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 SECOND QUARTER 2017 FINANCIAL RESULTS

- Product Sales of $7.0 billion -
- Diluted EPS of $2.33 per share -
- Non-GAAP Diluted EPS of $2.56 per share -
- Revised Full Year 2017 Guidance -

Foster City, CA, July 26, 2017 - Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the second quarter ended June 30, 2017. The financial results that follow represent a year-over-year comparison of the second quarter 2017 to the second quarter 2016. Total revenues were $7.1 billion in 2017 compared to $7.8 billion in 2016. Net income was $3.1 billion or $2.33 per diluted share in 2017 compared to $3.5 billion or $2.58 per diluted share in 2016. Non-GAAP net income, which excludes amounts related to acquisition-related, up-front collaboration, stock-based compensation and other expenses, was $3.4 billion or $2.56 per diluted share in 2017 compared to $4.2 billion or $3.08 per diluted share in 2016.
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(In millions, except per share amounts)
 
2017
 
2016
 
2017
 
2016
Product sales
 
$
7,046

 
$
7,651

 
$
13,423

 
$
15,332

Royalty, contract and other revenues
 
95

 
125

 
223

 
238

Total revenues
 
$
7,141

 
$
7,776

 
$
13,646

 
$
15,570

 
 
 
 
 
 
 
 
 
Net income attributable to Gilead
 
$
3,073

 
$
3,497

 
$
5,775

 
$
7,063

Non-GAAP net income* 
 
$
3,372

 
$
4,177

 
$
6,321

 
$
8,451

 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
2.33

 
$
2.58

 
$
4.38

 
$
5.11

Non-GAAP diluted earnings per share* 
 
$
2.56

 
$
3.08

 
$
4.79

 
$
6.11

 
 
 
 
 
 
 
 
 
*
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.
Product Sales
Total product sales for the second quarter of 2017 were $7.0 billion compared to $7.7 billion for the same period in 2016. Product sales for the second quarter of 2017 were $5.0 billion in the United States, $1.4 billion in Europe and $665 million in other locations. Product sales for the second quarter of 2016 were $4.9 billion in the United States, $1.6 billion in Europe and $1.2 billion in other locations.

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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
 

July 26, 2017
 
2
 
 
 

Antiviral Product Sales
Antiviral product sales, which include sales of our HIV, chronic hepatitis B (HBV) and chronic hepatitis C (HCV) products, were $6.4 billion for the second quarter of 2017 compared to $7.1 billion for the same period in 2016.
•
HIV and HBV product sales were $3.6 billion compared to $3.1 billion for the same period in 2016. The increase was 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).
•
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 $2.9 billion compared to $4.0 billion for the same period in 2016. The decline was due to lower sales of Harvoni and Sovaldi across all major markets, partially offset by sales of Epclusa, which was approved in the United States and Europe in June and July 2016, respectively.
Other Product Sales
Other product sales, which include Letairis® (ambrisentan), Ranexa® (ranolazine) and AmBisome® (amphotericin B liposome for injection), were $607 million for the second quarter of 2017 compared to $525 million for the same period in 2016.
Operating Expenses
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(In millions)
 
2017
 
2016
 
2017
 
2016
Research and development expenses (R&D)
 
$
864

 
$
1,484

 
$
1,795

 
$
2,749

Non-GAAP R&D expenses*
 
$
812

 
$
1,040

 
$
1,701

 
$
1,809

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses (SG&A)
 
$
897

 
$
890

 
$
1,747

 
$
1,575

Non-GAAP SG&A expenses*
 
$
827

 
$
838

 
$
1,634

 
$
1,476

 
 
 
 
 
 
 
 
 
*
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.
During the second quarter of 2017, compared to the same period in 2016:
•
R&D expenses decreased primarily due to the 2016 impact of Gilead’s purchase of Nimbus Apollo, Inc. and a U.S. Food and Drug Administration (FDA) priority review voucher.
•
Non-GAAP R&D expenses* decreased primarily due to the 2016 impact of Gilead’s purchase of an FDA priority review voucher.
Cash, Cash Equivalents and Marketable Securities
As of June 30, 2017, Gilead had $36.6 billion of cash, cash equivalents and marketable securities compared to $34.0 billion as of March 31, 2017. Cash flow from operating activities was $3.5 billion for the quarter. During the second quarter of 2017, Gilead paid cash dividends of $680 million and utilized $130 million on stock repurchases.

