Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2020 Gilead Sciences Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today to Douglas Maffei, Senior Director of Investor Relations. Thank you.
Please go ahead, sir.
Thank you, Dulem, and good afternoon, everyone. Just after market close today, we issued a press release to its earnings results for the Q3 of 2020. The press release and detailed slides are available on the Investors section of our website. The speakers on today's call will be Daniel O'Day, Chairman and Chief Executive Officer Joanna Mercier, Chief Commercial Officer Mehrdad Parfi, Chief Medical Officer and Andrew Dickinson, Chief Financial Officer. Also on the call and available for question and answer will be Christy Shaw, Chief Executive Officer of KITE and Diana Brainard, SVP and Head of our Virology Therapeutic Area.
Before we begin with our prepared remarks, let me remind you that we will be making forward looking statements, including risks and uncertainties related to the impact of the COVID-nineteen pandemic on Gilead's business, financial conditions and results of operations plans and expectations with regards to products, product candidates, corporate strategy, financial projections and the use of capital and 2020 financial guidance, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause actual results to differ materially from those statements. A description of these risks can be found in the earnings press release and our latest SEC disclosure 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. Non GAAP financial measures will be used to help you understand the company's underlying business performance. The GAAP to non GAAP reconciliations are provided in the earnings press release as well as on the Gilead website.
I will now turn the call over to Dan.
Thank you, Doug, and good afternoon, everyone. This has really been a pivotal quarter for Gilead. With last week's closing of the Immunomedics acquisition, we've effectively transformed our near and long term growth story. Trodelbi, an approved medicine for 3rd line metastatic triple negative breast cancer has tremendous potential for patients today and significant pan tumor potential for the future. We are all excited to deliver on that potential along with the teams from Immunomedics who became a part of the Gilead family last week.
I want to take this opportunity to thank everyone at Immunomedics for the extraordinary work that you've done on Trodelbi to date. It's an honor to work with all of you now to build on those efforts for the benefit of patients with cancer around the world. The acquisition is undoubtedly an inflection point in terms of our growth and adds to the growing pipeline of transformational medicines that we've been strengthening over the course of the year. All of this is building on the strong foundation of our core business. We've seen the strength and durability of our HIV business once again in the past quarter and we're confident in our long term leadership.
I'd like to briefly talk about the changing nature of our growth prospects, driven primarily by the acquisition of Immunomedics. I'll also touch on our core business and I'll say a few words about VICLIRI or remdesivir, which just gained FDA approval and then Joanna and Mehrdad will pick up with more details. I'll start with Immunomedics and Trudelby. The acquisition of Immunomedics is the largest transaction in Gilead's history and undoubtedly marks a turning point for the company. As you know, Tredelvy is already approved in the U.
S. For third line metastatic triple negative breast cancer. The recent data at ESMO underscored its transformative potential for this particularly challenging form of cancer, as well as the potential for treating bladder cancer. We will explore expansion into earlier lines of therapy in the short term and overall we see TRODELVY as a pipeline and a product. The prevalence of TROPE-two in multiple cancer types means TRODELVY has pan tumor potential.
Secondly, in addition to its extensive potential as a monotherapy, TRODELV stands out because of the way it lends itself to combinations. The early data are promising and we look forward to exploring combinations with various types of agents going forward. The acquisition gives us an immediate presence in the field of solid tumors and brings us the significant expertise of the teams from Immunomedics. We're complementing our existing strengths in hematologic cancers through our combined KITE and Gilead pipeline and building on the important progress we've already made this year in building our oncology pipeline. Including Immunomedics, we have completed a total of 10 transactions in oncology so far this year.
I'll just mention 2 of the significant opportunities that are the results of those transactions. Migrolumab is now in Phase 3 for MDS and offers a potential 1st in class option utilizing the CD47 pathway to activate the innate immune system. Our partnership with Arcus is progressing well. We are particularly excited by the potential of the TIGIT compound as well as other work that's coming out of that collaboration. In cell therapy, we're now the only company with 2 FDA approved therapies, Yescarta and TECARTIS and KITE.
Earlier this month, we received a positive opinion for KIDEXX-nineteen from the European Medicines Agency, the Committee for Medicinal Products for Human Use. I'm also pleased to announce that the FDA has accepted the ESGARDA SBLA for relapsed or refractory follicular lymphoma and marginal cell lymphoma after 2 or more lines of systemic therapy. The agency also granted priority review for this application. ZUMA7, the industry's first ever randomized trial in cell therapy and the only cell therapy in second line with overall survival as an endpoint will be delayed slightly due to the slowdown in the rates of events. However, we expect the data in the first half of twenty twenty one and based upon that data, we're ready to submit quickly after.
