GILEAD SCIENCES INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
GILD$166.89-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0000882095-24-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000882095-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 86 previous paragraphs and 91 current paragraphs.
60 unchanged; 19 reworded; 11 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
•Entered into an amended license agreement featuring the buy-out of global seladelpar royalties from Janssen Pharmaceutica NV for $320 million. This transaction will be reflected in Gilead’s third quarter results.
Current report
Net income attributable to Gilead was $1.6 billion and diluted earnings per share attributable to Gilead was $1.29 for the three months ended June 30, 2024, compared to net income attributable to Gilead of $1.0 billion and diluted earnings per share attributable to Gilead of $0.83 for the same period in 2023. The increase was primarily driven by lower operating expenses, including a 2023 expense of $525 million for settlements with certain plaintiffs in HIV antitrust litigation which did not repeat in 2024, as well as higher revenues and lower income tax expense, partially offset by higher net unrealized losses on equity securities.
Current report
Other product sales increased 15% and 14% to $280 million and $504 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to increased sales of Letairis related to a temporary shortage of generics in the market. The increase for the six months ended June 30, 2024 also included higher demand for AmBisome.
Current report
Product gross margin was 77.7% and 77.2% for the three and six months ended June 30, 2024, respectively, and remained relatively flat compared to the same periods in 2023.
Current report
Selling, general and administrative expenses decreased 26% and 13% to $1.4 billion and $2.8 billion for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to a 2023 expense of $525 million for settlements with certain plaintiffs in HIV antitrust litigation which did not repeat in 2024 as well as a decrease in our allocation of the branded prescription drug fee, partially offset by stock-based compensation and other integration expenses related to the acquisition of CymaBay.
Current report
Unfavorable movements in Other (income) expense, net for the three and six months ended June 30, 2024, compared to the same periods in 2023, primarily related to higher net losses from equity securities and lower interest income due to lower average cash balances.
Current report
Our effective tax rate decreased for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to the remeasurement of certain deferred tax liabilities related to acquired intangible assets recorded in the three months ended June 30, 2023 and a settlement with a tax authority in the three months ended June 30, 2024.
Current report
Cash, cash equivalents and marketable debt securities were $2.8 billion and $8.4 billion as of June 30, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024, we sold all of our marketable debt securities and used the proceeds to partially fund our acquisition of CymaBay.
Current report
Net cash provided by operating activities for the six months ended June 30, 2024 consisted of our net loss of $2.6 billion adjusted for non-cash and non-operating expenses of $8.1 billion primarily related to our acquisition of CymaBay, impairment charges and amortization expenses, partially offset by a $1.2 billion transition tax payment associated with the Tax Cuts and Jobs Acts of 2017.
Current report
Net cash used in financing activities primarily relates to $2.0 billion for dividend payments, $1.85 billion for repayment of debt and other obligations, and $500 million for common stock repurchases.
Current report
Subsequently, in August 2024, we announced that our Board of Directors declared a quarterly dividend of $0.77 per share of common stock for the third quarter of 2024. The dividend is payable on September 27, 2024, to stockholders of record at the close of business on September 13, 2024. Future dividends will be subject to Board approval.
Removed paragraphs (7)
Previous report
Other product sales increased 13% to $224 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to higher demand for AmBisome.
Previous report
Product gross margin decreased to 76.6% for the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by product mix, as well as higher intangible asset amortization expenses related to the pretreated hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) metastatic breast cancer indication for Trodelvy following its approval in February 2023.
Previous report
Selling, general and administrative expenses increased 4% to $1.4 billion for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to stock-based compensation expenses related to the acquisition of CymaBay and restructuring expenses.
Previous report
Other (income) expense, net for the three months ended March 31, 2024 primarily included $108 million of interest income, partially offset by $14 million of net unrealized losses on equity investments. Other (income) expense, net for the three months ended March 31, 2023 primarily included $256 million of net unrealized losses on equity investments, partially offset by $78 million of interest income.
Previous report
Net cash provided by operating activities was $2.2 billion for the three months ended March 31, 2024, compared to $1.7 billion for the same period in 2023. The change was primarily due to lower rebate payments, mostly due to timing, as well as lower inventory spend, partially offset by lower collections.
