Here’s the entire text of the prepared remarks from Gilead Sciences’ (ticker: GILD) Q3 2005 conference call. The Q&A is here. We recognize that this transcript may contain inaccuracies - if you find any, please post a comment below and we’ll incorporate your corrections. And please note: this conference call transcript is a Seeking Alpha product, so feel free to link to it but reproduction is not permitted without the explicit permission of Seeking Alpha.
[Operator]
Ladies and gentlemen, thank you for standing by. Welcome to the Gilead Sciences third quarter -2005 Earnings Conference Call, at this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. At that time if you have a question, simply press *, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star, then the number two. As a remainder this conference call is being recorded Tuesday, October 18, 2005. Your speakers for the day are John Milligan, Executive Vice President and CFO. John Martin, President and Chief Executive Officer, and Kevin Young, Executive Vice President of Commercial Operations. I would now like to turn the call over to Dr. Milligan. Please go ahead, sir.
[Dr. Milligan Executive Vice President and CFO]:
Good afternoon, and welcome to Gilead's third-quarter 2005 conference call. We issued a press release this afternoon providing results for the third quarter ended September 30, 2005, and describing the company's quarterly highlights. The press release is also available on our web site. Also joining us on today's call are Norman Bishofberger Executive Vice President of Research and Development, Mark Perry, Senior business advisor, Mat Howe Vice President Finance, and Susan Hubbard, Senior Director of Investor Relations.
I will begin the call by reviewing the third-quarter financial results and will provide updated financial guidance for the full year, 2005. Then, John Martin and Kevin Young will take us through the corporate and product-related highlights for the quarter. We'll keep our comments relatively brief so have time at the end of this call to answer your questions.
First let me start with the standard safe harbor statement. I would like to remind you that we will be making forward-looking statements relating to financial results within the meaning of the private securities act of 1995. These statements are based on certain assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statement. I refer you to our latest press release and form 10-K, our quarterly report on form 10q for the first and second quarter of 2005, and other publicly filed SEC filed disclosures documents for detailed description of the risk factors affecting our business.
In addition, during the call today we'll be providing you with information and data from clinical studies that have not yet been reviewed by the FDA nor included in our prescribing information. I want to remind you that our sales forces are permitted from our products only on FDA-approved prescribing information and we cannot guarantee the FDA will approve the inclusion of any of the clinical information or data discussed on this call in our prescribing information. Third quarter 2005 was another successful quarter for Gilead. Driven by the continued strong growth of our HIV franchise, we achieved a significant milestone in product sales in excess of $467.2 million, a 50% increase compared third quarter of 2004. This marked eight consecutive quarters of product revenue growth. HIV product sales surpassed the $1 billion mark for the first nine months of 2005, with successful product launches in more countries.
Our third quarter of 2005 net income was $179.2 million, up 58% compared to the third quarter of 2004. Diluted earnings per share grew by 52%, and income from operations increased by 53%. The strong operating performance is a validation of the significant effort by the more than 1,700 Gilead employees around the world. And the strategies that we've implemented for growing revenues and cash flows will make a controlled investment in our research and development programs and sales and marketing infrastructure. Now turning to the specific results for the third quarter.
Gilead had strong financial performances in the third quarter as product sales and earnings improved significantly in the third quarter, 2004. Total revenues are up 51% compared to the same quarter last year, driven primarily by higher sales of our HIV products and higher royalty revenue from collaborations with our corporate partners. Income before taxes grew substantially from $156.5 million for the third quarter of 2004 to $253.6 million for the third quarter of 2005. An increase of 58% driven by strong revenue growth coupled with continued controlled spending. Income before taxes decreased $24.6 million compared to the second quarter of 2005 primarily due to the $15 million payment to Emery University as part of our amendments for existing licensing and agreement for Cytarbine related to the ASPV indication as well as $8.4 million in severance and relocation costs related to our moving our European Headquarters from France to the United Kingdom. The company reported net income of $179.2 million or $0.38 per share on a fully diluted basis for the three months ended September 30, 2005. This compares to 25 cents per diluted share for the same period last year and $0.41 per diluted share for the second quarter of 2005. Our effective tax rate for the third quarter was 32%, unchanged from the effective tax rate for the third quarter of 2004.
