Q1 2009 Earning Report of Gilead Sciences Inc.

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Q1 2009 Earning Report of Gilead Sciences Inc.

  1. 1. Q1 2009 Earnings Results Conference Call and Webcast April 21, 2009 1
  2. 2. Forward-looking Statement and GAAP Reconciliation Forward-looking Statement Statements included in this presentation that are not historical in nature are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. Gilead directs readers to its Annual Report on Form 10-K for the year ended December 31, 2008 and its subsequent current reports on Form 8-K. Gilead claims the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements. GAAP Reconciliation This presentation contains references to financial measures for Gilead that are on a non-GAAP basis. Gilead provides a reconciliation between GAAP and non-GAAP in our press releases which are available on our website at www.gilead.com. 2
  3. 3. Q1 2009 Earnings Call Agenda ♦ Corporate Highlights John Martin, PhD, Chairman and CEO ♦ Financial Performance Robin Washington, SVP and CFO ♦ Commercial Update Kevin Young, EVP of Commercial Operations ♦ R&D Update Norbert Bischofberger, PhD, EVP of R&D and CSO ♦Upcoming Growth Drivers John Milligan, PhD, President and COO ♦ Q&A 3
  4. 4. Corporate Highlights John Martin, PhD, Chairman and CEO April 21, 2009 4
  5. 5. Gilead Completes Acquisition of CV Therapeutics on April 17, 2009 Vision for CV Therapeutics: Bolsters Gilead’s Presence in the Cardiovascular Space ♦ Ranexa for chronic angina with new, stronger US label – Specialty sales force detailing cardiologists ♦ Lexiscan opportunity in EU ♦ Proven development and regulatory organization – Improved opportunity for Letairis and darusentan ♦ Pipeline of cardiovascular products ♦ Improved future earnings profile and growth rate 5
  6. 6. Strong Geographical Presence Around the World Sweden Norway The Netherlands Edmonton, Alberta Ireland and Mississauga, ON Finland Germany U.K. Austria Belgium Denmark Durham, NC France Turkey Italy Westminster, CO Greece Portugal China San Dimas, CA Switzerland Spain Foster City, CA Palo Alto, CA Australia/New Zealand Seattle, WA LEGEND Gilead Locations HQ, Manufacturing Operations, Antiviral Research *Includes Field Employees Respiratory Research Sales and Marketing Operations Manufacturing Operations Antiviral Research Cardiovascular Research 6
  7. 7. Research and Development Norbert Bischofberger, PhD, EVP of R&D and CSO April 21, 2009 7
  8. 8. Gilead’s Platform Spans Four Therapeutic Areas Cardiovascular HIV/AIDS Liver Disease Respiratory / Metabolic Hepsera - HBV Atripla Ranexa - Angina Tamiflu - Influenza Truvada Viread - HBV Letairis - PAH Aztreonam Lysine Viread Cicletanine - PAH (Ph II) - CF (Ph III) Emtriva GS 9450 - HCV (Ph II) - Bronchiestasis (Ph II) Lexiscan - MPI Elvitegravir (Ph III) GS 9190 - HCV (Ph II) Integrase FDR (Ph II) GS 9310 / 11 - CF (Ph II) Darusentan GS 9350 (Ph I) GS 9411 - CF (Ph I) GS 9450 - Resistant - NASH (Ph II) Hypertension Ambrisentan (Ph III) - IPF (Ph III) Adentri CVT-6883 - Acute Heart Failure - Pulmonary Diseases (Ph III) (Ph I) Tecadenoson - Atrial Fibrillation (Ph II) CVT3619 - Diabetes (Ph I) 8
