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Gilead Sciences Announces Third Quarter 2022 Financial Results

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Product Sales Excluding Veklury Increased 11% Year-Over-Year to $6.1 billion

Biktarvy Sales Increased 22% Year-Over-Year to $2.8 billion

Oncology Sales Increased 79% Year-Over-Year to $578 million

FOSTER CITY, Calif.–(BUSINESS WIRE)–#Earnings–Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the third quarter of 2022.

Chairman and Chief Executive Officer of Gilead Sciences, Daniel O’Day said: “This was another very strong quarter across the business. In HIV, treatment and prevention markets continue to grow with further share gains for Biktarvy in treatment, and we received our first approval for our long-acting HIV agent, lenacapavir, in Europe. In oncology, there is increasing demand for cell therapies and Trodelvy. Yescarta and Tecartus received two approvals in Europe and Trodelvy was granted FDA Priority Review for HR+/HER2- metastatic breast cancer. Overall, we are seeing terrific progress from a commercial and clinical perspective and look forward to building on this momentum.”

Third Quarter 2022 Financial Results

Product Sales Performance

Total third quarter 2022 product sales decreased 5% to $7.0 billion compared to the same period in 2021. Total product sales, excluding Veklury, increased 11% to $6.1 billion in the third quarter of 2022 compared to the same period in 2021, primarily due to increased product sales related to HIV, cell therapy, hepatitis C virus (“HCV”) and Trodelvy® (sacituzumab govitecan-hziy).

HIV product sales increased 7% to $4.5 billion in the third quarter of 2022 compared to the same period in 2021, primarily driven by favorable channel mix associated with government utilization leading to higher average realized price, as well as higher demand.

HCV product sales increased 22% to $524 million in the third quarter of 2022 compared to the same period in 2021, primarily due to a favorable resolution of a prior year rebate claim in Europe and other favorable pricing dynamics in the United States, partially offset by fewer patient starts.

Hepatitis B virus (“HBV”) and hepatitis delta virus (“HDV”) product sales increased 7% to $264 million in the third quarter of 2022 compared to the same period in 2021, primarily driven by Vemlidy® (TAF 25mg). Vemlidy sales increased 10% in the third quarter of 2022 compared to the same period in 2021, primarily driven by favorable inventory dynamics.

Cell therapy product sales increased 79% to $398 million in the third quarter of 2022 compared to the same period in 2021.

Trodelvy sales increased by 78% to $180 million in the third quarter of 2022 compared to the same period in 2021, primarily driven by adoption in both the second- and third-line settings for the treatment of metastatic triple-negative breast cancer.

Veklury sales decreased by 52% to $925 million for the third quarter of 2022 compared to the same period in 2021, primarily driven by lower rates of COVID-19 related hospitalizations compared to the third quarter of 2021. Veklury revenue generally reflects COVID-19 related rates and severity of infections and hospitalizations, as well as the availability, uptake and effectiveness of vaccinations and alternative treatments for COVID-19.

Third Quarter 2022 Product Gross Margin, Operating Expenses and Effective Tax Rate

________________________________

(1)

Beginning in the second quarter of 2022, expenses related to development milestones and other collaboration payments made prior to regulatory approval of a developed product were reclassified from R&D expenses to Acquired IPR&D expenses in the Condensed Consolidated Statements of Income. We believe this presentation assists users of the financial statements to better understand the total costs incurred to acquire IPR&D projects. Prior periods have been recast for both GAAP and Non-GAAP reporting to reflect this classification, resulting in a reduction of previously-reported R&D expenses of $46 million and $93 million for the three and nine months ended September 30, 2021, respectively, and $8 million for the three months ended March 31, 2022.

Guidance and Outlook

For the full-year, Gilead has updated its guidance and now expects:

This financial guidance excludes the impact of any expenses related to potential acquisitions or business development transactions that have not been executed, fair value adjustments of equity securities and discrete tax charges or benefits associated with changes in tax related laws and guidelines as Gilead is unable to project such amounts. A reconciliation between GAAP and non-GAAP financial information for the 2022 guidance is provided in the accompanying tables. Also see the Forward-Looking Statements described below. The financial guidance is subject to a number of risks and uncertainties, including uncertainty around the duration and magnitude of the COVID-19 pandemic. While the pandemic can be expected to continue to impact Gilead’s business and broader market dynamics, the rate and degree of these impacts as well as the corresponding recovery from the pandemic may vary across Gilead’s business.