Now turning to revenue. Total revenues for the third quarter of 2005 were $493.5 million an increase of 51% from total revenue of $326.2 million in the third quarter 2004. Compared to the second quarter of 2005, total revenue is essentially remain flat quarter over quarter. Revenues from Gilead's product sales increased sequentially by 4% in the third quarter this year as the HIV and HPV product franchises continue to grow. This growth is offset by a decrease in royalty and contract income, which I'll describe in more detail later. Net product sales for the third quarter of 2005 were $467.2 million, a 50% increase over the same period last year and 4% higher than the second quarter of 2005. This growth was primarily driven by higher HIV and HPV product revenues as well as continued strong sales for AmBisome. HIV products sales grew to $366.5 million for the third quarter of 2005, up 59% compared to $228.1 million in the third quarter of 2004 and 6% sequentially from the previous quarter. This growth continues to be driven by the strong uptake of Truvada in the United States and European countries where the product has been launched and the strong sales of Viread in countries where Truvada has not yet been lunched. Truvada sales were $162.4 million for the third quarter 2005, up 32% sequentially. In the United States Truvada sales were up 25% sequentially primarily due to the use of Truvada in patient’s new therapy and secondarily from switches of patients on other regimens including those containing Viread in Truvada, for which U.S. sales decreased sequentially by 15% and 2% respectively.
Truvada sales in United States were $140.0 million for the third quarter, nearly double of $74.9 million recorded by Viread for the same period. Worldwide Truvada sales account for almost 45% of the total HIV product revenue. Outside the United States, the HIV product sales grew to $143.8 million from $88.6 million in the same period last year and from $139.3 million recorded in the second quarter of 2005. Increase is driven both by the continued successful launches of Truvada in several European countries during the first three quarters of 2005 as well as strong sales of Viread. Truvada is now available in Germany, Ireland, Portugal, United Kingdom, Spain, and just recently in Italy. The third quarter of 2005 Truvada product volume outside the United States more than doubled sequentially compared to the second quarter of 2005. As I mentioned, Viread sales continued to hold strong despite the strong uptake of Truvada. Compared to the same period of last year, international sales if Viread is up 45%, driven by sales in the European union, Australia, Canada, and Latin America. Hepsera for the treatment of chronic hepatitis B has sales of $46.9 million in the third quarter of 2005. A 58% increase compared to the third quarter of 2004, and a 2% increase sequentially from the previous quarter. For the third quarter of 2005, US and international sales were up to $21.9 million $25 million respectively. Hepsera sales in the European union increased by 52% to $22.6 million when compared to the same quarter of 2004.
Finally, sales of AmBisome were $54 million for the quarter, an increase of 10% over the same period in 2004 but a 3% decrease sequentially from the prior quarter's record sales level. Higher international sales volume of AmBisome was offset by lower pricing for some reason. The third quarter of 2005, we recognized royalties and contract revenues of $26.2 million compared to $15.5 million in the same quarter 2004 and $46.8 million for the second quarter of 2005. The increase compared to the third quarter 2004 primarily driven by higher royalties of $12.1 million received from Tamiflu sales by Roche compared to royalties of $1.7 million received from Roche in the third quarter of 2004. As a reminder we recognized royalties from sales on a one-quarter lag. Thus, the strong royalty revenue in the third quarter 2005 reflects stronger sales by Roche in the second quarter of 2005, as compared to Tamiflu sales in the same quarter of 2004. A higher Tamiflu sale during the second quarter of 2005 was mostly driven by pandemic planning purchases as Roche took several large government orders. Sequentially, royalty contract revenues decreased by 44%. This decrease was primarily the result of the higher royalty payment received from Roche in the second quarter, 2005.