Previous report
Net cash used in financing activities was $1.4 billion for the three months ended March 31, 2024 and 2023. During the three months ended March 31, 2024, we utilized cash of $990 million for dividend payments and $400 million for common stock repurchases. During the three months ended March 31, 2023, we utilized cash of $969 million for dividend payments and $400 million for common stock repurchases.
Previous report
Subsequently, in April 2024, we repaid $1.75 billion of senior unsecured notes due at maturity and made a scheduled $1.2 billion federal income tax payment for transition tax on the mandatory deemed repatriation of foreign earnings from the Tax Cuts and Jobs Act.
Reworded paragraphs (19)
Previous wording
The following discussion and analysis is intended to provide material information around events and uncertainties known to management that are relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the related notes thereto and other disclosures included as part of our Annual Report on Form 10-K for the year ended December 31, 2023 and our unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2024 and the related notes thereto and other disclosures (including the disclosures under Part II, Item 1A. Risk Factors) included in this Quarterly Report on Form 10-Q.
Current wording
The following discussion and analysis is intended to provide material information around events and uncertainties known to management that are relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the related notes thereto and other disclosures included as part of our Annual Report on Form 10-K for the year ended December 31, 2023 and our unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2024 and the related notes thereto and other disclosures (including the disclosures under Part II, Item 1A. Risk Factors) included in this Quarterly Report on Form 10-Q.
Previous wording
Total revenues increased 5% to $6.7 billion for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to higher HIV, Oncology and Liver Disease sales.
Current wording
Total revenues increased 5% to $7.0 billion and $13.6 billion for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to higher product sales in HIV, Oncology and Liver Disease.
Previous wording
Net loss attributable to Gilead was $4.2 billion and diluted loss per share attributable to Gilead was $3.34 for the three months ended March 31, 2024, compared to net income attributable to Gilead of $1.0 billion and diluted earnings per share attributable to Gilead of $0.80 for the same period in 2023. The decrease was primarily driven by an acquired in-process research and development (“IPR&D”) charge of $3.9 billion related to the acquisition of CymaBay, as well as a pre-tax IPR&D partial impairment charge of $2.4 billion related to assets acquired by Gilead from Immunomedics, Inc. (“Immunomedics”) in 2020.
Current wording
Net loss attributable to Gilead was $2.6 billion and diluted loss per share attributable to Gilead was $2.05 for the six months ended June 30, 2024, compared to net income attributable to Gilead of $2.1 billion and diluted earnings per share attributable to Gilead of $1.63 for the same period in 2023. The decrease was primarily driven by an acquired in-process research and development (“IPR&D”) charge of $3.9 billion related to the acquisition of CymaBay as well as a pre-tax IPR&D partial impairment charge of $2.4 billion related to assets acquired by Gilead from Immunomedics, Inc. (“Immunomedics”) in 2020 and higher net unrealized losses on equity securities. The decrease was partially offset by higher revenues, lower operating expenses, including the aforementioned $525 million legal settlement, and lower income tax expense.
Previous wording
HIV product sales increased 4% to $4.3 billion for the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by higher demand. In particular, Biktarvy sales increased primarily reflecting higher demand, including patients switching from Genvoya and other Gilead HIV products. Descovy sales decreased primarily driven by lower average realized price due to channel mix, partially offset by higher demand.
Current wording
HIV product sales increased 3% to $4.7 billion and $9.1 billion for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily driven by higher demand across treatment and prevention, partially offset by lower average realized price. In particular, Biktarvy sales increased primarily reflecting higher demand, including patients switching from Genvoya and other Gilead HIV products, partially offset by lower average realized price. Descovy sales decreased primarily driven by lower average realized price, partially offset by higher demand.
Previous wording
Liver Disease product sales increased 9% to $737 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by favorable inventory dynamics, the timing of chronic hepatitis C virus (“HCV”) product purchases by the Department of Corrections in the United States, as well as higher demand across HBV, HCV, and in the European Union (“EU”), chronic hepatitis D virus (“HDV”) products.
