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Press Release: Gilead Sciences Announces Fourth -2-

· 02/04/2021 16:01
Three Months Twelve Months Ended Ended December 31, December 31, -------------- -------------- (In millions, except percentages) 2020 2019 Change 2020 2019 Change -------------- ------ ------ ------ ------ ------ ------ Cost of goods sold $1,398 $1,683 (17)% $4,572 $4,675 (2)% Non-GAAP cost of goods sold $ 918 $1,417 (35)% $3,294 $3,587 (8)% -- 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.-- 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.-- 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.-- 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.-- 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(R) (bictegravir 50 mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg); and -- Growth of Descovy(R) (emtricitabine 200 mg/tenofovir alafenamide 25 mg) for pre-exposure prophylaxis ("PrEP") PrEP(R) ("Descovy for PrEP"). -- The full year 2020 decrease was also due to the expected decline in sales of Letairis(R) (ambrisentan 5 mg and 10 mg) and Ranexa(R) (ranolazine 500 mg and 1000 mg) after generic entries in the first half of 2019.NM - Not Meaningful (1) Trodelvy(R) (sacituzumab govitecan-hziy 180 mg) sales for the fourth quarter and full year 2020, including the period prior to the completion of Gilead's acquisition of Immunomedics, were $64 million and $137 million, respectively.Three Months Twelve Months Ended Ended December 31, December 31, -------------- ---------------- (In millions, except percentages) 2020 2019 Change 2020 2019 Change -------------- ------ ------ ------ ------- ------- ------ HIV products $4,257 $4,577 (7)% $16,938 $16,438 3% HCV products 423 630 (33)% 2,064 2,936 (30)% Veklury 1,938 -- NM 2,811 -- NM Cell therapy products 163 122 34% 607 456 33% Trodelvy(1) 49 -- NM 49 -- NM Other products 498 467 7% 1,886 2,289 (18)% ------ ------ ------- ------- Total product sales $7,328 $5,796 26% $24,355 $22,119 10% ===== ===== ====== ======(1) Represents charges recorded to write down slow moving and excess raw material and work in process inventory primarily in the fourth quarter 2019. (2) Full year 2020 primarily reflects charges related to Gilead's acquisition of Forty Seven, Inc. ("Forty Seven") as well as collaborations and other investments Gilead entered into during the year. Fourth quarter 2019 includes a pre-tax $800 million impairment charge related to assets obtained in Gilead's Kite Pharma Inc. ("Kite") acquisition. Full year 2019 includes $3.9 billion in upfront charges related to Gilead's global research and development collaboration agreement with Galapagos. (3) Primarily represents unrealized losses (gains) from changes in the fair value of Gilead's equity investments in Galapagos for the periods represented. (4) Primarily represents accelerated stock-based compensation expenses recorded in Cost of goods sold, R&D expenses and Selling, general and administrative ("SG&A") expenses from the second quarter 2020 Forty Seven acquisition and the fourth quarter 2020 Immunomedics, Inc. ("Immunomedics") acquisition. (5) Represents net favorable tax effects of intra-entity intangible asset transfers to different tax jurisdictions during the fourth quarter 2019. (6) These amounts were excluded from non-GAAP net income and non-GAAP diluted EPS. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 13 - 14.

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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:

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:

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

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:

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(R) (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(R) (tenofovir alafenamide 25 mg), Viread(R) (tenofovir disoproxil fumarate 300 mg), Letairis, Ranexa, Zydelig(R) (idelalisib 150 mg), AmBisome(R) (amphotericin b liposome for injection 50 mg/vial), Cayston(R) (aztreonam for inhalation solution 75 mg/vial) and Jyseleca(R) (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

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February 04, 2021 16:01 ET (21:01 GMT)