In the second quarter of 2005, Gilead received the royalty payment from Roche of $36.2 million from Tamiflu sales by Roche in the first quarter. The majority of which were from seasonal flu sales, particularly in Japan. Roche is scheduled to release their earnings tomorrow, and we will be monitoring their guidance on Tamiflu sales and evaluating any potential impact on Gilead's future financial performance. I'd like to take a few moments to discuss Tamiflu, the status of this with Roche, and the growing public attention to avian flu and the global pandemic planning. As you know, Gilead scientists invented Tamiflu. In 1996, we outlicensed rights for the worldwide commercialization to Roche. Gilead and Roche co-developed the drug with Gilead conducting three of four clinical trials that led to the product’s first approval for the treatments of influenza in the United States in 1999. On June 23 of this year, we delivered to Roche a notice of termination of our 1996 development and license agreement for Tamiflu for material breach of contract. The specific claims of breach are detailed in the notice of termination letter filed with the SEC as an 8-K and are privy to that documents for the details. Following the notice, Gilead and Roche were unable to resolve the outstanding dispute within the 90-day cure period. As a result the parties have now submitted the matter for confidential binding arbitration under the terms of the 1996 agreement. Until the matter is resolved, ongoing discussions between Roche and Gilead and the status of the arbitration are confidential.
There are a wide variety of outcomes that could result from the arbitration process, none of which we can speculate on or comment on. Since delivery of the notice of termination we've been committed to ensuring that our dispute will not in any way interfere with discussions between Roche and any parties interested in pandemic purchasing and will not adversely affect product manufacturing and supply. We cannot comment on Roche's recent public statements regarding the array of alternatives available to them for increasing manufacturing capacity. But we do want to reiterate that as the inventor of the compound and the company that developed the manufacturing method that was transferred to Roche, we are well versed in the technology and with all aspects of the manufacturing process. We are confident that should it become necessary, Gilead and our third-party manufacturers will be capable of manufacturing Tamiflu in significant quantities. We apologize, that this is all we can say at this point.
Now turning to gross margins. Product gross margins for the third quarter of 2005 are approximately 86% compared to product gross margins of approximately 87% for the same quarter of 2004. The slightly lower growth margin is primarily due to product mix change and switches continue Viread higher market product to Truvada. Turning to expenses. Research and development expenses were $78.8 million for the third quarter of 2005. An increase of 60% from $49.2 million in the same period last year, and an increase of 32% sequentially. Higher spending was primarily driven by the $15 million payment made to the Emery University in connection with the amendment of our license agreement with Emery, related to development of Cytarbine for hepatitis B drug as well as higher expenses related to increased headcount, purchases of clinical and product development materials, and increased costs and fees incurred by Gilead under our hepatitis-C collaboration. SG&A expenses in the third quarter of 2005 were $99.2 million, up 37% from the same quarter of 2004, and a 4% increase sequentially.