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July 26, 2017
 
3
 
 
 

Revised Full Year 2017 Guidance
Gilead revised its full year 2017 guidance, initially provided on February 7, 2017:
(In millions, except percentages and per share amounts)
 
Initially Provided
February 7, 2017
Reiterated
May 2, 2017
 
Updated
July 26, 2017
Net Product Sales
 
$22,500 - $24,500
 
$24,000 - $25,500
Non-HCV Product Sales
 
$15,000 - $15,500
 
$15,500 - $16,000
HCV Product Sales
 
$7,500 - $9,000
 
$8,500 - $9,500
Non-GAAP*
 
 
 
 
Product Gross Margin
 
86% - 88%
 
86% - 88%
R&D Expenses
 
$3,100 - $3,400
 
$3,200 - $3,400
SG&A Expenses
 
$3,100 - $3,400
 
$3,200 - $3,400
Effective Tax Rate
 
25.0% - 28.0%
 
25.0% - 28.0%
Diluted EPS Impact of Acquisition-related, Up-front Collaboration, Stock-based Compensation and Other Expenses
 
$0.84 - $0.91
 
$0.86 - $0.93
 
 
 
 
 
*
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.
Product and Pipeline Updates announced by Gilead during the Second Quarter of 2017 include:
Antiviral and Liver Diseases Programs
•
Announced that the European Committee for the Medicinal Products for Human Use, the scientific committee of the European Medicines Agency, adopted a positive opinion on the marketing authorization application for VoseviTM, a once-daily, single-tablet regimen of sofosbuvir 400 mg, velpatasvir 100 mg and voxilaprevir 100 mg for the treatment of HCV-infected patients. On July 18, 2017, Vosevi was approved by FDA.
•
Announced the submission of a new drug application (NDA) to FDA for an investigational, once-daily single-tablet regimen containing bictegravir (50 mg) (BIC), a novel investigational integrase strand transfer inhibitor, and emtricitabine/tenofovir alafenamide (200/25 mg) (FTC/TAF) for the treatment of HIV-1 infection in adults. BIC/FTC/TAF demonstrated high rates of virologic suppression and no treatment-emergent resistance through 48 weeks in Phase 3 clinical trials among treatment-naïve adult patients and among virologically suppressed adult patients who switched regimens. Additionally, Gilead submitted a marketing authorization application for BIC/FTC/TAF in the European Union during the second quarter of 2017.
•
Presented data at the 52nd Annual Meeting of the European Association for the Study of the Liver: The International Liver Congress™ 2017 which included the announcement of:
▪
Positive results from an open-label, proof-of-concept study evaluating GS-0976, an investigational inhibitor of acetyl-CoA carboxylase, in patients with nonalcoholic steatohepatitis. The data, from ten patients treated with GS-0976 20 mg taken orally once daily for 12 weeks, indicated that treatment was associated with statistically significant improvements in liver fat content and noninvasive markers of fibrosis, via inhibition of hepatic de novo lipogenesis.
▪
Positive results from two Phase 2 studies evaluating Harvoni tablets in HCV-infected patient populations not previously studied in dedicated clinical trials with direct-acting antiviral therapies. The studies demonstrated HCV cure rates of 99 percent in children aged 6 to 11 years, and 100 percent in adult patients co-infected with HCV and HBV.
▪
Positive 96-week results from two ongoing Phase 3 studies evaluating the safety and efficacy of daily Vemlidy® (TAF 25mg) in immune active patients and in patients switching from Gilead’s Viread

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July 26, 2017
 
4
 
 
 

(tenofovir disoproxil fumarate, TDF 300 mg). Vemlidy is a once-daily treatment approved for adults with HBV infection with compensated liver disease.
•
Announced that FDA approved supplemental indications for Harvoni tablets and Sovaldi tablets for the treatment of HCV infection in adolescents without cirrhosis or with compensated cirrhosis, 12 years of age and older, or weighing at least 35kg. Harvoni was approved for pediatric patients with genotype 1, 4, 5 or 6 HCV infection. Sovaldi was approved for pediatric patients with genotype 2 or 3 HCV infection, in combination with ribavirin.
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 second quarter 2017 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 43105505 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 July 28, 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 43105505.
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 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 Vosevi, Vemlidy, Epclusa, Descovy, Odefsey and Genvoya; the potential for increased pricing pressure globally and contracting pressure as well as decreased volume and market share from additional competitive HCV launches; 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; 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; the levels of inventory held by wholesalers

