred in 2018 following Gilead’s acquisition of Kite Pharma, Inc.
(2)    Amounts represent restructuring, contingent consideration and/or other individually insignificant amounts
(3)    Amounts represent measurement period adjustments relating to the enactment of the 2017 Tax Cuts and Jobs Act (Tax Reform)
(4)    Shares used in loss per share calculation for the three months ended September 30, 2019 exclude 7 million shares from dilutive equity awards
(5)    Amounts may not sum due to rounding


October 24, 2019
 
9
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP 2019 FULL YEAR GUIDANCE
(unaudited)
(in millions, except percentages and per share amounts)

 
 
Initially Provided
February 4, 2019
Reiterated
May 2, 2019
 
Updated
July 30, 2019
 
Updated
October 24, 2019
Projected product gross margin GAAP to non-GAAP reconciliation:
 
 
 
 
 
 
GAAP projected product gross margin
 
80% - 81%
 
80% - 81%
 
80% - 81%
Acquisition-related expenses
 
5% - 6%
 
5% - 6%
 
5% - 6%
Non-GAAP projected product gross margin(1)
 
85% - 87%
 
85% - 87%
 
85% - 87%
 
 
 
 
 
 
 
Projected research and development expenses GAAP to non-GAAP reconciliation:
 
 
 
 
 
 
GAAP projected research and development expenses
 
$4,195 - $4,480
 
$8,290 - $8,595
 
$8,390 - $8,595
Stock-based compensation expenses
 
(345) - (380)
 
(290) - (325)
 
(290) - (325)
Up-front collaboration and licensing expenses
 
(250) - (300)
 
(4,400) - (4,470)
 
(4,400) - (4,470)
Non-GAAP projected research and development expenses
 
$3,600 - $3,800
 
$3,600 - $3,800
 
$3,700 - $3,800
 
 
 
 
 
 
 
Projected selling, general and administrative expenses GAAP to non-GAAP reconciliation:
 
 
 
 
 
 
GAAP projected selling, general and administrative expenses
 
$4,255 - $4,490
 
$4,205 - $4,440
 
$4,305 - $4,440
Stock-based compensation expenses
 
(355) - (390)
 
(305) - (340)
 
(305) - (340)
Non-GAAP projected selling, general and administrative expenses
 
$3,900 - $4,100
 
$3,900 - $4,100
 
$4,000 - $4,100
 
 
 
 
 
 
 
Projected effective tax rate GAAP to non-GAAP reconciliation:
 
 
 
 
 
 
GAAP projected effective tax rate(2)
 
21.5% - 22.5%
 
21.5% - 22.5%
 
19.0% - 20.0%
Tax rate effect of adjustments noted above(2)
 
(1.5%) - (1.5%)
 
(1.5%) - (1.5%)
 
1.0% - 1.0%
Non-GAAP projected effective tax rate
 
20.0% - 21.0%
 
20.0% - 21.0%
 
20.0% - 21.0%
 
 
 
 
 
 
 
Projected diluted EPS impact of acquisition-related, up-front collaboration and licensing, stock-based compensation and other expenses(2):
 
 
 
 
 
 
Acquisition-related expenses / up-front collaboration and licensing expenses
 
$0.93 - $0.97
 
$3.47 - $3.51
 
$3.47 - $3.51
Stock-based compensation expenses
 
$0.47 - $0.53
 
$0.43 - $0.49
 
$0.43 - $0.49
Projected diluted EPS impact of acquisition-related, up-front collaboration and licensing, stock-based compensation and other expenses(2)
 
$1.40 - $1.50
 
$3.90 - $4.00
 
$3.90 - $4.00
____________________
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
(1)     Total stock-based compensation expenses have a less than one percent impact on non-GAAP projected product gross margin
(2)     Excludes fair value adjustments of equity securities and the associated income tax effect, as Gilead is unable to project future fair value adjustments, and other discrete tax charges or benefits



October 24, 2019
 
10
 
 
 

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
 
 
September 30,
 
December 31,
 
 
2019
 
2018
 
 
 
 
 