The increase in spending and SG&A is principally due to $8.4 million of severance and relocation expenses that we recorded to date related to relocation of our European commercial, Medical administrative headquarters from France to the United Kingdom. In relation to our European headquarters location, we continue to expect that total costs for severance and relocation, and hiring to be within the range of $10 million to $13 million, which we previously disclosed. These cost included relocating employees for transferring from France to the United Kingdom, severance costs for employees who have declined relocation, as well as recruiting costs associated with higher placement employees in the London area. The impact of foreign exchange was favorable on an overall basis during the quarter, due primarily to a stronger European currency relative to the US dollars when compared to the same period last year. The total net impact of foreign exchange on our pretax earnings for the third quarter and first nine months of 2005 was $5.3 and $14.7 million respectively when compared to the same period in 2004. This includes the foreign exchange impact on revenues, actually spending, and the results of our hedging program. Finally, I'd like to turn to the cash flow statement and balance sheet to highlight our cash flow performance for the quarter. The balance sheet at September 30, 2005, shows cash, cash equivalents and marketable securities at $1.7 billion. This is a decrease of 7% when compared to the balance of approximately $1.8 billion at June 30, 2005. This decrease is primarily related to the Emery royalty buyout payment we made of $341.3 million, partially offset by operating cash of $179.2 million generated from net income during the quarter. We'll continue to evaluate strategic ways to use our cash and investments, including opportunities to in license, acquire companies, or potential products to complement our own internal efforts as well as methods to offset future dilution from employee stock option exercises including potential stock buy-back programs. Now I'd like to turn to our financial guidance for 2005. For our entire HIV franchise, which includes Viread, Emtriva and Truvada, relating our guidance for net product sales for the franchise from a range of $1.275 to $1.325 billion to a range of $1.365 to $1.385 billion for the entire year 2005. This guidance is the result of continued strong sales of Viread in all markets and rapid uptake of Truvada in the United States and European union. Turning to AmBisome, based on strong year-to-date results we are also slightly raising our previous revenue guidance of $205 million to $215 million to a raise of $210 million to $220 million for 2005. For Hepsera we are tightening our estimated net product sales of Hepsera for the full year 2005 from a range of $160 million to $180 million to a range of $170 million to $180 million. We reiterate our previous gross margin guidance for 2005 to a range of $85 to 86%. We're also tightening our R&D expense guidance for 2005 from $265 million to $285 million to a range of $270 million to $280 million. With regard to SG&A expenses we are tightening our guidance for 2005 from $365 million to $385 million to a range of $370 to $380 million. We're also lowering and tightening our capital expenditures guidance for 2005 from a range of $55 million to $65 million to a range of $45 million to $50 million. Finally, our tax rate guidance for 2005, we reiterate our previous 31% to 33% guidance for our effective tax rate. However, we are evaluating a potential repatriation of foreign earnings under the homeland investment act, which could result in a net one-time benefit to our effective to affect the tax rate in the fourth quarter of 2005. In summary, as Gilead looks ahead, we will continue to make the investments that we haven’t search to promote our product lines. Particularly our HIV franchise AmBisome and Hepsera and continue to evaluate opportunity to build a strong and independent global business. This concludes the earnings reporting section of this conference call. At this point I'd like to turn the call over to John Martin and Kevin Young, who will review our corporate and commercial highlights for the third quarter 2005 and provide an update on the milestones we will be striving to achieve for the remainder of the year.
[Dr. Milligan Executive Vice President and CFO]:
Thank you, John. Good afternoon, everyone, and thank you for joining us today. We're pleased to summarize for you Gilead's accomplishments during the third quarter of 2005. I'll begin by providing a brief corporate update and discussing our pipeline programs. Then Kevin young will review our commercial efforts and John Milligan will wrap up the call. On the corporate front we very pleased to announce in July that John Cogan has joined our board of directors Dr. Cogan is currently a senior fellow at the Hoover Institution and at the Stanford Institute for Economic Policy Research. As the scope of our business grows increasingly complex, we look forward to benefiting from his expertise and healthcare economic policy. On a global front, during the third quarter, we were able to make significant progress in our efforts to bring medication to HIV patients in developing world countries through our Gilead Access Program.
We announced in August that we had reduced the no profit price of Viread and Truvada by 31% and 12% respectively. Our ability to continue to reduce prices of these medicines is the result of increased economies of scale, the manufacturer of active pharmaceutical way of both Viread and Truvada at a contract manufacturer in the Bahamas, and continued improvements in the manufacturing process. In an effort to deliver our HIV medication to those most in need, we also made progress on the registration front, submitting several filings to developing world countries over the course of the quarter bringing our total number of submissions to more than 35. And just last week, we finalized our nonexclusive licensing and distribution agreement with Aspen Pharma Care for Viread and Truvada in the developing world. Aspen will manufacture finished product for countries included in Gilead's access program and will distribute the products in every country in Africa. Finally I'm pleased to announce that Gilead's European team has moved into its new corporate headquarters in the United Kingdom. This office is located in Stock Way Park, a high technology business park only 10 minutes from Heathrow airport and about 35 minutes from Central London. This move builds an important foundation for the further development of the Gilead organization in Europe. Turning to research and development as you know, we continue our efforts in developing a fixed dose combination of Truvada and Sustiva. Despite the challenges we faced this remains an important area of focus for both Gilead and Bristol Myers.
