On July 28, 2015 Gilead Sciences, Inc. (Nasdaq: GILD) reported its results of operations for the second quarter ended June 30, 2015 (Filing, 8-K, Gilead Sciences, JUL 28, 2015, View Source [SID:1234506729]). The financial results that follow represent a year over year comparison of second quarter 2015 to the second quarter 2014. Total revenues were $8.2 billion in 2015 compared to $6.5 billion in 2014. Net income was $4.5 billion or $2.92 per diluted share in 2015 compared to $3.7 billion or $2.20 per diluted share in 2014. Non-GAAP net income, which excludes amounts related to acquisition, restructuring, stock-based compensation and other, was $4.8 billion or $3.15 per diluted share in 2015 compared to $3.9 billion or $2.36 per diluted share in 2014.
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Product Sales
Total product sales for the second quarter of 2015 were $8.1 billion compared to $6.4 billion for the second quarter of 2014. Product sales in the U.S. were $5.6 billion compared to $4.8 billion for the second quarter of 2014. In Europe, product sales were $2.0 billion compared to $1.3 billion for the same period in 2014.
Antiviral Product Sales
Antiviral product sales increased to $7.6 billion for the second quarter of 2015, up from $6.0 billion for the second quarter of 2014 primarily due to sales of Harvoni (ledipasvir 90 mg/sofosbuvir 400 mg), which was approved in the U.S. and Europe in the fourth quarter of 2014, partially offset by a decrease in sales of Sovaldi (sofosbuvir 400 mg) due primarily to the uptake in Harvoni.
Other Product Sales
Other product sales, which include Letairis (ambrisentan), Ranexa (ranolazine) and AmBisome (amphotericin B liposome for injection), were $495 million for the second quarter of 2015 compared to $401 million for the second quarter of 2014.
During the second quarter of 2015, compared to the same period in 2014:
• Non-GAAP research and development (R&D) expenses increased primarily due to the continued progression and expansion of Gilead’s clinical studies, particularly Phase 3 studies in the liver disease and oncology areas.
• Non-GAAP selling, general and administrative (SG&A) expenses increased primarily due to an increase in Gilead’s portion of the branded prescription drug fee along with growth and the geographic expansion in its business.
Cash, Cash Equivalents and Marketable Securities
As of June 30, 2015, Gilead had $14.7 billion of cash, cash equivalents and marketable securities compared to $14.5 billion as of March 31, 2015. During the second quarter of 2015, Gilead generated $5.7 billion in operating cash flow, utilized $900 million to repurchase 9 million shares under the $15.0 billion share repurchase plan approved in January 2015 and $3.9 billion to retire 46 million warrants related to the 2016 convertible debt. At June 30, 2015, approximately 9 million warrants remain outstanding. Gilead also paid its first cash dividend of $633 million, or $0.43 per share, during the second quarter of 2015.
Corporate Highlights
• Announced the signing of a definitive agreement to acquire EpiTherapeutics, a privately-held Danish company. EpiTherapeutics generated a library of first-in-class, selective small molecule inhibitors of epigenetic regulation of gene transcription, in particular histone demethylases.
• Announced that the company’s Board of Directors declared a quarterly cash dividend of $633 million or $0.43 per share of common stock and paid on June 29, 2015 to all stockholders of record as of the close of business on the record date of June 16, 2015. This was the first quarterly dividend declared under the Board’s dividend program announced on February 3, 2015.
Product & Pipeline Updates Announced by Gilead During the Second Quarter of 2015 Include:
Antiviral Program
• Announced that Gilead submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for two doses of an investigational fixed-dose combination of emtricitabine and tenofovir alafenamide (F/TAF) (200/10 mg and 200/25 mg) for the treatment of HIV-1 infection in adults and pediatric patients age 12 years and older, in combination with other HIV antiretroviral agents. Under the Prescription Drug User Fee Act, the FDA has set a target action date of April 7, 2016.
◦ This was Gilead’s second F/TAF-based NDA submitted to the FDA for review. In November 2014, Gilead filed an NDA for an investigational once-daily single tablet regimen containing elvitegravir 150 mg, cobicistat 150 mg, emtricitabine 200 mg and TAF 10 mg (E/C/F/TAF). The FDA has set a target action date of November 5, 2015.
• Announced that Gilead’s Marketing Authorization Application (MAA) for two doses of F/TAF (200/10 mg and 200/25 mg) was fully validated and under evaluation by the European Medicines Agency. The data included in the application support the use of F/TAF for the treatment of HIV-1 infection in adults in combination with other HIV antiretroviral agents.
◦ Gilead’s MAA for E/C/F/TAF was validated on December 23, 2014.
• Presented data at the 50th Annual Meeting of the European Association for the Study of the Liver including:
◦ Positive results from two studies evaluating the safety and efficacy of investigational uses of sofosbuvir-based regimens in HCV-infected patients with genotypes 2, 3, 4 and 5. Results from the BOSON study of sofosbuvir in combination with ribavirin or with pegylated interferon and ribavirin demonstrated high cure rates across all patients with genotypes 2 and 3. Separately, results from a Phase 2 study demonstrated the safety and efficacy of ledipasvir/sofosbuvir in patients with genotypes 4 or 5 infection.
◦ Positive results from several Phase 2 clinical studies evaluating investigational uses of ledipasvir/sofosbuvir and other sofosbuvir-based regimens for the treatment of HCV infection in patients with advanced liver disease, including patients with decompensated cirrhosis, patients with fibrosing cholestatic hepatitis C (a rare and severe form of the disease following liver transplantation) and patients with portal hypertension.
◦ Positive pre-clinical data and results from Phase 1 and Phase 2 studies supporting the development of an investigational all-oral, pan-genotypic regimen of sofosbuvir, the investigational NS5A inhibitor velpatasvir (formerly GS-5816) and GS-9857, an investigational NS3/4A protease inhibitor. In pre-clinical studies, GS-9857 demonstrated similarly potent antiviral activity against HCV replicons of all tested genotypes (1-6), as well as an improved resistance profile compared to other HCV protease inhibitors. In a healthy volunteer study, GS-9857 demonstrated a favorable pharmacokinetic profile. Data from a three-day monotherapy study also demonstrated that GS-9857 was well-tolerated for HCV patients with genotypes 1, 2, 3 and 4 at the 100 mg dose.
Oncology Program
• Announced positive results from the Phase 3 clinical Study 119 of an investigational use of Zydelig (idelalisib) in combination with ofatumumab in previously-treated patients with chronic lymphocytic leukemia. In Study 119, there was a 73-percent reduction in the risk of disease progression or death in patients receiving Zydelig in combination with ofatumumab compared to ofatumumab alone. These results were presented at the 51st Annual Meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper).