Second Quarter and First Half 2020

- Second Quarter Product Sales of $5.1 billion -

- First Half Product Sales of $10.5 billion -

- Second Quarter GAAP Loss of $(2.66) per share -

- Second Quarter Non-GAAP Diluted EPS of $1.11 per share -

Revised Full Year 2020 Guidance

- Product Sales of $23 billion to $25 billion -

- Non-GAAP Diluted EPS of $6.25 to $7.65 per share -

FOSTER CITY, Calif.--(BUSINESS WIRE)-- Gilead Sciences, Inc. (Nasdaq: GILD) announced today its results of operations for the second quarter and first half 2020.

“Gilead’s first half performance demonstrates the strength and durability of our core HIV business, even as we navigated the expected impact of the COVID-19 pandemic. We are already starting to see early signs of recovery from this impact and we are fully confident in our long-term HIV leadership,” said Daniel O’Day, Chairman and Chief Executive Officer of Gilead Sciences. “We are also making important progress with our pipeline. In addition to the critical work of advancing remdesivir, we have continued to strengthen our presence in immuno-oncology. This includes six immuno-oncology agreements this year and the recent FDA approval for TecartusTM in mantle cell lymphoma.”

Financial Results

Total revenues for the second quarter and first half 2020 were $5.1 billion and $10.7 billion, respectively, compared to $5.7 billion and $11.0 billion, respectively, for the same periods in 2019.
GAAP net loss and diluted loss per share for the second quarter 2020 were $(3.3) billion and $(2.66), respectively, compared to net income and diluted EPS of $1.9 billion and $1.47, respectively, for the same period in 2019.
GAAP net loss for the second quarter 2020 included an acquired in-process research and development (“IPR&D”) charge of $4.5 billion related to Gilead’s acquisition of Forty Seven, Inc (“Forty Seven”).
Non-GAAP net income and diluted EPS for the second quarter 2020 were $1.4 billion and $1.11, respectively, compared to $2.2 billion and $1.72, respectively, for the same period in 2019.
Gilead’s core business delivered a solid performance, despite the global impacts of COVID-19.

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(1) Starting in 2020, Gilead no longer regularly excludes share-based compensation expense from its non-GAAP financial information. To conform to this change, the prior period non-GAAP financial information has been recast to include share-based compensation expense. A reconciliation between GAAP and non-GAAP financial information is provided in the tables on pages 12 through 14.

Total Product Sales

Total product sales reflected a solid financial performance, despite the global impacts of COVID-19. Total product sales decreased 10% to $5.1 billion for the second quarter 2020 and 3% to $10.5 billion for the first half 2020, compared to $5.6 billion and $10.8 billion, respectively, for the same periods in 2019.

The decreases were primarily driven by:
Lower sales volume of chronic hepatitis C virus (“HCV”) products due to COVID-19, which led to fewer healthcare provider (“HCP”) visits and screenings;
Lower sales of Letairis® (ambrisentan 5 mg and 10 mg) and Ranexa® (ranolazine 500 mg and 1000 mg) after generic entries in the first half 2019; and
Approximately $160 million of favorable adjustments for statutory rebates primarily related to HCV and HIV sales recorded in Europe in the second quarter 2019, which did not reoccur in 2020.
The decreases were partially offset by:
Underlying demand growth in the core HIV business, with continued patient uptake of Biktarvy ® (bictegravir 50 mg/emtricitabine 200 mg/tenofovir alafenamide 25 mg), and Descovy ® (emtricitabine 200 mg/tenofovir alafenamide 25 mg) for pre-exposure prophylaxis (“PrEP”).
HIV product sales decreased 1% to $4.0 billion for the second quarter 2020 and increased 6% to $8.1 billion for the first half 2020, compared to $4.0 billion and $7.7 billion, respectively, for the same periods in 2019. The increases in the first half 2020, despite the global impacts of COVID-19, were primarily due to the underlying strength of the HIV franchise as demonstrated by increases in Biktarvy share and overall Gilead treatment share in the U.S.

