EX-99.1 2 exhibit991earningspressrel.htm EXHIBIT 99.1 Exhibit


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CONTACTS:
Investors
 
 
Media
 
Robin Washington
 
 
Amy Flood
 
(650) 522-5688
 
 
(650) 522-5643
 
 
 
 
 
 
Sung Lee
 
 
 
 
(650) 524-7792    
 
 
 
 
 
 
 
 
For Immediate Release

GILEAD SCIENCES ANNOUNCES FOURTH QUARTER
AND FULL YEAR 2016 FINANCIAL RESULTS

- Fourth Quarter Product Sales of $7.2 billion -
- Full Year 2016 Product Sales of $30.0 billion -
- Full Year 2016 Diluted EPS of $9.94 per share -
- Full Year 2016 Non-GAAP Diluted EPS of $11.57 per share -

Foster City, CA, February 7, 2017 - Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the fourth quarter and full year 2016. Total revenues for the fourth quarter of 2016 were $7.3 billion, compared to $8.5 billion for the same period in 2015. Net income for the fourth quarter of 2016 was $3.1 billion, or $2.34 per diluted share, compared to $4.7 billion, or $3.18 per diluted share for the same period in 2015. Non-GAAP net income, which excludes amounts related to acquisition-related, up-front collaboration, stock-based compensation and other expenses, for the fourth quarter of 2016 was $3.6 billion, or $2.70 per diluted share, compared to $4.9 billion, or $3.32 per diluted share for the same period in 2015.
Full year 2016 total revenues were $30.4 billion, compared to $32.6 billion for 2015. Net income for 2016 was $13.5 billion, or $9.94 per diluted share, compared to $18.1 billion, or $11.91 per diluted share for 2015. Non-GAAP net income for 2016, which excludes amounts related to acquisition-related, up-front collaboration, stock-based compensation and other expenses, was $15.7 billion, or $11.57 per diluted share, compared to $19.2 billion, or $12.61 per diluted share for 2015.
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
(In millions, except per share amounts)
2016
 
2015
 
2016
 
2015
Product sales
$
7,216

 
$
8,409

 
$
29,953

 
$
32,151

Royalty, contract and other revenues
104

 
97

 
437

 
488

Total revenues
$
7,320

 
$
8,506

 
$
30,390

 
$
32,639

 
 
 
 
 
 
 
 
Net income attributable to Gilead
$
3,108

 
$
4,683

 
$
13,501

 
$
18,108

Non-GAAP net income*
$
3,585

 
$
4,889

 
$
15,713

 
$
19,174

 
 
 
 
 
 
 
 
Diluted earnings per share
$
2.34

 
$
3.18

 
$
9.94

 
$
11.91

Non-GAAP diluted earnings per share*
$
2.70

 
$
3.32

 
$
11.57

 
$
12.61

 
 
 
 
 
 
 
 
*
Non-GAAP net income and non-GAAP diluted earnings per share exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 7 and 8.

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Gilead Sciences, Inc. 333 Lakeside Drive Foster City, CA 94404 USA
www.gilead.com
phone 650 574 3000 facsimile 650 578 9264
 

February 7, 2017
 
2



Product Sales
Total product sales for the fourth quarter of 2016 were $7.2 billion, compared to $8.4 billion for the same period in 2015. Product sales for the fourth quarter of 2016 were $4.9 billion in the United States, $1.4 billion in Europe, $314 million in Japan and $556 million in other locations. Product sales for the fourth quarter of 2015 were $4.8 billion in the United States, $1.7 billion in Europe, $1.4 billion in Japan and $565 million in other locations.
Total product sales during 2016 were $30.0 billion, compared to $32.2 billion in 2015. For 2016, product sales were $19.3 billion in the United States, $6.1 billion in Europe, $2.5 billion in Japan and $2.1 billion in other locations. For 2015, product sales were $21.2 billion in the United States, $7.2 billion in Europe, $1.9 billion in Japan and $1.9 billion in other locations.