In summary, we made great progress in building out and advancing our pipeline to drive growth this year and Trodelbi represents a true growth inflection point, changing our outlook significantly and positioning Gilead as an important contributor in the field of oncology. The foundation for all this additional growth is our durable core business. In HIV, we saw a solid rebound in the 3rd quarter with 14% quarterly sequential growth in the global franchise. While COVID-nineteen continues to impact our business, there were clear signs of recovery in the Q3. Moreover, the underlying demand is strong as Biktarvy continues to be the treatment of choice for patients and providers.
On the prevention side, we exceeded the goal we set at the beginning of the year of switching 40% to 45% of clinically appropriate at risk individuals on prep for Descovy. As of October 1, we were at 46%. Joanna will share more perspectives on our Q3 sales in a few moments. Finally, I'd like to briefly comment on remdesivir, which we now refer to by its brand name of Veklury. Veklury received full FDA approval this month for treating hospitalized patients with COVID-nineteen.
It's the only FDA approved therapy for COVID-nineteen in addition to being authorized or approved for use in more than 50 countries worldwide. We are also now in a position to meet global demand because of the work we've done since January to ramp up our supply. It's worth stepping back for just a moment to recognize how remarkable it is that we are in this position today. At the start of the year, most of the world had not even heard of COVID-nineteen. The scientific community knew very little about the virus or its devastating potential.
Today, less than 10 months later, we have an FDA approved therapy that is helping patients around the world to recover faster and for some groups of patients VICLURE is lowering the risk of death. All of this comes at a time when the rates of hospitalization sadly in many places are increasing. We have repeatedly seen the clinical benefits of VACQUERIA across multiple clinical trials. In the past quarter, these benefits have been unequivocally demonstrated by the gold standard of global clinical trials. The definitive results from the fully powered double blind placebo controlled and randomized NIAID ACT1 trial showed an average reduction in recovery time of 5 days.
I sometimes imagine how I would feel if a family member hospitalized for COVID-nineteen and I'm sure many of you think of this as well. I'm extremely grateful that a therapy exists that has been validated with all of the rigor required for an FDA approval and whose benefits have been demonstrated in peer reviewed data from a trial that is without question the pinnacle of clinical studies today. Mirdad will talk about all the recent data on VACLEARY, including what we've seen from the WHO study and the ongoing development program shortly. Joanna will talk about the recent move to a commercial distribution model in the U. S, which is going very well.
I'd just like to close on VICTORI by expressing my gratitude once again to all the Gilead employees who have put their hearts and souls into this work since January along with our many partners. On behalf of all of us, I want to say how privileged we feel to play a role in helping with the pandemic and to be able to put our antiviral expertise to work for patients with COVID-nineteen. I also want to emphasize that we will continue to do all it takes to fulfill our responsibility with Cyclery. To wrap up my prepared remarks, I want to emphasize that our portfolio and pipeline are much stronger going into the Q4 in 2021. By executing on our strategy in a disciplined way throughout the past 12 months, we have significantly changed the nature of our growth process, especially following the acquisition of Immunomedics and we have maintained the long term durability of our core HIV franchise.
We're not done of course, but we made significant progress and for that I want to thank all the teams at Gilead and Kite and our many partners worldwide. With this, I'll hand the call now over to Joanna.
Thanks, Dan, and good afternoon, everyone. I want to begin by building on Dan's comments about our durable core business. Our results through Q3 amid the ongoing COVID-nineteen pandemic have been strong and as anticipated, we continue to see signs of recovery during the quarter in underlying demand trends across our core franchises in U. S. And Europe.
Looking at our HIV business. We continue to make great progress in both treatment and prevention. Biktarvy in treatment and Descovy for prevention continue to gain share quarter over quarter. In treatment, Biktarvy remains the number one regimen across key global markets. In the U.
