Gilead Sciences, Inc. (NASDAQ:GILD) announced today its results of operations for the third quarter ended September 30, 2015. The financial results that follow represent a year-over-year comparison of third quarter 2015 to the third quarter 2014. Total revenues were $8.3 billion in 2015 compared to $6.0 billion in 2014. Net income was $4.6 billion or $3.06 per diluted share in 2015 compared to $2.7 billion or $1.67 per diluted share in 2014. Non-GAAP net income, which excludes amounts related to acquisition, restructuring, stock-based compensation and other, was $4.8 billion or $3.22 per diluted share in 2015 compared to $3.0 billion or $1.84 per diluted share in 2014.
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (In millions, except per share amounts) | 2015 | 2014 | 2015 | 2014 | |||||||||||
| Product sales | $ | 8,211 | $ | 5,968 | $ | 23,742 | $ | 17,252 | |||||||
| Royalty, contract and other revenues | 84 | 74 | 391 | 324 | |||||||||||
| Total revenues | $ | 8,295 | $ | 6,042 | $ | 24,133 | $ | 17,576 | |||||||
| Net income attributable to Gilead | $ | 4,600 | $ | 2,731 | $ | 13,425 | $ | 8,614 | |||||||
| Non-GAAP net income attributable to Gilead | $ | 4,836 | $ | 3,014 | $ | 14,285 | $ | 9,431 | |||||||
| Diluted EPS | $ | 3.06 | $ | 1.67 | $ | 8.73 | $ | 5.18 | |||||||
| Non-GAAP diluted EPS | $ | 3.22 | $ | 1.84 | $ | 9.29 | $ | 5.68 | |||||||
Product Sales
Total product sales for the third quarter of 2015 were $8.2 billion compared to $6.0 billion for the third quarter of 2014. Product sales in the U.S. were $5.6 billion compared to $4.2 billion for the third quarter of 2014. In Europe, product sales were $1.7 billion compared to $1.4 billion for the same period in 2014. Sales in other international locations increased to $1.0 billion compared to $327 million in the third quarter of 2014 primarily as a result of the launch of our HCV products in Japan.
Antiviral Product Sales
Antiviral product sales were $7.7 billion for the third quarter of 2015, compared to $5.5 billion for the third quarter of 2014 primarily due to sales of Harvoni® (ledipasvir 90 mg/sofosbuvir 400 mg), which was approved in the U.S. and Europe in the fourth quarter of 2014, partially offset by a decrease in sales of Sovaldi® (sofosbuvir 400 mg) due primarily to the uptake in Harvoni.
Other Product Sales
Other product sales, which include Letairis® (ambrisentan), Ranexa® (ranolazine) and AmBisome® (amphotericin B liposome for injection), were $509 million for the third quarter of 2015 compared to $424 million for the third quarter of 2014.
Operating Expenses
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (In millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
| Non-GAAP research and development expenses (R&D) | $ | 713 | $ | 586 | $ | 2,066 | $ | 1,686 | |||||||
| Non-GAAP selling, general and administrative expenses (SG&A) | $ | 850 | $ | 888 | $ | 2,211 | $ | 1,958 | |||||||
Note: Non-GAAP R&D and SG&A expenses exclude amounts related to acquisition, restructuring, stock-based compensation and other.
During the third quarter of 2015, compared to the same period in 2014:
- Non-GAAP research and development expenses increased primarily due to the progression of Gilead’s clinical studies.
- Non-GAAP selling, general and administrative expenses decreased primarily due to a cumulative catch-up of the branded prescription drug fee recorded in the same period in 2014, partially offset by higher costs to support Gilead’s growth and the geographic expansion in its business.
Cash, Cash Equivalents and Marketable Securities
As of September 30, 2015, Gilead had $25.1 billion of cash, cash equivalents and marketable securities compared to $14.7 billion as of June 30, 2015. This increase was primarily due to the issuance of senior unsecured notes in September 2015 for a total aggregate principal amount of $10.0 billion. During the third quarter of 2015, Gilead generated $4.1 billion in operating cash flow, utilized $3.1 billion to repurchase 28 million shares and paid a cash dividend of $627 million, or $0.43 per share.