Cash, cash equivalents and marketable securities
 
$
25,051

 
$
31,512

Accounts receivable, net
 
3,315

 
3,327

Inventories
 
882

 
814

Property, plant and equipment, net
 
4,377

 
4,006

Intangible assets, net
 
14,864

 
15,738

Goodwill
 
4,117

 
4,117

Other assets
 
6,540

 
4,161

Total assets
 
$
59,146

 
$
63,675

 
 
 
 
 
Current liabilities
 
$
9,567

 
$
10,605

Long-term liabilities
 
28,843

 
31,536

Stockholders’ equity(1)
 
20,736

 
21,534

Total liabilities and stockholders’ equity
 
$
59,146

 
$
63,675

____________________
 
 
 
 
Note:
 
 
 
 
(1)     As of September 30, 2019, there were 1,266 million shares of common stock issued and outstanding




October 24, 2019
 
11
 
 
 

GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in millions)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Atripla – U.S.
 
$
132

 
$
221

 
$
387

 
$
723

Atripla – Europe
 
10

 
29

 
52

 
119

Atripla – Other International
 
7

 
8

 
33

 
79

 
 
149

 
258

 
472

 
921

 
 
 
 
 
 
 
 
 
Biktarvy – U.S.
 
1,106

 
375

 
2,868

 
593

Biktarvy – Europe
 
108

 
11

 
229

 
13

Biktarvy – Other International
 
45

 
—

 
71

 
—

 
 
1,259

 
386

 
3,168

 
606

 
 
 
 
 
 
 
 
 
Complera / Eviplera – U.S.
 
40

 
61

 
126

 
210

Complera / Eviplera – Europe
 
45

 
67

 
179

 
279

Complera / Eviplera – Other International
 
8

 
11

 
26

 
39

 
 
93

 
139

 
331

 
528

 
 
 
 
 
 
 
 
 
Descovy – U.S.
 
256

 
310

 
735

 
895

Descovy – Europe
 
63

 
81

 
200

 
234

Descovy – Other International
 
44

 
15

 
128

 
41

 
 
363

 
406

 
1,063

 
1,170

 
 
 
 
 
 
 
 
 
Genvoya – U.S.
 
761

 
921

 
2,222

 
2,678

Genvoya – Europe
 
152

 
203

 
522

 
596

Genvoya – Other International
 
65

 
52

 
229

 
144

 
 
978

 
1,176

 
2,973

 
3,418

 
 
 
 
 
 
 
 
 
Odefsey – U.S.
 
317

 
323

 
865

 
905

Odefsey – Europe
 
111

 
95

 
328

 
230

Odefsey – Other International
 
8

 
5

 
27

 
15

 
 
436

 
423

 
1,220

 
1,150

 
 
 
 
 
 
 
 
 
Stribild – U.S.
 
63

 
111

 
208

 
388

Stribild – Europe
 
18

 
20

 
60

 
83

Stribild – Other International
 
13

 
15

 
30

 
36

 
 
94

 
146

 
298

 
507

 
 
 
 
 
 
 
 
 
Truvada – U.S.
 
688

 
665

 
1,896

 
1,821

Truvada – Europe
 
14

 
62

 
88

 
245

Truvada – Other International
 
19

 
30

 
61

 
108

 
 
721

 
757

 
2,045

 
2,174

 
 
 
 
 
 
 
 
 
Other HIV(1) – U.S.
 
3

 
10

 
23

 
30

Other HIV(1) – Europe
 
1

 
2

 
3

 
6

Other HIV(1) – Other International
 
1

 
2

 
11

 
10

 
 
5

 
14

 
37

 
46

 
 
 
 
 
 
 
 
 
Revenue share – Symtuza(2) – U.S.
 
68

 
8

 
165

 
8

Revenue share – Symtuza(2) – Europe
 
36

 
14

 
89

 
34

Revenue share – Symtuza(2) – Other International
 
—

 
—

 
—

 
—

 
 
104

 
22

 
254

 
42

 
 
 
 
 
 
 
 
 
Total HIV – U.S.
 
3,434

 
3,005

 
9,495

 
8,251

Total HIV – Europe
 
558

 
584

 
1,750

 
1,839

Total HIV – Other International
 
210

 
138

 
616

 
472

 
 
4,202

 
3,727

 
11,861

 
10,562

 
 
 
 
 
 
 
 
 
AmBisome – U.S.
 
