01—Abstract
Summary
Summary of the 10-K filed February 25, 2020. Cited figures are marked; the original filing is the authoritative source.
Gilead Sciences, Inc.'s 2019 10-K filing highlights a year of solid financial performance, driven by continued growth in its HIV franchise, which accounted for approximately 74%a of total product sales.
Total revenues reached $22.4 billionb, a slight increase from the prior year, primarily due to higher HIV product sales, notably Biktarvy, and increased use of Descovy for PrEP. The company also saw significant growth in its cell therapy business, Yescarta. However, sales for Hepatitis C (HCV) products declined due to lower pricing and patient starts, and older HIV products like Truvada saw decreased sales as patients shifted to newer TAF-based regimens and with the anticipation of generic competition.
Gilead is actively positioning itself for future growth, aiming to launch 10 new transformative therapies by 2030. Key strategic moves in 2019 included a significant R&D collaboration with Galapagos NV, aimed at accelerating the development of treatments for inflammatory and fibrotic diseases, and progress in its oncology pipeline with Kite Pharma.
The company's financial position remains strong, with substantial cash reserves, although R&D expenses increased significantly due to the Galapagos collaboration. Investors should monitor the company's ongoing pipeline development, particularly in inflammatory diseases and oncology, and remain aware of the potential impact of litigation, competition, and evolving healthcare regulations on future performance.
02—Key points
Key Highlights
- HIV franchise sales grew 12% to $16.4 billion in 2019, driven by strong demand for Biktarvy and increased use of Descovy for PrEP.
- Total revenues increased 1% to $22.4 billion in 2019, with product sales reaching $22.1 billion.
- HCV product sales decreased by 20% to $2.9 billion due to lower pricing and patient starts.
- Yescarta, a cell therapy, saw a significant 73% increase in sales, reaching $456 million.
- R&D expenses more than doubled to $9.1 billion, largely due to a $3.9 billion upfront payment for the Galapagos collaboration.
- Gilead entered into a transformative R&D collaboration with Galapagos NV to develop novel treatments for inflammatory and fibrotic diseases.
- The company faces significant litigation risks, notably patent infringement lawsuits concerning Yescarta and Biktarvy, which could lead to substantial damages.
- Gilead has a robust cash position ($25.8 billion at year-end 2019) and continues to return capital to shareholders through dividends and share repurchases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Gilead Sciences, Inc. kept $0.24.
- Revenue$22.45B100.0%
- Cost of revenue−$4.67B20.8%
- Gross profit$17.77B79.2%
- Operating costs−$13.49B60.1%
- Operating income$4.29B19.1%
- Interest, other & tax$1.10B4.9%
- Net income$5.39B24.0%
Where FY2019 revenue went
$22.45B- R&D: $9.11B, 41% of revenue
- Cost of revenue: $4.67B, 21% of revenue
- SG&A: $4.38B, 20% of revenue
- Operating income: $4.29B, 19% of revenue
Kept 19% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 25, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $22.45B$22.13B | +1.5% |
| Cost of Revenue | $4.67B$4.85B | −3.7% |
| Gross Profit | $17.77B$17.27B | +2.9% |
| R&D Expenses | $9.11B$5.02B | +81.5% |
| SG&A Expenses | $4.38B$4.06B | +8.0% |
| Operating Expenses | $18.16B$13.93B | +30.4% |
| Operating Income | $4.29B$8.20B | −47.7% |
| Interest Expense | $995.00M$1.08B | −7.6% |
| Net Income | $5.39B$5.46B | −1.3% |
| EPS (Basic) | $4.24$4.20 | +1.0% |
| EPS (Diluted) | $4.22$4.17 | +1.2% |
| Shares Outstanding (Basic) | 1.27B1.30B | −2.2% |
| Shares Outstanding (Diluted) | 1.28B1.31B | −2.4% |
05—Questions
Frequently Asked Questions
What were Gilead's key drivers of revenue growth in 2019?
Gilead's primary revenue growth driver in 2019 was its HIV franchise, which experienced a 12% increase in sales to $16.4 billion. This growth was largely attributed to the strong performance of Biktarvy and the increasing uptake of Descovy for Pre-Exposure Prophylaxis (PrEP). The cell therapy Yescarta also demonstrated significant growth, with sales up 73%.
What challenges did Gilead face in 2019?
Gilead faced challenges including a 20% decline in HCV product sales due to lower pricing and patient starts, and decreased sales for older HIV products like Truvada as patients switched to newer regimens or as generic competition emerged. The company also incurred a significant increase in R&D expenses due to strategic collaborations, and faces ongoing litigation risks related to patent infringement for key products like Yescarta and Biktarvy.
What is Gilead's outlook for future growth?
Gilead has set an ambitious goal to launch 10 new transformative therapies by 2030. The company is focusing on expanding its pipeline through internal R&D and external innovation, including its significant collaboration with Galapagos NV for inflammatory and fibrotic diseases. Gilead plans to continue investing in its core HIV business, its cell therapy portfolio, and other promising pipeline candidates to drive future growth.
How is Gilead managing its financial resources and returning capital to shareholders?
Gilead maintained a strong financial position in 2019 with $25.8 billion in cash, cash equivalents, and marketable debt securities. The company generated $9.1 billion in operating cash flow. Gilead continued its commitment to returning capital to shareholders by paying cash dividends totaling $3.2 billion and executing share repurchases totaling $1.7 billion under its existing repurchase program. A new $5 billion repurchase program was authorized in early 2020.
06—Continue