Current wording
Liver Disease product sales increased 17% and 13% to $832 million and $1.6 billion for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily driven by higher average realized price due to channel mix in the United States as well as higher demand in products for chronic hepatitis C virus (“HCV”), HBV and, in Europe, chronic hepatitis D virus (“HDV”).
Previous wording
Veklury product sales decreased 3% to $555 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by lower rates of COVID-19 related hospitalizations.
Current wording
Veklury product sales decreased 16% and 7% to $214 million and $769 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily driven by lower rates of COVID-19 related hospitalizations.
Previous wording
Cell Therapy product sales increased 7% to $480 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to increased Yescarta demand for the treatment of relapsed or refractory (“R/R”) large B-cell lymphoma outside the United States and increased Tecartus demand for the treatment of R/R adult acute lymphoblastic leukemia and R/R mantle cell lymphoma, mostly in Europe.
Current wording
Cell Therapy product sales increased 11% and 9% to $521 million and $1.0 billion for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to increased Yescarta demand for the treatment of relapsed or refractory (“R/R”) large B-cell lymphoma outside the United States and increased Tecartus demand for the treatment of R/R adult acute lymphoblastic leukemia and R/R mantle cell lymphoma, mostly in Europe.
Previous wording
Trodelvy product sales increased 39% to $309 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to higher demand.
Current wording
Trodelvy product sales increased 23% and 30% to $320 million and $628 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, primarily due to higher demand in second-line metastatic triple negative breast cancer and pre-treated HR+/HER2- metastatic breast cancer.
Previous wording
Approximately 28% of our product sales were denominated in foreign currencies during the three months ended March 31, 2024 and 2023. Foreign currency exchange, net of hedges, had an unfavorable impact on our total product sales of $47 million for the three months ended March 31, 2024, based on a comparison using foreign currency exchange rates from the three months ended March 31, 2023.
Current wording
Approximately 26% and 25% of our product sales were denominated in foreign currencies during the three months ended June 30, 2024 and 2023, respectively. Foreign currency exchange, net of hedges, had an unfavorable impact on our total product sales of $69 million for the three months ended June 30, 2024, based on a comparison using foreign currency exchange rates from the three months ended June 30, 2023.
Previous wording
Research and development expenses increased 5% to $1.5 billion for the three months ended March 31, 2024, compared to the same period in 2023. Personnel, infrastructure and other support costs increased primarily due to stock-based compensation expenses related to the acquisition of CymaBay and restructuring expenses. Clinical studies and other costs decreased primarily due to higher R&D reimbursements and the discontinuation or ramp-down of magrolimab and other studies.
Current wording
Research and development expenses were $1.4 billion and $2.9 billion for the three and six months ended June 30, 2024, respectively, and remained relatively flat compared to the same periods in 2023. Personnel, infrastructure and other support costs increased for the three months ended June 30, 2024 primarily due to higher compensation expenses and restructuring expenses. Personnel, infrastructure and other support costs increased for the six months ended June 30, 2024 primarily due to stock-based compensation expenses of $67 million and other integration costs related to the acquisition of CymaBay, higher compensation expenses and restructuring expenses. Clinical studies and other costs decreased during both periods in 2024, compared to the same periods in 2023, primarily due to timing of clinical activities, including the wind-down of studies for magrolimab and obeldesivir for treatment of COVID-19 and higher R&D reimbursements.
Previous wording
Acquired in-process research and development expenses were $4.1 billion for the three months ended March 31, 2024, primarily comprised of $3.9 billion related to the CymaBay acquisition and $100 million related to the Arcus Biosciences, Inc. collaboration. Acquired in-process research and development expenses were $481 million for the three months ended March 31, 2023, primarily comprised of $244 million related to the Tmunity Therapeutics, Inc. acquisition and $212 million related to the Arcellx, Inc. collaboration. See Note 6. Acquisitions, Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Current wording
Acquired in-process research and development expenses were $38 million and $4.2 billion for the three and six months ended June 30, 2024, respectively, with the expenses in the six month period primarily comprised of $3.9 billion related to the CymaBay acquisition in March 2024 and $100 million related to the Arcus Biosciences, Inc. collaboration amendment in January 2024. Acquired in-process research and development expenses were $236 million and $717 million for the three and six months ended June 30, 2023, respectively, primarily comprised of $170 million related to the XinThera, Inc. acquisition in May 2023, $244 million related to the Tmunity Therapeutics, Inc. acquisition in February 2023 and $212 million related to the Arcellx, Inc. collaboration entered into in January 2023. See Note 6. Acquisitions, Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Previous wording
No IPR&D impairment charges were recorded during the three months ended March 31, 2023.