Key Updates Since Our Last Quarterly Release

Virology

Oncology

Inflammation

Corporate

Certain amounts and percentages in this press release may not sum or recalculate due to rounding.

Conference Call

At 1:30 p.m. Pacific Time today, Gilead will host a conference call to discuss Gilead’s results. A live webcast will be available on http://investors.gilead.com and will be archived on www.gilead.com for one year.

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 financial information generally excludes acquisition-related expenses including amortization of acquired intangible assets and inventory step-up charges, and other items that are considered unusual or not representative of underlying trends of Gilead’s business, fair value adjustments of equity securities and discrete and related tax charges or benefits associated with changes in tax related laws and guidelines. Although Gilead consistently excludes the amortization of acquired intangible assets from the non-GAAP financial information, management believes that it is important for investors to understand that such intangible assets were recorded as part of acquisitions and contribute to ongoing revenue generation. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the accompanying tables.

Beginning in the first quarter of 2022, consistent with recent industry communications from the U.S. Securities and Exchange Commission (“SEC”), Gilead no longer excludes the initial costs of acquired IPR&D projects from its non-GAAP financial measures. Prior period non-GAAP financial measures are revised to conform to the new presentation.

About Gilead Sciences

Gilead Sciences, Inc. is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. The company is committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer. Gilead operates 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 those relating to: the impact of the COVID-19 pandemic on Gilead’s business, financial condition and results of operations; the development, manufacturing and distribution of Veklury as a treatment for COVID-19, including the uncertainty of the amount and timing of future Veklury sales and Gilead’s ability to effectively manage the global supply and distribution of Veklury; Gilead’s ability to achieve its anticipated full year 2022 financial results, including as a result of potential adverse revenue impacts from COVID-19 and potential revenues from Veklury; Gilead’s ability to make progress on any of its long-term ambitions or strategic priorities laid out in its corporate strategy; Gilead’s ability to accelerate or sustain revenues for its virology, oncology and other programs; Gilead’s ability to realize the potential benefits of acquisitions, collaborations or licensing arrangements, including the arrangement with Dragonfly; patent protection and estimated loss of exclusivity for our products and product candidates; Gilead’s ability to initiate, progress or complete clinical trials within currently anticipated timeframes or at all, the possibility of unfavorable results from ongoing and additional clinical trials, including those involving Trodelvy, Tecartus, Yescarta and bulevirtide, and the risk that safety and efficacy data from clinical trials may not warrant further development of Gilead’s product candidates or the product candidates of Gilead’s strategic partners; Gilead’s ability to submit new drug applications for new product candidates or expanded indications in the currently anticipated timelines; Gilead’s ability to receive regulatory approvals in a timely manner or at all, including FDA approval of lenacapavir for treatment of HIV-1 infection in heavily treatment-experienced people with multi-drug resistant HIV-1 infection, EC approval of lenacapavir for treatment of HIV-1 infection, in combination with other antiretroviral(s), in adults with multi-drug resistant HIV-1 infection for whom it is otherwise not possible to construct a suppressive anti-viral regimen, EC approval of Veklury for the treatment of COVID-19 in adults and adolescents with pneumonia requiring supplemental oxygen and EC approval for Tecartus for the treatment of adult patients 26 years of age and above with R/R B-cell precursor ALL, and the risk that any such approvals, if granted, may be subject to significant limitations on use; Gilead’s ability to successfully commercialize its products; the risk of potential disruptions to the manufacturing and supply chain of Gilead’s products, including the risk that Kite may be unable to increase its manufacturing capacity, timely manufacture and deliver its products or produce an amount of supply sufficient to satisfy demand for such products; pricing and reimbursement pressures from government agencies and other third parties, including required rebates and other discounts; a larger than anticipated shift in payer mix to more highly discounted payer segments; market share and price erosion caused by the introduction of generic versions of Gilead products; 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, including Yescarta; and other risks identified from time to time in Gilead’s reports filed with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 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, 2022 are not necessarily indicative of operating results for any future periods. Gilead directs readers to its press releases, annual reports on Form 10-K, quarterly reports on Form 10-Q 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.

