Gilead Sciences, Inc. · NASDAQ:GILD
Gilead Sciences — Q2 2012 Earnings Presentation
55 slides from Gilead Sciences's earnings presentation, Jul 26, 2012
Slide 1: Q2 2012 Earnings Results Conference Call and Webcast
Q2 2012 Earnings Results Conference Call and Webcast July 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: Q2 2012 Corporate Highlights
Q2 2012 Corporate Highlights ♦ 30 HCV and HBV abstracts presented at EASL, including: – Interim Phase 2 ATOMIC data examining 12-week course of treatment with investigational once-daily nucleotide GS-7977 + Peg- IFN & RBV in treatment-naïve patients with GT1 chronic HCV • 90 percent of patients (n=4
Slide 4: Q2 2012 Corporate Highlights (cont'd)
Q2 2012 Corporate Highlights (cont’d) ♦ FDA Advisory Committee voted to support approval of once-daily oral Truvada for PrEP to reduce the risk of HIV-1 infection among uninfected adults ♦ FDA Advisory Committee voted 13 to 1 in support of approval of Quad for the treatment of HIV-1 infection in tre
Slide 5: Q2 2012 Earnings Call Agenda
Q2 2012 Earnings Call Agenda Introduction Patrick O’Brien, Senior Director, Investor Relations Commentary Robin Washington, SVP and CFO John Martin, Chairman and Chief Executive Officer Norbert Bischofberger, EVP, R&D and CSO Q&A All Senior Management Including: John Milligan, President and COO Kevi
Slide 6: Robin Washington
Robin Washington SVP and Chief Financial Officer July 26, 2012 6
Slide 7: Financial Highlights: Total Product Sales
Financial Highlights: Total Product Sales ♦ Q2 2012 up 14% over Q2 2011 $2,500 $2,321 $2,208 $2,066 $2,133 $2,040 $2,000 $1,500 In Millions $1,000 $500 $0 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 7
Slide 8: Product Sales by Geography
Product Sales by Geography Q2 2012 Total Product Sales: $2,321 $ in millions U.S.: $1,365 Europe: $786 (59% of Total) (34% of Total) (21% YoY Growth) (3% YoY Growth) Other International: $170 (7% of Total) (15% YoY Growth) 8
Slide 9: Antiviral Franchise Q2 2012 Financial Performance and Key Metrics
Antiviral Franchise Q2 2012 Financial Performance and Key Metrics ♦ Q2 2012 up 14% from Q2 2011 Key Metrics U.S.: $2,500 ♦ Inventory levels remained at the low-end of the range – $2,012 consistent with prior quarters $2,000 $1,926 $1,795 $1,860 $1,764 ♦ Significant non-retail purchasing – ahead of S
Slide 10: Other Product Sales
Other Product Sales Product Q2 Q3 Q4 Q1 Q2 YTD %▲ From Q2 ($ in Millions) 2011 2011 2011 2012 2012 2012 2011 Viread $185.7 $192.9 $190.9 $191.7 $215.4 $407.1 16% Letairis $73.6 $79.0 $78.7 $87.3 $101.6 $188.9 38% Ranexa $86.1* $82.0 $83.7 $83.2 $95.6 $178.8 11% AmBisome $88.6 $82.2 $80.8 $84.8 $83.7
Slide 11: Non-GAAP R&D Expenses
Non-GAAP R&D Expenses ♦ Q2 2012 up 41% from Q2 2011 Key Metrics ♦ Higher R&D expenses in $400 Q2 2012 over Q2 2011 due $371 $349 primarily to: $331 - Continued advancement of $300 the product pipeline, $263 $269 particularly in the liver disease and oncology In Millions franchises $200 $100 $0 Q2 11
Slide 12: Non-GAAP SG&A Expenses
Non-GAAP SG&A Expenses ♦ Q2 2012 up 8% from Q2 2011 Key Metrics ♦ Higher SG&A expenses in $350 Q2 2012 over Q2 2011 $308 $299 driven primarily by: $300 $290 $276 - Increased expenses to $265 support the ongoing $250 growth of the business ♦ Pharmaceutical excise tax In Millions $200 resulting from U
Slide 13: Financial Highlights: Operating Cash Flows
Financial Highlights: Operating Cash Flows Key Metrics $1,500 ♦ Cash flows from operating activities included: $1,291 $1,250 - $460 million of accounts receivable reduction in $978 Spain as a result of $1,000 $943 $897 factoring and collections In Millions under the Ministry of $750 Finance and Publ
