Summary

• Gilead Sciences, Inc. is a biopharmaceutical company.
• The company treat life-threatening diseases, including HIV, viral hepatitis and cancer.
• Gilead operates in more than 35 countries worldwide, with headquarters in Foster City, California.

Gilead Sciences, Inc. (Nasdaq: GILD, LSE: 0QYQ) is a biopharmaceutical company. The company treat life-threatening diseases, including HIV, viral hepatitis and cancer. Gilead operates in more than 35 countries worldwide, with headquarters in Foster City, California.

Recent Developments

U.S. FDA Approves Label Update for Kite’s Yescarta® CAR T-Cell Therapy¹

December 21, 2023; Kite, a Gilead Company (Nasdaq: GILD), today announced that the U.S. Food and Drug Administration (FDA) has approved a label update for Yescarta® (axicabtagene ciloleucel) to include the overall survival (OS) primary analysis from the landmark Phase 3 ZUMA-7 study showing a statistically significant improvement for Yescarta in OS versus standard of care (SOC) as second-line treatment with curative intent for patients with relapsed or refractory large B-cell lymphoma (R/R LBCL) within 12 months of completion of first-line therapy.

The label update is based on results from the ZUMA-7 study which demonstrated a 27.4% reduction in the risk of death with Yescarta versus SOC, a relative 38% improvement in OS. With an estimated median follow up of 46.7 months overall, the primary analysis of OS showed a statistically significant improvement in the Yescarta arm compared to the standard therapy arm, despite more than half of patients (57%) in the SOC arm subsequently receiving cell therapy off protocol. The estimated 39-month OS rates were 55.9% in the Yescarta arm and 46% in the SOC arm.

Kite and Arcellx Announce Expansion in Strategic Partnership²

November 15, 2023; Kite, a Gilead Company and Arcellx, Inc. today announced that the companies have expanded their existing collaboration, which was originally announced in December 2022.

Kite has exercised its option to negotiate a license for Arcellx’s ARC-SparX program, ACLX-001, in multiple myeloma, which is comprised of ARC-T cells and SparX proteins that target BCMA. The companies have also expanded the scope of the collaboration for Arcellx’s CART-ddBCMA to include lymphomas.

Kite and Epic Bio Announce Collaboration to Develop New Therapies for Cancer³

October 31, 2023; Kite, a Gilead Company and Epicrispr Biotechnologies, today announced the companies have entered into a research collaboration and license agreement using Epic Bio’s proprietary gene regulation platform to develop next-generation cancer cell therapies. The agreement will allow Kite to leverage the licensed technology to modulate certain genes to potentially enhance CAR T-cell functionality.

Financial Highlights

Third Quarter 2023 Results⁴

Total third quarter 2023 product sales of $7.0 billion was flat compared to the same period in 2022, reflecting continued growth in the base business, offset by lower Veklury sales. Total product sales, excluding Veklury, increased 5% to $6.4 billion in the third quarter of 2023 compared to the same period in 2022, primarily due to increased sales in Oncology and HIV, partially offset by lower HCV sales.

• Total third quarter 2023 revenue of $7.1 billion was flat compared to the same period in 2022, primarily driven by increased sales in Oncology and HIV, offset by lower Veklury® (remdesivir) and chronic hepatitis C virus (“HCV”) product sales.
• Diluted Earnings Per Share (“EPS”) increased to $1.73 for the third quarter of 2023 compared to $1.42 for the same period in 2022, and non-GAAP diluted EPS increased to $2.29 for the third quarter of 2023 compared to $1.90 for the same period in 2022. The increases in GAAP and non-GAAP diluted EPS were primarily driven by lower tax expense, partially offset by net higher total costs and expenses.
• As of September 30, 2023, Gilead had $8.0 billion of cash, cash equivalents and marketable debt securities, up from $7.6 billion as of December 31, 2022.
• During the third quarter of 2023, Gilead generated $1.8 billion in operating cash flow.
• During the third quarter of 2023, Gilead repaid $2.3 billion of debt, paid dividends of $953 million and repurchased $300 million of common stock. Additionally, Gilead issued senior unsecured notes in an aggregate principal amount of $2.0 billion.
• Product gross margin was 77.6% for the third quarter of 2023 compared to 80.0% for the same period in 2022, primarily driven by intangible asset amortization expenses related to the pretreated HR+/HER2- metastatic breast cancer indication for Trodelvy following its approval in February 2023, as well as product mix. Non-GAAP product gross margin was 85.9% for the third quarter of 2023 compared to 86.8% in the same period in 2022, primarily driven by product mix.
• Research & development (“R&D”) expenses for the third quarter of 2023 were $1.5 billion compared to $1.1 billion in the same period in 2022. Non-GAAP R&D expenses for the third quarter of 2023 were $1.5 billion compared to $1.2 billion in the same period in 2022. The increases in GAAP and non-GAAP R&D expenses were primarily driven by increased clinical activity, as well as costs associated with the discontinuation of two Phase 3 magrolimab studies.
• Acquired in-process research and development (“IPR&D”) expenses for the third quarter of 2023 were $91 million, driven by an upfront payment related to the Tentarix Biotherapeutics Inc. (“Tentarix”) collaboration and other collaboration-related activities.
• Selling, general and administrative (“SG&A”) expenses and non-GAAP SG&A expenses for the third quarter of 2023 were $1.3 billion compared to $1.2 billion in the same period in 2022. The increases in GAAP and non-GAAP SG&A expenses were primarily driven by increased commercial activities in Oncology.
• The effective tax rate (“ETR”) for the third quarter of 2023 was 6.3% compared to 26.6% for the same period in 2022, and non-GAAP ETR for the third quarter of 2023 was 7.0% compared to 22.4% for the same period in 2022. Both ETR and non-GAAP ETR decreases were primarily driven by a decrease in tax reserves as a result of reaching agreement with a tax authority on certain tax positions.

