Slide 1: Q1 2012 Earnings Results Conference Call and Webcast
Q1 2012 Earnings Results Conference Call and Webcast April 26, 2012 1
Slide 2: Forward-looking Statements
Forward-looking Statements The projected financial results presented in the following slides represent management's estimates of Gilead’s future financial results. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results t
Slide 3: Q1 2012 Earnings Call Agenda
Q1 2012 Earnings Call Agenda Introduction Susan Hubbard, VP, Investor Relations Robin Washington, SVP and CFO Commentary Kevin Young, EVP, Commercial Operations and Q&A Norbert Bischofberger, EVP, R&D and CSO John Milligan, President and COO 3
Slide 4: Robin Washington
Robin Washington SVP and Chief Financial Officer April 26, 2012 4
Slide 5: Q1 2012 Corporate Highlights
Q1 2012 Corporate Highlights ♦ Completed acquisition of Pharmasset for $137 per share in cash, or approximately $11.1 billion, on January 17, 2012 ♦ Presented results from the arm of the Phase 2 ELECTRON study of GS-7977 plus ribavirin in 10 hepatitis C genotype 1 patients with a prior “null” respon
Slide 6: Q1 2012 Corporate Highlights (cont'd)
Q1 2012 Corporate Highlights (cont’d) ♦ FDA granted a six-month Priority Review for once-daily Truvada for pre-exposure prophylaxis to reduce the risk of HIV-1 infection among uninfected adults ♦ Initiated Phase 2 clinical trial evaluating GS-7340 containing co-formulated single tablet regimen for t
Slide 7: Financial Highlights: A Snapshot of Q1 2012
Financial Highlights: A Snapshot of Q1 2012 ♦ Total revenues of $2.28 billion ♦ Product sales of $2.21 billion ♦ Net income per diluted share of $0.57^; Non-GAAP net income per diluted share of $0.91* * Excludes after-tax acquisition-related, restructuring and stock-based compensation expenses. ^ Im
Slide 8: Financial Highlights: Q1 2012
Financial Highlights: Q1 2012 (US$ millions, except per share amounts) Q1 2012 Q1 2011 % Change Product sales $ 2,208 $ 1,864 19% Antiviral products 1,926 1,631 18% Atripla 888 745 19% Truvada 758 673 13% Viread 192 168 14% Complera/Eviplera 52 – Letairis 87 62 40% AmBisome 85 79 8% Ranexa 83 68 22%
Slide 9: Financial Highlights: Non-GAAP Diluted EPS
Financial Highlights: Non-GAAP Diluted EPS ♦ Q1 2012 up 5% from Q1 2011 $1.25 $1.00 $1.02 $1.00 $0.97 $0.91^ $0.87 $0.75 $0.50 $0.25 $0.00 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Note: For the 2011 and 2012 periods, non-GAAP diluted EPS excludes after-tax acquisition-related, restructuring and stock-based com
Slide 10: Financial Highlights: Total Revenues
Financial Highlights: Total Revenues ♦ Q1 2012 up 19% over Q1 2011 $2,500 $2,282 $2,200 $2,137 $2,122 $2,000 $1,926 $1,500 In Millions $1,000 $500 $0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 10
Slide 11: Financial Highlights: Total Product Sales
Financial Highlights: Total Product Sales ♦ Q1 2012 up 19% over Q1 2011 $2,500 $2,208 $2,066 $2,133 $2,040 $2,000 $1,864 $1,500 In Millions $1,000 $500 $0 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 11
Slide 12: Non-GAAP Product Gross Margins
Non-GAAP Product Gross Margins Key Metrics 100% ♦ Q1 2012 decrease from Q1 2011 due 75.7% 74.9% 75.3% 73.4% 74.5% primarily to: 75% - Higher cost of efavirenz and changes in product 50% mix as Atripla and Complera increased as a percentage of 25% revenue, while Truvada decreased 0% Q1 11 Q2 11 Q3 11
Slide 13: Non-GAAP R&D Expenses
Non-GAAP R&D Expenses ♦ Q1 2012 up 40% from Q1 2011 Key Metrics $349 $331 ♦ Higher R&D expenses in $300 Q1 2012 over Q1 2011 due $263 $269 primarily to: $250 $237 - Increased clinical activities across all therapeutic areas with significant changes tied $200 to study progression in Liver In Millions
Slide 14: Non-GAAP SG&A Expenses
Non-GAAP SG&A Expenses ♦ Q1 2012 up 17% from Q1 2011 Key Metrics $308 ♦ Higher SG&A expenses in $300 $290 Q1 2012 over Q1 2011 $276 $263 $265 driven primarily by: $250 - Increased expenses associated with the $200 ongoing growth of the business In Millions - Pharmaceutical excise tax $150 resulting
Slide 15: Non-GAAP Operating Margins
Non-GAAP Operating Margins Key Metrics 60% ♦ Q1 2012 decrease from Q1 2011 driven primarily 50.4% 50.7% 50.7% by: 45.2% 47.3% - Increased investments in R&D 40% - Decreased product gross margin driven by a change in product mix and higher costs of efavirenz 20% 0% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Note:
Slide 16: Non-GAAP Effective Tax Rate
Non-GAAP Effective Tax Rate Q1 Q1 2011 2012 Effective Tax Rate 26.0% 26.8% ♦ Effective tax rate increased year-over-year due to: – Expiration of the federal research tax credit and the geographic mix of product sales 16
Slide 17: Financial Highlights: Operating Cash Flows
Financial Highlights: Operating Cash Flows Key Metrics $1,000 $978 ♦ Cash flows from operating $943 activities included: $897 $821 - Impact from the $750 $193.9 million or $0.25 per diluted share acquisition- related stock-based In Millions compensation expense and $500 $453 other Pharmasset-related
Slide 18: Full Year 2012 Guidance
Full Year 2012 Guidance ($ in millions, except percentages and per share amounts) Guidance^ Net Product Sales $ 8,600 – $ 8,800 Non-GAAP* Product Gross Margin 73% – 75% R&D $ 1,325 – $ 1,400 SG&A $ 1,225 – $ 1,300 Effective Tax Rate 26% – 28% Diluted EPS Impact of Acquisition- $ 0.56 – $ 0.59 Relate
Slide 19: Full Year 2012 Guidance
Full Year 2012 Guidance ($ in millions, except percentages and per share amounts) Projected product gross margin GAAP to non-GAAP reconciliation: 4/26/12 GAAP projected product gross margin 72% - 74% Acquisition-related amortization of purchased intangibles 1% - 1% Non-GAAP projected product gross m
Slide 20: GAAP to Non-GAAP Earnings Per Share Reconciliation
GAAP to Non-GAAP Earnings Per Share Reconciliation Three Months Ended Mar. 31, 2012 GAAP EPS $0.57 Stock-Based Compensation Expenses $0.30* Restructuring Expenses $0.01 Acquisition-Related Expenses $0.03 Non-GAAP EPS $0.91 Note: Amounts may not sum due to rounding. * Includes $0.25 per diluted share
Slide 21: Pharmasset Acquisition Financing
Pharmasset Acquisition Financing At Acquisition Close Mar. 31, Funding Sources Jan. 2012 2012 Deal Senior Credit Facilities $2.15 B $1.80 B Structure Senior Unsecured Notes $3.70 B $3.70 B (3, 5, 10 and 30 year maturities) Debt to EBITDA** ~2.4x ~2.4x Goal by End of Q2 2013 - Debt to EBITDA of ~1.5x
Slide 22: Pharmasset Acquisition Accounting
Pharmasset Acquisition Accounting We completed the acquisition of Pharmasset on January 17, 2012. The tables below summarize how the acquisition was recorded for U.S. GAAP purposes. Amount Amount Balance Sheet Classification: (in millions) Income Statement: (in millions) Intangible assets – IPR&D $1
Slide 23: Kevin Young CBE
Kevin Young CBE EVP Commercial Operations April 26, 2012 23
Slide 24: U.S. and Big EU HIV Market Dynamics