  9. 9. Darusentan for Resistant Hypertension ♦ Positive DAR 311 top-line results announced on 4/2/09, full data to be presented at ASH on 5/8/09 in San Francisco, CA – Met co-primary efficacy endpoints of change from baseline to week 14 in trough sitting systolic blood pressure (SBP) and trough sitting diastolic blood pressure (DBP) (p<0.001 for all darusentan groups) Placebo 50 mg 100 mg 300 mg SBP from baseline 8.6 mmHg 16.5 mmHg 18.1 mm Hg 18.1 mm Hg 5.3 mmHg 10.1 mmHg 9.9 mmHg 10.7 mmHg Reductions in mean trough sitting DBP from baseline Peripheral edema 17% 32% 36% 29% Discontinued due to edema 0% 1.2% 4.9% 5.9% Decreases in hemoglobin 0.19 g/dL 0.92 g/dL 0.93 g/dL 1.08 g/dL Decreases in hematocrit 0.89% 2.89% 2.54% 2.88% 1 patient 0 1 patient Serum aminotransferase 1patient concentrations (>3x upper limit of normal range) ♦ DAR 312* double-blinded, 14-week, placebo and active comparator (guanfacine) study in patients taking full doses of three or more antihypertensive agents, including a diuretic – n=770; 90% enrolled, data early 2010 * As of April 2, 2009 9
  10. 10. Financial Performance Robin Washington, SVP and CFO April 21, 2009 10
  11. 11. Financial Highlights: A Snapshot of Q1 2009 ♦ Total revenues were up 22 percent over Q1 2008 ♦ Net income attributable to Gilead per diluted share of $0.63; Non-GAAP net income attributable to Gilead per diluted share of $0.66* ♦ $3.6 billion in cash, cash equivalents and marketable securities as of March 31, 2009 ♦ Cash flow from operations of $641.3 million * Excludes after-tax stock-based compensation expense 11
  12. 12. Financial Highlights: Non-GAAP EPS ♦ Q1 2009 increase of 24% over Q1 2008 +24% $0.75 $0.66 +16% $0.53 2007 $0.46 $0.50 2008 2009 $0.25 $0.00 Q1 Note: Non-GAAP EPS for all periods exclude after-tax stock-based compensation expense On January 1, 2009, Gilead adopted FSP APB 14-1 on a retrospective basis for its convertible senior notes. GAAP and non-GAAP net income attributable to Gilead and the per share amounts have been adjusted from that which was previously reported to reflect additional after-tax interest expense. 12
  13. 13. Financial Highlights: Total Revenues ♦ Q1 2009 increase of 22% over Q1 2008 +22% $ In Millions $1,530 $1,600 +22% $1,258 $1,200 $1,028 2007 2008 2009 $800 $400 $0 Q1 13
  14. 14. Financial Highlights: Total Product Sales ♦ Q1 2009 increase of 27% over Q1 2008 +27% $ In Millions $1,448 $1,500 +36% $1,250 $1,141 2007 $1,000 $840 2008 2009 $750 $500 $250 $0 Q1 14
  15. 15. Financial Highlights: Operating Cash Flows $ In Millions $750 +6% +25% $641 $606 $484 2007 $500 2008 2009 $250 $0 Q1 Note: On January 1, 2009, Gilead adopted SFAS 160 on a retrospective basis for its noncontrolling interest. Accordingly, the operating cash flow amounts have been adjusted from that which was previously reported to reflect the impact. 15
  16. 16. Product Sales: Antiviral Franchise Q1 Q1 Product %▲ 2009 2008 ($ in Millions) $1,340.8 $1,047.7 Antiviral Franchise 28% U.S. 754.0 643.2 ♦ Europe 509.8 349.3 ♦ Other International 77.0 55.2 ♦ $590.4 $479.4 Truvada® U.S. 281.0 238.5 ♦ 23% Europe 278.4 218.4 ♦ Other International 30.9 22.5 ♦ $509.9 $324.2 Atripla® U.S. 374.1 306.5 ♦ 57% Europe 124.8 14.2 ♦ Other International 11.0 3.5 ♦ $160.6 $152.7 Viread® 5% U.S. 69.6 63.1 ♦ Europe 65.3 65.7 ♦ Other International 25.7 23.9 ♦ $72.7 $83.0 Hepsera® U.S. 25.7 31.3 ♦ -12% Europe 38.9 48.5 ♦ Other International 8.1 3.3 ♦ $7.2 $8.4 Emtriva® U.S. 3.6 3.8 ♦ -14% Europe 2.4 2.6 ♦ Other International 1.3 2.0 ♦ Note: Amounts may not sum due to rounding 16
  17. 17. Other Product Sales Product Q1 Q1 %▲ 2009 2008 ($ in Millions) AmBisome® $64.3 $71.0 -10% Letairis® $39.6 $20.3 95% 17
  18. 18. Royalty, Contract and Other Revenues Q1 Q1 ($ in Millions) 2009 2008 %▲ Total Royalty, $82.9 $116.8 -29% Contract & Other Revenues ♦ Lower royalty, contract and other revenues are primarily due to: – Lower Q1 2009 Tamiflu royalties of $33.2 million, down 64% from Q1 2008, partially offset by the recognition of $23.7 million of previously deferred collaboration payments from a corporate partner as we no longer have substantive ongoing performance obligations 18
