Analyst Conference Summary

Gilead Sciences

conference date: April 18, 2007 @ 1:30 PM PT
for quarter ending: March 31, 2007 (1st quarter)

Forward-looking statements

Overview: Very successful quarter.

Basic data:

Revenues were $1.03 billion, up 48% from year-earlier.

Net income was $407.4 million or $0.85 per diluted share, up 55% over year-earlier. Excluding $40.2 million of stock-based compensation, non-GAAP net income was $447.6 million or $0.93 per share, up 57.6% from year-earlier.

Cash and equivalents were $1.86 billion. $490 million in operating cash flow.


Full year 2007 remains unaltered. $3.4 to 3.5 billion net product revenues. Spending will ramp beginning in Q2 due to launching of new drugs and Phase III trials. Stock-based compensation expense $0.27 to $0.30 per share. Gross margin of 78-80%.

Conference Highlights:

Product sales were $840.2 million, a 50% increase from $559.4 million in Q1 2006. Product gross margin was 80%.

Truvada sales were $345.9 million, up 39% from Q1 2006.

Atripla sales were $190.2 million; sales commenced Q3 2006.

Viread sales were $160.7 million, up 16%.

Emtriva sales were $8.3 million, down 16%.

Hepsera sales were $71.3 million, up 35%.

AmBisome sales were $61.5 million, up 14%.

Royalty and contract revenues were $188.2, up 41% from year-earlier. Q2 royalty payment for Tamiflu will be lower.

GAAP R&D expense was $130.1 million. SG&A expense was $166.6 million.

$15 million favorable impact on earnings from currency exchange.

29.9% tax rate.

Looking at strategic use of cash.

Reviewed R&D program. Ambrisentan for PAH (pulmonary arterial hypertension) still in FDA review with June 15 review date. Aztreonam for Cystic Fibrosis is in Phase III; expects to file NDA in second half of this year. Pipeline also includes Tenofovir, Darusentan, GS 9137, GS 9190, and a variety of preclinical/research candidates. Late in second half 2007 Atripla could be approved in EU.

Atripla is now the number 1 HIV drug. In fact Gilead had top 4 drugs. Despite launch of 2 rivals in last two years Hepsera has remained the market leader and has shown strong revenue growth.


HIV integrase inhibitor GS 9137 more Phase II studies? Believes data supports move to Phase III. Will probably start as a second line treatment, only then move to 1st line treatment. In naive patients it depends on safety profile. Does not plan right now to study 9137 in naive patients; that would be a later phase.

Comovir switchers? In Q4 70% Atripla came from switchers, 30% was from non-Gilead drugs. 27,000 comovir patients remain, but there are other buckets too.

GS 9190? Seen reduction of RNA with just a single dose. Excited about multiple dose in coming study.

Inventory for HIV products? Flat on the whole. Atripla is lower than they would like.

Guidance not changed despite strong Q1? AmBisome did better than expected, as did Hepsera. Sometimes those are bumpy; they don't know if these are bumps or trends.

Hepsera color? Still room to grow in Europe. Resistance development data is best for Hepsera. But Viread looks good going forward for Hepatitis B.

Atripla roll out in Europe? About 11 months, same as Truvada. Germany and UK will be first.

Anti-viral patient growth expectations? Annual growth was 9%, which is higher than in the past. Patients are seeking therapy earlier in disease. New therapies also encourage more treatment starts.

Truvada persistance of therapy? Don't know, but first line therapy times are growing with better therapies.

Q2 expense color? Fully expect to spend the money (analyst thought estimate was too high).

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Copyright 2007 William P. Meyers