GILEAD SCIENCES, INC. [GILD] Filings

10-Q 1 gild-20220331.htm FORM 10-Q gild-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			94-3047598
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California 94404

(Address of principal executive offices) (Zip Code)

650-574-3000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value, $0.001 per share

GILD

The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of April 29, 2022: 1,254,313,448

GILEAD SCIENCES, INC.

INDEX

PART I.

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2022 and 2021

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

We own or have rights to various trademarks and trade names used in our business, including the following: GILEAD®, GILEAD SCIENCES®, AMBISOME®, ATRIPLA®, BIKTARVY®, CAYSTON®, COMPLERA®, DESCOVY®, DESCOVY FOR PREP®, EMTRIVA®, EPCLUSA®, EVIPLERA®, GENVOYA®, HARVONI®, HEPCLUDEX® (BULEVIRTIDE), HEPSERA®, JYSELECA® (FILGOTINIB), LETAIRIS®, ODEFSEY®, RANEXA®, SOVALDI®, STRIBILD®, TECARTUS®, 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.

PART I. FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in millions, except per share amounts)	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	4,296	$	5,338
Short-term marketable debt securities	1,029		1,182
Accounts receivable, net	3,787		4,493
Inventories	1,482		1,618
Prepaid and other current assets	2,035		2,141
Total current assets	12,629		14,772
Property, plant and equipment, net	5,253		5,121
Long-term marketable debt securities	1,427		1,309
Intangible assets, net	30,331		33,455
Goodwill	8,314		8,332
Other long-term assets	5,126		4,963
Total assets	$	63,080	$	67,952
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	583	$	705
Accrued government and other rebates	3,450		3,244
Accrued and other current liabilities	3,500		6,145
Current portion of long-term debt and other obligations, net	1,025		1,516
Total current liabilities	8,558		11,610
Long-term debt, net	25,183		25,179
Long-term income taxes payable	4,793		4,767
Deferred tax liability	3,687		4,356
Other long-term obligations	944		976
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, par value $0.001 per share; 5 shares authorized; none outstanding	—		—
Common stock, par value $0.001 per share; 5,600 shares authorized; 1,255 and 1,254 shares issued and outstanding, respectively	1		1
Additional paid-in capital	4,867		4,661
Accumulated other comprehensive income	73		83
Retained earnings	14,986		16,324
Total Gilead stockholders’ equity	19,927		21,069
Noncontrolling interest	(12)		(5)
Total stockholders’ equity	19,915		21,064
Total liabilities and stockholders’ equity	$	63,080	$	67,952

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


	Three Months Ended
	March 31,
(in millions, except per share amounts)	2022		2021
Revenues:
Product sales	$	6,534	$	6,340
Royalty, contract and other revenues	56		83
Total revenues	6,590		6,423
Costs and expenses:
Cost of goods sold	1,424		1,361
Research and development expenses	1,186		1,055
In-process research and development impairment	2,700		—
Acquired in-process research and development expenses	—		62
Selling, general and administrative expenses	1,083		1,055
Total costs and expenses	6,393		3,533
Income from operations	197		2,890
Interest expense	(238)		(257)
Other income (expense), net	(111)		(369)
Income (loss) before income taxes	(152)		2,264
Income tax benefit (expense)	164		(542)
Net income	12		1,722
Net loss attributable to noncontrolling interest	7		7
Net income attributable to Gilead	$	19	$	1,729
Net income per share attributable to Gilead common stockholders - basic	$	0.02	$	1.38
Shares used in per share calculation - basic	1,255		1,256
Net income per share attributable to Gilead common stockholders - diluted	$	0.02	$	1.37
Shares used in per share calculation - diluted	1,262		1,262

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended
	March 31,
(in millions)	2022		2021
Net income	$	12	$	1,722
Other comprehensive income (loss):
Net foreign currency translation gain, net of tax	5		10
Available-for-sale debt securities:
Net unrealized loss, net of tax	(19)		(2)
Reclassifications to net income, net of tax	—		—
Net change	(19)		(2)
Cash flow hedges:
Net unrealized gain, net of tax	24		68
Reclassifications to net income, net of tax	(20)		22
Net change	4		90
Other comprehensive income (loss)	(10)		98
Comprehensive income	2		1,820
Comprehensive loss attributable to noncontrolling interest	7		7
Comprehensive income attributable to Gilead	$	9	$	1,827