  19. 19. Non-GAAP Product Gross Margin 100% ♦ Q1 2009 decrease from 79.9% 79.1% Q1 2008 driven primarily by: 77.6% 80% – Higher proportion of 60% Atripla sales which includes the efavirenz 40% component at zero gross 20% margin 0% Q1 2007 2008 2009 Note: Non-GAAP product gross margin for all periods exclude stock-based compensation expense 19
  20. 20. Non-GAAP R&D Expenses Q1 Q1 ($ in Millions) 2009 2008 %▲ Non-GAAP $171.8 $138.4 24% R&D Expenses* ♦ Higher non-GAAP R&D expenses in Q1 2009 were primarily due to: – Increased headcount – Increased clinical study activity * Excludes stock-based compensation expense 20
  21. 21. Non-GAAP SG&A Expenses Q1 Q1 ($ in Millions) 2009 2008 %▲ Non-GAAP $183.1 $177.4 3% SG&A Expenses* ♦ Higher non-GAAP SG&A expenses in Q1 2009 were primarily due to: – Increased headcount * Excludes stock-based compensation expense 21
  22. 22. Other Selected Financial Information Mar. 31, Dec. 31, 2009 2008 Cash, Cash Equivalents & Marketable $3,608.9 $3,239.6 Securities ($ in Millions) Inventories ($ in Millions) $936.7 $927.9 Days Sales Outstanding 63 65 (Accounts Receivable) Common Shares Repurchased During $230.0 $753.5 the Quarter ($ in Millions)* Diluted Shares Used in Per Share Calculation 942,479 942,837 for the Quarter (GAAP) (In thousands) * As of March 31, 2009, the remaining authorized amount of share repurchases that may be made under the current share repurchase program that expires in December 2010 was $768 million. 22
  23. 23. Effective Tax Rate Q1 Q1 2008 2009 Effective Tax Rate 26.3% 27.9% ♦ Q1 2009 effective tax rate decreased over Q1 2008 primarily due to: – Extension of federal R&D tax credit – Increased earnings in lower tax rate jurisdictions 23
  24. 24. Commercial Update Kevin Young, EVP of Commercial Operations April 21, 2009 24
  25. 25. 12 Products Contributing to Revenue Stream Through Direct Sales or Partner Promotion HIV/AIDS HIV/AIDS HIV/AIDS Japan Tobacco (Japan) Japan Tobacco (Japan) Bristol-Myers Squibb (US and EU) Chronic Hepatitis B Merck (Developing Countries) Pulmonary Arterial Hypertension HIV/AIDS Chronic Hepatitis B GSK (EU) Japan Tobacco (Japan) GSK (Asia, Latin America) Age-related Macular Degeneration Influenza A & B Severe Fungal Infections Roche (Worldwide) OSI (US) / Pfizer (OUS) Astellas (US and Canada) Sumitomo (Japan) Myocardial Perfusion Imaging Chronic Angina CMV Retinitis/AIDS Astellas (US and Canada) Menarini (EU) 25
  26. 26. HIV Franchise Highlights Around the World, More than One Million Individuals Received One of Gilead’s Four HIV Medications* U.S. ♦ >70% of all treated patients received Gilead HIV products ♦ >80% of treatment naïve patients started therapy on a Gilead product ♦ Atripla was the most prescribed regimen in HIV (31% of all patients) ♦ Truvada remained the most prescribed product in HIV (35% of all patients) EU ♦ Atripla is reimbursed in 15 countries, including all of the Big 5 ♦ Truvada continued to build on its solid base as the #1 brand in all Big 5 markets ♦ >70% of all patients initiating therapy received a Tenofovir- containing regimen U.S. data from Synovate Healthcare U.S. HIV Monitor Q4 2008 EU data from IMS/GERS & Synovate Q4 2008 * Including developing world 26
  27. 27. U.S. HIV Market Dynamics Significant Opportunity Remains to Grow Market by Increasing Diagnosis and Bringing Patients onto Therapy 1,400 1,056 – 1,156 1,200 835 – 915 Patients in 000s 1,000 Up 7%^ ~79% 800 565 600 409 ~62% 400 ~72% 200 0 HIV Infected* Diagnosed* On Antiretroviral On Atripla, Truvada Treatment** or Viread** Sources: * October, 2008 CDC estimates as of the end of 2006 ** Synovate Healthcare U.S. HIV Monitor Q4 2008 growth rate calculated as moving annual total ^ Growth rate calculated as MAT (moving annual total) 27
