Welcome to the Gilead Sciences, Inc., 2024 Annual Meeting of Stockholders. I would now like to introduce you to Daniel O'Day.
Good morning. I'm Daniel O'Day, Chairman of the Board and Chief Executive Officer of Gilead Sciences, and I'm pleased to welcome you to Gilead's 2024 Annual Meeting of Stockholders. Before I call the meeting to order, I'd like to introduce you to some of the members of the Gilead team. Joining us today are members of the Board of Directors: Kevin Lofton, our lead independent director; Jacqueline Barton; Jeffrey Bluestone; Sandra Horning; Kelly Kramer; Ted Love; Harish Manwani; Javier Rodriguez; and Anthony Welters. Before we move forward with additional introductions, I'd like to take this opportunity to thank our longstanding director, Kevin Lofton, who has served as a member of our Board of Directors since 2009 and as our lead independent director since 2020.
Kevin's service to Gilead through pivotal times of financial and operational growth has been highly valuable to the Gilead Board and management, to the company, and all our stakeholders. As Kevin transitions off the Gilead Board, we thank him for his years of dedication and wish him all the best for the future. Continuing on with introductions, we also have several members of our leadership team here this morning: Andy Dickinson, our Chief Financial Officer; Johanna Mercier, our Chief Commercial Officer; Merdad Parsey, our Chief Medical Officer; Cindy Perettie, our Executive Vice President from Kite; Deb Telman, our Executive Vice President, Corporate Affairs and General Counsel; and Jacquie Ross, our Head of Investor Relations. Also joining us today are Dan Lujan and Richard Jackson from Ernst & Young, our independent auditor. Deborah Telman will serve as secretary for the meeting.
We'll first conduct the formal business of the meeting as described in our proxy statement. The meeting will run in accordance with the agenda and the procedures set forth in the Rules of Conduct and Procedures posted on the virtual meeting portal. There'll be an opportunity to submit questions and comments relating to the items of business at the meeting, which will be addressed during the formal portion of the meeting. After the formal portion of the meeting has concluded, we will provide an overview of Gilead's business activities and address questions relating to the company. In either case, questions or comments may be submitted in the designated field on the virtual meeting portal by stockholders who have logged in with their 16-digit control number. If you experience any technical difficulties during the meeting, please call the technical support number posted on the virtual meeting website.
In the event we experience any technical difficulties before the conclusion of the formal business of the meeting, we may temporarily adjourn and reconvene the meeting in accordance with our bylaws. It's now shortly after 10:00 A.M. Pacific Daylight Time on May 8th, 2024, and this meeting is officially called to order. The Board of Directors has appointed Kristina Veaco of Veaco Group to act as inspector of election for this meeting. Ms. Veaco has taken and subscribed the customary oath of office to execute her duties with strict impartiality. We will file this oath with the records of the meeting. Her function is to determine the qualifications of voters, accept their votes, and, when validating in all matters is completed, to tally the ballots cast as to each matter. Will the secretary please report on the stockholders list and the mailing of the meeting notice?
I have a complete list of the stockholders of record of the company's common stock on March 15, 2024, the record date for this meeting. I also have an affidavit from Broadridge certifying that a notice of annual meeting of stockholders of the company was disseminated to all stockholders on record on the record date.
Will the secretary please report on the existence of a quorum?
I have been informed by the inspector of election that proxies have been received for 1,115,379,536 shares of the 1,246,969,303 shares of common stock outstanding on the record date, which represents approximately 89.44% of the total number of outstanding shares. This constitutes a quorum for the transaction of business.
I hereby declare the polls open for voting.
Only matters for which notice has been given in accordance with our bylaws may be brought before the annual meeting. Those matters are described in the proxy statement relating to this meeting. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the voting button on the virtual meeting portal and following the instructions there. Stockholders who have voted prior to the meeting by proxy, telephone, or internet, and do not want to change their vote do not need to take any further action.
After presentation of all matters, I will open the floor for questions or comments on those items of business. In order to ensure that the business of the meeting proceeds in an orderly fashion and that stockholders who wish to participate have a fair opportunity to do so, please limit your questions and comments to the items of business listed on the agenda. There'll be an opportunity to submit questions and comments on other matters relating to the company following the conclusion of the formal meeting.