9

 
9

 
27

 
40

AmBisome – Europe
 
57

 
59

 
174

 
170

AmBisome – Other International
 
33

 
34

 
96

 
102

 
 
99

 
102

 
297

 
312



October 24, 2019
 
12
 
 
 

GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY - (Continued)
(unaudited)
(in millions)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Ledipasvir/Sofosbuvir(3) – U.S.
 
$
54

 
$
185

 
$
257

 
$
649

Ledipasvir/Sofosbuvir(3) – Europe
 
14

 
38

 
63

 
116

Ledipasvir/Sofosbuvir(3) – Other International
 
56

 
88

 
222

 
225

 
 
124

 
311

 
542

 
990

 
 
 
 
 
 
 
 
 
Letairis – U.S.
 
121

 
241

 
522

 
689

 
 
 
 
 
 
 
 
 
Ranexa – U.S.
 
31

 
178

 
205

 
581

 
 
 
 
 
 
 
 
 
Sofosbuvir/Velpatasvir(4) – U.S.
 
282

 
225

 
731

 
733

Sofosbuvir/Velpatasvir(4) – Europe
 
118

 
136

 
428

 
502

Sofosbuvir/Velpatasvir(4) – Other International
 
116

 
116

 
341

 
278

 
 
516

 
477

 
1,500

 
1,513

 
 
 
 
 
 
 
 
 
Vemlidy – U.S.
 
78

 
66

 
214

 
172

Vemlidy – Europe
 
6

 
2

 
15

 
8

Vemlidy – Other International
 
50

 
19

 
122

 
41

 
 
134

 
87

 
351

 
221

 
 
 
 
 
 
 
 
 
Viread – U.S.
 
7

 
17

 
28

 
40

Viread – Europe
 
15

 
10

 
57

 
72

Viread – Other International
 
35

 
43

 
119

 
137

 
 
57

 
70

 
204

 
249

 
 
 
 
 
 
 
 
 
Vosevi – U.S.
 
42

 
78

 
140

 
250

Vosevi – Europe
 
12

 
21

 
43

 
57

Vosevi – Other International
 
9

 
4

 
18

 
12

 
 
63

 
103

 
201

 
319

 
 
 
 
 
 
 
 
 
Yescarta – U.S.
 
86

 
75

 
275

 
183

Yescarta – Europe
 
32

 
—

 
59

 
—

Yescarta – Other International
 
—

 
—

 
—

 
—

 
 
118

 
75

 
334

 
183

 
 
 
 
 
 
 
 
 
Zydelig – U.S.
 
13

 
15

 
36

 
46

Zydelig – Europe
 
13

 
4

 
42

 
44

Zydelig – Other International
 
—

 
1

 
1

 
2

 
 
26

 
20

 
79

 
92

 
 
 
 
 
 
 
 
 
Other(5) – U.S.
 
42

 
37

 
119

 
93

Other(5) – Europe
 
(21
)
 
19

 
96

 
75

Other(5) – Other International
 
4

 
8

 
12

 
117

 
 
25

 
64

 
227

 
285

 
 
 
 
 
 
 
 
 
Total product sales – U.S.
 
4,199

 
4,131

 
12,049

 
11,727

Total product sales – Europe
 
804

 
873

 
2,727

 
2,883

Total product sales – Other International
 
513

 
451

 
1,547

 
1,386

 
 
$
5,516

 
$
5,455

 
$
16,323

 
$
15,996

____________________
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)    Includes Emtriva and Tybost
(2)    Represents Gilead’s revenue from cobicistat (C), emtricitabine (FTC) and tenofovir alafenamide (TAF) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland UC
(3)    Amounts consist of sales of Harvoni and the authorized generic version of Harvoni sold by Gilead’s separate subsidiary, Asegua Therapeutics LLC
(4)    Amounts consist of sales of Epclusa and the authorized generic version of Epclusa sold by Gilead’s separate subsidiary, Asegua Therapeutics LLC
(5)    Includes Cayston, Hepsera and Sovaldi. In Europe, the period-over-period changes were primarily due to adjustments recorded in 2019 for statutory rebates related to sales of Sovaldi made in prior years