Gilead Sciences Inc GILD
Q3 2012 Earnings Call Transcript

Transcript Call Date 10/23/2012

Operator: Ladies and gentlemen, thank you for standing by and welcome to Gilead Sciences' Third Quarter 2012 Earnings Conference Call. My name is Ann, and I'll be your conference operator today. At this time, all participants are in a listen-only mode and as a reminder, this conference call is being recorded.

I would now like to turn the call over to Patrick O'Brien, Vice President of Investor Relations. Please go ahead.

Patrick O'Brien - IR: Thank you, Ann. Good afternoon, everyone. We issued a press release this afternoon providing earnings results for the third quarter, which are available on our website. You can also find a detailed earnings slide deck that will support some of the topics we will cover on today's call.

For our prepared remarks and Q&A, I'm joined by our Chairman and CEO, John Martin; our President and Chief Operating Officer, John Milligan; our Executive Vice President of Research and Development, Norbert Bischofberger; our Executive Vice President of Commercial Operations, Kevin Young; and our Chief Financial Officer, Robin Washington.

Before we begin with our formal remarks, we want to remind you that we will be making forward-looking statements including plans and expectations with respect to our product candidates and financial projections, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause our actual results to differ materially from these statements.

A description of these risks can be found in our latest SEC disclosure documents and our recent press releases. In addition, Gilead does not undertake any obligation to update any forward-looking statements made during this call.

We will also be using non-GAAP financial measures to help you understand our underlying business performance. The GAAP reconciliations are provided in our press release as well as our website.

I will now turn the call over to Robin Washington.

Robin L. Washington - SVP and CFO: Thank you, Patrick and thank you all for joining us this afternoon. Gilead continues to deliver solid year-to-date and third quarter financial results. Product sales for the third quarter were $2.36 billion, an increase of 14% year-over-year. The U.S. contributed $1.4 billion to product sales, up 20% year-over-year driven by strong retail demand and the expansion of our HIV franchise. Europe contributed $781 million to product sales, up 5% year-over-year and flat sequentially due to purchasing patterns related to the summer holidays.

an expense standpoint, non-GAAP R&D expenses increased to $384 million, up 42% year-over-year primarily due to the continued advancement of our product pipelines and in particular, the progression and in expansion of our Phase 3 studies in both liver disease and oncology. Additionally, non-GAAP SG&A expenses increased to $287 million, up 8% year-over-year due to the ongoing growth of our business and an increase in the U.S. pharmaceutical excise tax partially offset by lower bad debt expense. Sequentially, SG&A expenses decreased 4% due to lower spending as a result of the European summer holidays partially offset by investments in the launch of Stribild.

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