10-QPeriod: Q1 FY2020

GILEAD SCIENCES, INC. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 6, 2020For Securities:GILD

Summary

Gilead Sciences, Inc. reported total revenues of $5.55 billion for the first quarter of 2020, a 5% increase year-over-year, driven primarily by robust growth in HIV product sales. Despite a 44% decline in Atripla sales and a 33% decrease in Truvada sales, the company saw significant increases in Biktarvy (113%) and Descovy (34%). However, net income attributable to Gilead decreased by 22% to $1.55 billion, or $1.22 per diluted share, from $1.98 billion, or $1.54 per diluted share, in the prior year. This decline was largely attributed to unfavorable changes in the fair value of equity investments, notably its investment in Galapagos NV. The company also highlighted its rapid response to the COVID-19 pandemic, particularly the advancement of remdesivir as a potential treatment. Remdesivir received Emergency Use Authorization (EUA) from the FDA in May 2020, and Gilead is scaling up manufacturing significantly. Despite the pandemic's potential impact on healthcare access and patient starts, especially for HIV and HCV treatments, Gilead anticipates continued investment in remdesivir and other pipeline developments, including the acquisition of Forty Seven, Inc. for $4.9 billion in April 2020 to bolster its oncology pipeline.

Financial Highlights

58 data points
Beta

Revenue

$5.55B

81.1% Gross Margin

Net Income

$1.55B

28.0% Net Margin

EPS (Diluted)

$1.22

Total Assets

$59.74B

Cash & Equivalents

$10.05B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$5.55B
Cost of Revenue$969.00M
Gross Profit$4.50B
R&D Expenses$1.10B
SG&A Expenses$1.08B
Operating Expenses$3.15B
Operating Income$2.40B
Interest Expense$241.00M
Net Income$1.55B
EPS (Basic)$1.23
EPS (Diluted)$1.22
Shares Outstanding (Basic)1.26B
Shares Outstanding (Diluted)1.27B

Key Highlights

  • 1Total revenues grew 5% to $5.55 billion, driven by a 14% increase in HIV product sales to $4.13 billion.
  • 2Biktarvy sales more than doubled, increasing by 113% to $1.69 billion, and Descovy-based products saw a 34% increase to $3.50 billion.
  • 3Net income attributable to Gilead decreased by 22% to $1.55 billion ($1.22 per diluted share) compared to $1.98 billion ($1.54 per diluted share) in Q1 2019, primarily due to investment fair value changes.
  • 4Gilead is rapidly advancing remdesivir for COVID-19 treatment, securing Emergency Use Authorization (EUA) from the FDA in May 2020.
  • 5The company acquired Forty Seven, Inc. for approximately $4.9 billion in April 2020 to strengthen its oncology portfolio with magrolimab.
  • 6Cash, cash equivalents, and marketable securities stood at $24.3 billion as of March 31, 2020.
  • 7The company continued its share repurchase program, buying back $1.3 billion of common stock in Q1 2020, with $2.1 billion remaining under the 2016 program.

Frequently Asked Questions

Gilead reported total revenues of $5.55 billion for the first quarter of 2020, a 5% increase compared to $5.28 billion in the same period of 2019. This growth was primarily driven by a 5% increase in product sales to $5.47 billion, largely due to higher sales of HIV products.

While Gilead stated that COVID-19 did not materially impact its Q1 2020 results, it anticipates potential short-term impacts on business due to factors like reduced patient access to treatments for HIV and HCV. The company is heavily investing in the development and manufacturing of remdesivir as a potential COVID-19 treatment, which received EUA in May 2020. Gilead also noted increased customer buying patterns for HIV products in March 2020, partly related to the pandemic, which is expected to reverse in subsequent quarters.

Gilead faces significant ongoing litigation. For Yescarta, a jury awarded damages and royalties to Juno Therapeutics; the trial judge affirmed the verdict, estimating a potential loss of approximately $1.2 billion through Q1 2020 if the judgment is upheld on appeal, though Gilead believes the verdict to be in error and plans to appeal. For Biktarvy, ViiV Healthcare is alleging patent infringement; a trial is set for September 2020 in the U.S., and a Canadian court dismissed ViiV's infringement claim in April 2020. Gilead believes it does not infringe and/or that the patents are invalid in these cases.

Gilead entered into an agreement in March 2020 to acquire Forty Seven, Inc. for approximately $4.9 billion, a deal that closed in April 2020, to expand its immuno-oncology pipeline with the drug candidate magrolimab. The company also continued to advance its pipeline and responded actively to the COVID-19 pandemic by scaling up remdesivir production and securing EUA.