U.S. and Big 5 EU HIV Market Dynamics In the U.S., ~600,000 HIV infected people In the Big 5 EU, ~300,000 HIV infected people NOT on antiretroviral treatment NOT on antiretroviral treatment 1,400 ~1,200 1,200 800 ~948 8%^ 700 ~631 P a tie n ts in 0 0 0 's 1,000 600 5%^ Patients in 000's 800 ~718 500
Slide 25: Fixed-Dose Regimens Increasingly Highlighted in Major Treatment Guidelines
Fixed-Dose Regimens Increasingly Highlighted in Major Treatment Guidelines International U.S. U.K. AIDS Society EUROPE (DHHS) (Draft BHIVA) (IAS - USA) (EACS) Atripla Truvada Atripla Truvada or + EFV ABC/3TC Truvada + ATV/r Truvada + Truvada + ATV/r + DRV/r One of the Preferred Truvada + DRV/r (once
Slide 26: Complera/Eviplera: A New HIV Single Tablet Regimen (STR)
Complera/Eviplera: A New HIV Single Tablet Regimen (STR) ♦ Launched in the U.S. on August 11, 2011 – ~37% YOY growth in prescriptions for new patient starts on STRs – Uptake from naïve patients and switches (other than Atripla) 4,500 New to Brand Patients (U.S.) 4,000 – TRx volume above Prezista Tot
Slide 27: U.S. Complera Launch Adding to Number of Patients on a Single-Tablet Regimen
U.S. Complera Launch Adding to Number of Patients on a Single-Tablet Regimen 100 91 90 80 70 59 % of naive pts 60 50 40 40 30 30 19 20 10 5 4 0 On a Gilead HIV Gilead STR Gilead Atripla Truvada Complera Epzicom Combivir Product Single- Tablet Regimen Q3 2011 Q4 2011 Base: All initiations within each
Slide 28: Antiviral Franchise Q1 2012 Financial Performance and Key Metrics
Antiviral Franchise Q1 2012 Financial Performance and Key Metrics ♦ Q1 2012 up 18% from Q1 2011 Key Metrics $2,500 U.S.: ♦ Inventory levels remained at the low-end of the range – $2,000 $1,926 $1,764 $1,795 $1,860 consistent with the prior quarter $1,631 ♦ Robust non-retail purchasing Sales in Milli
Slide 29: Atripla Q1 2012 Financial Performance and Key Metrics
Atripla Q1 2012 Financial Performance and Key Metrics ♦ Q1 2012 up 19% from Q1 2011 Key Metrics* $900 $888 $863 $822 $795 U.S.: $800 $745 ♦ Most prescribed regimen $700 in HIV with 35% of all $267.5 $270.7 treated patients $267.2 $255.0 $253.1 $600 ♦ Captured 40% of naïve Sales in Millions patient s
Slide 30: Truvada Q1 2012 Financial Performance and Key Metrics
Truvada Q1 2012 Financial Performance and Key Metrics ♦ Q1 2012 up 13% from Q1 2011 Key Metrics* $800 $745 $746 $758 $711 U.S.: $673 ♦ Most prescribed product in HIV with 37% of all $600 treated patients ♦ Captured 30% of naïve Sales in Millions $317.0 $321.9 $319.1 $299.2 $322.0 patient share $400
Slide 31: Other Product Sales
Other Product Sales Product Q1 Q2 Q3 Q4 Q1 %▲ From Q1 ($ in Millions) 2011 2011 2011 2011 2012 2011 Viread $168.4 $185.7 $192.9 $190.9 $191.7 14% Ranexa $68.3 $86.1* $82.0 $83.7 $83.2 22% AmBisome $78.5 $88.6 $82.2 $80.8 $84.8 8% Letairis $62.2 $73.6 $79.0 $78.7 $87.3 40% Hepsera $38.1 $38.7 $35.6 $
Slide 32: Letairis for Pulmonary Arterial Hypertension
Letairis for Pulmonary Arterial Hypertension ♦ Q1 2012 revenue of $87.3 million – 40% increase over Q1 2011 – 11% increase over Q4 2011 ♦ Letairis captured ~50% of the ERA market (all patients*) ♦ February 2012 approval of long term data in label – 3 year survival estimate of 79% versus historical c
Slide 33: Ranexa for Chronic Angina
Ranexa for Chronic Angina ♦ Q1 2012 product sales of $83.2 million – 22% increase over Q1 2011 – 1% decrease from Q4 2011 ♦ ~96,000 Ranexa prescribers in Q1 2012, up from ~94,000 in Q4 2011 ♦ ~177,000 patients received Ranexa in Q1 2012, up from ~174,000 in Q4 2011 ♦ Trials leading to new indication
Slide 34: Norbert Bischofberger, Ph.D.