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July 26, 2017
 
5
 
 
 

and retailers which may cause fluctuations in Gilead’s earnings; Gilead’s ability to submit new drug applications and receive regulatory approval for new product candidates in the timelines currently anticipated or at all, including for Vosevi and BIC/FTC/TAF; 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 GS-0976; 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. 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 March 31, 2017 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®, VOSEVITM 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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July 26, 2017
 
6
 
 
 

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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
 Revenues:
 
 
 
 
 
 
 
 
 Product sales
 
$
7,046

 
$
7,651

 
$
13,423

 
$
15,332

 Royalty, contract and other revenues
 
95

 
125

 
223

 
238

 Total revenues
 
7,141

 
7,776

 
13,646

 
15,570

 Costs and expenses:
 
 
 
 
 
 
 
 
 Cost of goods sold
 
1,126

 
864

 
2,083

 
2,057

 Research and development expenses
 
864

 
1,484

 
1,795

 
2,749

 Selling, general and administrative expenses
 
897

 
890

 
1,747

 
1,575

 Total costs and expenses
 
2,887

 
3,238

 
5,625

 
6,381

 Income from operations
 
4,254

 
4,538

 
8,021

 
9,189

 Interest expense
 
(269
)
 
(227
)
 
(530
)
 
(457
)
 Other income (expense), net
 
130

 
88

 
241

 
169

 Income before provision for income taxes
 
4,115

 
4,399

 
7,732

 
8,901

 Provision for income taxes
 
1,046

 
902

 
1,964

 
1,837

 Net income
 
3,069

 
3,497

 
5,768

 
7,064

 Net income (loss) attributable to noncontrolling interest
 
(4
)
 
—

 
(7
)
 
1

 Net income attributable to Gilead
 
$
3,073

 
$
3,497

 
$
5,775

 
$
7,063

 
 
 
 
 
 
 
 
 
 Net income per share attributable to Gilead common stockholders - basic
 
$
2.35

 
$
2.62

 
$
4.42

 
$
5.20

 Shares used in per share calculation - basic
 
1,307

 
1,335

 
1,307

 
1,359

 Net income per share attributable to Gilead common stockholders - diluted
 
$
2.33

 
$
2.58

 
$
4.38

 
$
5.11

 Shares used in per share calculation - diluted
 
1,317

 
1,355

 
1,319

 
1,383

 Cash dividends declared per share
 
$
0.52

 
$
0.47

 
$
1.04

 
$
0.90



July 26, 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
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
Cost of goods sold reconciliation:
 
 
 
 
 
 
 
 
GAAP cost of goods sold
 
$
1,126

 
$
864

 
$
2,083

 
$
2,057

Acquisition related-amortization of purchased intangibles
 
(210
)
 
(210
)
 
(420
)
 
(420
)
Stock-based compensation expenses
 
(4
)
 
(4
)
 
(8
)
 
(7
)
Other(1)
 
(20
)
 
3

 
(20
)
 
6

Non-GAAP cost of goods sold
 
$
892

 
$
653

 
$
1,635

 
$
1,636

 
 
 
 
 
 
 
 
 
Product gross margin reconciliation:
 
 
 
 
 
 
 
 
GAAP product gross margin
 
84.0
%
 
88.7
%
 
84.5
%
 
86.6
 %
Acquisition related-amortization of purchased intangibles
 
3.0
%
 
2.7
%
 
3.1
%
 
2.7
 %
Other(1)
 
0.3
%
 
—
%
 
0.1
%
 
—
 %
Non-GAAP product gross margin(2)
 
87.3
%
 
91.5
%
 
87.8
%
 
89.3
 %
 
 
 
 
 
 
 
 
 
Research and development expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP research and development expenses
 
$
864

 
$
1,484

 
$
1,795

 
$
2,749

Up-front collaboration expenses
 
—

 
—

 
—

 
(368
)
Acquisition related expenses-acquired IPR&D
 
—

 
(400
)
 
—

 
(400
)
Acquisition related-IPR&D impairment
 
—

 
—

 
—

 
(114
)
Stock-based compensation expenses
 
(47
)
 
(44
)
 
(89
)
 
(85
)
Other(1)
 
(5
)
 
—

 
(5
)
 
27

Non-GAAP research and development expenses
 
$
812

 
$
1,040

 
$
1,701

 
$
1,809

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses reconciliation:
 
 
 
 
 
 
 