The reader is cautioned that forward-looking statements are not guarantees of future performance and is cautioned not to place undue reliance on these 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®, HEPCLUDEX®, HEPSERA®, JYSELECA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, SUNLENCA® , TECARTUS®, TRODELVY®, TRUVADA®, TRUVADA FOR PREP®, TYBOST®, VEKLURY®, VEMLIDY®, VIREAD®, VOSEVI®, YESCARTA® and ZYDELIG®. This report may also refer to trademarks, service marks and trade names of other companies.

For more information on Gilead Sciences, Inc., please visit www.gilead.com or call the Gilead Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235).

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

(in millions, except per share amounts)

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

 

Product sales

 

$

6,978

 

 

$

7,356

 

 

$

19,650

 

 

$

19,848

 

Royalty, contract and other revenues

 

 

64

 

 

 

65

 

 

 

242

 

 

 

213

 

Total revenues

 

 

7,042

 

 

 

7,421

 

 

 

19,892

 

 

 

20,061

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

1,395

 

 

 

1,223

 

 

 

4,261

 

 

 

3,974

 

Research and development expenses

 

 

1,149

 

 

 

1,101

 

 

 

3,429

 

 

 

3,243

 

Acquired in-process research and development expenses

 

 

448

 

 

 

65

 

 

 

786

 

 

 

270

 

In-process research and development impairment

 

 

—

 

 

 

—

 

 

 

2,700

 

 

 

—

 

Selling, general and administrative expenses

 

 

1,213

 

 

 

1,190

 

 

 

3,653

 

 

 

3,596

 

Total costs and expenses

 

 

4,205

 

 

 

3,579

 

 

 

14,829

 

 

 

11,083

 

Income from operations

 

 

2,837

 

 

 

3,842

 

 

 

5,063

 

 

 

8,978

 

Interest expense

 

 

(229

)

 

 

(250

)

 

 

(709

)

 

 

(763

)

Other income (expense), net

 

 

(176

)

 

 

(154

)

 

 

(571

)

 

 

(696

)

Income before income taxes

 

 

2,432

 

 

 

3,438

 

 

 

3,783

 

 

 

7,519

 

Income tax expense

 

 

(646

)

 

 

(852

)

 

 

(850

)

 

 

(1,694

)

Net income

 

 

1,786

 

 

 

2,586

 

 

 

2,933

 

 

 

5,825

 

Net loss attributable to noncontrolling interest

 

 

3

 

 

 

6

 

 

 

19

 

 

 

18

 

Net income attributable to Gilead

 

$

1,789

 

 

$

2,592

 

 

$

2,952

 

 

$

5,843

 

Net income per share attributable to Gilead common stockholders – basic

 

$

1.43

 

 

$

2.06

 

 

$

2.35

 

 

$

4.65

 

Shares used in per share calculation – basic

 

 

1,255

 

 

 

1,256

 

 

 

1,255

 

 

 

1,256

 

Net income per share attributable to Gilead common stockholders – diluted

 

$

1.42

 

 

$

2.05

 

 

$

2.34

 

 

$

4.63

 

Shares used in per share calculation – diluted

 

 

1,261

 

 

 

1,262

 

 

 

1,261

 

 

 

1,262

 

Cash dividends declared per share

 

$

0.73

 

 

$

0.71

 

 

$

2.19

 

 

$

2.13

 

 

 

 

 

 

 

 

 

 

Product gross margin

 

 

80.0

%

 

 

83.4

%

 

 

78.3

%

 

 

80.0

%

Research and development expenses as a % of revenues

 

 

16.3

%

 

 

14.8

%

 

 

17.2

%

 

 

16.2

%

Selling, general and administrative expenses as a % of revenues

 

 

17.2

%

 

 

16.0

%

 

 

18.4

%

 

 

17.9

%

Operating margin

 

 

40.3

%

 

 

51.8

%

 

 

25.5

%

 

 

44.8

%

Effective tax rate

 

 

26.6

%

 

 

24.8

%

 

 

22.5

%

 

 

22.5

%

Contacts

Investors:
Jacquie Ross, CFA

investor_relations@gilead.com

Media:
Ashleigh Koss

public_affairs@gilead.com

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