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


	Three Months Ended March 31, 2022
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Shares	Amount
Balance as of December 31, 2021	1,254	$	1	$	4,661	$	83	$	16,324	$	(5)	$	21,064
Net income (loss)	—	—		—		—		19		(7)		12
Other comprehensive loss, net of tax	—	—		—		(10)		—		—		(10)
Issuances under employee stock purchase plan	1	—		73		—		—		—		73
Issuances under equity incentive plans	7	—		21		—		—		—		21
Stock-based compensation	—	—		131		—		—		—		131
Repurchases of common stock	(7)	—		(19)		—		(425)		—		(444)
Dividends declared ($0.73 per share)	—	—		—		—		(932)		—		(932)
Balance as of March 31, 2022	1,255	$	1	$	4,867	$	73	$	14,986	$	(12)	$	19,915


	Three Months Ended March 31, 2021
(in millions, except per share amounts)	Gilead Stockholders’ Equity									Noncontrolling Interest		Total Stockholders’ Equity
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
	Shares	Amount
Balance as of December 31, 2020	1,254	$	1	$	3,880	$	(60)	$	14,381	$	19	$	18,221
Net income (loss)	—	—		—		—		1,729		(7)		1,722
Other comprehensive income, net of tax	—	—		—		98		—		—		98
Issuances under employee stock purchase plan	1	—		76		—		—		—		76
Issuances under equity incentive plans	5	—		12		—		—		—		12
Stock-based compensation	—	—		140		—		—		—		140
Repurchases of common stock	(6)	—		(16)		—		(383)		—		(399)
Dividends declared ($0.71 per share)	—	—		—		—		(906)		—		(906)
Balance as of March 31, 2021	1,254	$	1	$	4,092	$	38	$	14,821	$	12	$	18,964

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended
	March 31,
(in millions)	2022		2021
Operating Activities:
Net income	$	12	$	1,722
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	80		78
Amortization expense	445		395
Stock-based compensation expense	130		139
Acquired in-process research and development expenses	—		62
In-process research and development impairment	2,700		—
Deferred income taxes	(651)		71
Net loss from equity securities	96		351
Other	190		201
Changes in operating assets and liabilities:
Accounts receivable, net	699		975
Inventories	53		(69)
Prepaid expenses and other	(20)		(8)
Accounts payable	(91)		(253)
Income taxes payable	(146)		(316)
Accrued and other liabilities	(1,657)		(738)
Net cash provided by operating activities	1,840		2,610
Investing Activities:
Purchases of marketable debt securities	(613)		(931)
Proceeds from sales of marketable debt securities	119		60
Proceeds from maturities of marketable debt securities	506		619
Acquisitions, including in-process research and development, net of cash acquired	(30)		(1,255)
Purchases of equity securities	(28)		(279)
Capital expenditures	(247)		(165)
Other	(777)		(91)
Net cash used in investing activities	(1,070)		(2,042)
Financing Activities:
Proceeds from issuances of common stock	94		88
Repurchases of common stock	(352)		(309)
Repayments of debt and other obligations	(500)		(1,250)
Payments of dividends	(945)		(917)
Other	(91)		(89)
Net cash used in financing activities	(1,794)		(2,477)
Effect of exchange rate changes on cash and cash equivalents	(18)		(23)
Net change in cash and cash equivalents	(1,042)		(1,932)
Cash and cash equivalents at beginning of period	5,338		5,997
Cash and cash equivalents at end of period	$	4,296	$	4,065

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. The financial statements include all adjustments consisting of normal recurring adjustments that the management of Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

The accompanying Condensed Consolidated Financial Statements include the accounts of Gilead, our wholly-owned subsidiaries and certain variable interest entities for which we are the primary beneficiary. All intercompany transactions have been eliminated. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income or loss attributable to noncontrolling interests in our Condensed Consolidated Statements of Income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties.