Antiviral Product Sales
Antiviral product sales, which include sales of our HIV and other antiviral products and our chronic hepatitis C (HCV) products, were $6.6 billion for the fourth quarter of 2016, compared to $7.9 billion for the same period in 2015. For 2016, antiviral product sales were $27.7 billion, compared to $30.2 billion in 2015.
•
HIV and other antiviral product sales for the fourth quarter of 2016 were $3.4 billion, compared to $3.0 billion for the same period in 2015 and $12.9 billion for the full year 2016, compared to $11.1 billion in 2015. The increases were primarily due to the continued uptake of our tenofovir alafenamide (TAF)-based products, Genvoya® (elvitegravir 150 mg/cobicistat 150 mg/emtricitabine 200 mg/tenofovir alafenamide 10 mg), Descovy® (emtricitabine 200 mg/tenofovir alafenamide 25 mg) and Odefsey® (emtricitabine 200 mg/rilpivirine 25 mg/tenofovir alafenamide 25 mg), partially offset by decreases in sales of tenofovir disoproxil fumarate (TDF)-based products.
•
HCV product sales, which consist of Harvoni® (ledipasvir 90 mg/sofosbuvir 400 mg), Sovaldi® (sofosbuvir 400 mg) and Epclusa® (sofosbuvir 400 mg/velpatasvir 100 mg), were $3.2 billion for the fourth quarter of 2016, compared to $4.9 billion for the same period in 2015 and $14.8 billion for the full year 2016, compared to $19.1 billion in 2015. The declines were due to lower sales of Harvoni and Sovaldi, partially offset by sales of Epclusa, which was launched in 2016 across various locations.
Other Product Sales
Other product sales, which include Letairis® (ambrisentan), Ranexa® (ranolazine) and AmBisome® (amphotericin B for liposome injection), were $621 million for the fourth quarter of 2016, compared to $523 million for the same period in 2015. For 2016, other product sales were $2.2 billion, compared to $1.9 billion in 2015.
Operating Expenses
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
 
December 31,
(In millions)
 
2016
 
2015
 
2016
 
2015
Research and development (R&D) expenses
 
$
1,208

 
$
757

 
$
5,098

 
$
3,014

Non-GAAP R&D expenses* 
 
$
959

 
$
779

 
$
3,749

 
$
2,845

 
 
 
 
 
 
 
 
 
Selling, general and administrative (SG&A) expenses
 
$
992

 
$
1,066

 
$
3,398

 
$
3,426

Non-GAAP SG&A expenses*
 
$
938

 
$
1,013

 
$
3,194

 
$
3,224

 
 
 
 
 
 
 
 
 
*
Non-GAAP R&D and SG&A expenses exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 7 and 8.


February 7, 2017
 
3



During the fourth quarter of 2016, compared to the same period in 2015:
•
R&D expenses and non-GAAP R&D expenses* increased primarily due to the overall progression of Gilead’s clinical studies, including ongoing milestone payments.
•
R&D expenses for the fourth quarter of 2016 also include an impairment charge related to in-process R&D (IPR&D).
For 2016 compared to 2015:
•
R&D expenses and non-GAAP R&D expenses* increased primarily due to the overall progression of Gilead’s clinical studies, including ongoing milestone payments, and Gilead’s purchase of a U.S. Food and Drug Administration (FDA) priority review voucher.
•
R&D expenses for 2016 also include up-front collaboration expenses related to Gilead’s license and collaboration agreement with Galapagos NV, purchase of Nimbus Apollo, Inc. and impairment charges related to IPR&D.
•
SG&A expenses and non-GAAP SG&A expenses* decreased primarily due to lower branded prescription drug fee expense, partially offset by higher costs to support Gilead’s product launches and the geographic expansion of its business.
Cash, Cash Equivalents and Marketable Securities
As of December 31, 2016, Gilead had $32.4 billion of cash, cash equivalents and marketable securities, compared to $26.2 billion as of December 31, 2015, primarily due to the issuance of $5.0 billion aggregate principal amount of senior unsecured notes in September 2016. During 2016, Gilead generated $16.7 billion in operating cash flow, utilized $11.0 billion to repurchase 123 million shares of its stock and paid cash dividends of $2.5 billion.
Full Year 2017 Guidance
Gilead provided its full year 2017 guidance:
(In millions, except percentages and per share amounts)
 