Second Quarter

The decreases for the second quarter 2020 were driven by:
Lower sales volume of Truvada® (emtricitabine (“FTC”) and tenofovir disoproxil fumarate (“TDF”))-based products;
COVID-19 impact including lower PrEP demand, driven by reduced initiations and therapy discontinuations due to reduced HCP visits and impact on social dynamics;
Unfavorable payer mix in the U.S.;
The reversal of the pull forward of revenues into the first quarter due to COVID-19, as outlined in Gilead’s prior quarter earnings release; and
The favorable adjustments for statutory rebates in Europe recorded in the second quarter 2019.
The decreases were substantially offset by the continued patient uptake of Biktarvy and Descovy for PrEP®.
First Half

The HIV franchise demonstrated growth of 6% in the first half 2020 compared to prior year, driven by increased demand including for Biktarvy.

The increases were partially offset by:
Lower sales volume of Truvada (FTC/TDF)-based products;
Lower average net selling price; and
The favorable adjustments for statutory rebates recorded during the second quarter 2019.
COVID-19 primarily impacted PrEP, driven by reduced initiations and therapy discontinuations, and to a lesser degree resulted in reduced HIV treatment switches.

HCV product sales decreased 47% to $448 million for the second quarter 2020 and 28% to $1.2 billion for the first half 2020, compared to $842 million and $1.6 billion, respectively, for the same periods in 2019.

The decreases were primarily due to:
Lower sales volume driven by lower patient starts in the U.S. and Europe attributable to a decrease in HCP visits and screenings due to COVID-19;
Lower average net selling price; and
The second quarter 2019 favorable adjustments for statutory rebates recorded in Europe.
Yescarta ® (axicabtagene ciloleucel) generated $156 million and $296 million in sales during the second quarter and first half 2020, respectively, compared to $120 million and $216 million, respectively, for the same periods in 2019. The increases were primarily driven by the continued uptake in Europe.

Product Sales by Geography

U.S. product sales decreased 7% to $3.8 billion for the second quarter 2020 and 1% to $7.8 billion for the first half 2020, compared to the same periods in 2019.

The decreases were primarily due to:
Lower sales of Letairis and Ranexa after generic entries in the first half 2019;
Lower sales volume of HCV products driven by lower patient starts attributable to a decrease in HCP visits and screenings due to COVID-19; and
The reversal of the pull forward of revenues into the first quarter due to COVID-19, as outlined in Gilead’s prior quarter release.
The decreases were partially offset by HIV treatment demand growth driven by the continued patient uptake of Biktarvy and the increased usage of Descovy for PrEP.
Europe product sales decreased 30% to $724 million for the second quarter 2020 and 14% to $1.7 billion for the first half 2020, compared to the same periods in 2019.

The decreases were primarily due to lower sales volume of HCV products driven by lower patient starts due to COVID-19. The decreases were also impacted by the second quarter 2019 favorable adjustments for statutory rebates.
Other international product sales increased 12% to $573 million for the second quarter 2020 and 9% to $1.1 billion, for the first half 2020, compared to the same periods in 2019.

The increases were primarily due to higher sales volume of Epclusa® (sofosbuvir 400 mg/velpatasvir 100 mg), Biktarvy and Vemlidy® (tenofovir alafenamide 25 mg), partially offset by lower average net selling price.
Operating Expenses

AND Dividend
Gilead Sciences Announces Third Quarter 2020 Dividend
FOSTER CITY, Calif.--(BUSINESS WIRE)-- Gilead Sciences, Inc. (Nasdaq: GILD) today announced that the company’s Board of Directors has declared a cash dividend of $0.68 per share of common stock for the third quarter of 2020. The dividend is payable on September 29, 2020, to stockholders of record at the close of business on September 15, 2020. Future dividends will be subject to Board approval.