Norbert Bischofberger, Ph.D. EVP, R&D and CSO April 26, 2012 34
Slide 35: Research and Development Focus
Research and Development Focus HIV/AIDS e Re as ise sp ira rD to ve ry Li Focused Efforts in Areas of Unmet Medical Need Inf gy lam lo ma co On tio n Cardiovascular & Metabolic 35
Slide 36: Pipeline Product Candidates
Pipeline Product Candidates Filed for Phase Marketing 1 2 3 Approval HIV/AIDS Quad Integrase STR (elvitegravir/FTC/TDF/cobicistat) U.S. and European Approvals Submitted Cobicistat (PK enhancer) Elvitegravir (integrase inhibitor) GS-7340 (nucleotide reverse transcriptase inhibitor) Liver Disease GS-7
Slide 37: Pipeline Product Candidates (cont'd)
Pipeline Product Candidates (cont’d) Phase 1 2 3 Respiratory Aztreonam for Inhalation Solution - Bronchiectasis GS-6624 (monoclonal antibody) - IPF Cardiovascular/Metabolic Ranolazine (late sodium current inhibitor) - Incomplete revascularization post PCI Ranolazine (late sodium current inhibitor) -
Slide 38: 47th Annual Meeting of the European Association for the Study of the Liver (EASL 2012)
47th Annual Meeting of the European Association for the Study of the Liver (EASL 2012) ♦ April 18 – 22, 2012 (Centre Convencions Internacional Barcelona – Barcelona, Spain) ♦ More than 9,000 attendees ♦ Gilead compounds featured in 30 plus posters or presentations, including: – 7 for GS-7977 – 7 Vir
Slide 39: GS-7977 at EASL (cont'd)
GS-7977 at EASL (cont’d) ♦ ATOMIC (Kowdley, et al.): 90% of treatment-naïve patients with HCV GT1 achieved SVR12 with an interferon-sparing 12-week regimen of GS- 7977 + PEG/RBV – Extending therapy for 24 weeks did not increase the response rate based upon SVR4 data across all arms – GS-7977/PEG/RBV
Slide 40: GS-7977 at EASL (cont'd)
GS-7977 at EASL (cont’d) ♦ SVR CONCORDANCE (Lawitz, et al.): 99% of patients across the program who achieved SVR4 for whom post-treatment Week 12 data are available achieved SVR12 ♦ AI444-40 (Sulkowski, et al.): GS-7977 + BMS-790052 cured 100% of GT1 and >90% of GT 2/3 infected treatment naive patie
Slide 41: GS-1101 is a Potent, Selective Small Molecule that Disrupts PI3Kδ Activation
GS-1101 is a Potent, Selective Small Molecule that Disrupts PI3Kδ Activation and Supportive Intercellular Signaling ♦ In multiple lymphoid primary tumors GS-1101 enhances apoptosis and increases the therapeutic efficacy of other agents when given in combination ♦ Patients with iNHL or CLL receiving
Slide 42: John F. Milligan, Ph.D.
