Press Release

  Fourth Quarter 2020 Year-Over-Year:
- Product Sales increased 26% to $7.3 billion, primarily due to Veklury^® (remdesivir) -
- Diluted EPS of $1.23; Non-GAAP Diluted EPS of $2.19 -

Full Year 2020 Year-Over-Year:
- Product Sales increased 10% to $24.4 billion, primarily due to Veklury -
- Diluted EPS of $0.10; Non-GAAP Diluted EPS of $7.09 -
- Returned $5.0 billion of cash to shareholders through dividends and share repurchases -

Full Year 2021 Guidance:
- Product Sales including Veklury of $23.7 billion to $25.1 billion -
- Operating expenses flat to low single-digit percentage decline -
- Non-GAAP Diluted EPS of $6.75 to $7.45 -

FOSTER CITY, Calif.--(BUSINESS WIRE)--Feb. 4, 2021-- Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the fourth quarter and full year 2020.

“Gilead continues to play a central role in the pandemic, with Veklury now treating one in two hospitalized patients in the United States. At the same time, we continue to meet the needs of people living with HIV, cancer, viral hepatitis and other conditions,” said Daniel O’Day, Chairman and Chief Executive Officer, Gilead Sciences. “As we head into 2021, we have many additional opportunities to help patients, especially in oncology where Trodelvy, for example has the potential to treat a broad range of cancer types. These new opportunities, together with our continued leadership in antivirals put Gilead on a clear path to growth.”

Financial Results

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Total revenues for the fourth quarter and full year 2020 increased 26% and 10%, respectively, compared to the same periods in 2019, primarily due to the launch of Veklury in 2020.

• Product sales excluding Veklury sales for the fourth quarter and full year 2020 decreased 7% and 3%, respectively, compared to the same periods in 2019, due to the continued effects of COVID-19 on Gilead’s HIV and hepatitis C virus (“HCV”) franchises, as well as the expected decline in sales of Truvada^® (emtricitabine (“FTC”) and tenofovir disoproxil fumarate (“TDF”))-based products due to the loss of exclusivity of Truvada and Atripla^® (efavirenz 600 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) in the United States in October 2020. See further discussion below.
• Veklury sales were $1.9 billion and $2.8 billion, for the fourth quarter and full year 2020, respectively, reflecting higher hospitalization and treatment rates due to the most recent COVID-19 surge.

Diluted EPS decreased 42% to $1.23 for the fourth quarter 2020, and 98% to $0.10 for the full year 2020, compared to the same periods in 2019, primarily due to changes in the fair value of Gilead’s equity investments in Galapagos NV (“Galapagos”), a 2019 discrete tax benefit related to intra-entity transfers and higher acquisition-related expenses. Full year 2020 was also impacted by higher acquired in-process research and development (“IPR&D”) expenses.

Non-GAAP diluted EPS increased 99% to $2.19 for the fourth quarter 2020, and 16% to $7.09 for the full year 2020, compared to the same periods in 2019, primarily due to higher non-GAAP operating income driven by growth in product sales and improved gross margin, partially offset by higher research and development (“R&D”) investments and other operating expenses.

The following tables summarize significant items that affected the comparability of net income attributable to Gilead and diluted EPS for the periods presented:

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Product Sales

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Total product sales increased 26% to $7.3 billion for the fourth quarter 2020, and 10% to $24.4 billion for the full year 2020, respectively, compared to the same periods in 2019, primarily due to the launch of Veklury in 2020.

Product sales excluding Veklury sales decreased 7% and 3% for the fourth quarter and full year 2020, respectively, compared to the same periods in 2019, primarily due to the following:

• Lower HCV sales volume due to the impact of the COVID-19 pandemic as described below; and
• Expected decline in sales of Truvada-based products due to the loss of exclusivity of Truvada and Atripla in the United States in October 2020.
• The decreases were partially offset by:
  • Continued patient uptake of Biktarvy^® (bictegravir 50 mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg); and
  • Growth of Descovy^® (emtricitabine 200 mg/tenofovir alafenamide 25 mg) for pre-exposure prophylaxis (“PrEP”) PrEP^® (“Descovy for PrEP”).
• The full year 2020 decrease was also due to the expected decline in sales of Letairis^® (ambrisentan 5 mg and 10 mg) and Ranexa^® (ranolazine 500 mg and 1000 mg) after generic entries in the first half of 2019.