Slide 14: Other Selected Financial Information
Other Selected Financial Information ($ in Millions, except days sales outstanding) Mar. 31, Jun. 30, 2012 2012 Cash, Cash Equivalents & Marketable Securities $1,500.1 $2,271.7 Interest Expense (Non-GAAP) and ($124.0)^ ($89.5) Other Income (Expense), net Inventories $1,418.0 $1,603.4 Days Sales Outs
Slide 15: Pharmasset Acquisition Financing
Pharmasset Acquisition Financing At Acquisition Close Jun. 30, Funding Sources Jan. 2012 2012 Deal Senior Credit Facilities $2.15 B $1.45 B Structure Senior Unsecured Notes $3.70 B $3.70 B (3, 5, 10 and 30 year maturities) Debt to EBITDA* ~2.4x ~2.3x Goal by End of Q2 2013 - Debt to EBITDA of ~1.5x
Slide 16: 2012 YTD Share Repurchase Activity
2012 YTD Share Repurchase Activity Dollar Share Type of Average Amount Number Repurchase Purchase Price (In Millions) (In Millions) Q1 2012 Open Market $20.8 0.4 $51.62 Q2 2012 Open Market $240.9 4.8 $49.74 Totals $261.7 5.2 $49.88 $5.0 billion share repurchase program authorized January 20, 2011, w
Slide 17: Full Year 2012 Guidance
Full Year 2012 Guidance ($ in millions, except percentages and per share amounts) Original Guidance Guidance Guidance Updated Updated 2/2/12 4/26/12 7/26/12 Net Product Sales $ 8,600 – $ 8,800 Unchanged $ 8,800 – $ 9,000 Non-GAAP* Product Gross Margin 73% – 75% Unchanged Unchanged R&D $ 1,325 – $ 1,
Slide 18: Full Year 2012 Guidance Reconciliation
Full Year 2012 Guidance ($ in millions, except percentages and per share amounts) Projected product gross margin GAAP to non-GAAP reconciliation: 7/26/12 GAAP projected product gross margin 72% - 74% Acquisition-related amortization of purchased intangibles 1% - 1% Non-GAAP projected product gross m
Slide 19: John Martin, Ph.D. Chairman and Chief Executive Officer
John Martin, Ph.D. Chairman and Chief Executive Officer July 26, 2012 19
Slide 20: Truvada for PrEP Approval
Truvada for PrEP Approval ♦ On May 10, 2012, the FDA’s Antiviral Drugs Advisory Committee voted to support approval of once-daily oral Truvada for PrEP ♦ FDA approved once-daily oral Truvada in combination with safer sex practices, to reduce the risk of sexually acquired HIV-1 infection in adults at
Slide 21: Quad: First Integrase Containing Single Tablet Regimen for 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 22: XIX International AIDS Conference (World AIDS 2012)
XIX International AIDS Conference (World AIDS 2012) ♦ July 22– 27, 2012 in Washington, DC ♦ 35 Total Abstracts Accepted – 2 for Elvitegravir including: • Study 145: 96-Week Efficacy and Safety Results (oral presentation) • Study 145: 96-Week Integrase Resistance – 1 for Cobicistat • Study 114: Cobic
Slide 23: Anticipated Key Pipeline Milestones in 2012
Anticipated Key Pipeline Milestones in 2012 HIV/AIDS Q3 U.S. FDA marketing approval anticipated (PDUFA August 27, 2012) Quad 2H Release top-line 96 week data from Phase 3 Studies 102 and 103 Q4 RAL 12 week switch study data Q2 ; U.S. FDA advisory committee panel meeting for PrEP filing (May 10
Slide 24: Anticipated Key Pipeline Milestones in 2012 (cont'd)
Anticipated Key Pipeline Milestones in 2012 (cont’d) Liver Disease GS-5885 Q2 ; Complete drug-drug interaction studies in HCV with GS-7977 Q2 ; Top-line SVR-4 data from Phase 2 Electron GT-1 in HCV patients Q2 ; Top-line SVR-4 data from Phase 2 Quantum study in HCV patients Q2 ; Initiate Phase 3 stu
Slide 25: Norbert Bischofberger, Ph.D.
