Gilead Sciences, Inc. · NASDAQ:GILD
Gilead Sciences — Q4 2012 Earnings Presentation
56 slides from Gilead Sciences's earnings presentation, Feb 4, 2013
Slide 1: Q4 2012 Earnings Results
Q4 2012 Earnings Results Conference Call and Webcast February 4, 2013
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: 2012 Major Accomplishments
2012 Major Accomplishments •HIV: – Launch of Complera/Eviplera in EU – Launch of Stribild in U.S. – Completed phase 2 study TAF (GS-7340) •HCV: – Completion of enrollment of four phase 3 studies of Sofosbuvir (GS-7977) – Initiation of 1st phase 3 FDC study of GS-7977/GS-5885 •Oncology: – Initiation
Slide 4: Q4 2012 Earnings Call Agenda
Q4 2012 Earnings Call Agenda Introduction Patrick O’Brien, VP, Investor Relations Commentary John Martin, Chairman and Chief Executive Officer Kevin Young, EVP, Commercial Operations Robin Washington, SVP and CFO Q&A Also: John Milligan, President and COO Norbert Bischofberger, EVP, R&D and CSO 4
Slide 5: John C. Martin, Ph.D.
John C. Martin, Ph.D. Chairman and Chief Executive Officer February 4, 2013
Slide 6: Pipeline Product Candidates
Pipeline Product Candidates Phase Regulatory 1 2 3 Submissions HIV/AIDS Stribild (EVG/FTC/TDF/cobicistat) European Regulatory Submission Cobicistat (PK enhancer) U.S. and European Regulatory Submissions Elvitegravir (integrase inhibitor) U.S. and European Regulatory Submissions STR of EVG/TAF/FTC/co
Slide 7: Pipeline Product Candidates (cont'd)
Pipeline Product Candidates (cont’d) Phase 1 2 3 Oncology/Inflammation Idelalisib (PI3K delta inhibitor) - CLL Idelalisib (PI3K delta inhibitor) - iNHL Simtuzumab (monoclonal antibody) - Myelofibrosis Simtuzumab (monoclonal antibody) - Pancreatic Cancer Simtuzumab (monoclonal antibody) - Colorectal
Slide 8: Sofosbuvir Phase 3 Programs: GT2/3
Sofosbuvir Phase 3 Programs: GT2/3 Study Weeks 12 16 24 28 36 SOF 400mg QD Overall SVR12 67% FISSION N=253 + RBV (97% in GT-2 and 56% in GT-3) Genotype 2/3 (naïve) Overall SVR12 67% N=243 Peg-IFN + RBV (78% in GT-2 and 63% in GT-3) study commenced December 2011; fully enrolled end of April 2012 SOF
Slide 9: Sofosbuvir Phase 3 Program: GT 1,4,5 and 6
Sofosbuvir Phase 3 Program: GT 1,4,5 and 6 Study Weeks 12 24 NEUTRINO: Treatment-naïve patients, multicenter, open-label study SOF 400 mg QD + Overall SVR12 90% N=327 PEG 180 µg/week + (89% in GT-1 (n=292); 97% in GT-4, 5 or 6 (n=35)) RBV 500 or 600 mg BID ● Primary objective: – Determine efficacy o
Slide 10: Sofosbuvir Regulatory Filings
Sofosbuvir Regulatory Filings • Anticipate filing NDA/MAA Q2 2013: – GT 2/3 with RBV • Treatment naïve, interferon intolerant and experienced patients – GT 1, 4, 5 and 6 with PEG & RBV • Treatment naïve patients 10
Slide 11: ION-1 Sofosbuvir/Ledipasvir Phase 3 FDC Study
ION-1 Sofosbuvir/Ledipasvir Phase 3 FDC Study 12 weeks 24 weeks SOF 400 mg + LDV SVR12 90 mg FDC SOF 400 mg +LDV 90 mg FDC SVR12 GT1 Treatment Naïve Patients SOF 400 mg + LDV SVR12 n=200/arm 90 mg FDC/RBV SOF 400 mg + LDV 90 mg FDC/RBV SVR12 • Interim analysis (SVR4 of the 12 week arms) after 200 pa
Slide 12: ION-2 Sofosbuvir/Ledipasvir Phase 3 FDC Study
ION-2 Sofosbuvir/Ledipasvir Phase 3 FDC Study 12 weeks 24 weeks SOF 400 mg + LDV 90 mg FDC SVR12 SOF 400 mg + LDV 90 mg FDC + RBV SVR12 GT1 Treatment Experienced Patients SOF 400 mg + LDV 90 mg FDC SVR12 n=100/arm SOF 400 mg + LDV SVR12 90 mg FDC + RBV Primary Endpoint: • Determine antiviral efficac
Slide 13: STR of TAF Phase 2 Studies in Treatment Naïve HIV-1 Patients