Product sales for the fourth quarter 2020 were $5.3 billion in the United States, $1.4 billion in Europe and $656 million in other international locations. Product sales for the fourth quarter 2019 were $4.5 billion in the United States, $840 million in Europe and $440 million in other international locations. For 2020, product sales were $18.1 billion in the United States, $3.9 billion in Europe and $2.3 billion in other international locations. For 2019, product sales were $16.6 billion in the United States, $3.6 billion in Europe and $2.0 billion in other international locations.

HIV product sales decreased 7% to $4.3 billion for the fourth quarter 2020, and increased 3% to $16.9 billion for the full year 2020, compared to the same periods in 2019.

HIV product sales for the fourth quarter 2020 decreased primarily due to the following:

• Lower sales volume of Truvada (FTC/TDF)-based products driven by the loss of exclusivity of Truvada and Atripla in the United States in October 2020, partially offset by the continued patient uptake of Biktarvy and growth of Descovy for PrEP; and
• Lower average net selling price driven by the effects of:
  • Unfavorable payer mix primarily due to higher public health service utilization; and
  • Product mix due to the loss of exclusivity of Truvada in the United States.

HIV products sales for the full year 2020 increased primarily due to the following:

• Continued patient uptake of Biktarvy and growth of Descovy for PrEP.
• The increase was partially offset by:
  • Lower sales volume of Truvada (FTC/TDF)-based products driven by the loss of exclusivity of Truvada and Atripla in the United States in October 2020 and the COVID-19 pandemic impact on Gilead’s HIV franchise; and
  • Lower average net selling price driven by unfavorable payer mix primarily due to higher public health service utilization.

HCV product sales decreased 33% to $423 million for the fourth quarter 2020, and 30% to $2.1 billion for the full year 2020, compared to the same periods in 2019. The decreases were primarily due to the following:

• Lower sales volume driven by lower patient starts in the United States and Europe due to the COVID-19 pandemic; and
• Lower average net selling price reflecting higher sales return reserves and discounts.

Veklury sales contributed $1.9 billion and $2.8 billion in sales for the fourth quarter and full year 2020, respectively, primarily in the United States and Europe, with the fourth quarter volumes particularly reflecting higher hospitalization and treatment rates due to the most recent COVID-19 surge.

Cell therapy product sales, which include Yescarta^® (axicabtagene ciloleucel) and Tecartus^TM (brexucabtagene autoleucel), increased 34% to $163 million for the fourth quarter 2020, and 33% to $607 million for the full year 2020, compared to the same periods in 2019. The increases were primarily driven by the continued uptake of Yescarta in Europe and the third quarter 2020 product launch of Tecartus in the United States.

Trodelvy sales generated $49 million in sales in the United States, following the acquisition by Gilead of Immunomedics on October 23, 2020.

Other product sales, which include Vemlidy^® (tenofovir alafenamide 25 mg), Viread^® (tenofovir disoproxil fumarate 300 mg), Letairis, Ranexa, Zydelig^® (idelalisib 150 mg), AmBisome^® (amphotericin b liposome for injection 50 mg/vial), Cayston^® (aztreonam for inhalation solution 75 mg/vial) and Jyseleca^® (filgotinib), increased 7% to $498 million for the fourth quarter 2020, compared to the same period in 2019, primarily due to higher sales volume of Vemlidy in other international locations. Other product sales decreased 18% to $1.9 billion for the full year 2020, compared to the same period in 2019, primarily due to the expected declines in sales of Letairis and Ranexa after generic entries in the first half of 2019, partially offset by higher sales volume of Vemlidy in other international locations.

Cost of Goods Sold and Product Gross Margin

Cost of Goods Sold

• Cost of goods sold and non-GAAP cost of goods sold for the fourth quarter and full year 2020 decreased, compared to the same periods in 2019, primarily due to the $500 million charge recorded in the fourth quarter 2019 to write down inventory, which was driven by lower long-term demand for Gilead’s HCV products.
• The decrease for the full year 2020 was partially offset by higher manufacturing ramp-up expenses related to Veklury as a treatment for COVID-19. As previously disclosed, Gilead implemented process refinements and expanded its production capacity of Veklury to ensure the broader supply for patients during 2020.
• Cost of goods sold for the fourth quarter 2020, compared to the same period in 2019, included higher acquisition-related expenses from amortization of intangible assets, inventory step-up charges and accelerated stock-based compensation expenses related to the Immunomedics acquisition.

Product Gross Margin

• Product gross margin and non-GAAP product gross margin for the fourth quarter and full year 2020 improved year-over-year due to the fourth quarter 2019 inventory write-down described above.