S, 1 in 2 new patients start on Biktarvy and roughly 1 in 2 patients switching to Biktarvy do so from a non Gilead single tablet regimen, growing overall Gilead share. In PrEP, despite COVID dynamics, we continue to make progress with Descovy with 46% conversion of clinically appropriate individuals at risk at the end of September, exceeding our stated goal of 40% to 45%. Our overall HIV revenue in Q3 was very strong with 14% sequential growth over Q2 and 8% year over year growth driven by both demand fundamentals and normalized inventory dynamics. The unique quarterly phasing of inventory dynamics this year and the recent Truvada loss of exclusivity will impact our sequential quarterly revenue dynamics in the 4th quarter. With 91% of Gilead's U.
S. Patients having converted to TAF based regimens, we will continue to build on our strength in HIV, including long acting formulations for both treatment and prevention. Now briefly on HCV. Our HCV business showed 4% sequential growth over Q2, while down 31% from Q3 last year due to lower patient starts year on year. As markets started to reopen in the U.
S. And Europe, we saw an increase in diagnosis and patient starts in Q3. Our strong market share across core markets puts us in a position of strength as patients return through the rest of the year and into 2021. I'd like to now highlight some specifics on the initial commercialization of Vyclerae, which began in the Q3. As our teams have begun reaching out to physicians and hospital systems, it has been incredibly inspiring to hear their stories of how they have used this medication and what it's meant to patients as well as their loved ones.
As a reminder, the commercial model in the Q3 was governed by an agreement with the U. S. Government to allocate 90% of our supply to patients in the U. S. Through a partnership with the U.
S. Department of Health and Human Services. During the quarter, we recorded VICLARY sales of $873,000,000 A portion of inventory that will be consumed in Q4 was recognized as revenue in the Q3. As Dan mentioned, we have now pivoted beginning October 1 to a more traditional commercial model, working directly with AmerisourceBergen to provide VICLARY directly to U. S.
Hospitals. AmerisourceBergen will remain our sole distributor of VICLARY through the end of the year to ensure consistency and continuity. In Europe, we signed a joint procurement agreement with the European Commission on October 8 that enabled participating countries in the EU, the European Economic Area and the U. K. To purchase SAQUERY to meet both real time demand and stockpiling needs coordinated by the European Commission.
This agreement temporarily removes the need for country by country reimbursement processes that typically follow marketing authorization, recognizing the urgency of the current health crisis. It encompasses purchases of VICLRI over the next 6 months and can be extended if needed. Predicting the underlying demand of poor Vyclary continues to be challenging, given so many variables including incidence rates, hospitalization rates as well as future vaccines and emerging treatments. Now turning to TRUDELVY. As you know, the Immunomedics deal closed less than a week ago and we're already working closely with the joint team to ensure the continuity of Trodelvy's strong launch in third line metastatic triple negative breast cancer and accelerate its future potential.
It is a true catalyst for growth and the joint team is energized as we continue to accelerate the work on this transformational therapy together as one team. While not part of our Q3 results, I'd like to highlight Immunomedics Q3 results for Jadelbi in the U. S. Xadelbi achieved $53,000,000 in net sales in Q3, the 1st full quarter of commercial availability. Total net sales were $73,000,000 in the 1st 5 months of commercial launch in the midst of a pandemic.
Over 1,000 accounts ordered TRYDERBY in the 1st 5 months of commercial launch and of those, that 488 were new and unique in Q3. We've seen robust adoption continuing Q3 in both community and academic centers. We look forward to expanding commercialization to Europe and other markets around the world as quickly as possible starting with an EU submission in Q1 of next year. And to close, few words on Dycelica, which is the brand name for filgotinib. Dycelica has now launched in Germany and launch planning is well underway across Europe as well as Japan.
We anticipate sales in both regions during the Q4. Despite a crowded and competitive marketplace, the teams are well prepared to differentiate GYSTELICA. We look forward to updating you on our progress in the future. Murdegh will provide a little bit more color on the ongoing regulatory considerations and our thinking there. And so with that, I'd like to turn the call over to Murdock.
Thanks, Joanna, and good afternoon, everyone. I'm pleased to share some perspectives on several critical pipeline related updates and progress. Starting with Veklury, We're very pleased with the recent full approval of Veklury by the FDA. Veklury is now approved in the U. S.
For the treatment of hospitalized patients with COVID-nineteen based disease on a strong and consistent body of evidence from 3 rigorous, randomized, controlled clinical trials over the past 6 months to inform us about the profile of Vectlurry. It's the 1st antiviral treatment proven to help patients hospitalized with COVID-nineteen recover and leave the hospital more quickly, a significant benefit for patients, their families and society. The results include the double blind placebo controlled NIAID Phase 3 ACT1 trial published recently in the New England Journal of Medicine. The study met its primary endpoint of time to clinical recovery through day 29, demonstrating VICLURE plus standard of care reduced the time to recovery through day 29 compared with placebo plus standard of care from 15 to 10 days with a P value of less than 0.001. The key secondary endpoint of clinical status at day 15 was also met.
Patients receiving VACLURE were 50% more likely to have it improved by day 15 compared with those receiving placebo and the effect was maintained through day 29. The secondary mortality endpoint in the overall population only showed a trend towards reduced mortality with a P value of 0.07. Recall that when we started these trials with the NIAID, we knew very little about the disease itself and didn't know which patients might be most likely to benefit from VEKLURE. Given the range of disease severity in the overall study population and the emerging understanding that clinical outcomes are highly dependent on a patient's requirement for oxygen at baseline. An exploratory post hoc analysis was conducted to determine whether there were differences in mortality based on patients' baseline clinical status with respect to the requirement for oxygen support.
In this post hoc analysis, in patients requiring low flow oxygen at baseline, the largest subgroup of patients in the trial, over 40% of patients, those who received Biklari had a 72% reduction in mortality at day 15 and a 70% reduction in mortality at day 29 with confidence intervals that do not cross 1. These results are what we would have expected and hoped for with an antiviral therapy that should have the most impact when given earlier in the course of the disease before the inflammatory cascade leads to critical illness. These data add to the breadth of evidence from 2 additional randomized controlled clinical trials establishing the use of Vekleri as a standard of care for the treatment of COVID-nineteen in hospitalized patients. All three of these Phase 3 trials have been published in peer reviewed journals and the raw data was shared with the FDA as part of the NDA review process for them to perform their own independent analyses as is their standard approach. We continue to pursue other ways to expand the utility of Remdesivir as a backbone of treatment, including exploring how combinations could be more effective and new means of administering the drug that don't require intravenous administration.
Now last week, interim results from the World Health Organization SOLIDARITY trial were released through a preprint server. These results don't alter the demonstration of efficacy observed with remdesivir in the studies I just described. That trial was intentionally designed to be pragmatic and enable participation across a wide range of health care settings. They're components of the study design and data that should provide pause. These may be clarified or placed into appropriate context during the peer review process.
Given that we haven't received the data, nor have there been peer reviewed nor have these data been peer reviewed, it's difficult for us to discuss the study. Some of the issues we and others have identified in WHO study include the lack of a PCR confirmation of COVID-nineteen at the time of enrollment, the lack of distinction between patients requiring low flow or high flow oxygen in the results, no data monitoring, no data verification and 20% of the data being reported as missing from the preliminary analysis. We can only speculate at this point that these factors may have contributed to the negative outcomes reported in this study. It is however important to note that the totality of data generated thus far for VICLURE suggests that antivirals are most effective earlier in the disease course. As you get sicker, inflammation such as ARDS or fibrosis, potentially things like vascular blood clots and bacterial pneumonias could kick in.
The NIAID data suggests that patients on low flow oxygen are those that show the greatest benefit in time to discharge and mortality. An antiviral doesn't clear inflammation or blood clots once they're formed. So this makes sense. Sicker patients on high flow oxygen and mechanical ventilation may need an antiviral, but it will be insufficient to treat the inflammation. In those patients treatment in addition to antivirals such as dexamethasone may be beneficial and have been demonstrated to be that way using WHO data.
We look forward to learning more about the SOLIDARITY trial results and sharing this information with regulators once we have the data in hand. Most importantly, at this moment, the world is combating a pandemic that isn't going away. As we see infections once again on the rise across the U. S. And Europe, it's critical that physicians have every tool possible at their disposal and that patients are encouraged to seek care for what we know can be a rapidly progressing and deadly virus.
We're proud of the role that GALERIA has played in this pandemic and I'm proud of and profoundly grateful to the team that's worked so hard to advance this medicine for patients, including those collaborators at the NIAID, the investigators and patients who've been integral to the conduct of these studies. We regularly receive letters of gratitude from people who've been treated with VICLURE and we're grateful for the opportunity to provide this important treatment during this time. So now I'd like to turn to oncology. As Dan mentioned, we're very excited now to have the Trodelbi program in house with the closing of the Immunomedics transaction. We're excited to welcome the impressive Immunomedics team to Gilead.
As Dan and Joanna both mentioned, Tridelbi represents a growth inflection point for the company and I'd like to highlight recent progress that has us excited about the full potential of this medicine. You may have seen the ESMO data that Immunomedics presented from the confirmatory Phase 3 ASCENT study. In this study, despite having received a median of 4 prior anticancer treatments, patients with treated with TRIDELV showed a statistically significant and clinically meaningful improvement in overall survival, with a median of 12.1 months versus 6.7 months for chemotherapy and a hazard ratio of 0.48 and a p value of less than 0.0001. TRADELBI also demonstrated statistically significant improvement in ORR, 35% versus 5% and CBR, 45% versus 9% when compared with chemotherapy. These remarkable results should establish TRODELBI as a new standard of care in patients with third line metastatic TNBC.
In urothelial cancer, another area of focus as reported at ESMO last month, Immunomedics released the positive results from cohort 1 of the pivotal Phase 2 TROPHY U01 study of TRODELV in cisplatin eligible patients with metastatic urothelial cancer. These results confirm the interim findings and prior Phase III study results showing TRIDENTIFIED ACTIVATE has significant activity and is well tolerated in patients with heavily pretreated metastatic urothelial cancer who progressed despite platinum based chemotherapy and checkpoint inhibitors. TRUDELVI has the potential to be an important new treatment for patients with metastatic urothelial cancer. Based on these exciting data, in terms of the path forward for TRUDELLI, the BLA supplemental BLA seeking expansion of TRUDELLI's label to include the ASCENT results is expected to be submitted in Q4 to the FDA under the RTOR program. The SBLA submission to the FDA for an accelerated approval of Tridelby in metastatic urothelial cancer is expected in Q4 as well.
In addition, the MAA for Tridelvi in metastatic TNBC in Europe is planned for submission to the EMA in the Q1 of 2021. The potential for tridaldine earlier lines of therapy and additional tumor types is something we're really excited to explore. Results from studies with combinations of PARP inhibitors and separately checkpoint inhibitors give us even more options to explore the potential of this new treatment for patients. Beyond TRUDELVI, I'd like to highlight other opportunities in our oncology pipeline that continue to excite us. On migrolimab, our anti CD47 asset, we continue to pursue options for filing the accelerated approval pathway for migrolumab in addition to azacitidine and MDS in 2021 based on the ongoing single arm study.
As with all single arm studies, the risks and the FDA will make a decision based on the totality of the data and whether the data support a substantial benefit from available standard of care. The recent breakthrough designation from migrolimab provides recognition by the FDA the potential for migrolumab and enables us to have more frequent FDA interactions. We also have attained PRIME designation for migrolumab, another recognition of the potential for migrolumab. We've initiated our enhanced randomized Phase 3 study comparing migronumab plus azacitidine versus azacitidine alone in higher risk MDS patients to confirm the Phase I results for potential full approval. The emerging data from our partner, Arcus, is very exciting and we look forward to updating you in due course.
Moving to antivirals, we continue to be excited about linacaprevir, the company's investigational long acting HIV-one capsid inhibitor, an injectable administered every 6 months. The study evaluating lenacaprevir in highly treatment experienced HIV patients is progressing and we're on track for a planned filing in 2021. We also recently announced the addition of a new study arm of Lenacaprevir to the women's to the existing planned women's HIV prevention study, evaluating Descovy and Truvada in women at risk of HIV. In parallel, we will also initiate a study of linacaprevir for HIV prevention in men and transgender people who have sex with men. Turning to filgotinib, we're excited about the launch of GY Celica for rheumatoid arthritis in Europe.
During the quarter, we shared data from the Phase 2bthree selection trial in ulcerative colitis showing filgotinib 200 milligram induced remission at week 10 and achieved endoscopic histologic and 6 month corticosteroid free remission at week 58 with a consistent safety profile. We plan to file filgotinib for ulcerative colitis in Europe before the year end and Japan early next year. As we previously shared, in August, the FDA issued a complete response letter for filgotinib in rheumatoid arthritis, requesting data from the MANTA and MANTA RAISE studies and expressing concerns regarding the benefit risk profile of the 200 milligram dose. We met with the FDA for a Type C meeting to discuss MANTA and we'll meet again for a Type A meeting in Q4 to further discuss the CRL. In the meantime, we're pausing screening and enrollment for ongoing trials in psoriatic arthritis, ankylosing spondylitis and uveitis as we believe the FDA meeting will inform the broader filgotinib development program.