Norbert Bischofberger, Ph.D. EVP, R&D and CSO July 26, 2012 25
Slide 26: Pipeline Product Candidates: HIV and Liver Disease
Pipeline Product Candidates: HIV and Liver Disease Phase Regulatory 1 2 3 Submissions HIV/AIDS Quad Integrase STR (elvitegravir/FTC/TDF/cobicistat) U.S. and European Regulatory Submissions Cobicistat (PK enhancer) U.S. and European Regulatory Submissions Elvitegravir (integrase inhibitor) U.S. and E
Slide 27: Pipeline Product Candidates: Respiratory, Cardiovascular/Metabolic and Oncology/Inflammation
Pipeline Product Candidates: Respiratory, Cardiovascular/Metabolic and Oncology/Inflammation Phase 1 2 3 Respiratory Aztreonam for Inhalation Solution - Bronchiectasis GS-6624 (monoclonal antibody) - IPF GS-5806 - Respiratory Syncytial Virus Cardiovascular/Metabolic Ranolazine (late sodium current i
Slide 28: GS-7340 for HIV: Novel Nucleotide Prodrug Advancing in the Clinic
GS-7340 for HIV: Novel Nucleotide Prodrug Advancing in the Clinic ♦ Novel prodrug of tenofovir that specifically targets the lymphatic system, the primary site of HIV replication ♦ GS-7340 is a potential improvement over Viread – Safety and efficacy – Smaller size allows for fixed-dose formulations
Slide 29: GS-1101 Phase 3 Studies in CLL
GS-1101 Phase 3 Studies in CLL ♦ Studies 115 and 116 in relapsed-refractory CLL patients (Double-Blind Continuing Therapy) Study 116 (Randomized Double-Blind Initial Therapy) Until PD GS-1101 150 mg BID + Arm 1 (n=80) Rituximab 375 mg/m2 week 0 + GS-1101 150 mg BID Screening Rituximab 500 mg/m2 week
Slide 30: ELECTRON Phase 2 Study Arms
ELECTRON Phase 2 Study Arms: Focus on Outcomes from HCV GT1 Arms to Support Phase 3 Study Weeks 4 8 12 16 24 36 (SVR 4) (SVR 12) (SVR 24) 100% 100% 100% N = 10 GS-7977 400 mg QD + RBV (GT 2/3) GS-7977 400 mg QD + RBV + Peg- 100% 100% 100% N=9 IFN (GT 2/3) GS-7977 + RBV 100% 100% 100% N = 10 GS-7977
Slide 31: Quantum Phase 2 HCV Trial Design
Quantum Phase 2 HCV Trial Design: Evaluating all Genotypes in Treatment-Naïve Patients Study Weeks 2-8 12 GS-938 300 mg Discontinued GS-938 300 mg + Discontinued GS-7977 400 mg SVR 4 53% 10/19 in GT 1 N=~25 GS-7977 400 mg QD +RBV GS-938 300 mg + GS-7977 400 mg + Discontinued N=239 RBV GS-938 300 mg
Slide 32: GS-7977 NIAID Study
GS-7977 NIAID Study ♦ GS-7977 + 500-600mg BID vs. 600 QD RBV in GT-1 HCV infected treatment-naïve patients 24 Weeks 48 Weeks 100% SVR4 (9/9) Part A (n=10) GS-7977 + RBV (BID) (n=25) GS-7977 + RBV (BID) Part B (n=25) GS-7977 + RBV (QD) 32
Slide 33: GS-7977 Phase 3 Programs: GT2/3
GS-7977 Phase 3 Programs: GT2/3 Study Weeks 12 16 24 28 36 GS-7977 400mg QD FISSION N=~250 SVR12 + RBV Genotype 2/3 (naïve) N=~250 Peg-IFN + RBV SVR12 study commenced December 2011, fully enrolled end of April 2012 GS-7977 400mg QD SVR12 POSITRON N=~180 + RBV Genotype 2/3 (IFN intolerant) GS-7977 pl
Slide 34: GS-7977 Phase 3 Program: GT 1,4,5,6
GS-7977 Phase 3 Program: GT 1,4,5,6 Study Weeks 12 24 NEUTRINO: Treatment-naïve patients, multicenter, open-label study GS-7977 400 mg QD + SVR 12 N=~300 PEG 180 µg/week + RBV 500 or 600 mg BID ♦ Primary objective: – Determine efficacy of 12 weeks of treatment with GS-7977+PEG+RBV as measured by SVR