Operating Expenses

R&D

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• R&D expenses and non-GAAP R&D expenses for the fourth quarter 2020 increased, compared to the same period in 2019, primarily due to the charge recorded in the fourth quarter 2020, in connection with the agreement to amend the existing arrangement with Galapagos for the commercialization and development of Jyseleca of $190 million (€160 million), milestones of $70 million to Pionyr Immunotherapeutics, Inc. (“Pionyr”), and Trodelvy and other pipeline investments.
• In addition to the drivers described above, R&D expenses and non-GAAP R&D expenses for the full year 2020 increased year-over-year primarily due to:
  • Higher clinical trial expenses related to the investigation of remdesivir as a treatment for COVID-19 and higher investments in oncology programs, including magrolimab, an investigational anti-CD47 monoclonal antibody.
  • The increases were partially offset by lower clinical trial expenses from the completion of certain inflammation programs and lower costs as a result of Gilead’s pause or postponement of certain clinical trials due to the COVID-19 pandemic.
• R&D expenses for the fourth quarter and full year 2020 also increased due to accelerated stock-based compensation expenses of $58 million and $166 million, respectively, related to the fourth quarter 2020 Immunomedics acquisition and, for the full year 2020, the second quarter 2020 Forty Seven acquisition.

Acquired IPR&D

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• Acquired IPR&D expenses of $5.9 billion for the full year 2020 were primarily related to Gilead’s acquisition of Forty Seven as well as collaborations and other investments Gilead entered into during the year, separately with Arcus Biosciences, Inc., Pionyr, Tango Therapeutics, Inc., Tizona Therapeutics, Inc. and Jounce Therapeutics, Inc.
• Acquired IPR&D expenses for the fourth quarter 2019 were related to the $800 million impairment charge from assets obtained in Gilead’s Kite acquisition. Full year 2019 included $3.9 billion in upfront charges related to Gilead’s global research and development collaboration agreement with Galapagos.

SG&A

• SG&A expenses and non-GAAP SG&A expenses for the fourth quarter 2020 increased, compared to the same period in 2019, primarily due to expenses related to additional funds allocated to corporate grants, including non-profit grantees to support racial equity and social justice efforts, the timing of marketing expenses related to Biktarvy, and commercialization efforts for Veklury and Trodelvy.
• SG&A expenses and non-GAAP SG&A expenses for the full year 2020 increased year-over-year, primarily due to a $97 million charge related to a previously disclosed legal settlement, increased corporate grants, higher costs associated with the commercialization efforts for Veklury, marketing expenses related to Biktarvy and donations of remdesivir.
• SG&A expenses for the fourth quarter and full year 2020 also increased due to accelerated stock-based compensation expenses of $168 million and $204 million, respectively, related to the fourth quarter 2020 Immunomedics acquisition and, for the full year 2020, the second quarter 2020 Forty Seven acquisition.
• The increases were partially offset by lower travel and other spend due to the COVID-19 pandemic.

Other Income (Expense), Net and Interest Expense

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• The unrealized losses primarily relating to Gilead’s investments in Galapagos unfavorably impacted Other income (expense), net for the fourth quarter and full year 2020, compared to unrealized gains in the prior year periods.
• Interest expense for the fourth quarter 2020 increased primarily due to the senior unsecured notes issued in September 2020 and $1.0 billion borrowed under a three-year term loan facility related to the Immunomedics acquisition.

Effective Tax Rate

The effective tax rate (“ETR”) and non-GAAP ETR for the fourth quarter 2020 were 14.9% and 15.8%, respectively, compared to (41.5)% and 31.5% for the same period in 2019. The year-over-year increase in ETR was primarily due to a $1.2 billion discrete tax benefit related to intra-entity intangible asset transfers to different tax jurisdictions recorded in the fourth quarter 2019. The year-over-year decrease in non-GAAP ETR was primarily due to a $114 million discrete tax expense related to the Altera Corp. v. Commissioner ruling recorded in the fourth quarter 2019. The ETR and non-GAAP ETR for the fourth quarter 2020 reflected $76 million of discrete tax benefits related to settlements with taxing authorities.

The ETR and non-GAAP ETR for the full year 2020 were 94.7% and 18.6%, respectively, compared to (4.0)% and 22.4% for the same period in 2019. The increase in ETR was primarily due to the above-mentioned unrealized losses on Gilead’s equity investments in Galapagos and certain acquired IPR&D charges in 2020 that were non-deductible for income tax purposes. In addition, the ETR for the full year 2019 included the $1.2 billion discrete tax benefit described above. The ETR and non-GAAP ETR for the full year 2020 reflected $167 million of discrete tax benefits related to settlements with taxing authorities.