Provided
February 7, 2017
Net Product Sales
 
$22,500 - $24,500
Non-HCV Product Sales
 
$15,000 - $15,500
HCV Product Sales
 
$7,500 - $9,000
Non-GAAP*
 
 
Product Gross Margin
 
86% - 88%
R&D Expenses
 
$3,100 - $3,400
SG&A Expenses
 
$3,100 - $3,400
Effective Tax Rate
 
25.0% - 28.0%
Diluted EPS Impact of Acquisition-related, Up-front Collaboration, Stock-Based Compensation and Other Expenses
 
$0.84 - $0.91
 
 
 
*
Non-GAAP product gross margin, R&D and SG&A expenses and effective tax rate exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. A reconciliation between GAAP and non-GAAP full year 2017 guidance is provided in the tables on page 9.
Corporate Highlights
•
Announced the promotion of James R. Meyers to Executive Vice President, Worldwide Commercial Operations, in November 2016.
Product & Pipeline Updates announced by Gilead during the Fourth Quarter of 2016 include:
Antiviral and Liver Diseases Programs
•
Announced that FDA and Japanese Ministry of Health, Labour and Welfare approved Vemlidy® (tenofovir alafenamide) 25mg, a once-daily treatment for adults with chronic hepatitis B virus (HBV) infection with compensated liver disease. Additionally, the Committee for Medicinal Products for Human Use, the scientific

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February 7, 2017
 
4



committee of the European Medicines Agency, adopted a positive opinion on Gilead’s Marketing Authorization Application for Vemlidy.
•
Announced the submission of a New Drug Application (NDA) to FDA for an investigational, once-daily single-tablet regimen containing sofosbuvir 400 mg, velpatasvir 100 mg, and voxilaprevir 100 mg for the treatment of direct-acting antiviral (DAA)-experienced HCV-infected patients. The data submitted in the NDA support the use of the regimen for 12 weeks in DAA-experienced patients with genotype 1 to 6 HCV infection without cirrhosis or with compensated cirrhosis.
•
Announced positive results from an open-label Phase 2 trial evaluating the investigational apoptosis signal-regulating kinase 1 inhibitor selonsertib (formerly GS-4997) alone or in combination with the monoclonal antibody simtuzumab in patients with nonalcoholic steatohepatitis and moderate to severe liver fibrosis (fibrosis stages F2 or F3). The data demonstrate regression in fibrosis that was, in parallel, associated with reductions in other measures of liver injury in patients treated with selonsertib for 24 weeks. These data were presented in a late-breaking abstract session at the Liver Meeting® 2016.
•
Announced positive two-year (96-week) data from a Phase 3 study and 48-week data from two Phase 3b studies evaluating the safety and efficacy of switching virologically suppressed HIV-1-infected patients from regimens containing Truvada® (emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) to regimens containing Descovy®. Results demonstrated regimens containing Descovy to be statistically non-inferior to regimens containing Truvada, with improvements in certain renal and bone laboratory parameters among patients receiving Descovy-based regimens.
Non-GAAP Financial Information
The information presented in this document has been prepared by Gilead in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise noted as non-GAAP. Management believes non-GAAP information is useful for investors, when considered in conjunction with Gilead’s GAAP financial information, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead’s operating results as reported under GAAP. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 7, 8 and 9.
Conference Call
At 4:30 p.m. Eastern Time today, Gilead’s management will host a conference call and a simultaneous webcast to discuss results from its fourth quarter 2016 and full year 2016 as well as provide 2017 guidance and a general business update. To access the webcast live via the internet, please connect to the company’s website at www.gilead.com/investors 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast. Alternatively, please call 1-877-359-9508 (U.S.) or 1-224-357-2393 (international) and dial the conference ID 43555238 to access the call.
A replay of the webcast will be archived on the company’s website for one year, and a phone replay will be available approximately two hours following the call through February 9, 2017. To access the phone replay, please call 1-855-859-2056 (U.S.) or 1-404-537-3406 (international) and dial the conference ID 43555238.
About Gilead
Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company’s mission is to advance the care of patients suffering from life-threatening diseases. Gilead has operations in more than 30 countries worldwide, with headquarters in Foster City, California.
Forward-looking Statements
Statements included in this press release 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 that could cause actual results to differ materially. These risks and uncertainties include: Gilead’s ability to achieve its anticipated full year 2017 financial results; Gilead’s ability to sustain growth in