Current wording
No IPR&D impairment charges were recorded during the three months ended June 30, 2024 and three and six months ended June 30, 2023.
Previous wording
Interest expense increased 11% to $254 million for the three months ended March 31, 2024, compared to the same period in 2023 due to a higher average interest rate on long-term debt. See Note 9. Debt and Credit Facilities of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information on our long-term debt and related interest rates.
Current wording
Interest expense increased 3% and 7% to $237 million and $491 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, due to a higher average interest rate on long-term debt, partially offset by lower debt balances. See Note 9. Debt and Credit Facilities of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information on our long-term debt and related interest rates.
Previous wording
The following table summarizes the period-over-period changes in Income tax (benefit) expense:
Current wording
The following table summarizes the period-over-period changes in Income tax expense:
Previous wording
Our effective tax rate decreased for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to the non-deductible acquired IPR&D expense recorded in connection with our first quarter 2024 acquisition of CymaBay.
Current wording
Our effective tax rate decreased for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to the non-deductible acquired IPR&D expense recorded in connection with our first quarter 2024 acquisition of CymaBay.
Previous wording
Cash, cash equivalents and marketable debt securities were $4.7 billion and $8.4 billion as of March 31, 2024 and December 31, 2023, respectively. Cash and cash equivalents decreased by $1.4 billion from December 31, 2023 to March 31, 2024. The following table summarizes our cash flow activities:
Current wording
Cash and cash equivalents decreased by $3.3 billion from December 31, 2023 to June 30, 2024 due to the following cash flow activities:
Previous wording
Net cash used in investing activities was $2.2 billion for the three months ended March 31, 2024, compared to $826 million for the same period in 2023. The change was primarily due to the $3.9 billion net cash payment for the CymaBay acquisition, partially offset by proceeds from liquidation of marketable debt securities to fund the acquisition.
Current wording
Net cash used in investing activities primarily relates to the $3.9 billion net cash payment for the CymaBay acquisition and purchases of equity securities, partially offset by proceeds from the liquidation of marketable debt securities.
Previous wording
A summary of our capital resources and material cash requirements is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. Other than as disclosed in Notes 4. Available-For-Sale Debt Securities and Equity Securities, 6. Acquisitions, Collaborations and Other Arrangements, 9. Debt and Credit Facilities, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our capital resources and material cash requirements during the three months ended March 31, 2024.
Current wording
We believe our existing capital resources, including cash and cash equivalents and our revolving credit facility, supplemented by cash flows generated from our operations, will be adequate to satisfy our capital needs for the foreseeable future. A summary of our capital resources and material cash requirements is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. Other than as disclosed in the Liquidity section above and in Notes 4. Available-For-Sale Debt Securities and Equity Securities, 6. Acquisitions, Collaborations and Other Arrangements, 9. Debt and Credit Facilities, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our capital resources and material cash requirements during the six months ended June 30, 2024.
Previous wording
A summary of our critical accounting estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. Other than as disclosed in Notes 2. Revenues, 7. Intangible Assets, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting estimates during the three months ended March 31, 2024.
Current wording
A summary of our critical accounting estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. Other than as disclosed in Notes 2. Revenues, 7. Intangible Assets, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting estimates during the six months ended June 30, 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Approximately 28% and 26% of our product sales were denominated in foreign currencies during the six months ended June 30, 2024 and 2023, respectively. Foreign currency exchange, net of hedges, had an unfavorable impact on our total product sales of $116 million for the six months ended June 30, 2024, based on a comparison using foreign currency exchange rates from the six months ended June 30, 2023.