Analyst Conference Summary

Gilead Sciences
GILD

conference date: July 25, 2013 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2013 (second quarter, Q2 2013)


Forward-looking statements

Overview: Revenue up both sequentially and y/y.

Basic data (GAAP) :

Revenue was $2.77 billion, up 9% sequentially from $2.53 billion and up 15% from $2.41 billion in the year-earlier quarter.

Net income was $772.6 million, up 7% sequentially from $722.2 million and up 9% from $711.6 million year-earlier.

Earnings per share (EPS) were 0.46, up 7% sequentially from $0.43 but flat from year-earlier.

Guidance:

Reiterated full year 2013 guidance. Net product sales $10 to 10.2 billion. Gross margin 74% to 76%. $1.8 to $1.9 billion R&D expense. $1.55 to $1.65 billion SG&A expense. 26% to 28% effective tax rate.

Conference Highlights:

Demand was strong across all therapeutic areas. Stribild launch is going well. ADAP purchasing was robust in the quarter.

Non-GAAP numbers: net income was $839.7 million, up 5% sequentially from $801.9 million. Non-GAAP EPS was $0.50, up 4% sequentially from $0.48, and up 2% from $0.49 year-earlier.

SG&A expense will increase in the second half to support the launch of hepatitis therapies.

Product sales were $2.66 billion, up 11% sequentially from $2.39 billion, and up 15% from $2.32 billion year-earlier. Royalty and other revenue was $110 million.

Revenues by product ($ millions):
  Q2 2013 Q1 2013 Q2 2012 y/y increase
Atripla
$938.1
$877.1
$904.0
15%
Truvada
807.8
700.2
785.9
3%
Viread
250.2
210.3
215.4
16%
Stribild
99.4
92.1
0
na%
Hepsera
21.5
26.4
26.2
-%
Complera
188.7
148.2
72.9
159%
AmBisome
75.1
85.3
83.6
-10%
Emtriva
6.6
6.7
7.8
-15%
Ranexa
106.5
96.3
95.6
12%
Letairis
128.3
118.1
101.6
26%

Cayston+other

35.0
32.8
28.1
25%















Cash and equivalents ended at $2.98 billion. Operating cash flow was approximately $950 million. Long-term debt was $6.3 billion. Share repurchases were suspended in February, pending reaching debt target goals.

In next 12 months 3 cardiovascular studies of Ranolazine should mature.

New drug applications have been filed for sofosbuvir in various combinations for various genotypes for Hepatitis C with FDA, Europe, Canada, Turkey, Switzerland and Australia. PDUFA date is December 8, with an October 25 advisory committee review. The combination of with ledipasvir application planned for Q2 2014, using data from ION phase 3 studies. In Japan sofosbuvir with and without ledipasvir is in Phase 3 trials under an agreement with PMDA (the Japanese regulatory agency).

Phase 2 data for Idelalisib for previously untreated CLL was presented at ASCO, with 24 month progression free survival of 93%. Phase 2 for double refractory iNHL showed a 54% overall response rate with median duration of response of 11.9 months. Momelotinib for myelofibrosis, simtuzumab for myelofibrosis, pancreatic and colorectal cancer, and GS-9973, and GS-9820 are all in Phase 2.

Cost of goods sold was $684 million. Research and development expense was $523.9 million (up from $396.2 million year-earlier). Selling, general and administrative expense was $405.0 million (up from $332.5 million year-earlier). Income from operations was $1.15 billion. Interest expense was $78 million. Other expense was $0. Income tax provision was $308 million. Net loss attributable to noncontrolling interest was $5 million.

Q&A:

Japan agreement? Just an agreement on Phase III strategy for genotype 1 hepatitis. We are also looking for clinical trials in China and Russia. We are now starting to build out our own organization in Japan for the sofosbuvir launch.

Number of estimated hepatitis patients in U.S. under active care? We are building a database that would give us that number after a couple of quarters.

We will resume share repurchase program in second half, focussing on balancing share dilution.

5816 role? Could have a role for genotype 3 patients. But intent is to include it in a combination for a broad range of genotypes. A genotype test costs $400, so a lot of cost can be eliminated if one pill is good for all types.

Screening changes for Hep C? As newer treatments become available we will see more calls for better screening. This has also been talked about in Germany. The upgrade to B category helps drive reimbursement for screening.

CLL and mantel cell competition? They have a very good results, but ours has much better statistics on preventing progression. We see a big role for our compound in CLL. You also can't look at market share, since most patients will live longer and cycle through the differing drugs. We are building an oncology business unit for a strong launch by mid 2014.

SVR 4 and 12 correlation? The FDA gave the world a gift when they said filings with 12 weeks instead of with 24. Also, you can't draw conclusions across different drugs. We have no plan to file with SVR 4.

Prison population with hepatitis C? Long term interferon is very difficult in that setting. We have had productive discussions about addressing the correctional populationand the VA setting.

Challenge with CLL was the number of different doses used, so relatively few patients at the dose we would like.

Could get to 150,000 hepatitis C patients per year with new treatments.

Panel questions for sofosbuvir? The only unanswered question we know of is what is the optimal treatment for genotype 3. Would 24 weeks be better than 16, or with Neutrino treatment.

Stribild lightness? We go into inventory management agreements after 9 months, when we we know what to expect. So there was a tick down due to inventory adjustment, but the uptake has been very good.

We are talking with payers about sofosbuvir. The payers were not happy with the transcriptase inhibitors, but we think we will get good support. We think it will also be a nice profile for the VA, so we expect a healthy uptake in the VA setting.

7977 arbitration with Roche? It is going along as scheduled, nothing is likely to happen this year.

Japanese pricing? Difficult to say, depends on age of patients. Many are older and have advanced disease. That is why Japanese doctors and patients are looking forward to new therapies. Pricing in Japan is typically at a discount to the U.S.

OpenIcon Analyst Conference Summaries Main Page

Gilead Investor Relations page

More Gilead analyst conference summaries

Search

More Analyst Conference Pages:

 
 ADBE
 AKAM
 ALTR
 AMAT
 AMD
 AMGN
 ANSV
 BIIB
 CELG
 CSCO
 DNA
 DNDN
 GILD
 GOOG
 HILL
 HPQ
 INTC
 HNSN
 MCHP
 MRVL
 MSFT
 MXIM
 NOVL
 NVDA
 ORCL
 ONXX
 RACK
 RHT
 TTMI
 XLNX
 YHOO

Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2013 William P. Meyers