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February 7, 2017
 
5



revenues for its antiviral and other programs; the risk that estimates of patients with HCV or anticipated patient demand may not be accurate; the risk that private and public payers may be reluctant to provide, or continue to provide, coverage or reimbursement for new products, including Epclusa, Harvoni, Genvoya, Odefsey, Descovy and Vemlidy; the potential for increased pricing pressure and contracting pressure as well as decreased volume and market share from additional competitive HCV launches; austerity measures in European countries and Japan that may increase the amount of discount required on Gilead’s products; an increase in discounts, chargebacks and rebates due to ongoing contracts and future negotiations with commercial and government payers; a larger than anticipated shift in payer mix to more highly discounted payer segments and geographic regions and decreases in treatment duration; availability of funding for state AIDS Drug Assistance Programs (ADAPs) and Veterans Administration (VA); continued fluctuations in ADAP and VA purchases driven by federal and state grant cycles which may not mirror patient demand and may cause fluctuations in Gilead’s earnings; market share and price erosion caused by the introduction of generic versions of Viread and Truvada outside the United States, an uncertain global macroeconomic environment; and potential amendments to the Affordable Care Act or other government action that could have the effect of lowering prices or reducing the number of insured patients; the possibility of unfavorable results from clinical trials involving investigational compounds; Gilead’s ability to initiate clinical trials in its currently anticipated timeframes; the levels of inventory held by wholesalers and retailers which may cause fluctuations in Gilead’s earnings; Gilead’s ability to submit new drug applications for new product candidates in the timelines currently anticipated; Gilead’s ability to receive regulatory approvals in a timely manner or at all, for new and current products, including its single-tablet regimen containing sofosbuvir, velpatasvir and voxilaprevir; Gilead’s ability to successfully commercialize its products, including Epclusa, Harvoni, Genvoya, Odefsey, Descovy and Vemlidy; the risk that physicians and patients may not see advantages of these products over other therapies and may therefore be reluctant to prescribe the products; Gilead’s ability to successfully develop its oncology, inflammation, cardiovascular and respiratory programs; safety and efficacy data from clinical studies may not warrant further development of Gilead’s product candidates, including selonsertib; Gilead’s ability to pay dividends or complete its share repurchase program due to changes in its stock price, corporate or other market conditions; fluctuations in the foreign exchange rate of the U.S. dollar that may cause an unfavorable foreign currency exchange impact on Gilead’s future revenues and pre-tax earnings; and other risks identified from time to time in Gilead’s reports filed with the U.S. Securities and Exchange Commission (SEC). In addition, Gilead makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Gilead bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. You are urged to consider statements that include the words may, will, would, could, should, might, believes, estimates, projects, potential, expects, plans, anticipates, intends, continues, forecast, designed, goal, or the negative of those words or other comparable words to be uncertain and forward-looking. Gilead directs readers to its press releases, Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and other subsequent disclosure documents filed with the SEC. 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.
# # #
Gilead owns or has rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®, CAYSTON®, COMPLERA®, DESCOVY®, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPSERA®, LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, TRUVADA®, TYBOST®, VEMLIDY®, VIREAD®, VITEKTA®, VOLIBRIS®, and ZYDELIG®.
ATRIPLA® is a registered trademark of Bristol-Myers Squibb & Gilead Sciences, LLC. LEXISCAN® is a registered trademark of Astellas U.S. LLC. MACUGEN® is a registered trademark of Eyetech, Inc. SUSTIVA® is a registered trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU® is a registered trademark of Hoffmann-La Roche Inc.
For more information on Gilead Sciences, Inc., please visit www.gilead.com or
call the Gilead Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235).

