10-QPeriod: Q3 FY2001

GILEAD SCIENCES, INC. Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 13, 2001For Securities:GILD

Summary

Gilead Sciences, Inc. reported financial results for the nine months and third quarter ended September 30, 2001. The company experienced an increase in total revenues to $50.9 million for the third quarter and $159.4 million for the nine months, primarily driven by a 20% increase in AmBisome® product sales in the third quarter and an 18% increase for the nine-month period. Despite revenue growth, Gilead continued to operate at a loss, with a net loss of $25.2 million for the third quarter and $79.3 million for the nine months, compared to $17.4 million and $38.4 million in the respective prior-year periods. Significant increases in Research and Development (R&D) and Selling, General, and Administrative (SG&A) expenses were noted, driven by development activities for Viread™ (HIV treatment) and other pipeline products. Key developments include the recent U.S. FDA approval and initial marketing of Viread™ in October 2001. The company also benefited from an $8.8 million gain on the sale of its interest in the Proligo joint venture. Gilead's cash position declined significantly, with cash and cash equivalents falling to $37.3 million from $197.3 million at the beginning of the year, largely due to substantial investments in marketable securities and operating cash burn. The company expressed confidence in its existing capital resources to meet foreseeable needs but acknowledged potential future funding requirements.

Key Highlights

  • 1Total revenues increased to $50.9 million for Q3 2001 and $159.4 million for the first nine months of 2001, up from $45.2 million and $143.1 million in the respective prior-year periods.
  • 2Product sales, primarily driven by AmBisome®, grew by 20% year-over-year in Q3 2001 to $44.7 million and by 18% for the nine-month period to $131.3 million.
  • 3Net loss widened to $25.2 million ($0.26 per share) for Q3 2001 and $79.3 million ($0.84 per share) for the nine months of 2001, compared to losses of $17.4 million ($0.19 per share) and $38.4 million ($0.42 per share) in the prior-year periods.
  • 4Research and Development expenses increased significantly by 29% in Q3 and 58% for the nine months, reflecting investments in Viread™ (HIV), adefovir dipivoxil (HBV), and daptomycin.
  • 5Selling, General, and Administrative expenses rose by 50% in Q3 and 42% for the nine months, attributed to increased marketing efforts and sales force expansion for Viread™.
  • 6Gilead received U.S. FDA approval for Viread™ for HIV treatment in October 2001 and commenced initial shipments.
  • 7Cash and cash equivalents significantly decreased to $37.3 million from $197.3 million at the start of the year, impacted by substantial investing activities and operating losses.

Frequently Asked Questions

Gilead reported increased total revenues, reaching $50.9 million in the third quarter of 2001 and $159.4 million for the first nine months of 2001. This growth was primarily driven by a 20% increase in AmBisome® product sales in the third quarter and an 18% increase for the nine-month period, with AmBisome® accounting for the vast majority of product sales. Royalty revenue also contributed, though it saw a decrease for the nine-month period, partly due to lower Tamiflu® royalties.

Gilead Sciences is not yet profitable. The company reported a net loss of $25.2 million for the third quarter of 2001 and a net loss of $79.3 million for the first nine months of 2001. These losses represent an increase compared to the net losses of $17.4 million and $38.4 million reported for the corresponding periods in 2000. The widening losses are primarily due to significant increases in research and development and selling, general, and administrative expenses.

A major development for Gilead was the U.S. Food and Drug Administration (FDA) approval of Viread™ (tenofovir disoproxil fumarate) for the treatment of HIV infection on October 26, 2001. Initial product shipments commenced in October 2001. This launch is a key strategic focus, driving significant increases in R&D and SG&A expenses.

Gilead's cash position has significantly decreased. Cash and cash equivalents stood at $37.3 million as of September 30, 2001, a substantial drop from $197.3 million at the beginning of the year. This decline is largely attributable to substantial investments in marketable securities and ongoing operating losses. While the company generated some cash from the sale of its Proligo interest and stock issuances, the net cash used in operating and investing activities was significant. Gilead believes its current capital resources are adequate for the foreseeable future but notes potential future funding needs.