STR of TAF Phase 2 Studies in Treatment Naïve HIV-1 Patients Study 292: (Positive 24 week top-line data October 31, 2012) Treatment Arm 1 (n=114) STR TAF 10mg/EVG 150 mg/COBI 150 mg/FTC 200 mg 24 weeks + placebo-to-match Stribild Similar virologic Screening response to Stribild at (n = 171) Treatmen
Slide 14: STR of TAF Phase 3 Study in Treatment Naïve HIV-1 Patients
STR of TAF Phase 3 Study in Treatment Naïve HIV-1 Patients Study 104: Treatment Arm 1 (n=420) STR TAF 10mg/EVG 150 mg/COBI 150 mg/ 48 weeks FTC 200 mg + placebo-to-match Stribild Screening Treatment Arm 2 (n=420) (n = 840) Stribild + placebo-to-match STR EVG 150 mg/ 48 weeks COBI 150 mg/FTC200 mg/TA
Slide 15: Idelalisib Phase 3 Studies Relapsed-refractory CLL Patients
Idelalisib Phase 3 Studies Relapsed-refractory CLL Patients Study 115 n=195 Idelalisib + Bendamustine + Rituximab Screening n=195 Placebo + Bendamustine + Rituximab Study 116 n=80 Idelalisib + Rituximab Screening n=80 Placebo + Rituximab Study 119 n=105 Idelalisib + Ofatumumab Screening n=105 Ofatum
Slide 16: Idelalisib in Combo with Rituximab Phase 3 Studies in iNHL Patients
Idelalisib in Combo with Rituximab Phase 3 Studies in iNHL Patients Randomized, double-blind initial combo therapy Rituximab 375 mg/m2 weekly x 4, then every 8 weeks x 4 Arm A Study 124 n=250 Idelalisib 150 mg BID Screening Arm B Rituximab 375 mg/m2 weekly x 4, then every 8 weeks x 4 n=125 Placebo B
Slide 17: Simtuzumab: Study 0101
Simtuzumab: Study 0101 Pancreatic Cancer Phase 2 randomized study combined with gemcitabine as first-line treatment for metastatic pancreatic adenocarcinoma Gemcitabine + Arm 1 (n=78) Placebo Screening Gemcitabine + Arm 2 (n=78) Simtuzumab 700 mg Arm 3 (n=78) Gemcitabine + Simtuzumab 200 mg ● Primar
Slide 18: Simtuzumab: Study 0203
Simtuzumab: Study 0203 Colorectal Cancer (CRC) Phase 2 study to evaluate simtuzumab combined with FOLFIRI as second-line treatment for metastatic KRAS mutant colorectal adenocarcinoma FOLFIRI + Arm 1 (n=85) Placebo Screening FOLFIRI + Arm 2 (n=85) Simtuzumab 700 mg Arm 3 (n=85) FOLFIRI + Simtuzumab
Slide 19: Simtuzumab: Study 102
Simtuzumab: Study 102 Myelofibrosis Phase 2 study to evaluate simtuzumab in adult patients with Primary, Post Polycythemia Vera or Post Essential Thrombocythemia Myelofibrosis Stage 1 Stage 2 Arm 1 (n=12) Arm 1 (n=15) Ruxilitinib + Simtuzumab Patients Simtuzumab 700 mg receiving 700 mg Ruxilitinib A
Slide 20: Significant Pipeline Milestones in 2H 2012 and 1H 2013
Significant Pipeline Milestones in 2H 2012 and 1H 2013 HIV/AIDS Q4 12 Release top-line 96-week data from Phase 3 Studies 102 and 103 at HIV11 (Glasgow) Stribild Q4 12 Raltegravir to Stribild 12-week switch study data Q4 12 Initiate dosing in WAVES study Stribild to ATV/r + TVD in women Q2 13
Slide 21: Significant Pipeline Milestones in 2H 2012 and 1H 2013 (cont'd)
Significant Pipeline Milestones in 2H 2012 and 1H 2013 (cont’d) Liver Disease Q4 12 Initiate Phase 3 FDC of Sofosbuvir + Ledipasvir study in GT-1 HCV patients Q4 12 Present SVR-4 data from Phase 2 Electron Sofosbuvir + Ledipasvir + RBV 12-week study in GT-1 treatment naïve HCV patients at AASLD
Slide 22: Significant Pipeline Milestones in 2H 2012 and 1H 2013 (cont'd)
Significant Pipeline Milestones in 2H 2012 and 1H 2013 (cont’d) Cardiovascular Ranexa Q4 12 Complete Phase 4 Ranolazine study (TERISA) Respiratory Simtuzumab Q1 13 Initiate Phase 2 study for IPF Top-line data from Cayston Phase 3 Aztreonam for Non-CF Cayston Q3 13 Bronchiectasis Inflammation/O
