Analyst Conference Summary

Gilead Sciences

conference date: July 26, 2011 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2011 (second quarter, Q2)

Forward-looking statements

Overview: Continued good growth trends, particularly for Atripla.

Basic data (GAAP) :

Revenues were $2.14 billion, up 11% sequentially from $1.93 billion and likewise up 11% from $1.93 billion in the year-earlier quarter.

Net income was $746.2 million, up 15% sequentially from $651.1 million and up 5% from $712.1 million year-earlier.

Earnings per share (EPS) were $0.93, up 16% sequentially from $0.80 and up 18% from $0.79 year-earlier.


Unchanged. For the full year 2011, net product sales of between $7.9 and $8.1 billion. Gross margin (non-GAAP) 74% to 76%. Non-GAAP expenses $1.95 to $2.05 billion. Tax rate 25 to 27%.

Based on recent acquisitions and collaboration our expenses are tending towards the high end of the range.

Conference Highlights:

Record product revenues and EPS. Non-GAAP net income was $797.7 million; EPS $1.00, up from $0.85 year-earlier.

Product sales of $2.04 billion were up 13% y/y. Antiviral, including HIV, product sales were $1.76 billion, up 11% y/y. U.S. market share of HIV franchise reached 70.4%. European product sales increased 13% y/y to $762 million.

Revenues by product ($ millions):
  Q2 2011 Q2 2010 y/y increase

Royalty, contract and other collaboration revenues were $97.7 million, down 19% from $121.2 million year-earlier, mainly due to lower Tamiflu royalties (at $50.6 million).

Cash and equivalents balance ended at $5.50 billion. $723.9 million in stock was repurchased. Cash flow from operations was $943.3 million.

Cost of goods sold was $533.9 million. Research and development $282.4 million. Selling general and administrative expense $304.3 million. Leaving income from operations of $1.017 billion. Net interest and other income negative $34 million. Income tax provision $240 million.Net loss to noncontrolling interest $3.8 million.

Agreed to license protease inhibitor Prezista (darunavir) for HIV from Tibotec. Agreed to license and develop MDT-637, an inhalable antiviral fusion inhibitor for respiratory syncytial virus from Microdose Therapeutx.

Endurant for HIV single tablet regimen of Truvada plus Rilpivirine has a PDUFA date (for FDA action) of August 10, 2011. Gilead sales force will be ready to launch the product commercially on approval. In Europe approval anticipated in Q4. The Quad regimen data is due in Q3; if positive, will file for approval in Q1 2012. Cobicistat data is due in Q4. Elvitegravir achieved primary endpoint this quarter. Seven hepatitis (HCV) drugs are still in Phase I or Phase II trials. See also Gilead Pipeline.

HPTN Study 053 showed anti-retroviral treatment (ART) resulted in a 96% reduction in HIV transmission.

Letairis for pulmonary arterial hypertension had label updated to remove potential liver injury warning.


Quad filing in Q1 2012, factors other than positive results? Data submitted will be the two phase III studies. No new analyses will be needed. We talked to the FDA about all the requirements for the filing. Elvitegravir will be submitted separately as well.

Ex-U.S. patient data, are numbers flat despite rising revenues? European team did a great job in the quarter. We don't have a first line agent for Atripla, so that limits market share and keeps Truvada as a backbone. 7% increase in revenue in Q2, 1% was FX, 3% were seasonal buy-ins typical in June. 3 to 4% real demand increase. There was no Q1 to Q2 price change.

Are you seeking patient-naive labels in Europe for Quad and Truvada plus Rilpivirine? Yes, we will seek it for both. The studies were done on treatment naive patients.

On Quad, we just need non-inferiority. We will be very pleased with non-inferiority. Physicians like integrase from the point of view of tolerability and a single tablet.

Is Endurant (Truvada plus Rilpivirine) just a bridge to Quad? We know the patient population that this will target, including pregnant women and those who have problems with Atripla. Not just a bridge while waiting for Quad, no matter how excited we are about Quad.

Pricing of new drugs, competitive landscape? It is too early to talk about that.

We have not seen any generic CTC in the U.S. There are not very many patients on the drug, it is not that attractive to introduce into the U.S.

More: Gilead Q2 2011 Slide Show (pdf)

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Copyright 2011 William P. Meyers