The first item of business is the election of nine director nominees named in the proxy statement to serve for the next year and until their successors are elected and qualified. The director nominees are Jacqueline Barton, Jeffrey Bluestone, Sandra Horning, Kelly Kramer, Ted Love, Harish Manwani, Daniel O'Day, Javier Rodriguez, and Anthony Welters, each a current director of the company. The Board of Directors has recommended a vote in favor of each of the nominees. The second item of business is the ratification of the selection of Ernst & Young LLP by the Audit Committee of the Board of Directors as Gilead's independent registered public accounting firm for the fiscal year ending December 31st, 2024. The Board of Directors has recommended a vote in favor of this proposal.
The third item of business is the approval, on an advisory basis, of the compensation of our named executive officers as presented in the proxy statement. The Board of Directors has recommended a vote in favor of this proposal. The fourth item of business is the approval of an amendment to our restated certificate of incorporation to reflect new Delaware law provisions regarding officer exculpation. The Board of Directors has recommended a vote in favor of this proposal. The fifth item of business is consideration of a stockholder proposal requesting that the board include one member from the company's non-management employees. The Board of Directors has recommended a vote against this proposal for the reasons set forth in the proxy. Mr. Jing Zhao will present the proposal now.
I will now open the line of Mr. Zhao.
Good morning, fellow shareholders. My proposal is to recommend that Gilead Sciences reform the board structure to include one member of the board of directors from the company's non-management employees. It becomes a common practice for non-management employee representation in the corporate boards in Europe and the UK, and there is a new trend pushing this practice in the United States. American corporate board structure needs reform now, as seen in last year's nationwide strikes. American ballooning executive compensation is neither responsible for the society nor sustainable for the economy. There's no rational methodology to decide the executive compensation, particularly because there is no company-wide union in the company. There is no employee representation in the board, and the board is nominated and elected without any competition.
It is time for our executives as citizens to take their social responsibility on their own initiative rather than to be forced by the public. The board statement against non-management employees makes no sense. Our company's employees are highly qualified to serve the board, and my proposal at the end specifically stated that the board has the flexibility to design guidelines to select a candidate for the new board nominee from non-management employees. Please vote for proposal number five. Thank you.
Thank you. The sixth item of business: consideration of a stockholder proposal requesting that the board issue a report detailing the risks and costs to the company caused by opposing or otherwise altering company policy in response to state policies regulating abortion, and detailing any strategies beyond litigation and legal compliance that the company may deploy to minimize or mitigate these risks. The Board of Directors has recommended a vote against this proposal for the reasons set forth in the proxy statement. David Bahnsen has submitted a prerecorded presentation of this proposal. Operator, please play the recording.
My name is David Bahnsen, and I'm a professional wealth manager, not a political activist. We own shares in Gilead for investment purposes, not activism purposes. It is not our intent to bring politics into the corporate governance process, but rather to get companies out of the habit of speaking out on highly contentious political issues. Case in point: abortion. Gilead has spoken out publicly in favor of abortion and has joined litigation in favor of abortifacients. Furthermore, the company pledged substantial shareholder resources to pro-abortion advocacy groups and, in addition, pledged more shareholder resources to an employee matching program for abortion advocacy. Finally, the company announced a program of reimbursement for abortion-related costs, including travel. But in its extensive listing of healthcare benefits in its opposition statement to my proposal, it lists no similar reimbursement for adoption-related travel.
This is exactly the kind of politicization and lack of even-handedness that is alienating tens of millions of citizens, many of them shareholders, from corporations such as ours. Nothing compels Gilead to take sides in the abortion debate. There is no compelling business interest to do so, but there is a compelling business interest not to. Gilead is in the life-saving business. Gilead should stay out of classic 50/50 issues, which are outside its management team's zone of competence. It is simply not your job to decide what issues deserve public support, and it is not your job to use our money to subsidize organizations that promote such things. If Gilead genuinely believes in personal choice, it should, at the very least, announce that it supports all personal choices, including the choice to adopt with equal expenditure, vigor, and visibility. I now cede the remainder of my time.
Thank you.
This concludes the playback.
Thank you. The board's opposition statement for the stockholder proposal has been included in the proxy statement for all stockholders to consider. The seventh item of business is consideration of a stockholder proposal requesting that the board adopt a policy requiring the named executive officers to retain at least 25% of net after- tax shares of stock acquired through equity pay programs until reaching normal retirement age, at least 60. The Board of Directors has recommended a vote against this proposal for the reasons set forth in the proxy. Mr. John Chevedden will present the proposal.