Slide 23: Kevin Young CBE
Kevin Young CBE EVP, Commercial Operations February 4, 2013
Slide 24: Total Product Sales
Total Product Sales Q4 2012 up 18% over Q4 2011 $3,000 $2,358 $2,511 $2,500 $2,321 $2,133 $2,208 $2,000 In Millions $1,500 $1,000 $500 $0 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 24
Slide 25: Product Sales by Geography
Product Sales by Geography Q4 2012 Net Product Sales: $2,511 $ in millions U.S.: $1,503 Europe: $813 (60% of Total) (32% of Total) (22% YoY Growth) (9% YoY Growth) Other International: $195 (8% of Total) (31% YoY Growth) 25
Slide 26: U.S. HIV Patient Dynamics
U.S. HIV Patient Dynamics Only ~50% of HIV Infected Patients U.S. Total Currently Being Treated HIV Infected 1,200 1,200 1,000 Total Treated Patients with ARV On a Gilead Product Patients in Thousands 800 644 611 600 555 508 521 484 82% 79% 400 79% 76% 73% 65% 200 0 2007 2008 2009 2010 2011 2012 Sou
Slide 27: Antiviral Franchise Q4 2012 Financial Performance and Key Metrics
Antiviral Franchise Q4 2012 Financial Performance and Key Metrics Q4 2012 up 17% from Q4 2011 Key Metrics U.S.: $2,500 ● Growth driven by solid $2,168 demand $2,012 $2,036 $2,000 $1,926 ● Inventory levels rose to the $1,860 mid-point of the range ● Purchasing above demand in $743.4 Sales in Millions
Slide 28: Atripla Q4 2012 Financial Performance and Key Metrics
Atripla Q4 2012 Financial Performance and Key Metrics Q4 2012 up 6% from Q4 2011 Key Metrics* $1,000 $917 $863 $888 $904 U.S.: $865 ● Most prescribed regimen in HIV with 33% of all $750 treated patients $281.5 $270.3 $267.5 $270.7 $280.1 ● Captured 33% of naïve Sales in Millions patient share $500 E
Slide 29: Truvada Q4 2012 Financial Performance and Key Metrics
Truvada Q4 2012 Financial Performance and Key Metrics Key Metrics* $1,000 Q4 2012 up 12% from Q4 2011 U.S.: $804 $833 ● Most prescribed product $786 $746 $758 in HIV with 37% of all $750 treated patients ● Captured 34% of naïve Sales in Millions patient share $334.9 $317.0 $321.9 $329.9 $328.8 Europ
Slide 30: Complera/Eviplera Q4 2012 Financial Performance and Key Metrics
Complera/Eviplera Q4 2012 Financial Performance and Key Metrics Key Metrics* $125 $118 U.S.: $99 ● Captured 24% of naïve $100 patient share $27.9 $14.3 ● Primarily being used in healthier patients, African Sales in Millions $73 $75 Americans and women of $7.2 child bearing age $52 Europe & Other Int
Slide 31: U.S. Complera and Stribild Driving Gilead STR Share of Initiations
U.S. Complera and Stribild Driving Gilead STR Share of Initiations 3rd Agent Penetration of Naïve Market 70 69 2010 Q4 2011 Q4 (1st Qtr of Complera) 59 2012 Q4 (1st Qtr of Stribild) 60 50 50 50 40 40 % of naive pts 30 25 25 19 19 20 16 15 14 10 10 10 9 9 8 6 6 5 4 0 Gilead STR Atripla Complera Strib
Slide 32: U.S.: Stribild and Complera Source of Business
U.S.: Stribild and Complera Source of Business Stribild Complera First ~3 Months of Launch First ~3 Months of Launch (Aug – Nov 2012) (Aug– Nov 2011 ) Switch INI 5% Switch INI 13% Naïve Naïve 32% 30% Switch PI Switch PI 19% 24% Switch Switch Switch Other Atripla Switch Other 20% 13% Atripla 13% 26%
Slide 33: Europe: Eviplera Source of Business – Q4 2012
Europe: Eviplera Source of Business – Q4 2012 UK Germany France Switch INI Switch INI Switch INI 2% 2% 8% Switch PI 15% Naïve 28% Switch Naïve Other Switch PI Naïve Switch PI 40% 23% 44% 10% 42% Switch Switch Atripla Atripla Switch 22% 33% Switch Atripla Other Switch 18% 7% Other 6% Launched Q4 2011