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February 7, 2017
 
6



GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in millions, except per share amounts)

 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
 Revenues:
 
 
 
 
 
 
 
 Product sales
$
7,216

 
$
8,409

 
$
29,953

 
$
32,151

 Royalty, contract and other revenues
104

 
97

 
437

 
488

 Total revenues
7,320

 
8,506

 
30,390

 
32,639

 Costs and expenses:
 
 
 
 
 
 
 
 Cost of goods sold
1,075

 
1,062

 
4,261

 
4,006

 Research and development expenses
1,208

 
757

 
5,098

 
3,014

 Selling, general and administrative expenses
992

 
1,066

 
3,398

 
3,426

 Total costs and expenses
3,275

 
2,885

 
12,757

 
10,446

 Income from operations
4,045

 
5,621

 
17,633

 
22,193

 Interest expense
(265
)
 
(230
)
 
(964
)
 
(688
)
 Other income (expense), net
140

 
46

 
428

 
154

 Income before provision for income taxes
3,920

 
5,437

 
17,097

 
21,659

 Provision for income taxes
821

 
752

 
3,609

 
3,553

 Net income
3,099

 
4,685

 
13,488

 
18,106

 Net income (loss) attributable to noncontrolling interest
(9
)
 
2

 
(13
)
 
(2
)
 Net income attributable to Gilead
$
3,108

 
$
4,683

 
$
13,501

 
$
18,108

 
 
 
 
 
 
 
 
 Net income per share attributable to Gilead common stockholders - basic
$
2.36

 
$
3.26

 
$
10.08

 
$
12.37

 Shares used in per share calculation - basic
1,316

 
1,436

 
1,339

 
1,464

 Net income per share attributable to Gilead common stockholders - diluted
$
2.34

 
$
3.18

 
$
9.94

 
$
11.91

 Shares used in per share calculation - diluted
1,327

 
1,472

 
1,358

 
1,521

 Cash dividends declared per share
$
0.47

 
$
0.43

 
$
1.84

 
$
1.29



February 7, 2017
 
7



GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
Cost of goods sold reconciliation:
 
 
 
 
 
 
 
 
GAAP cost of goods sold
 
$
1,075

 
$
1,062

 
$
4,261

 
$
4,006

Acquisition related-amortization of purchased intangibles
 
(214
)
 
(206
)
 
(844
)
 
(826
)
Stock-based compensation expenses
 
(3
)
 
(2
)
 
(14
)
 
(11
)
Other(1)
 
2

 
3

 
11

 
6

Non-GAAP cost of goods sold
 
$
860

 
$
857

 
$
3,414

 
$
3,175

 
 
 
 
 
 
 
 
 
Product gross margin reconciliation:
 
 
 
 
 
 
 
 
GAAP product gross margin
 
85.1
%
 
87.4
 %
 
85.8
 %
 
87.5
 %
Acquisition related-amortization of purchased intangibles
 
3.0
%
 
2.4
 %
 
2.8
 %
 
2.6
 %
Non-GAAP product gross margin(2)
 
88.1
%
 
89.8
 %
 
88.6
 %
 
90.1
 %
 
 
 
 
 
 
 
 
 
Research and development expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP research and development expenses
 
$
1,208

 
$
757

 
$
5,098

 
$
3,014

Up-front collaboration expenses
 
—

 
—

 
(373
)
 
—

Acquisition related expenses-acquired IPR&D
 
—

 
—

 
(400
)
 
(66
)
Acquisition related-IPR&D impairment
 
(201
)
 
—

 
(432
)
 
—

Stock-based compensation expenses
 
(47
)
 
(45
)
 
(176
)
 
(173
)
Other(1)
 
(1
)
 
67

 
32

 
70

Non-GAAP research and development expenses
 
$
959

 
$
779

 
$
3,749

 
$
2,845

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP selling, general and administrative expenses
 
$
992

 
$
1,066

 
$
3,398

 
$
3,426

Stock-based compensation expenses
 
(52
)
 
(50
)
 
(190
)
 
(198
)
Other(1)
 
(2
)
 
(3
)
 
(14
)
 
(4
)
Non-GAAP selling, general and administrative expenses
 
$
938

 
$
1,013

 
$
3,194

 
$
3,224

 
 
 
 
 
 
 
 
 
Operating margin reconciliation:
 
 
 
 
 
 
 