We continue to believe in the benefit risk profile of filgotinib. I'd also like to highlight that we remain committed to inflammation into our long term collaboration with Galapagos. Finally, I wanted to highlight that we are focused on ongoing strategic portfolio review and disciplined prioritization of our overall portfolio. We've shared a summary of important upcoming milestones across the pipeline and the materials we've provided. I'll turn over the call to Andy now.
Thanks, Mehrdad, and good afternoon, everyone. Our Q3 performance was strong and it reflects the solid underlying fundamentals in our core HIV franchise and the start of the post donation phase for Veklury. It also reflects the ongoing and dynamic impact of the COVID-nineteen pandemic. You will find our detailed Q3 results in the press release and materials we posted. In my following remarks, I will review elements of our Q3 performance and provide you with an update on our full year guidance.
Turning now to the financial highlights. Total revenues for the Q3 of 2020 were $6,600,000,000 with non GAAP diluted earnings per share of $2.11 This compares to total revenue of $5,600,000,000 and non GAAP diluted earnings per share of $1.64 for the same period last year. Non GAAP diluted earnings per share for the Q3 of 2020 increased 29% year over year, primarily due to higher operating income driven by growth in HIV product sales and our initial Vectlury sales as well as lower non GAAP tax rates. As noted in the earnings press release, on a GAAP basis, the 3rd quarter diluted earnings per share was $0.29 primarily due to $1,200,000,000 in charges related to our collaborations and equity investments in building out our oncology pipeline as well as a $900,000,000 loss from unfavorable changes in the fair value of our equity investment in Galapagos. Product sales for the Q3 of 2020 were $6,500,000,000 up 28% sequentially and up 18% year over year, primarily due to Vectlori sales and our core HIV products driven by stronger demand as well as higher volume as channel inventory continues to normalize in the United States.
HIV revenues grew sequentially 14%, driven by continued patient uptake of Biktarvy and Descovy for PrEP and increased channel inventory purchases in the United States. HIV revenues increased 8% year over year, primarily due to higher demand driven by Biktarvy. And as I said earlier, the normalization of inventory purchases in the U. S, partially offset by lower sales of Truvada. HCV revenues grew 4% sequentially, primarily due to higher patient starts in the United States and Europe, but the revenues were down 31% year over year, primarily due to the COVID-nineteen pandemic and its impact on patient starts.
Cell therapy revenues were down 6% sequentially due to COVID-nineteen and up 25% year over year driven by continued patient uptake and expansion of Yescarta in Europe. Now turning to our expenses. Non GAAP R and D expense was $1,200,000,000 for the quarter, down 3% sequentially and up 12% year over year. The sequential decrease was primarily driven by lower investments in remdesivir in the 3rd quarter. The year over year increase was primarily driven by higher investments in remdesivir, partially offset by positive or deferrals of certain clinical trials due to the COVID-nineteen pandemic.
Non GAAP SG and A expense was $1,100,000,000 down 6% sequentially and up 5% year over year. The sequential decrease in expenses was primarily driven by the 2nd quarter accrual of $97,000,000 related to a Department of Justice matter, which subsequently settled in the Q3. The year over year increase was primarily driven by headcount growth, partially offset by lower marketing spend due to COVID-nineteen. Now moving to the balance sheet and cash flow. We finished the quarter with $26,000,000,000 in cash and marketable debt securities.
During the quarter, we generated $2,300,000,000 in cash flow from operations. We paid dividends of $861,000,000 We repaid $2,000,000,000 of maturing debt and we repurchased $201,000,000 of stock. In addition, we issued $7,250,000,000 of senior notes and arranged a $1,000,000,000 term loan, which we drew down in Q4 to partially fund the acquisition of Immunomedics. After closing the Immunomedics acquisition, our balance sheet remains strong and our capital allocation priorities remain unchanged. We have, however, curtailed our share repurchase program in the near term as we focused on paying down debt incurred in the acquisition.
As Dan indicated, the acquisition will immediately accelerate our revenue growth and is expected to be neutral to accretive to our non GAAP EPS in 2023 by 2023 and significantly accretive thereafter. Turning now to COVID and its continued impact on our business and the broader business environment. As we do every quarter, we've updated our base case utilizing external projections and views. As you know, the pandemic continues to progress in unpredictable ways. The recent uptick of infection and hospitalization rates in the U.