I will now open the line of Mr. Chevedden.
Hello. This is John Chevedden, proposal seven: executives to retain significant stock. Shareholders asked the Board of Directors to adopt a policy requiring the five named executive officers to retain a significant percent of stock acquired through equity pay programs until reaching normal retirement age and report to shareholders regarding the policy in our company's next annual meeting proxy. For purposes of this policy, normal retirement age would be an age of at least 60 and be determined by our executive pay committee. Shareholders recommend a share retention percentage requirement of 25% of net after-tax shares. Requiring senior executives to hold a significant portion of stock obtained through executive pay plans would focus our executives on our company's long-term success. A Conference Board task force report stated that hold-to-retirement requirements give executives an ever-growing incentive to focus on long-term stock price performance.
This proposal topic is all the more important at Gilead Sciences due to the recent poor stock performance. Gilead's stock has fallen from $87 to $65 from January 2024 to now. Gilead has been rated for very little long-term total return potential. Sales from key drugs have flatlined or fallen, and newcomer drugs are not promising. A more rigorous named executive officer retention plan would ultimately improve shareholder's value significantly for years into the future. Please vote yes, executives to retain significant stock, proposal seven.
Thank you. The board's opposition statement for the stockholder proposal has been included in the proxy statement for all stockholders to consider.
We will now turn to questions or comments submitted by stockholders through the virtual meeting portal that are related to the items of business listed on the agenda. As a courtesy to the other stockholders present, please limit yourself to one question or comment of reasonable length.
Our first question. The company has in place a director resignation governance policy that provides the board post-election discretion to determine whether to accept or reject the resignation of an incumbent director who fails to be reelected. Does the policy undermine the voting rights of shareholders by allowing the board to have the final say on the unelected director's status?
Gilead has a majority vote standard applicable to the election of directors, which is further implemented through our director resignation policy. Almost 90% of the companies in the S&P 500 have similar director resignation policies. The resignation policy empowers shareholders within the confines established under state law by allowing the board to balance considerations such as board composition and continuity while also taking into account the interests of shareholders who express their views through their vote.
Our next question. The statement of support for proposal six notes that you subsidize abortion and asks whether you also offer adoption subsidies. Do you offer adoption benefits or not?
Yes. I'm sorry. Gilead's employee compensation benefits portfolio is designed to optimize our employees' performance and support their well-being, allowing them to focus on mission-critical work. Each year, we reassess our compensation and benefits package to confirm whether its offers, benefits, and incentives align with our total rewards philosophy and our portfolio of benefits and incentives, which varies by country and is subject to employee eligibility requirements, includes adoption, surrogacy, and other family planning assistance support.
Chairman, that concludes our questions and comments relating to the proposal.
Thank you. The polls will be closing momentarily. We will pause for a moment here. It is now 10:19 A.M. Pacific Daylight Time, and I hereby declare the polls closed. Will the secretary please provide a preliminary report on voting?
I will now report on the voting of stockholders at this meeting. Each share of common stock is entitled to one vote on each matter to be voted upon at the annual meeting. The voting was conducted by proxy, written ballot, and through our virtual meeting portal. The preliminary report of inspector of election is as follows. The director nominees named in the proxy statement have been elected with at least approximately 92.4% of the shares voting in favor of each nominee. The selection of Ernst & Young LLP by the audit committee of the board of directors as Gilead's independent registered public accounting firm for the fiscal year ending December 31st, 2024, has been ratified with approximately 93.2% of the shares voting in favor.
The advisory vote to approve the compensation of our named executive officers as presented in the proxy statement has been approved with approximately 92% of the shares voting in favor. The amendment to our restated certificate of incorporation to reflect new Delaware law provisions regarding officer exculpation has been approved with approximately 72.6% of the outstanding shares voting in favor. The stockholder proposal requesting that the board include one member from Gilead's non-management employees has not been approved with approximately 5.9% of the shares voting in favor. The stockholder proposal requesting that the board issue a report on risk of supporting abortion has not been approved with approximately 1.8% of the shares voting in favor.
The stockholder proposal requesting that the board adopt a policy requiring the named executive officers to retain a significant percentage of stock acquired through equity pay programs has not been approved with approximately 35.8% of the shares voting in favor. The final results of the voting will be reported in a Form 8-K within four business days from today.