  28. 28. EU Big 5 HIV Market Dynamics Similar Dynamics as Seen in the U.S. with Strong Support in the EU for Increased Testing Initiatives and Early Treatment 600 557 Up 7%^ Patients in 000s 377 400 ~68% 273 ~72% 166 200 ~61% 0 HIV Infected* Diagnosed* On Antiretroviral On Atripla, Truvada Treatment** or Viread** Sources: * National Surveillance Units per country & ECDC Q4 2008 ** IMS/GERS & Synovate Q4 2008 ^ Growth rate calculated as MAT (moving annual total) 28
  29. 29. Viread for Hepatitis B: Rapidly Gaining Market Share in the U.S. Weekly Gilead HBV Franchise NRx Market Share Has Grown from 43% to 51% Since Launch of Viread* 40% 35% Baraclude 33% 30% Viread* 26% Hepsera 25% 25% 20% Epivir 14% 15% 10% 5% Tyzeka 3% 0% 1/ 09 7/ 08 8/ 08 11 08 1/ 8 10 /08 12 08 1/ 09 2/ 09 11 /08 12 /08 2/ 09 3/ 09 3/ 09 9 8/ 08 9/ 08 10 /08 8/ 8 9/ 08 /0 /0 0 2/ 4/ 1/ 4/ 9/ 1/ / / / / / / / / 0 30 13 /7 /5 16 27 13 27 15 29 12 26 18 7/ /2 /1 /1 /2 Source: Weekly Wolters Kluwer Health (WKH) Prescriber data *Gilead Proprietary Method of estimating Viread market share 29
  30. 30. U.S. HBV Market Dynamics Approximately 1 in 10 Asian Americans is Living with Chronic Hepatitis B 2,000 2,000 Patients in 000s 1,500 1,000 Up 13% Y/Y 500 300 ~15% ~21% 62 0 HBV Chronically Infected* Diagnosed** On Oral Antiviral Treatment** Sources: *CDC 12/4/08 Institute of Medicine presentation ** Based on Gilead estimates as of Q1 2009 30
  31. 31. Viread for HBV Launch Update EU Approval on April 25, 2008 U.S. Approval on August 11, 2008 1H08 2H08 2009 Austria Spain Australia Germany United States New Zealand Belgium Greece Portugal Poland France Italy Netherlands Denmark, Finland, Norway and Sweden UK Canada Turkey As of March 31, 2009 31
  32. 32. Letairis for Pulmonary Arterial Hypertension ♦ PAH afflicts ~200K patients worldwide, ~75 - 90K in the U.S. – ~5K newly diagnosed per year in the U.S. ♦ Marketed in the U.S. by Gilead; in EU by GSK as Volibris® ♦ Approximately 1out of every 3 U.S. patients receiving an ERA received Letairis at the end of Q1 09 ♦ ~30% of all U.S. patients taking Letairis had switched from bosentan ♦ Physician prescribing base nearly doubled over past 12 months ♦ Phase IV trial ongoing along with 17 investigator initiated studies Source: Gilead conducted physician survey as of March 31, 2009 32
  33. 33. Upcoming Growth Drivers John Milligan, PhD, President and COO April 21, 2009 33
  34. 34. Anticipated Pipeline Milestones in 2009 HIV/AIDS GS 9350/ Present PK data from both GS 9350 and integrase FDR at CROI Q1 09 Elvitegravir/ Truvada Initiate Ph II in treatment-naïve HIV patients Q2 09 GS 9350 Initiate Ph II as a pharmacokinetic enhancer in a PI based regimen Q2 09 Liver Disease GS 9450 Initiate Ph IIb in HCV Q2 09 Complete Ph IIa in NASH Q4 09 Respiratory Q2 09 GS 9411 Complete Ph I Cardiovascular Q1 09 Cicletanine Initiate Ph II in PAH Q2 09 Ambrisentan Initiate Ph III study in pulmonary hypertension associated with IPF Present ARIES-3 data at ATS meeting Q2 09 Darusentan Complete and release data from DAR 311 Ph III study in resistant hypertension (presentation at ASH) Q4 09 Complete DAR 312 Ph III study in resistant hypertension 34
  35. 35. Gilead’s Strengths to Drive Growth ♦ Significant growth drivers for antiviral franchise ♦ Research and development strength, with cardiovascular efforts augmented with the acquisition of CV Therapeutics ♦ Numerous presentations at upcoming scientific conferences ♦ Demonstrated track record bringing forward “best-in-class” compounds ♦ Unique organizational structure ♦ Strong balance sheet 35
  36. 36. Q&A April 21, 2009 36

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