John F. Milligan, Ph.D. President and Chief Operating Officer April 26, 2012 42
Slide 43: Continuing to Innovate in HIV
Continuing to Innovate in HIV QUAD GS-7340 STRs 2001 2001 2003 2003 2004 2004 2006 2006 2011 2011 2012 2012 2013 2013 2015 2015 Cobicistat/Atazanavir Cobicistat/Darunavir 43
Slide 44: Quad: First Integrase Containing Single Tablet Regimen for the Treatment of HIV
Quad: First Integrase Containing Single Tablet Regimen for the Treatment of HIV Truvada Market leading NRTI backbone + Elvitegravir Integrase Inhibitor with once daily dosing + Cobicistat Novel PK enhancer with no HIV activity, good chemical stability, and can be easily formulated as a tablet Quad ♦
Slide 45: Study 102 Quad versus Atripla Results
Study 102 Quad versus Atripla Results (CROI 2012) ♦ Efficacy of Quad non-inferior to Atripla – first fully powered study comparing single tablet daily HIV regimens – 88% vs 84%, respectively – High virologic suppression consistent across subgroups, including high HIV RNA at baseline ♦ Quad was well
Slide 46: Study 103 Quad versus Ritonavir-Boosted Atazanavir plus Truvada Results
Study 103 Quad versus Ritonavir–Boosted Atazanavir plus Truvada Results (CROI 2012) ♦ Efficacy of Quad was non-inferior to ATV/r+TDF/FTC – 90% vs 87%, respectively – Robust, durable, and consistent efficacy on all endpoints – High virologic suppression rates in all subgroups, including high HIV RNA
Slide 47: GS-7340 for HIV (CROI 2012)
GS-7340 for HIV (CROI 2012) ♦ GS-7340 25 mg, compared to TDF (Viread) 300 mg, achieves: – Greater antiviral activity in 10-day monotherapy – Higher intracellular TFV-DP by ~7-fold – Lower circulating plasma TFV by ~90% ♦ At 1/10th the dose of TDF 300 mg, GS-7340 can be formulated into new single-tab
Slide 48: Anticipated Key Pipeline Milestones in 2012
Anticipated Key Pipeline Milestones in 2012 HIV/AIDS Viread Q1 ; Received U.S. FDA approval of pediatric indication for Viread lower-strength tablets and oral powder formulations Q1 ; Initiate Phase 3b 48 week integrase inhibitor switch study (n = 50) Q1 ; Present 48 week data from Phase 3 Studies 1
Slide 49: Anticipated Key Pipeline Milestones in 2012 (cont'd)
Anticipated Key Pipeline Milestones in 2012 (cont’d) Liver Disease GS-9190 Q2 ; Present data from four drug all oral antiviral Ph 2 studies in treatment- GS-9451 naïve and treatment-experienced HCV patients GS-5885 Q2 ; Complete drug-drug interaction studies in HCV with GS-7977 Q2 ; Top-line SVR-4 d
Slide 50: Backup Slides
Backup Slides April 26, 2012 50
Slide 51: Total Royalty, Contract and Other Revenues
Total Royalty, Contract and Other Revenues ♦ Q1 2012 up 19% from Q1 2011 Key Metrics ♦ Q1 2012 increase from $100 $98 Q1 2011 due to: - Higher royalties for Volibris in Europe and Truvada in $75 $74 Asia, offset by lower $67 Tamiflu royalties $63 Sales in Millions $56 - Excluding Tamiflu, Royalty Co
Slide 52: European Total Product Sales Increased 10% Year-over-Year Excluding FX
European Total Product Sales Increased 10% Year-over-Year Excluding FX ♦ FX impact to European revenues was favorable $10.1 million QoQ and unfavorable $21.4 million YoY ♦ FX impact to international revenues (including ROW) was $800 favorable $12.2 million QoQ and unfavorable $16.4 million YoY $762
Slide 53: Other Selected Financial Information
Other Selected Financial Information Dec. 31, Mar. 31, 2011 2012 Cash, Cash Equivalents & Marketable Securities ($ in Millions) $9,964.0 $1,500.1 Other Income and (Expense), net ($24.8) ($124.0)^ (Non-GAAP) ($ in millions) Inventories ($ in Millions) $1,390.0 $1,418.0 Days Sales Outstanding (Account
Slide 54: Dilution from Outstanding Convertible Notes
Dilution from Outstanding Convertible Notes Dilutive Impact of Outstanding Notes Total 2013 2014 2016 Dilution Average share price Q1 2012 ($47.66) Convertible Notes $650M $1.25B $1.25B Conversion Price $38.10 $45.08 $45.41 Share Dilution 3.4M 1.5M 1.3M 6.2M Warrants Warrant Exercise Price $53.90 $5
Slide 55: Median CD4 Cell Count at Initiation of Therapy in the U.S. and Big 5 EU
Median CD4 Cell Count at Initiation of Therapy in the U.S. and Big 5 EU U.S. DHHS treatment guidelines IAS treatment guidelines updated in March 2012 updated in July 2010 350 350 346 331 325 325 325 304 300 300 275 275 250 250 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Total Total Total Q4 10 Q1 11 Q2 11 Q
Slide 56: Q1 2012 Earnings Results Conference Call and Webcast
Q1 2012 Earnings Results Conference Call and Webcast April 26, 2012 56