This concludes the formal portion of our meeting. After adjournment, I'll provide an overview of Gilead's business. Following the presentation, we'll take questions and comments from stockholders through the virtual meeting portal. This meeting is now adjourned. We'll transition now to an overview of our business. We'll begin with a general update and then drill down into specifics. As a reminder, we will be making forward-looking statements during this presentation, all of which involve certain assumptions, risks, and uncertainties that are beyond our control and could cause actual results to differ materially from these statements. A description of these risks can be found in our latest SEC disclosures documents. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements. Gilead entered 2024 with a strong foundation, thanks to continued positive momentum in 2023.
On this slide, you'll see some of the highlights across our financial performance, clinical and regulatory activity, and the pipeline. We saw continued growth in our base business, driven mainly by HIV and oncology. Because of the work to expand and diversify our pipeline, we've seen an increase in clinical and regulatory activity, which increased further in the first months of 2024. Highlights span our three core therapeutic areas, and I'll share more information on some of these later. I want to briefly point out Seladelpar, our new addition to our portfolio of treatments for liver disease, which we gained through our acquisition of CymaBay Therapeutics. The acquisition closed in the first quarter, and we look forward to bringing this therapy to patients very soon pending regulatory approval. Our current pipeline features 54 clinical programs and 40 clinical phase assets across all three of our core therapeutic areas.
From this diverse pipeline, we can expect multiple updates in the remainder of 2024, including three phase III updates for programs in HIV and cancer. An overview of our clinical pipeline execution in 2023 can be found here. We executed well in 2023 across our pipeline with six updates and seven starts across virology, oncology, and inflammation. We are well positioned to achieve our ambition of delivering 10+ transformative therapies by the end of 2030. Since we set this ambition five years ago, we've delivered five transformative therapies across virology and oncology, as highlighted on the right. With FDA review of Seladelpar for PBC underway, we could see the addition of a sixth transformative therapy, this time in inflammation, as early as August. The aim of our transformation strategy has been to ensure sustainable growth through a stronger, more diverse portfolio.
We are confident that the progress made in building out our research in early and mid-stage clinical pipeline should fuel our late-stage and commercial portfolio in 2025 and beyond. As I mentioned earlier, we have returned our base business to consistent growth with strong underlying performance across our HIV, oncology, and liver franchises. We expect to deliver 4%-6% year-over-year growth for the base business in 2024 in line with guidance provided earlier this year. Focusing on HIV, Biktarvy remains the global leader in treatment. Over 1 million people manage their HIV with Biktarvy today, with sales annualizing over $12 billion. As of the first quarter of this year, we are at approximately 49% U.S. market share, up 3 percentage points year-over-year. This growth rate continues to outpace all other branded HIV treatment regimens on the market.
Looking ahead, Biktarvy has exclusivity in the U.S. and EU until at least 2033. Meantime, Gilead's innovation in HIV continues to deliver new options in treatments and prevention. We are preparing for five new launches by 2030 across HIV treatment and prevention. This begins with long-acting lenacapavir for prevention as early as 2025. There is tremendous opportunity for our long-acting prevention. A twice-yearly subcutaneous shot would be transformative on a global scale, and there is considerable excitement among communities, key opinion leaders, and public health organizations for the potential of lenacapavir to help end the HIV epidemic for good. We are looking forward to the first phase III update for twice-yearly lenacapavir for PrEP from our PURPOSE 1 trial later this year. This is just one of six phase III trials in HIV in progress or expected to start soon. I'll turn now to oncology, starting with our commercial performance.
In four years, we've grown our oncology business from less than $500 million to a run rate of over $3 billion a year. Our portfolio today is anchored by Trodelvy, which is the only approved TROP-2 directed ADC available in market, and our industry-leading cell therapies, Yescarta and Tecartus. In second line, metastatic non-small cell lung cancer. While our EVOKE-01 study did not meet its primary endpoint, we did observe improvements in certain subgroups and continue to believe in Trodelvy's potential in lung cancer. We look forward to presenting additional data from the EVOKE-01 trial at the annual meeting of the American Society of Clinical Oncology, or ASCO, later this month to elaborate on these findings. We also look forward to data for first-line treatment and to advancing the seven phase III studies for Trodelvy that are currently underway.