 
GAAP operating margin
 
55.3
%
 
66.1
 %
 
58.0
 %
 
68.0
 %
Up-front collaboration expenses
 
—
%
 
—
 %
 
1.2
 %
 
—
 %
Acquisition related-amortization of purchased intangibles
 
2.9
%
 
2.4
 %
 
2.8
 %
 
2.5
 %
Acquisition related expenses-acquired IPR&D
 
—
%
 
—
 %
 
1.3
 %
 
0.2
 %
Acquisition related-IPR&D impairment
 
2.7
%
 
—
 %
 
1.4
 %
 
—
 %
Stock-based compensation expenses
 
1.4
%
 
1.1
 %
 
1.3
 %
 
1.2
 %
Other(1)
 
—
%
 
(0.8
)%
 
(0.1
)%
 
(0.2
)%
Non-GAAP operating margin(2)
 
62.3
%
 
68.9
 %
 
65.9
 %
 
71.7
 %
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)     Amounts related to consolidation of a contract manufacturer, contingent consideration and/or other individually insignificant amounts
(2)     Amounts may not sum due to rounding



February 7, 2017
 
8



GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION - (Continued)
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
Effective tax rate reconciliation:
 
 
 
 
 
 
 
 
GAAP effective tax rate
 
20.9
 %
 
13.8
%
 
21.1
 %
 
16.4
 %
Up-front collaboration expenses
 
—
 %
 
—
%
 
(0.4
)%
 
—
 %
Acquisition related-amortization of purchased intangibles
 
(1.5
)%
 
—
%
 
(0.8
)%
 
(0.3
)%
Acquisition related expenses-acquired IPR&D
 
—
 %
 
—
%
 
(0.4
)%
 
—
 %
Stock-based compensation expenses
 
—
 %
 
—
%
 
—
 %
 
0.1
 %
Other(1)
 
—
 %
 
0.1
%
 
—
 %
 
—
 %
Non-GAAP effective tax rate(2)
 
19.4
 %
 
13.9
%
 
19.5
 %
 
16.2
 %
 
 
 
 
 
 
 
 
 
Net income attributable to Gilead reconciliation:
 
 
 
 
 
 
 
 
GAAP net income attributable to Gilead
 
$
3,108

 
$
4,683

 
$
13,501

 
$
18,108

Up-front collaboration expenses
 
—

 
—

 
373

 
—

Acquisition related-amortization of purchased intangibles
 
206

 
203

 
818

 
808

Acquisition related expenses-acquired IPR&D
 
—

 
—

 
400

 
66

Acquisition related-IPR&D impairment
 
198

 
—

 
371

 
—

Stock-based compensation expenses
 
73

 
67

 
276

 
251

Other(1)
 
—

 
(64
)
 
(26
)
 
(59
)
Non-GAAP net income attributable to Gilead
 
$
3,585

 
$
4,889

 
$
15,713

 
$
19,174

 
 
 
 
 
 
 
 
 
Diluted earnings per share reconciliation:
 
 
 
 
 
 
 
 
GAAP diluted earnings per share
 
$
2.34

 
$
3.18

 
$
9.94

 
$
11.91

Up-front collaboration expenses
 
—

 
—

 
0.27

 
—

Acquisition related-amortization of purchased intangibles
 
0.16

 
0.14

 
0.60

 
0.53

Acquisition related expenses-acquired IPR&D
 
—

 
—

 
0.29

 
0.04

Acquisition related-IPR&D impairment
 
0.15

 
—

 
0.27

 
—

Stock-based compensation expenses
 
0.06

 
0.05

 
0.20

 
0.17

Other(1)
 
—

 
(0.04
)
 
(0.02
)
 
(0.04
)
Non-GAAP diluted earnings per share(2)
 
$
2.70

 
$
3.32

 
$
11.57

 
$
12.61

 
 
 
 
 
 
 
 
 
Shares used in per share calculation (diluted) reconciliation:
 
 
 
 
 
 
 
 
GAAP shares used in per share calculation (diluted)
 
1,327

 
1,472

 
1,358

 
1,521

Share impact of current stock-based compensation rules
 
(1
)
 
—

 
—

 
—

Non-GAAP shares used in per share calculation (diluted)
 
1,326

 
1,472

 
1,358

 
1,521

 
 
 
 
 
 
 
 
 
Non-GAAP adjustment summary:
 
 
 