Revised 2015 Full Year Guidance
Gilead updated its full year 2015 guidance as follows:
| (In millions, except percentages and per share amounts) |
Initially |
Updated |
Updated |
Updated |
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| Net Product Sales | $26,000 – $27,000 | $28,000 – $29,000 | $29,000 – $30,000 | $30,000 – $31,000 | |||||||
| Non-GAAP* | |||||||||||
| Product Gross Margin | 87% – 90% | 87% – 90% | 88% – 90% | 88% – 90% | |||||||
| R&D expenses | $3,000 – $3,300 | $3,000 – $3,300 | $2,800 – $3,000 | $2,800 – $3,000 | |||||||
| SG&A expenses | $3,000 – $3,300 | $3,000 – $3,300 | $3,000 – $3,200 | $3,000 – $3,200 | |||||||
| Effective Tax Rate | 18.0% – 20.0% | 18.0% – 20.0% | 17.0% – 18.0% | 17.0% – 18.0% | |||||||
| Diluted EPS Impact of Acquisition-Related, Restructuring, Stock-Based Compensation Expenses and Other | $0.82 – $0.87 | $0.82 – $0.87 | $0.82 – $0.87 | $0.82 – $0.87 | |||||||
| * Non-GAAP product gross margin, R&D and SG&A expenses and effective tax rate exclude amounts related to acquisition, restructuring, stock-based compensation and other. | |||||||||||
Product & Pipeline Updates Announced by Gilead During the Third Quarter of 2015 Include:
Antiviral Program
- Announced positive topline results from four international Phase 3 clinical studies (ASTRAL-1, ASTRAL-2, ASTRAL-3 and ASTRAL-4) evaluating a once-daily, fixed-dose combination of sofosbuvir (SOF) with velpatasvir (VEL), an investigational pangenotypic NS5A inhibitor, for the treatment of genotype 1-6 HCV infection. In the ASTRAL-1, ASTRAL-2 and ASTRAL-3 studies, patients with genotype 1-6 HCV infection received 12 weeks of SOF/VEL. Among these patients, 21 percent had compensated cirrhosis and 28 percent had failed prior treatments. In the ASTRAL-4 study, patients with decompensated cirrhosis (Child-Pugh class B) received 12 weeks of SOF/VEL with or without ribavirin, or 24 weeks of SOF/VEL.
- Announced that the Japanese Ministry of Health, Labour and Welfare approved Harvoni, the first once-daily single tablet regimen (STR) for the treatment of chronic hepatitis C genotype 1 infection in adults. In Japan, Harvoni is indicated for the suppression of viremia in patients with genotype 1 HCV infection with or without compensated cirrhosis, with a treatment duration of 12 weeks.
- Announced that the company submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for an investigational, once-daily STR that combines Gilead’s emtricitabine 200 mg and tenofovir alafenamide (TAF) 25 mg with rilpivirine 25 mg (R/F/TAF) from Janssen Sciences Ireland UC, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, for the treatment of HIV-1 infection in adult and pediatric patients 12 years of age and older. The data submitted in the NDA support the use of R/F/TAF among patients who are HIV treatment-naïve or who are virologically suppressed and want to replace their current antiretroviral treatment regimen.
- Announced that the company’s Marketing Authorization Application (MAA) for R/F/TAF was fully validated and under evaluation by the European Medicines Agency (EMA). The data included in the application support the use of R/F/TAF for the treatment of HIV-1 infection in adults and pediatric patients 12 years and older.
- Announced that the Committee for Medicinal Products for Human Use, the scientific committee of the EMA, adopted a positive opinion on the company’s MAA for E/C/F/TAF on September 25, 2015.
- Announced a Phase 3 study of F/TAF for the treatment of HIV-1 infection met its primary objective. The ongoing study was designed to explore the efficacy and safety of F/TAF-based regimens among virologically suppressed adult patients switching from HIV treatment regimens containing emtricitabine/tenofovir disoproxil fumarate. At week 48, the F/TAF-based regimens and the TDF-based regimens achieved similar rates of virologic suppression based on the proportion of patients with HIV RNA levels (viral load) of less than 50 copies/mL.
- Announced positive results from a Phase 3 clinical study of E/C/F/TAF among virologically suppressed adult patients switching from TDF-containing regimens. The study met its primary endpoint by demonstrating non-inferiority of E/C/F/TAF to the TDF-based regimens at week 48. The study also demonstrated statistical superiority among patients with HIV-1 RNA levels less than 50 copies/mL at week 48 and statistically significant improvements in bone and renal laboratory parameters. These data were presented at the 8th IAS Conference on HIV Pathogenesis, Treatment & Prevention. (Original Source)
Shares of Gilead Sciences are down 1.90% to $108.88 in after-hours trading. GILD has a 1-year high of $123.37 and a 1-year low of $85.95. The stock’s 50-day moving average is $103.19 and its 200-day moving average is $109.07.
On the ratings front, Gilead Sciences has been the subject of a number of recent research reports. In a report issued on October 23, J.P. Morgan analyst Cory Kasimov reiterated a Buy rating on GILD, with a price target of $133, which implies an upside of 21.6% from current levels. Separately, on October 19, Oppenheimer’s Wendy Lam reiterated a Buy rating on the stock and has a price target of $124.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Cory Kasimov and Wendy Lam have a total average return of -1.7% and 1.7% respectively. Kasimov has a success rate of 46.3% and is ranked #3148 out of 3802 analysts, while Lam has a success rate of 75.0% and is ranked #2400.
Overall, 2 research analysts have assigned a Hold rating and 10 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $129.60 which is 18.5% above where the stock opened today.