In cell therapy, we are the clear global leader and are focused on pursuing the significant opportunity that remains. We have the most extensive long-term CAR-T data available. Yescarta has demonstrated curative potential in large B-cell lymphoma from the landmark 5-year overall survival data that shows 43% of patients in full remission. We are also focused on accelerating our manufacturing time, which is already industry-leading at 14 days of turnaround in the United States. As we look at potential applications of cell therapy beyond lymphoma, we are encouraged by robust phase I data from Anito-cel and multiple myeloma, where there is significant unaddressed need in both later and earlier lines. Anito-cel was developed in partnership with Arcellx. This update, shared in December 2023 at the annual meeting of the American Society of Hematology, or ASH, demonstrated potential best-in-class efficacy and safety.
Given the highly promising science coupled with Kite's industry-leading manufacturing and reliability, we believe anito-cel is strongly positioned for success. As I wrap up my oncology commentary, I will reiterate our unique pipeline optionality and combination potential, which has produced a dynamic range, a late-stage portfolio, and a deep bench of early programs where we're at the cutting edge of novel targets. Here on the right-hand side, you can see four examples of the many in early development: CD19, CD20 bicistronic, the DGK alpha program, the CCR8, and the PARP1 inhibitor. Moving to inflammation, I'll return briefly to seladelpar, the most recent addition to our portfolio. In phase III clinical trials, seladelpar demonstrated benefits and has the potential to be a best-in-class therapy.
PBC is an area of high unmet need, and we look forward to leveraging Gilead's extensive expertise, experience, and footprint in liver diseases to bring seladelpar to patients if approved. We anticipate an FDA regulatory decision by August 14th and a decision from European regulators early next year. Further, as we look into the rest of our inflammation pipeline, we have several early-phase assets that have progressed into phase II trials. Our capital allocation priorities remain unchanged, with sufficient flexibility in our balance sheet. Overall, we will continue to be disciplined in our use of capital. And while we will continue to be flexible and opportunistic, it's unlikely that Gilead will be engaging in any sizable M&A transactions in the near term. In summary, we are continuing into 2024 with confidence in our ability to drive further value for all stakeholders, including patients, society, and investors.
We will be very focused on continuing to deliver on our commercial and pipeline priorities with a view to both near and long-term performance. We will continue to advance progress for our unmatched HIV portfolio, which is poised for durable growth. We look forward to accelerating the expansion of our oncology business by focusing on both our marketed therapies and those in the pipeline, with multiple updates coming starting in the second half of 2024. Now we would like to take stockholder questions and comments submitted through the virtual meeting portal. As a courtesy to the other stockholders present, please limit yourself to one question or comment of reasonable length. Questions and comments will be addressed in accordance with the rules of conduct and procedures posted on the virtual meeting portal. Please note that we will attempt to answer as many questions as time allows.
Thank you. Our first question: Will R&D be a greater or lesser % of sales in 2024 than in 2023, and why?
Hi, it's Andrew Dickinson, Gilead CFO. Thank you for the question. Our R&D as a percentage of revenue, in 2023, we reinvested 21% of our revenues into R&D across Gilead and Kite. We expect our R&D investments to be similar or modestly higher this year based on the guidance that we provided at the beginning of the year. And the rationale is the pipeline that Dan described in his comments. We have a broad pipeline that's been expanding with late-stage investments. We recently completed the CymaBay acquisition, which has a modest impact on our R&D expenses. But overall, you see the trend of expenses and expense growth moderating from prior years in 2024, and we've highlighted recently that we expect that trend to continue. Thank you for the question.
Thank you. Our next question: How much will be spent on dividends and share buybacks in 2024?
Hi, it's Andy again. Thank you for that question as well. In dividends, as you saw on slide 17, we paid out $3.8 billion in dividends. In 2023, we increased our dividend at the beginning of the year by just over 2.5%, and we expect to pay out approximately $4 billion in cumulative dividends to our shareholders in 2024. In terms of share buybacks in 2023, we used $1 billion of capital to repurchase shares. That was solely to offset dilution rate related to employee stock issuances, and we expect to use a similar amount of capital in terms of share repurchases in 2024.
Chairman, that concludes our session for questions and comments. Stockholders are reminded that they may contact the company's investor relations team with questions and comments after the conclusion of this meeting. Please see the rules of conduct and procedures posted on the virtual meeting portal for additional information.
On behalf of our board of directors and management team, I want to thank all of our stockholders for joining us for today's annual meeting and for your investment in Gilead. We value your support as we continue to work on your behalf to help improve global health and generate value for all of our stakeholders.
This concludes the Gilead Sciences, Inc. 2024 annual meeting of stockholders. Thank you very much.