 
 
 
 
 
Cost of goods sold adjustments
 
$
215

 
$
205

 
$
847

 
$
831

Research and development expenses adjustments
 
249

 
(22
)
 
1,349

 
169

Selling, general and administrative expenses adjustments
 
54

 
53

 
204

 
202

Other income (expense) adjustments(1)
 
—

 
—

 
—

 
1

Total non-GAAP adjustments before tax
 
518

 
236

 
2,400

 
1,203

Income tax effect
 
(40
)
 
(34
)
 
(191
)
 
(150
)
Other(1)
 
(1
)
 
4

 
3

 
13

Total non-GAAP adjustments after tax
 
$
477

 
$
206

 
$
2,212

 
$
1,066

 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)     Amounts related to consolidation of a contract manufacturer, contingent consideration and/or other individually insignificant amounts
(2)     Amounts may not sum due to rounding


February 7, 2017
 
9



GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP 2017 FULL YEAR GUIDANCE
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Provided
February 7, 2017
Projected product gross margin GAAP to non-GAAP reconciliation:
 
 
GAAP projected product gross margin
 
82% - 84%
Acquisition-related expenses
 
4% - 4%
Non-GAAP projected product gross margin(1)
 
86% - 88%
 
 
 
Projected research and development expenses GAAP to non-GAAP reconciliation:
 
 
GAAP projected research and development expenses
 
$3,295 - $3,640
Acquisition-related expenses / up-front collaboration expenses
 
(15) - (45)
Stock-based compensation expenses
 
(180) - (195)
Non-GAAP projected research and development expenses
 
$3,100 - $3,400
 
 
 
Projected selling, general and administrative expenses GAAP to non-GAAP reconciliation:
 
 
GAAP projected selling, general and administrative expenses
 
$3,305 - $3,615
Stock-based compensation expenses
 
(205) - (215)
Non-GAAP projected selling, general and administrative expenses
 
$3,100 - $3,400
 
 
 
Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses:
 
 
Acquisition-related expenses / up-front collaboration expenses
 
$0.62 - $0.67
Stock-based compensation expenses
 
0.22 - 0.24
Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses
 
$0.84 - $0.91
 
 
 
Note:
 
 
(1)     Stock-based compensation expenses have a less than one percent impact on non-GAAP projected product gross margin


February 7, 2017
 
10



GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
 
December 31,
 
December 31,
 
2016
 
2015 (1)
 

 
 
Cash, cash equivalents and marketable securities
$
32,380

 
$
26,208

Accounts receivable, net
4,514

 
5,854

Inventories
1,587

 
1,955

Property, plant and equipment, net
2,865

 
2,276

Intangible assets, net
8,971

 
10,247

Goodwill
1,172

 
1,172

Other assets
5,488

 
4,004

Total assets
$
56,977

 
$
51,716

 
 
 
 
Current liabilities
$
9,219

 
$
9,890

Long-term liabilities
28,395

 
22,711

Equity component of currently redeemable convertible notes
—

 
2

Stockholders’ equity(2)
19,363

 
19,113

Total liabilities and stockholders’ equity
$
56,977

 
$
51,716

 
 
 
 
Notes:
 
 
 
(1)     Derived from the audited consolidated financial statements as of December 31, 2015. Certain amounts have been reclassified to conform to current year presentation
(2)     As of December 31, 2016, there were 1,310 million shares of common stock issued and outstanding


February 7, 2017
 
11



GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in millions)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
Antiviral products:
 
 
 
 
 
 
 
 
Harvoni – U.S.
 
$
976

 
$
1,707

 
$
4,941

 
$
10,090

Harvoni – Europe
 
363

 
587

 
1,810

 
2,219

Harvoni – Japan
 
195

 
899

 
1,839

 
1,010

Harvoni – Other International
 
106

 
152

 
491

 
545

 
 
1,640

 
3,345

 
9,081

 
13,864

 
 
 
 
 
 
 
 
 
Epclusa – U.S.
 
934

 
—

 
1,591

 
—

Epclusa – Europe
 
101

 
—

 
141

 
—

Epclusa – Other International
 
13

 
—

 
20

 
—

 
 
1,048

 
—

 
1,752

 
—

 
 
 
 
 
 
 
 
 
Truvada – U.S.
 