Slide 34: Robin L. Washington
Robin L. Washington SVP and Chief Financial Officer February 4, 2013
Slide 35: Total Revenues
Total Revenues Q4 2012 up 18% over Q4 2011 $3,000 $2,588 $2,500 $2,405 $2,427 $2,200 $2,282 $2,000 In Millions $1,500 $1,000 $500 $0 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 35
Slide 36: Non-GAAP R&D Expenses
Non-GAAP R&D Expenses Q4 2012 up 17% from Q4 2011 Key Metrics ● Higher R&D expenses in $450 Q4 2012 over Q4 2011 $409 due primarily to: $400 $384 $371 - Continued progression of $349 $350 $331 our Phase 3 studies and investment in our product $300 pipeline, particularly in liver disease and oncology
Slide 37: Non-GAAP SG&A Expenses
Non-GAAP SG&A Expenses Q4 2012 up 15% from Q4 2011 Key Metrics ● Higher SG&A expenses in $350 $332 Q4 2012 over Q4 2011 driven primarily by: $308 $299 $300 $290 $287 - Increased expenses to support the ongoing $250 growth of the business • In Millions $200 Pharmaceutical excise tax for 2012 resultin
Slide 38: Operating Cash Flows
Operating Cash Flows $1,500 $1,291 ** $1,250 $1,000 $978 In Millions $745 $706 $750 $500 $453* $250 $0 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 * Q1 2012 included a $194 million payment to Pharmasset employees as part of stock based compensation & other payments. ** Q2 2012 included $460 million in collections
Slide 39: Outstanding Debt
Outstanding Debt At Acquisition Close Dec. 31, Jan. 2012* 2012 Senior Credit Facilities** $2.15 B $0.75 B Senior Unsecured Notes** $4.70 B $4.70 B Convertible Notes** $3.15 B $2.93 B Total Debt** $10.00 B $8.38 B Debt to Non-GAAP EBITDA*** ~2.3x ~1.8x Goal by Mid 2013 – Debt to Non-GAAP EBITDA of ~1
Slide 40: 2012 Share Repurchase Activity
2012 Share Repurchase Activity Dollar Type of Share Average Amount Repurchase Number Purchase Price (In Millions) Q1 2012 Open Market $20.8 804,526 $25.81 Q2 2012 Open Market $240.9 9,688,372 $24.87 Q3 2012 Open Market $205.2 6,920,316 $29.65 Q4 2012 Open Market $200.0 5,641,776 $35.45 Totals $666.9
Slide 41: Full Year 2013 Guidance
Full Year 2013 Guidance ($ in millions, except percentages and per share amounts) Provided on 2/4/13 Net Product Sales $ 10,000 – $ 10,200 Non-GAAP* Product Gross Margin 74% – 76% R&D $ 1,800 – $ 1,900 SG&A $ 1,550 – $ 1,650 Effective Tax Rate 26% – 28% Diluted EPS Impact of Acquisition-Related, $ 0
Slide 42: Full Year 2013 Guidance
Full Year 2013 Guidance ($ in millions, except percentages and per share amounts) Projected product gross margin GAAP to non-GAAP reconciliation: 2/4/13 GAAP projected product gross margin 74.5% - 76.5% Acquisition-related amortization of purchased intangibles 0.5% - 0.5% Non-GAAP projected product
Slide 43: Appendix Slides
Appendix Slides February 4, 2013
Slide 44: Financial Highlights: Q4 2012
Financial Highlights: Q4 2012 (US$ millions, except per share amounts) Q4 2012 Q4 2011 % Change Net Product sales $ 2,511 $ 2,133 18% Antiviral products 2,168 1,860 17% Atripla 917 863 6% Truvada 833 746 12% Viread 227 191 19% Complera/Eviplera 118 20 498% Stribild 40 NA NM Letairis 116 79 48% Ranex
Slide 45: Financial Highlights: Fiscal Year
Financial Highlights: Fiscal Year (US$ millions, except per share amounts) FY 2012 FY 2011 % Change Net Product sales $ 9,398 $ 8,102 16% Antiviral products 8,142 7,050 15% Atripla 3,574 3,225 11% Truvada 3,181 2,875 11% Viread 849 738 15% Complera/Eviplera 342 39 783% Stribild 58 NA NM Letairis 410