 
GAAP selling, general and administrative expenses
 
$
897

 
$
890

 
$
1,747

 
$
1,575

Stock-based compensation expenses
 
(51
)
 
(47
)
 
(94
)
 
(91
)
Other(1)
 
(19
)
 
(5
)
 
(19
)
 
(8
)
Non-GAAP selling, general and administrative expenses
 
$
827

 
$
838

 
$
1,634

 
$
1,476

 
 
 
 
 
 
 
 
 
Operating margin reconciliation:
 
 
 
 
 
 
 
 
GAAP operating margin
 
59.6
%
 
58.4
%
 
58.8
%
 
59.0
 %
Up-front collaboration expenses
 
—
%
 
—
%
 
—
%
 
2.4
 %
Acquisition related-amortization of purchased intangibles
 
2.9
%
 
2.7
%
 
3.1
%
 
2.7
 %
Acquisition related expenses-acquired IPR&D
 
—
%
 
5.1
%
 
—
%
 
2.6
 %
Acquisition related-IPR&D impairment
 
—
%
 
—
%
 
—
%
 
0.7
 %
Stock-based compensation expenses
 
1.4
%
 
1.2
%
 
1.4
%
 
1.2
 %
Other(1)
 
0.6
%
 
—
%
 
0.3
%
 
(0.2
)%
Non-GAAP operating margin(2)
 
64.6
%
 
67.5
%
 
63.6
%
 
68.4
 %
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)     Amounts related to restructuring, contingent consideration, consolidation of a contract manufacturer and/or other individually insignificant amounts
(2)     Amounts may not sum due to rounding
 
 
 
 


July 26, 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
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
Effective tax rate reconciliation:
 
 
 
 
 
 
 
 
GAAP effective tax rate
 
25.4
 %
 
20.5
 %
 
25.4
 %
 
20.6
 %
Up-front collaboration expenses
 
—
 %
 
—
 %
 
—
 %
 
(0.7
)%
Acquisition related-amortization of purchased intangibles
 
(1.1
)%
 
(0.7
)%
 
(1.1
)%
 
(0.7
)%
Acquisition related expenses-acquired IPR&D
 
—
 %
 
(1.5
)%
 
—
 %
 
(0.8
)%
Stock-based compensation expenses(1)
 
0.5
 %
 
—
 %
 
0.5
 %
 
—
 %
Other(2)
 
(0.1
)%
 
—
 %
 
(0.1
)%
 
0.1
 %
Non-GAAP effective tax rate(3)
 
24.7
 %
 
18.3
 %
 
24.7
 %
 
18.5
 %
 
 
 
 
 
 
 
 
 
Net income attributable to Gilead reconciliation:
 
 
 
 
 
 
 
 
GAAP net income attributable to Gilead
 
$
3,073

 
$
3,497

 
$
5,775

 
$
7,063

Up-front collaboration expenses
 
—

 
—

 
—

 
368

Acquisition related-amortization of purchased intangibles
 
202

 
204

 
404

 
408

Acquisition related expenses-acquired IPR&D
 
—

 
400

 
—

 
400

Acquisition related-IPR&D impairment
 
—

 
—

 
—

 
99

Stock-based compensation expenses(1)
 
61

 
69

 
106

 
133

Other(2)
 
36

 
7

 
36

 
(20
)
Non-GAAP net income attributable to Gilead
 
$
3,372

 
$
4,177

 
$
6,321

 
$
8,451

 
 
 
 
 
 
 
 
 
Diluted earnings per share reconciliation:
 
 
 
 
 
 
 
 
GAAP diluted earnings per share
 
$
2.33

 
$
2.58

 
$
4.38

 
$
5.11

Up-front collaboration expenses
 
—

 
—

 
—

 
0.27

Acquisition related-amortization of purchased intangibles
 
0.15

 
0.15

 
0.31

 
0.30

Acquisition related expenses-acquired IPR&D
 
—

 
0.30

 
—

 
0.29

Acquisition related-IPR&D impairment
 
—

 
—

 
—

 
0.07

Stock-based compensation expenses(1)
 
0.05

 
0.05

 
0.08

 
0.10

Other(2)
 
0.03

 
0.01

 
0.03

 
(0.01
)
Non-GAAP diluted earnings per share(3)
 
$
2.56

 
$
3.08

 
$
4.79

 
$
6.11

 
 
 
 
 
 
 
 
 
Non-GAAP adjustment summary:
 
 
 
 
 
 
 