Cash, Cash Equivalents and Marketable Debt Securities

As of December 31, 2020, Gilead had $7.9 billion of cash, cash equivalents and marketable debt securities compared to $25.8 billion as of December 31, 2019. During 2020, Gilead generated $8.2 billion in operating cash flow, issued senior unsecured notes in an aggregate principal amount of $7.25 billion, borrowed an aggregate principal amount of $1.0 billion under a three-year term loan facility, utilized $25.7 billion on acquisitions, net of cash acquired (including IPR&D), repaid $2.5 billion of principal amount of debt, paid cash dividends of $3.4 billion and utilized $1.6 billion on share repurchases.

Gilead may choose to repay certain of its long-term debt obligations prior to maturity dates based on its assessment of current and long-term liquidity and capital requirements.

Full Year 2021 Guidance

Gilead is providing full year 2021 guidance below. Veklury sales are subject to significant volatility and uncertainty due to a highly dynamic and complex global health environment, which continues to evolve. As a result, Gilead believes providing its full year 2021 guidance excluding Veklury sales is useful for investors, when considered in conjunction with its GAAP financial information.

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The financial guidance excludes the effects of any potential future strategic acquisitions, collaborations and investments, the exercise of opt-ins or options related to collaboration programs where Gilead has such rights with its collaboration partners, and any other transactions or items that have not yet been identified or quantified. This guidance is subject to a number of risks and uncertainties. See Forward-Looking Statements described in the section below.

Outlook

The COVID-19 pandemic continues to impact Gilead’s business and broader market dynamics, including HCV and HIV market volume. Gilead expects a gradual recovery in underlying market dynamics starting the second quarter 2021. Gilead expects that its HIV treatment business will continue to remain largely unaffected and that patients with HCV will begin to initiate treatment by the second quarter 2021. Truvada and Atripla sales are expected to continue to decline in the first quarter 2021 and beyond as multiple generics are expected to enter the market starting in the second quarter 2021. Biktarvy, Trodelvy, Vemlidy and cell therapy are expected to be key growth drivers in 2021 absorbing the full year impact of Truvada and Atripla loss of exclusivity in the United States. The acquisition of Immunomedics will immediately contribute to Gilead’s revenue growth and is expected to be neutral to accretive to Gilead’s non-GAAP EPS in 2023 and significantly accretive thereafter. Gilead is well positioned to drive its future growth potential through its renewed pipeline in oncology. Gilead’s capital allocation priorities remain unchanged and will continue to prioritize investment in its business and R&D pipeline and maintain a focus on disciplined expense management. The fundamentals of Gilead’s business and long-term outlook remain strong.

Key Product, Pipeline and Corporate Updates⁽¹⁾

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Non-GAAP Financial Information

The information presented in this document has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), unless otherwise noted as non-GAAP. Management believes non-GAAP information is useful for investors, when considered in conjunction with Gilead’s GAAP financial information, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead’s operating results as reported under GAAP. Non-GAAP financial information excludes acquisition-related expenses including amortization of acquired intangible assets and inventory step-up charges in Cost of goods sold, acquired IPR&D expenses, and other items that are considered unusual or not representative of underlying trends of Gilead’s business, fair value adjustments of equity securities and discrete and related tax charges or benefits associated with changes in tax related laws and guidelines. Acquired IPR&D expenses reflect IPR&D impairments as well as the initial costs of externally developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront payments related to various collaborations and the initial costs of rights to IPR&D projects. Although Gilead consistently excludes the amortization of acquired intangible assets from the non-GAAP financial information, management believes that it is important for investors to understand that such intangible assets were recorded as part of acquisitions and contribute to ongoing revenue generation. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the tables on pages 13 - 15.

Conference Call

At 4:30 p.m. Eastern Time, Gilead’s management will host a conference call to discuss the company’s fourth quarter 2020 financial results and will provide a business update. The live webcast of the call can be accessed at Gilead’s Investors page at http://investors.gilead.com. Please connect to the website at least 15 minutes prior to the start of the call to ensure adequate time for any software download that may be required to listen to the webcast. Alternatively, please call 877-359-9508 (U.S.) or 224-357-2393 (international) and dial the conference ID 3316988 to access the call. Telephone replay will be available approximately two hours after the call through 8:00 p.m. Eastern Time, February 6, 2021. To access the replay, please call 855-859-2056 (U.S.) or 404-537-3406 (international) and dial the conference ID 3316988. The webcast will be archived on www.gilead.com for one year.