Slide 46: Other Product Sales
Other Product Sales Product Q4 Q1 Q2 Q3 Q4 FY %▲ From Q4 ($ in Millions) 2011 2012 2012 2012 2012 2012 2011 Viread $190.9 $191.7 $215.4 $214.9 $226.7 $848.7 19% Letairis $78.7 $87.3 $101.6 $105.1 $116.1 $410.1 48% Ranexa $83.7 $83.2 $95.6 $95.1 $99.1 $372.9 19% AmBisome $80.8 $84.8 $83.7 $87.4 $90.8
Slide 47: Total Royalty, Contract and Other Revenues
Total Royalty, Contract and Other Revenues Q4 2012 up 16% from Q4 2011 Key Metrics ● Q4 2012 increased from $100 Q4 2011 due to: $84 - Increase in other royalty $74 $77 revenues, which $75 $67 $69 included higher royalties from GSK for Volibris Sales in Millions and Japan Tobacco for $50 Truvada $28
Slide 48: European Total Product Sales Increased 7% Year-over-Year Excluding FX
European Total Product Sales Increased 7% Year-over-Year Excluding FX • FX impact to European revenues was favorable $9 million QoQ and favorable $8 million YoY • FX impact to international revenues (including ROW) was favorable $10 million QoQ and favorable $12 million YoY $825 • FX impact to pre-t
Slide 49: Non-GAAP Product Gross Margins
Non-GAAP Product Gross Margins Key Metrics 100% ● Q4 2012 decreased sequentially from 73.4% 74.5% 74.3% 75.5% 73.8% Q3 2012 due to: 75% - Higher royalty expenses including one-time adjustments and higher 50% royalty tiers - Increase in non-retail units 25% - Minimal impact from Stribild 0% Q4 11 Q1
Slide 50: Non-GAAP Operating Margins
Non-GAAP Operating Margins 60% 47.3% 47.2% 48.5% 45.9% 45.2% 40% 20% 0% Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Note: Non-GAAP operating margins exclude acquisition-related, restructuring and stock-based compensation expenses. 50
Slide 51: Non-GAAP Effective Tax Rate
Non-GAAP Effective Tax Rate FY Q4 Q4 FY 2011 2011 2012** 2012* Effective Tax Rate 24.6% 23.7% 25.7% 26.8% ● Effective tax rate increased year-over-year due to: – Geographic mix of earnings – Expiration of the federal R&D tax credit at the end of 2011 – The 2012 Taxpayer Relief Act was signed into la
Slide 52: Non-GAAP Diluted EPS
Non-GAAP Diluted EPS Q4 2012 up 4% from Q4 2011 $0.75 $0.49 $0.50 $0.50 $0.50 ^ $0.49 $0.45 $0.25 $0.00 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Notes: Non-GAAP diluted EPS excludes after-tax acquisition-related, restructuring and stock-based compensation expenses. Adjusted for 2-for-1 stock split that was eff
Slide 53: GAAP to Non-GAAP Diluted Earnings Per Share Reconciliation
GAAP to Non-GAAP Diluted Earnings Per Share Reconciliation Q4 2012 GAAP Diluted EPS $0.47 Stock-Based Compensation Expenses $0.03 Acquisition-Related Expenses $0.01 Non-GAAP Diluted EPS $0.50 Note: Amount may not sum due to rounding. 53
Slide 54: Other Selected Financial Information
Other Selected Financial Information ($ in Millions, except days sales outstanding) Sept. 30, Dec. 31, 2012 2012 Cash, Cash Equivalents & Marketable Securities $2,651.1 $2,582.1 Interest Expense and ($92.8) ($84.5) Other Income (Expense), net Inventories $1,617.4 $1,745.0 Days Sales Outstanding (Acc
Slide 55: Dilution from Outstanding Convertible Notes
Dilution from Outstanding Convertible Notes Dilutive Impact of Outstanding Notes 2013 2014 2016 Total Notes Notes Notes Dilution* Average share price Q4 2012 $35.65 FY 2012 $28.26 Convertible Notes $650M^ $1.25B $1.25B (notional at issuance) Conversion Price $19.05 $22.54 $22.71 Q4 2012 Share Diluti
Slide 56: Q4 2012 Earnings Results
Q4 2012 Earnings Results Conference Call and Webcast February 4, 2013