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GILEAD SCIENCES, INC. Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed March 11, 2004
Period End
December 31, 2003
Security
GILD
In the record · 2016–202610-K1210-Q328-K117

GILD filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 117 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Sep ’16Sep ’16
  2. Leadership change8-K · Mar ’19Mar ’19
  3. FY2020 annual report10-K · Feb ’21Feb ’21
  4. Leadership change8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K filed March 11, 2004. Cited figures are marked; the original filing is the authoritative source.

Gilead Sciences' 2003 10-K shows a company in transition from a single-product story to a broader HIV franchise.

Total revenues rose 86% to $867.9 milliona, driven by Viread (tenofovir DF), which generated $566.5 million in product sales and royalties (about 65% of revenue), and AmBisome contributed $210.9 million (about 24%). Viread and AmBisome together accounted for roughly 90% of revenue, a heavy concentration that the risk factors flag directly. Reported results were a net loss of $72.0 million ($0.36 per share), but this was driven by a non-cash $488.6 million in-process R&D charge from the January 2003 Triangle Pharmaceuticals acquisition.

Excluding that charge, the business was solidly profitable, and operating cash flow more than tripled to $234.6 millionb. A $111.6 million tax benefit from releasing the valuation allowance also flattered earnings, and management guided to a normalized 32%-35% effective tax rate for 2004. Looking forward, management guided 2004 Viread sales to $700-750 million (25%-30% growth), while expecting AmBisome to decline to $160-180 million as European competitors erode share.

It also expects R&D of $200c-220 million and SG&A of $310-330 million, which together point to higher operating costs. The balance sheet remained strong, with $707 million in cash and marketable securities against $345 million of 2% convertible senior notes due 2007.

Investors should weigh several risks: heavy dependence on two products, reimbursement pressure in Germany, Italy and France, collection risk on roughly $148 milliond of receivables from government-owned customers in Southern Europe, and pending securities class actions and a Medicaid AWP lawsuit. The company also has a growing pipeline of Emtriva and a Viread/Emtriva fixed-dose combination, though these remain in development or early commercialization.

02—Key points

Key Highlights

  1. Total revenues rose 86% to $867.9 million in 2003 from $466.8 million in 2002, led by Viread sales of $566.5 million (up 151%).
  2. Reported net loss of $72.0 million ($0.36 per share) reflects a $488.6 million non-cash in-process R&D charge from the Triangle Pharmaceuticals acquisition.
  3. Operating cash flow increased to $234.6 million from $74.4 million, a gain of 215% year over year.
  4. A $111.6 million tax benefit from reversing the valuation allowance boosted 2003 earnings; 2004 effective tax rate is guided to 32%-35%.
  5. 2004 guidance: Viread sales of $700-750 million, AmBisome sales of $160-180 million, R&D of $200-220 million, and SG&A of $310-330 million.
  6. Concentration risk is high: Viread and AmBisome make up about 90% of revenue, and AmBisome faces growing European competition.
  7. Litigation exposure includes securities class actions filed after the October 2003 stock drop, a derivative suit, and a Westchester County Medicaid AWP lawsuit covering Viread.

03—Questions

Frequently Asked Questions

  1. Why did Gilead report a net loss in 2003 despite strong revenue growth?

    The net loss of $72.0 million was driven primarily by a one-time, non-cash $488.6 million in-process R&D charge from acquiring Triangle Pharmaceuticals in January 2003. Excluding that charge, and partly offset by a $111.6 million tax benefit, the operating business generated substantial profit.

  2. How dependent is Gilead on its key products?

    Highly dependent. Viread accounted for 65% of total revenues and AmBisome for 24%, together about 90%. Viread faces HIV competition and reimbursement cuts, while AmBisome faces new European rivals, and management expects AmBisome sales to fall in 2004.

  3. What are the main growth drivers for 2004?

    Management expects Viread sales of $700-750 million (25%-30% growth), supported by the expanding once-daily HIV regimen market. Growth also depends on the Emtriva launch, Hepsera expansion, and development of a Viread/Emtriva fixed-dose combination, though these face regulatory and commercial uncertainty.

  4. What financial and legal risks should investors watch?

    Key risks include about $148 million of receivables from government-owned customers in Greece, Spain, Portugal and Italy, which are subject to slow payments; pending federal securities class actions and derivative suits; a Medicaid AWP lawsuit by Westchester County; and potential European price cuts and mandatory discounts.

04—Continue

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