Analyst Conference Summary
|Revenues by product (millions):|
34% y/y increase
Cost of goods sold was $266 million. Research and development $177 million. Selling, general and administrative expense $220 million. Purchased in-process R&D $11 million. Leaving income from operations of $605 million. Other income net $13 million. Income tax provision $176 million.
$0.49 non-GAAP earnings per share.
Cash and equivalents ended at $2.91 billion. $426 million operating cash flow. Repurchased $150 million stock. $2 billion remains in share repurchase program.
In May Gilead acquired all of Navitas's cicletanine assets to evaluate cicletanine as a potential treatment of pulmonary arterial hypertension (PAH). Cicletanine has been granted ophan drug status in the U.S.
Viread patents were confirmed by the Patent Office.
Pipeline was advanced significantly in Q2; Gilead has largest pipeline ever. HCV (hepatitis C) clinical trials continue. Elvitegravir (GS 9137) is most advanced new HIV product.
Non-GAAP product gross margin was 78.4%, down slighly sequentially and y/y, due to higher proportion of Atripla sales.
Atripla is now available in 13 EU countries, but not in France, where negotiations may delay launch into 2009.
Ready to support Viread for HBV in US, with August 11 FIDUFA date. Letairis for PAH use continues to expand, now up to 22% of patients in U.S.
HIV market share trends? Not likely to shift due to 5202 or DAD until actual publication.
External inventory issues should be back to normal, so normal purchasing in Q3. Wholesale inventories were flat quarter to quarter.
Integrase inhibitor trial plans? Two Phase III studies, one in U.S. and one abroad. Enrollment timing is difficult to predict. To go to treatment naive patients we need to develop our own booster for Elvitegravir, which we are working on.
R&D expense increase? Drivers are hiring, especially for molecule process development, and 311 and 312 studies have been accelerated. We also have more programs than ever before. We are well below the industry average for R&D as % of revenues.
Price freezes? We think the price hold is the right thing to do for patients. It affects about 35% of our business. Federal price increases are pegged to inflation.
Atripla curve in Europe? Will slow after initial ramp, but then will see conversions from other drugs. Truvada will come back after the initial round of conversions to Atripla.
Have we established a new, lower, operating margin? We did have some one-time items in Q2. Longer term trends for Atripla will also put pressure on margin. We are trying to hold the line on sales and marketing expense.
Viread for HBV launch guidance? It is difficult to know how much is already prescribed off-label, but we think it is quite low. We will concentrate on newly diagnosed patients.
311 data availability? Could see early in 2009. But is a pivotal study, so data examination takes a few months.
M&A plans? We have a pretty full drug candidate pipeline, so we would be very selective.
Is Latairis a profitable product worth investing in? Yes, we wanted to get into this space and physicians are just becoming comfortable prescribing it. We will continue to take market share. We intend to build out our cardiovascular franchise with other drugs and indications. One study could support IPF as an indication; if we need two studies, we would do them concurrently.
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Copyright 2008 William P. Meyers