Slide 35: GS-7977 Regulatory Filings
GS-7977 Regulatory Filings ♦ With positive data, anticipate filing NDA/MAA mid-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 35
Slide 36: GS-7977/GS-5885 Phase 3 Study
GS-7977/GS-5885 Phase 3 Study 12 weeks 24 weeks GS-7977/GS-5885 FDC SVR12 GS-7977/GS-5885 FDC SVR12 GT1 Treatment Naïve Patients GS-7977/GS-5885 FDC/RBV SVR12 n=200/arm GS-7977/GS-5885 FDC/RBV SVR12 ♦ Interim analysis (SVR4 of the 12 week arms) after 200 patients (50/arm) have been enrolled ♦ Design
Slide 37: Appendix Slides
Appendix Slides July 26, 2012 37
Slide 38: Financial Highlights: Q2 2012
Financial Highlights: Q2 2012 (US$ millions, except per share amounts) Q2 2012 Q2 2011 % Change Product sales $ 2,321 $ 2,040 14% Antiviral products 2,012 1,764 14% Atripla 904 822 10% Truvada 786 711 10% Viread 215 186 16% Complera/Eviplera 73 - Letairis 102 74 38% Ranexa 96 86 11% AmBisome 84 89 (
Slide 39: Financial Highlights: Year to Date
Financial Highlights: Year to Date (US$ millions, except per share amounts) YTD 2012 YTD 2011 % Change Product sales $ 4,530 $ 3,903 16% Antiviral products 3,938 3,395 16% Atripla 1,792 1,567 14% Truvada 1,544 1,384 12% Viread 407 354 15% Complera/Eviplera 125 - Letairis 189 136 39% Ranexa 179 154 1
Slide 40: Financial Highlights: Non-GAAP Diluted EPS
Financial Highlights: Non-GAAP Diluted EPS ♦ Q2 2012 down 1% from Q2 2011 $1.25 $1.02 $0.99 $1.00 $0.97 $1.00 $0.91^ $0.75 $0.50 $0.25 $0.00 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Notes: Non-GAAP diluted EPS excludes after-tax acquisition-related, restructuring and stock-based compensation expenses. ^ Includ
Slide 41: GAAP to Non-GAAP Earnings Per Share Reconciliation
GAAP to Non-GAAP Earnings Per Share Reconciliation Three Months Ended Jun. 30, 2012 GAAP EPS $0.91 Stock-Based Compensation Expenses $0.05 Restructuring Expenses $0.01 Acquisition-Related Expenses $0.01 Non-GAAP EPS $0.99 Note: Amounts may not sum due to rounding. 41
Slide 42: Financial Highlights: Total Revenues
Financial Highlights: Total Revenues ♦ Q2 2012 up 13% over Q2 2011 $2,500 $2,405 $2,282 $2,137 $2,200 $2,122 $2,000 $1,500 In Millions $1,000 $500 $0 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 42
Slide 43: Total Royalty, Contract and Other Revenues
Total Royalty, Contract and Other Revenues ♦ Q2 2012 down 14% from Q2 2011 Key Metrics ♦ Q2 2012 decrease from $100 $98 Q2 2011 due to: - Lower Tamiflu royalties $84 - Excluding Tamiflu, Royalty $75 $74 Contract and Other $67 Revenues increased by Sales in Millions $56 $8.8 million or 19% in Q2 2012
Slide 44: Non-GAAP Product Gross Margins
Non-GAAP Product Gross Margins Key Metrics 100% ♦ Q2 2012 decrease from Q2 2011 due 74.9% 75.3% 73.4% 74.5% 74.3% primarily to: 75% - Higher royalty expense 50% 25% 0% Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Note: Non-GAAP product gross margins exclude after-tax acquisition-related, restructuring and stock-ba
Slide 45: Non-GAAP Operating Margins