 
Cost of goods sold adjustments
 
$
234

 
$
211

 
$
448

 
$
421

Research and development expenses adjustments
 
52

 
444

 
94

 
940

Selling, general and administrative expenses adjustments
 
70

 
52

 
113

 
99

Total non-GAAP adjustments before tax
 
356

 
707

 
655

 
1,460

Income tax effect(1)
 
(57
)
 
(32
)
 
(109
)
 
(77
)
Other(2)
 
—

 
5

 
—

 
5

Total non-GAAP adjustments after tax
 
$
299

 
$
680

 
$
546

 
$
1,388

 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
(1)     Income tax effect related to stock-based compensation expenses for the three and six months ended June 30, 2017 include the incremental tax benefit of $13 million and $33 million, respectively, recognized from the adoption of Accounting Standards Update 2016-09 “Improvements to Employee Share-Based Payment Accounting”
(2)     Amounts related to restructuring, contingent consideration, consolidation of a contract manufacturer and/or other individually insignificant amounts
(3)     Amounts may not sum due to rounding


July 26, 2017
 
9
 
 
 

GILEAD SCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP 2017 FULL YEAR GUIDANCE
(unaudited)
(in millions, except percentages and per share amounts)
 
 
Initially Provided
February 7, 2017
Reiterated
May 2, 2017
 
Updated
July 26, 2017
Projected product gross margin GAAP to non-GAAP reconciliation:
 
 
 
 
GAAP projected product gross margin
 
82% - 84%
 
82% - 84%
Acquisition-related expenses
 
4% - 4%
 
4% - 4%
Non-GAAP projected product gross margin(1)
 
86% - 88%
 
86% - 88%
 
 
 
 
 
Projected research and development expenses GAAP to non-GAAP reconciliation:
 
 
 
 
GAAP projected research and development expenses
 
$3,295 - $3,640
 
$3,410 - $3,655
Acquisition-related expenses / up-front collaboration expenses
 
(15) - (45)
 
(15) - (45)
Stock-based compensation expenses
 
(180) - (195)
 
(195) - (210)
Non-GAAP projected research and development expenses
 
$3,100 - $3,400
 
$3,200 - $3,400
 
 
 
 
 
Projected selling, general and administrative expenses GAAP to non-GAAP reconciliation:
 
 
 
 
GAAP projected selling, general and administrative expenses
 
$3,305 - $3,615
 
$3,435 - $3,645
Stock-based compensation expenses
 
(205) - (215)
 
(235) - (245)
Non-GAAP projected selling, general and administrative expenses
 
$3,100 - $3,400
 
$3,200 - $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
 
$0.62 - $0.67
Stock-based compensation expenses
 
0.22 - 0.24
 
0.24 - 0.26
Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses
 
$0.84 - $0.91
 
$0.86 - $0.93
 
 
 
 
 
Note:
 
 
 
 
(1)     Stock-based compensation expenses have a less than one percent impact on non-GAAP projected product gross margin


July 26, 2017
 
10
 
 
 

GILEAD SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
 
 
June 30,
 
December 31,
 
 
2017
 
2016(1)
 
 
 
 
 
Cash, cash equivalents and marketable securities
 
$
36,576

 
$
32,380

Accounts receivable, net
 
4,478

 
4,514

Inventories
 
1,408

 
1,587

Property, plant and equipment, net
 
3,012

 
2,865

Intangible assets, net
 
8,551

 
8,971

Goodwill
 
1,172

 
1,172

Other assets
 
5,066

 
5,488

Total assets
 
$
60,263

 
$
56,977

 
 
 
 
 
Current liabilities
 
$
8,492

 
$
9,218

Long-term liabilities
 
28,680

 
28,396

Stockholders’ equity(2)
 
23,091

 
19,363

Total liabilities and stockholders’ equity
 
$
60,263

 
$
56,977

 
 
 
 
 
Notes:
 
 
 
 
(1)     Derived from the audited consolidated financial statements as of December 31, 2016. Certain amounts have been reclassified to conform to current year presentation
(2)     As of June 30, 2017, there were 1,306 million shares of common stock issued and outstanding




July 26, 2017
 
11
 
 
 

GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY
(unaudited)
(in millions)
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
Antiviral products:
 
 
 
 
 
 
 
 
Harvoni – U.S.
 
$
984

 
$
1,474

 
$
1,910

 
$
2,881

Harvoni – Europe
 
230

 
512

 
473

 
1,067

Harvoni – Other International
 
168

 
578

 
370

 
1,633

 
 
1,382

 
2,564

 
2,753

 
5,581

 
 
 
 
 
 
 
 
 
Epclusa – U.S.
 