About Gilead Sciences

Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. The company strives to transform and simplify care for people with life-threatening illnesses around the world. Gilead has operations in more than 35 countries worldwide, with headquarters in Foster City, California.

Forward-Looking Statements

Statements included in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: the risks and uncertainties related to the impact of the COVID-19 pandemic on Gilead’s business, financial condition and results of operations; the risks and uncertainties related to the development, manufacturing and distribution of Veklury as a treatment for COVID-19, including the uncertainty of the amount and timing of future Veklury sales and the risk that Gilead may be unable to recoup the expenses incurred to date and future expenses related to the development and production of Veklury, and Gilead may be unable to effectively manage the global supply and distribution of Veklury; Gilead’s ability to achieve its anticipated full year 2021 financial results, including as a result of potential adverse revenue impacts from COVID-19, increases in R&D expenses and potential revenues from Veklury; Gilead’s ability to make progress on any of its long-term ambitions laid out in its corporate strategy; Gilead’s ability to accelerate or sustain revenues for its antiviral and other programs; Gilead’s ability to realize the potential benefits of acquisitions, collaborations or licensing arrangements, including the acquisition of Immunomedics and, upon closing, MYR GmbH; Gilead’s ability to complete the MYR GmbH acquisition in a timely manner or at all; Gilead’s ability to initiate, progress or complete clinical trials within currently anticipated timeframes; the possibility of unfavorable results from ongoing and additional clinical trials involving Tecartus, Trodelvy and Yescarta; the risk that safety and efficacy data from clinical studies may not warrant further development of Gilead’s product candidates, including cilofexor, fircostat, filgotinib, lenacapavir and magrolimab, or the product candidates of Gilead’s strategic partners; Gilead’s ability to submit new drug applications for new product candidates in the currently anticipated timelines; Gilead’s ability to receive regulatory approvals in a timely manner or at all, including FDA approval of Trodelvy for treatment of adult patients with mTNBC and EMA approval of filgotinib for treatment of adults with moderately to severely active UC and the risk that any such approvals may be subject to signification limitations on use; Gilead’s ability to successfully commercialize its products; the risk of potential disruptions to the manufacturing and supply chain of Gilead’s products; the risk that private and public payers may be reluctant to provide, or continue to provide, coverage or reimbursement for new products; the risk that efforts to control prescription drug prices could have a material adverse effect on Gilead’s business; a larger than anticipated shift in payer mix to more highly discounted payer segments; market share and price erosion caused by the introduction of generic versions of Gilead products; the risk that physicians and patients may not see advantages of these products over other therapies and may therefore be reluctant to prescribe the products; and other risks identified from time to time in Gilead’s reports filed with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, Gilead makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Gilead bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There may be other factors of which Gilead is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ significantly from these estimates. Further, results for the quarter and the year ended December 31, 2020 are not necessarily indicative of operating results for any future periods. Gilead directs readers to its press releases, Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and other subsequent disclosure documents filed with the SEC. Gilead claims the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements.

All forward-looking statements are based on information currently available to Gilead and Gilead assumes no obligation to update or supplement any such forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements.

Gilead owns or has rights to various trademarks, copyrights and trade names used in its business, including the following: GILEAD^®, GILEAD SCIENCES^®, AMBISOME^®, ATRIPLA^®, BIKTARVY^®, CAYSTON^®, COMPLERA^®, DESCOVY^®, DESCOVY FOR PREP^®, EMTRIVA^®, EPCLUSA^®, EVIPLERA^®, GENVOYA^®, HARVONI^®, HEPSERA^®, JYSELECA^®, LETAIRIS^®, ODEFSEY^®, RANEXA^®, SOVALDI^®, STRIBILD^®, TECARTUS^TM, TRODELVY^®, TRUVADA^®, TRUVADA FOR PREP^®, TYBOST^®, VEKLURY^®, VEMLIDY^®, VIREAD^®, VOSEVI^®, YESCARTA^® and ZYDELIG^®.

This report also refers to trademarks, service marks and trade names of other companies.

For more information on Gilead Sciences, Inc., please visit www.gilead.com or call the Gilead Public Affairs Department at 1-800-GILEAD-5 (1-800-445-3235).