In August we announced that we had turned our efforts to the development of a bi-layer pill where Truvada and Sustiva are physically separated in two layers combined in one pill. We're evaluating three bi-layer pills in parallel ranging in size from 1,400 to 1,600 milligrams. Based on pre-clinical data we believe that this approach has a greater probability of achieving ____ than our prior two attempts. Should these efforts prove successful we will be on track to file NDA for the triple combination during the first half of 2006. Moving to another development program in HIV, we are very pleased with the progress to date with GS-9137, our novel integration inhibitor for which we initiated phase 1-2 study in late June.
As you may recall we end licenses comes down March of this year from Japan Tobacco and were able to file the I & D in June with a strong pre-clinical toxicology package. Also prior to end licenses Japan Tobacco had completed a phase-one study in healthy human volunteers in Japan. The phase 1-2 study that we are conducting is a short dose-ranging model therapy study on HIV-infected individuals. We're evaluating GS-9137's potential to be a once or twice-a-day drug, and assessing the potency and short-term safety of this compound. We hope to present data from the study in early 2006.
Integration inhibitors represent a promising new field in HIV research. Given our experience developing novel compounds in HIV and due to the unmet medical need for some late-stage patients, if the phase 1-2 study results are positive we believe GS-9137 could follow a rapid development path with phase-two studies beginning in 2006. Turning to our hepatitis development programs. In July, we initiated two phase-three clinical trials. Study 102 and study 103, comparing the efficacy and safety of Tanofavir versus Hepsera in patients chronically infected with hepatitis-B. We believe that the 300-milligram dose of Tanofavir, the same dose marketed as Vireead for HIV has the potential to be important treatment for hepatitis-B. There have been several scientific presentations highlighting significant hepatitis-B viral low decreases in HIV, HPV co-infective patients treated with Tanofavir.
We look to confirm those results in our phase-three studies. We are making steady progress to enroll patients in the two trials and believe it will take approximately 12 months to complete enrollment of nearly 600 patients. Once enrollment is complete, the studies will run for 48 weeks. Based on these estimated timelines, the earliest we would be able to file a supplementary NDA would be in 2008. Hepatitis-C, we took our most advanced candidate, GS-9132, into the clinic in a phase-one study in August. We evaluate the pharamcokinetics, tolerability and safety of single escalating doses of GS-9132 in approximately 20 healthy volunteers. As you may recall, GS-9132 is the compound we are developing in partnership with the Kileon Pharmaceuticals. It is a small molecule inhibitor of hepatitis-C virus replication, which works through a novel mechanism involving HCV protease.
Kileon will lead the development of GS-9132 through the proof of concept study at which time Gilead will assume responsible for the further development of the compound . We look forward to presenting data on this compound at a scientific conference at 2006. As we as we stated previously, we believe that the treatment paradigm for HCV will fall similar to that of HIV and are, therefore, committed to bringing forward several compounds in hepatitis-C. We continue to make progress in our other early-stage efforts, which include the Gene Lab's Nucleocyte program and our internal protease and _____ programs.
I am proud of the recent R&D accomplishments we have made by advancing three compounds into clinical trials in the areas of HIV, hepatitis-B and hepatitis-C. We are committed to building both through internal research and end licensing and acquisitions efforts. A pipeline of products that will be helpful to the growth of the company in the years ahead and that will make a difference in the treatment of life-threatening diseases worldwide. I will now turn the call over to Kevin Young to review our commercial product efforts. Kevin…
[Kevin Young]
Thank you, John. Good afternoon, everyone. I will begin by highlighting the developments in our HIV franchise where we have continued to experience growth in all our commercial markets. Since the US launch of Truvada we've increased the combined new prescription market share of all of our HIV products to 37.8% from 26.9%. As of the week ended October 7, 2005, Truvada alone captured 20.2% of the new prescriptions and 18.7% of the total prescriptions in the anoxia I-class. At the same point in time, Viread continued to hold 16.2% of the new prescriptions and 17.6% of total prescriptions in the class. The third quarter also marked a change in regard so to speak for our HIV franchise.
