Gilead Sciences, Inc. (GILD)
Q3 2009 Earnings Call Transcript
October 20, 2009 4:30 pm ET
Susan Hubbard – IR
John Martin – Chairman and CEO
Robin Washington – SVP and CFO
Kevin Young – EVP, Commercial Operations
Norbert Bischofberger – EVP, R&D and Chief Scientific Officer
John Milligan – President and COO
Geoff Meacham – JPMorgan
Mark Schoenebaum – Deutsche Bank
Michael Aberman – Credit Suisse
Rachel McMinn – Bank of America
Karim de Felipe – Citi
Geoff Porges – Bernstein
Joshua Schimmer – Leerink Swann
Steve Harr – Morgan Stanley
Jason Kantor – RBC Capital Markets
Davis Bu – Goldman Sachs
Phil Nadeau – Cowen & Company
Tom Russo – Baird
Jim Birchenough – Barclays Capital
Bret Holley – Oppenheimer
John Sonnier – William Blair
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Thank you, Melanie and good afternoon everyone. Welcome to Gilead’s third quarter 2009 earnings conference call. We’re pleased you could join us today. We issued a press release this afternoon providing results for the third quarter ended September 30th, 2009. This press release is available on our website at www.gilead.com. We have also posted slides that outline the topics discussed on this call.
Joining me today are John Martin, Chairman and Chief Executive Officer; John Milligan, President and Chief Operating Officer; Kevin Young, Executive Vice President of Commercial Operations; Norbert Bischofberger, Executive Vice President of Research and Development and Chief Scientific Officer; and Robin Washington, Senior Vice President and Chief Financial Officer. We will keep prepared comments brief to allow more time for Q&A.
I would first like to remind you that we will be making statements relating to future events, expectations, trends, objectives, and financial results that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions that are subject to a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in any forward-looking statement. I refer you to our Form 10-K for the year ended December 31st, 2008, Form 10-Q’s for the first second quarter of 2009, subsequent press releases, and other publicly filed SEC disclosure documents for a detailed description of risk factors and other matter related to our business. In addition, please note that we undertake no obligation to update or revise these forward-looking statements.
We will also be making certain references to financial measures that are on a non-GAAP basis. We provide a reconciliation between GAAP and non-GAAP numbers on our website.
I will now turn the call over to John Martin.
Good afternoon everyone and thank you for joining us today. The third quarter of 2009 was financially excellent and productive on many levels. Product revenues for the quarter reached a record high of $1.65 billion. Our antiviral franchise continued its momentum in gaining share across all our commercial markets with record revenues of $1.47 billion. Importantly, we generated $861 million in operating cash flow.
In July, we were very pleased to welcome Kevin Lofton to Gilead’s Board of Directors. Kevin is currently the President and Chief Executive Officer of Catholic Health Initiatives, a Denver-based healthcare system operating the full continuum of services from hospitals to home health agencies throughout the nation. His expertise and knowledge of real-world hospital administration and patient care issues will prove invaluable to our Board and our management team and I look forward to learning from his contributions and insights.
On the regulatory front, in September, the European Commission granted conditional approval of Cayston, our inhaled antibiotic for the treatment of chronic pulmonary infections due to Pseudomonas aeruginosa in adult with cystic fibrosis. We plan to begin making the product available in Germany and the U.K. in the early part of 2010. Also, during the third quarter we received conditional approval for Cayston in Canada. Cayston is the first new inhaled antibiotic to be licensed for the treatment of cystic fibrosis in a decade and it has the potential to improve the lives of patients suffering from this disease.
And before I turn the call over to Robin to review our financial results, I would like to highlight two very important developments for patients with HIV/AIDS on the U.S. policy front. First, in early September, the U.S. Department of Health and Human Services announced a proposal to add HIV screening test to Medicare’s list of covered preventive services. This proposal would mean that Medicare would cover annual voluntary screening of those at risk for HIV infection as well as women who are pregnant. A final decision regarding this proposal is expected in December.
Secondly, on September 30, the Senate Health Education Labor and Pension or HELP Committee approved draft legislation that would extend the Ryan White Treatment Act through 2013. This measure would authorize $2.35 billion in funding in fiscal 2010 with annual increases through 2013, for which $2.75 billion would be authorized. In addition to access to care and treatment, the treatment act would, for the first time, establish a national goal of administering five million HIV test each year.
As you may know, just under a quarter of the patients in the United States received antiviral therapy through state AIDS Drugs Assistance Programs under this Ryan White Act. And this extension would ensure continuity for those currently treated and create the opportunity to diagnose more patients, bringing them into care and onto therapy. Final adoption of this legislation is expected by the end of October.
For policy developments, here at Gilead we have exciting progress to share in terms of our marketed [ph] products and our pipeline programs. I will turn the call over to Robin who will begin by reviewing our financial results for the third quarter.