We assess at the inception of an arrangement with another entity whether the relationship results in it being a variable interest entity (“VIE”) and, if so, whether we are the primary beneficiary of the VIE. This assessment is based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. We did not have any material VIEs as of March 31, 2022.

The accompanying Condensed Consolidated Financial Statements and related Notes to Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2021, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission. Certain amounts and percentages in these Condensed Consolidated Financial Statements and accompanying notes may not sum or recalculate due to rounding.

Segment Information

We have one operating segment, which primarily focuses on the discovery, development and commercialization of innovative medicines in areas of unmet medical need. Our Chief Executive Officer, as the chief operating decision-maker (“CODM”), manages and allocates resources to the operations of our company on an entity-wide basis. Managing and allocating resources on an entity-wide basis enables our CODM to assess the overall level of resources available and how to best deploy these resources across functions and research and development (“R&D”) projects based on unmet medical need and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities to best support the long-term growth of our business. See Note 2. Revenues for a summary of disaggregated revenues by product and geographic region.

Significant Accounting Policies, Estimates and Judgments

The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe 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. Estimates are assessed each period and updated to reflect current information. Actual results may differ significantly from these estimates.

Concentrations of Risk

We are subject to credit risk from our portfolio of cash equivalents and marketable securities. Under our investment policy, we limit amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. We are not exposed to any significant concentrations of credit risk from these financial instruments. The goals of our investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after-tax rate of return.

We are also subject to credit risk from our accounts receivable related to our product sales. Trade accounts receivable are recorded net of allowances for wholesaler chargebacks related to government and other programs, cash discounts for prompt payment and credit losses. Estimates of our allowance for credit losses consider a number of factors, including existing contractual payment terms, individual customer circumstances, historical payment patterns of our customers, a review of the local economic environment and its potential impact on expected future customer payment patterns and government funding and reimbursement practices. The majority of our trade accounts receivable arises from product sales in the United States and Europe.

2. REVENUES

Disaggregation of Revenues

The following table summarizes our Total revenues:


	Three Months Ended March 31, 2022								Three Months Ended March 31, 2021
(in millions)	U.S.		Europe		Other International		Total		U.S.		Europe		Other International		Total
Product sales:
HIV
Biktarvy	$	1,706	$	261	$	184	$	2,151	$	1,465	$	216	$	143	$	1,824
Complera/Eviplera	17		24		4		44		25		34		4		63
Descovy	311		32		31		374		282		42		35		359
Genvoya	457		77		48		582		506		106		61		673
Odefsey	232		96		11		339		240		113		14		367
Stribild	22		8		3		32		31		11		4		46
Truvada	28		4		6		38		119		7		9		135
Revenue share - Symtuza(1)	86		44		3		132		89		44		2		135
Other HIV(2)	5		4		5		14		29		5		14		48
Total HIV	2,862		550		295		3,707		2,786		578		286		3,650

Veklury	801		304		430		1,535		820		388		248		1,456
Hepatitis C virus (“HCV”)
Ledipasvir/Sofosbuvir(3)	13		4		18		35		19		16		21		56
Sofosbuvir/Velpatasvir(4)	162		83		85		330		214		75		92		381
Other HCV(5)	24		8		2		34		25		44		4		73
Total HCV	199		95		105		399		258		135		117		510
Hepatitis B virus (“HBV”) / Hepatitis delta virus (“HDV”)
Vemlidy	80		9		111		200		77		8		96		181
Viread	—		6		17		23		4		7		20		31
Other HBV/HDV(6)	—		13		—		13		—		8		—		8
Total HBV/HDV	80		28		128		235		81		23		116		220

Cell therapy
Tecartus	47		15		1		63		27		4		—		31
Yescarta	125		77		9		211		92		61		7		160
Total cell therapy	172		92		10		274		119		65		7		191

Trodelvy	119		25		2		146		72		—		—		72
Other
AmBisome	25		66		53		144		12		66		43		121
Letairis	43		—		—		43		54		—		—		54
Other(7)	26		15		9		50		38		20		8		66
Total other	94		81		62		236		104		86		51		241
Total product sales	4,329		1,174		1,031		6,534		4,240