In August, one year after its launch, Truvada surpassed Glaxo’s Combivir in new prescription market share. Notably, in September, Truvada surpassed both Viread and Combivir in total prescription market share. Further, Truvada has achieved a 3 to 1 edge in both market share and prescription volume over GSK- Epzicom, the combination of abacavir and 3TC, which was approved on the same day as Truvada. The HIV market in the US has experienced demographic shifts, and we are recognizing significant potential for market expansion through education and awareness. In the United States, approximately 40,000 new patients started antiretroviral therapy last year, and the number of total patients receiving antiretroviral therapy is now approximately 430,000. Introduction of safer, more tolerable, and easier to take therapies like Truvada, improvements in diagnostic tests for HIV, and a trend among some physicians to start their patients on therapy earlier have all contributed to this increase in treated patients. As these trends continue to play out in the market over time, we believe that we are well positioned with Truvada to capture a large proportion of the greater than 500,000 patients who are infected, but are not currently on therapy in the United States.
Out of the total pool of patients on antiretroviral therapy today, independent market research estimates that more than 95,000 patients are receiving Truvada therapy as we enter the third quarter, and importantly, Truvada is currently capturing nearly 60% of new patient starts, up from 50% in the previous quarter, as well as switches from other therapy. One of the factors contributing to the increasing overall Truvada use is the continued rollout of important scientific data, 48-week results of study 934, our head-to-head study of Truvada versus Combivir in patients were presented for the second time this summer at the International Aids conference. We have extended the study to 144 weeks and will continue to present the data in important and appropriate forums during the next several years. We expect the 48-week data to be added to the Viread and Truvada labels during the second half of next year, which will provide additional support to our US sales force. In addition, Viread and Emtriva, the components of Truvada, were used as the backbone in both arms of Abbott's study 418 evaluating Kaletra as a once-daily therapy.
This data was added to the Kaletra label earlier this year and have provided us with the ability to promote Truvada as the NRTI backbone of choice when used with a third agent from either the NNRTI or PI class.
Finally as many of you know, interim data from Gilead's comet study, which is a single-arm study evaluating switching from twice daily Combivir to once daily Truvada, in virologically suppressed of HIV patients were to be presented at the Inter Science Conference on antimicrobial agents and chemo therapy in September in New Orleans. Due to the catastrophic event of Hurricane Katrina, the conference was rescheduled to occur in December in Washington, D.C. Many of the patients in the comet study will have passed the 24-week end point by December, and data from those patients will be included in the presentation. And prior to that, interim data from comet will also be presented at the European AIDS Conference in Dublin, in Ireland, in November.
Turning to our performance in the European union. Truvada has now launched in four of the five major European countries including the United Kingdom, Germany, Spain, and most recently Italy. We anticipate that the product will launch in France early next year. A significant milestone as France represents the largest HIV market in Europe with more than 50,000 patients on antiretroviral therapy. With the launch in France, all of the big-five European markets will have launched Truvada in less than one year from EMEA approval. We are very pleased that we have been successful not only at achieving a concentrated rollout among the major European countries, but that we have worked efficiently with European pricing authorities to achieve a consistent one-plus-one pricing pattern.