Full Year 2022 Results

Total revenues were $27.3 billion in 2022 and remained relatively flat compared to 2021, primarily due to increased sales in HIV, cell therapy and Trodelvy, offset by lower sales of Veklury.

Net income attributable to Gilead was $4.6 billion or $3.64 diluted earnings per share attributable to Gilead in 2022, compared to $6.2 billion or $4.93 diluted earnings per share attributable to Gilead in 2021. The decrease was primarily due to the following items net of their related tax effect: a partial inprocess research and development (“IPR&D”) impairment charge of $2.7 billion during the three months ended March 31, 2022 related to assets the company acquired from Immunomedics, Inc. (“Immunomedics”) in 2020, a $406 million charge related to the termination of the Trodelvy collaboration agreement with Everest and higher R&D expenses, partially offset by a $1.25 billion charge for a settlement related to bictegravir litigation in the fourth quarter of 2021 that did not repeat in 2022.

Product gross margin increased to 79.0% in 2022 as compared to 75.6% in 2021, primarily driven by a $1.25 billion charge for a settlement related to bictegravir litigation in the fourth quarter of 2021 that did not repeat in 2022. The increase was partially offset by higher royalty expenses driven by Biktarvy royalties, the reversal of a $175 million litigation reserve in the third quarter of 2021 that did not repeat in 2022, and changes in product mix.

Research and development expenses increased by $376 million in 2022 compared to 2021, primarily due to higher clinical development spend related mostly to Trodelvy and the Arcus Biosciences, Inc. (“Arcus”) collaboration, as well as inflationary increases.

Acquired in-process research and development expenses of $944 million in 2022 were primarily related to a $389 million charge associated with its acquisition of MiroBio, a $315 million charge associated with the Dragonfly collaboration, an $82 million charge associated with the Jounce collaboration and acquisition of GS-1811, and a $60 million charge associated with the MacroGenics collaboration. Acquired in-process research and development expenses of $939 million in 2021 were primarily related to a $625 million charge associated with an option exercised under the Arcus collaboration.

Company Overview

Gilead was founded in 1987 with an initial focus on antiviral medicines. In 2001, the company received its first approval for an HIV therapy, and in the years that followed the company delivered many firsts in HIV management and prevention that have helped transform the trajectory of the disease. Using the same scientific approach, the company were also able to deliver treatment options for hepatitis B, as well as four curative treatments for hepatitis C between 2013 and 2017.

Manufacturing Facilities

The company own or lease manufacturing facilities to manufacture and distribute certain products and API for clinical and/or commercial uses.

• Foster City, California: The company conduct process chemistry research, analytical method development and formulation and device development activities, and manufacture API and drug product for its clinical trials.
• San Dimas and La Verne, California: The company manufacture AmBisome and also package and label the majority of its commercial products for distribution to the Americas and the Pacific Rim
• Oceanside, California: The company utilize the facility for commercial retroviral vector manufacturing and clinical manufacturing and process development of its biologics candidates.
• El Segundo, California: The company utilize the facility for clinical and commercial manufacturing and processing of its cell therapy products.
• Frederick, Maryland: The company utilize the facility for clinical and commercial manufacturing and processing of its cell therapy products.
• Cork and Dublin, Ireland: The company utilize the Cork facility for commercial manufacturing, packaging and labeling of its products. The company also perform quality control testing, labeling, packaging and final release of many of its products at the Cork facility, which are distributed to the EU and other international markets through its facility in Dublin.
• Edmonton, Canada: The company conduct process chemistry research and scale-up activities for its clinical development candidates, manufacture API for both investigational and commercial products and conduct chemical development activities to improve existing commercial manufacturing processes.
• Hoofddorp, Netherlands: The company utilize the facility for commercial manufacturing and processing of its cell therapy products.

Products Portfolio

The company has a robust portfolio and pipeline spanning virology, oncology and inflammation. The company's  primary revenue-generating products are

Global Operations

References

1. ^ https://www.gilead.com/news-and-press/press-room/press-releases/2023/12/us-fda-approves-label-update-for-kites-yescarta-car-tcell-therapy-to-include-overall-survival-data
2. ^ https://www.gilead.com/news-and-press/press-room/press-releases/2023/11/kite-and-arcellx-announce-expansion-in-strategic-partnership
3. ^ https://www.gilead.com/news-and-press/press-room/press-releases/2023/10/kite-and-epic-bio-announce-collaboration-to-develop-new-therapies-for-cancer
4. ^ https://www.gilead.com/news-and-press/press-room/press-releases/2023/11/gilead-sciences-announces-third-quarter-2023-financial-results