Non-GAAP Operating Margins Key Metrics 60% ♦ Q2 2012 decrease from Q2 2011 driven primarily 50.7% 50.7% by: 45.2% 47.3% 47.2% - Increased investments in R&D 40% 20% 0% Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Note: Non-GAAP operating margins exclude after-tax acquisition-related, restructuring and stock-based
Slide 46: Non-GAAP Effective Tax Rate
Non-GAAP Effective Tax Rate Q2 Q2 YTD 2011 2012 2012 Effective Tax Rate 24.4% 27.2% 27.0% ♦ Effective tax rate increased year-over-year due to: – Expiration of the federal research tax credit – Geographic mix of earnings 46
Slide 47: 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 unfavorable $4.2 million QoQ and unfavorable $32.9 million YoY ♦ FX impact to international revenues (including ROW) was unfavorable $4.5 million QoQ and unfavorable $31.7 million YoY ♦ FX impa
Slide 48: Dilution from Outstanding Convertible Notes
Dilution from Outstanding Convertible Notes Dilutive Impact of Outstanding Notes Total 2013 2014 2016 Dilution Average share price Q2 2012 ($49.88) YTD 2012 ($48.78) Convertible Notes $650M $1.25B $1.25B Conversion Price $38.10 $45.08 $45.41 Q2 Share Dilution 4.0M 2.7M 2.5M 9.2M YTD Share Dilution 3
Slide 49: Atripla Q2 2012 Financial Performance and Key Metrics
Atripla Q2 2012 Financial Performance and Key Metrics ♦ Q2 2012 up 10% from Q2 2011 Key Metrics* $1,000 $888 $904 U.S.: $863 $822 $795 ♦ Most prescribed regimen in HIV with 33% of all $750 treated patients $267.5 $270.7 $280.1 ♦ Captured 34% of naïve $255.0 $267.2 Sales in Millions patient share $50
Slide 50: Truvada Q2 2012 Financial Performance and Key Metrics
Truvada Q2 2012 Financial Performance and Key Metrics ♦ Q2 2012 up 10% from Q2 2011 Key Metrics* $1,000 U.S.: ♦ Most prescribed product $786 $745 $746 $758 in HIV with 38% of all $750 $711 treated patients ♦ Captured 32% of naïve Sales in Millions $317.0 $321.9 $322.0 $319.1 patient share $328.8 $50
Slide 51: Complera Q2 2012 Financial Performance and Key Metrics
Complera Q2 2012 Financial Performance and Key Metrics Key Metrics* $100 U.S.: ♦ Primarily being used in healthier patients, African $75 $73 Americans and women of child bearing age Sales in Millions ♦ Captured 25% of naïve $52 $50 patient share Europe & Other International: ♦ Launched in Australia,
Slide 52: 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%^ P a tie n ts in 0 0 0 's 1,000 700 ~639 600 6%^ Patients in 000's 800 ~727 ~62
Slide 53: 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 2012 348 348 350 350 325 325 325 325 300 300 275 275 250 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Total Total Total YTD 250 2009 2010 2011 2012 Q
Slide 54: Gilead's Ongoing HIV R&D Focus
Gilead’s Ongoing HIV R&D Focus Bring Forward New Once-Daily, Single Tablet Regimens to Provide Additional Options for Patients Current ♦ ATRIPLA (1550 mg) – 1st NNRTI-Based STR ♦ COMPLERA (1150 mg) ATRIPLA – 2nd NNRTI-Based STR Future COMPLERA ♦ Quad (1350 mg) – EVG/COBI/FTC/TDF – 1st Integrase Inhi
Slide 55: Q2 2012 Earnings Results Conference Call and Webcast
Q2 2012 Earnings Results Conference Call and Webcast July 26, 2012 55