Looking at Truvada's performance to date in Europe, in Germany despite the fact that Truvada launched three months after Glaxo’s Kivexa, which is known as Epzicom in the US. Truvada is outselling Kivexa three-prescriptions to one. In the UK even though Truvada launched four months after Kivexa, Truvada began outselling Kivexa three months after the launch, and in Spain after only two months on the market, Truvada is now in formulary in more than 25% of HIV-treating hospitals. Turning to Viread the European union , overall sales have remained strong since the launch of Truvada. We continue to see Viread grow largely as a result of its convenient once-daily dosing and its established position in second and third lines of therapy. According to third-party market research, Viread has now passed Combivir in NRTI market share with Viread at 19.7% and Combivir at 17.1%. This continued growth is in part attributable to our European sales force’s ability to promote the 24-week study 934 data, currently included in the Truvada European label.
Overall, approximately 100,000 patients are receiving Viread and Emtriva or Truvada as individual agents as part of their HIV treatment regimen in the European union. The use of our HIV portfolio has grown mainly because of expanded use of Viread and patients starting on Truvada therapy balanced by conversions from Viread and Emtriva to Truvada. We believe that Truvada represents a significant opportunity to further penetrate earlier lines of treatment and secure its position as the once daily NRTI backbone of choice. Turning to Hepsera for chronic hepatitis B. In United States, Hepsera prescription volume grew 33% on an annual basis at the end of the third quarter 2005. In spite of increasing competition, Hepsera prescription volume has increased 6% since the launch of Entacavir by Bristol-Myers Squibb.
As the antiviral market leader for the treatment of chronic hepatitis B, Hepsera has benefited from the growth of the market since the entrance of a new competitor. Hepsera continues to be supported by its long-term efficacy, proven safety, and a superior resistance profile. We'll present exciting five-year data from the Hepsera study 438 at the American Association for the study of the liver diseases annual meeting, San Francisco, in November. As detailed in the publicly available abstracts, data from the study in E-antigen negative patients, a difficult to treat of form of hepatitis B, indicate that the treatment with Hepsera up to five years reversed signs of liver damage. In total, there will be seven Hepsera presentations at the meeting.
In the European union, much of the growth in Hepsera is occurring in France, Spain, Italy, and countries of the Mediterranean region. Most notably Turkey. During the third quarter, 2005, total unit volume of Hepsera increased by 55% compared to the same period in 2004. Finally, Hepsera was launched in China on August 25th by a commercial partner in Asia, Glaxo Smith Kline. To conclude my description about of our commercial products, AmBisome continues to perform well in our key market segments, namely fever of unknown origin, and confirmed invasive fungal infections. On a volume basis, unit sales of AmBisome in Europe where Gilead markets directly or through distributors increased by 11% during the third quarter of 2005 compared to the same period last year. AmBisome remains the gold standard for serious fungal infections and continues to maintain nearly 24% market share in the intravenous anti fungal market.
As you'll recall, late last year we concluded the Ambilo trial, which evaluated higher loading doses of AmBisome versus the standard 3 mg /kg dose. Data from this study will be presented at the American society of Hematology in early December in Atlanta. We are very pleased with the continuing growth of all our franchises during the quarter. Finally, I would like to conclude by highlighting how proud I am of the employees at Gilead for their swift response to help and address the urgent needs of physicians and patients in the wake of Hurricane Katrina. We were able to communicate to the relevant state government and public health officials about our efforts to ensure ongoing access to Truvada, Viread, Emtriva, and Hepsera. One of these efforts included dispensing replacement products at no cost to the state AIDS Drug assistance programs in the Gulf states and to out-of-state displaced individuals.
Helping to address medical needs essential to our mission at Gilead. At a time like this, I am pleased that we were able to contribute to the relief efforts. Now I will return the call back to John Milligan.
[Dr. Milligan Executive Vice President and CFO]:
Thank you, Kevin. Thanks to everyone for joining us on the call today. We're proud of the financial, commercial, and product development accomplishments Gilead achieved in the third quarter. We look forward to continued strong product revenue performance during the remainder of 2005, driven by our growing HIV franchise as well as Hepsera and AmBisome sales. We remain focused on investing wise in our pipeline and our marketing and sales programs for continuing to deliver earnings for our shareholders. I'd now turn the call back to the operator so that we can take your questions.
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