864

 
64

 
1,599

 
64

Epclusa – Europe
 
248

 
—

 
386

 
—

Epclusa – Other International
 
59

 
—

 
78

 
—

 
 
1,171

 
64

 
2,063

 
64

 
 
 
 
 
 
 
 
 
Genvoya – U.S.
 
710

 
268

 
1,379

 
409

Genvoya – Europe
 
125

 
30

 
212

 
46

Genvoya – Other International
 
22

 
4

 
35

 
5

 
 
857

 
302

 
1,626

 
460

 
 
 
 
 
 
 
 
 
Truvada – U.S.
 
567

 
631

 
1,031

 
1,207

Truvada – Europe
 
184

 
245

 
373

 
496

Truvada – Other International
 
61

 
66

 
122

 
137

 
 
812

 
942

 
1,526

 
1,840

 
 
 
 
 
 
 
 
 
Atripla – U.S.
 
334

 
479

 
650

 
968

Atripla – Europe
 
86

 
140

 
180

 
283

Atripla – Other International
 
55

 
54

 
97

 
97

 
 
475

 
673

 
927

 
1,348

 
 
 
 
 
 
 
 
 
Sovaldi – U.S.
 
61

 
775

 
88

 
1,420

Sovaldi – Europe
 
113

 
263

 
219

 
543

Sovaldi – Other International
 
141

 
320

 
321

 
672

 
 
315

 
1,358

 
628

 
2,635

 
 
 
 
 
 
 
 
 
Viread – U.S.
 
141

 
142

 
258

 
265

Viread – Europe
 
76

 
81

 
147

 
157

Viread – Other International
 
83

 
64

 
155

 
137

 
 
300

 
287

 
560

 
559

 
 
 
 
 
 
 
 
 
Stribild – U.S.
 
225

 
326

 
451

 
702

Stribild – Europe
 
54

 
84

 
121

 
165

Stribild – Other International
 
14

 
19

 
30

 
39

 
 
293

 
429

 
602

 
906

 
 
 
 
 
 
 
 
 
Descovy – U.S.
 
232

 
49

 
441

 
49

Descovy – Europe
 
47

 
12

 
84

 
12

Descovy – Other International
 
7

 
—

 
12

 
—

 
 
286

 
61

 
537

 
61

 
 
 
 
 
 
 
 
 
Odefsey – U.S.
 
230

 
58

 
433

 
69

Odefsey – Europe
 
27

 
—

 
50

 
—

Odefsey – Other International
 
1

 
—

 
2

 
—

 
 
258

 
58

 
485

 
69

 
 
 
 
 
 
 
 
 
Complera / Eviplera – U.S.
 
112

 
199

 
224

 
421

Complera / Eviplera – Europe
 
127

 
156

 
252

 
302

Complera / Eviplera – Other International
 
15

 
13

 
31

 
26

 
 
254

 
368

 
507

 
749




July 26, 2017
 
12
 
 
 

GILEAD SCIENCES, INC.
PRODUCT SALES SUMMARY - (Continued)
(unaudited)
(in millions)
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Other Antiviral – U.S.
 
$
28

 
$
12

 
$
53

 
$
22

Other Antiviral – Europe
 
6

 
7

 
10

 
13

Other Antiviral – Other International
 
2

 
1

 
3

 
2

 
 
36

 
20

 
66

 
37

 
 
 
 
 
 
 
 
 
Total antiviral products – U.S.
 
4,488

 
4,477

 
8,517

 
8,477

Total antiviral products – Europe
 
1,323

 
1,530

 
2,507

 
3,084

Total antiviral products – Other International
 
628

 
1,119

 
1,256

 
2,748

 
 
6,439

 
7,126

 
12,280

 
14,309

 
 
 
 
 
 
 
 
 
Other products:
 
 
 
 
 
 
 
 
Letairis
 
230

 
203

 
441

 
378

Ranexa
 
200

 
153

 
353

 
297

AmBisome
 
92

 
85

 
184

 
171

Zydelig
 
35

 
41

 
70

 
90

Other
 
50

 
43

 
95

 
87

 
 
607

 
525

 
1,143

 
1,023

 
 
 
 
 
 
 
 
 
Total product sales
 
$
7,046

 
$
7,651

 
$
13,423

 
$
15,332