604

 
587

 
2,384

 
2,057

Truvada – Europe
 
200

 
272

 
913

 
1,118

Truvada – Other International
 
64

 
77

 
269

 
284

 
 
868

 
936

 
3,566

 
3,459

 
 
 
 
 
 
 
 
 
Atripla – U.S.
 
444

 
582

 
1,898

 
2,222

Atripla – Europe
 
108

 
161

 
520

 
694

Atripla – Other International
 
55

 
57

 
187

 
218

 
 
607

 
800

 
2,605

 
3,134

 
 
 
 
 
 
 
 
 
Genvoya – U.S.
 
485

 
44

 
1,301

 
44

Genvoya – Europe
 
68

 
1

 
160

 
1

Genvoya – Other International
 
10

 
—

 
23

 
—

 
 
563

 
45

 
1,484

 
45

 
 
 
 
 
 
 
 
 
Sovaldi – U.S.
 
112

 
660

 
1,895

 
2,388

Sovaldi – Europe
 
164

 
259

 
891

 
1,601

Sovaldi – Japan
 
119

 
473

 
635

 
878

Sovaldi – Other International
 
146

 
155

 
580

 
409

 
 
541

 
1,547

 
4,001

 
5,276

 
 
 
 
 
 
 
 
 
Stribild – U.S.
 
296

 
408

 
1,523

 
1,476

Stribild – Europe
 
71

 
83

 
314

 
282

Stribild – Other International
 
20

 
20

 
77

 
67

 
 
387

 
511

 
1,914

 
1,825

 
 
 
 
 
 
 
 
 
Viread – U.S.
 
171

 
156

 
591

 
541

Viread – Europe
 
68

 
77

 
302

 
310

Viread – Other International
 
85

 
73

 
293

 
257

 
 
324

 
306

 
1,186

 
1,108

 
 
 
 
 
 
 
 
 
Complera / Eviplera – U.S.
 
146

 
216

 
821

 
796

Complera / Eviplera – Europe
 
135

 
149

 
580

 
576

Complera / Eviplera – Other International
 
16

 
15

 
56

 
55

 
 
297

 
380

 
1,457

 
1,427

 
 
 
 
 
 
 
 
 
Odefsey – U.S.
 
138

 
—

 
302

 
—

Odefsey – Europe
 
17

 
—

 
27

 
—

 
 
155

 
—

 
329

 
—

 
 
 
 
 
 
 
 
 
Descovy – U.S.
 
112

 
—

 
226

 
—

Descovy – Europe
 
34

 
—

 
69

 
—

Descovy – Other International
 
3

 
—

 
3

 
—

 
 
149

 
—

 
298

 
—

 
 
 
 
 
 
 
 
 


February 7, 2017
 
12



GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY - (Continued)
(unaudited)
(in millions)
 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Other Antiviral – U.S.
 
$
12

 
$
9

 
$
48

 
$
39

Other Antiviral – Europe
 
4

 
6

 
22

 
26

Other Antiviral – Other International
 
—

 
1

 
2

 
4

 
 
16

 
16

 
72

 
69

 
 
 
 
 
 
 
 
 
Total antiviral products – U.S.
 
4,430

 
4,369

 
17,521

 
19,653

Total antiviral products – Europe
 
1,333

 
1,595

 
5,749

 
6,827

Total antiviral products – Japan
 
314

 
1,372

 
2,474

 
1,888

Total antiviral products – Other International
 
518

 
550

 
2,001

 
1,839

 
 
6,595

 
7,886

 
27,745

 
30,207

 
 
 
 
 
 
 
 
 
Other products:
 
 
 
 
 
 
 
 
Letairis
 
226

 
192

 
819

 
700

Ranexa
 
210

 
169

 
677

 
588

AmBisome
 
94

 
74

 
356

 
350

Zydelig
 
39

 
40

 
168

 
132

Other
 
52

 
48

 
188

 
174

 
 
621

 
523

 
2,208

 
1,944

 
 
 
 
 
 
 
 
 
Total product sales
 
$
7,216

 
$
8,409

 
$
29,953

 
$
32,151