S. And Europe is obviously of concern to all and will potentially impact the business environment during the Q4 and into 2021. Globally, external views suggest widespread vaccination will not become a reality until late in 2021. As a result, we expect the pandemic to continue to impact our business and broader market dynamics, including in particular HCV, HIV prep and Vectleri demand into 2021 and potentially beyond. We also expect that our HIV treatment business will continue to remain largely unaffected and that the remainder of our core business will continue to recover in the fourth quarter and into the first half of twenty twenty one.
That as context, let me turn to our updated full year 2020 guidance. It's important to reiterate that we are operating in a highly complex and dynamic environment and the projections are subject to greater uncertainty than has historically been the case. We have reaffirmed and narrowed our revenue guidance range to $23,000,000,000 to $23,500,000,000 reflecting the latest estimates for Vectlury. The guidance range provided during our Q2 earnings reflected underlying uncertainty in the demand dynamics for Vectlury given the nature of this pandemic and as Jomana mentioned earlier, factors such as the rate of infections by region, severity, hospitalizations and stockpiling demand, all of which have been difficult to forecast. On the expense side, we're raising our SG and A expense guidance to low double digit percentage growth reflecting the Immunomedics acquisition.
Our full year operating income guidance range is reaffirmed and narrowed and is now $10,700,000,000 to $11,200,000,000 Our full year non GAAP EPS range is also reaffirmed and narrowed and is now $6.25 to $6.25 to $6.60 per
share. As we
think about our performance to date and our guidance, we are encouraged by the significant process we've made in such a challenging environment this year. Before we hand the call off for Q and A, we would like to express our gratitude to our 12,000 Gilead and Kite employees globally. Their spirit, dedication and resilience make it possible for us to have a meaningful impact on patients with some of the world's hardest to treat diseases. We'd now like to open the call for questions.
Our first question comes from the line of Matthew Harrison from Morgan Stanley. Please go ahead.
Great. Good afternoon. Thanks for taking the question. I guess on filgotinib, can you guys maybe just describe what you're thinking in terms of the potential outcomes here once you have that Type A meeting? Is this something where you could decide not to launch the drug in the U.
S. At all? Or is this more a nuanced approach where maybe you won't move forward with RA, but move forward with the IBD indication? Thanks very much.
Hi, Matthew, it's Mehrdad. Yes, I think the outcomes it's hard to predict what the outcomes are. I do think that both the options you suggested are possible. And I would sort of tend towards your latter approach, which is that we would if things aren't able to move forward with RA, we'd like to keep the door open for us to continue to move forward in IVD, and continue those discussions, obviously, dependent on the MANTA and the MANTA Ray data outcome.
Thank you. Our next question comes from the line of Evan Sergeman from Credit Suisse. Please go ahead. Hi, guys. Thank you so much for taking the question.
I know it's
a busy day. So with the recent review of Galapagos' Toledo program, Mirdad, what do you really need to see from the proof of concept trials to opt in and be comfortable potentially incorporating this into your portfolio given your focus on portfolio optimization? Thank you.
Yeah, thanks. Great question. They're doing a really great job of exploring the potential of that program in multiple indications. And they have a great approach of trying to get there quickly looking for early signals of activity. On our end, we obviously we would like to see the programs derisked to the appropriate level, at the time that we opt in.
That will vary based on, the signals we see and the magnitude of the improvement that we see. So, obviously, if you saw hypothetically a huge response in one indication that was really unexpected and blew it out of the water, we might opt in more early. Whereas if it's more nuanced in a small trial, we might want to flush that out a little bit more before we opt in. Our contract allows us to continue to work with them as the programs are de risked and our desire is to opt in and move as quickly as possible once we have an appropriate level of risk.
Excellent. Thank you so much. Appreciate it. Thank you. Our next question comes from the line of Cory Kasimov from JPMorgan.
Please go ahead. Hey, good afternoon guys. Thanks for taking the question. Wanted to ask about remdesivir and the change to guidance now. I guess I'm just trying to better understand kind of what has changed since your guidance in 2Q that leads to the lowering of the fiscal year guidance by $1,500,000,000 And I mean, just given the pace of infections that we're seeing across the country, can you just kind of go into a little bit more detail on why the lowering and kind of how this market is evolving in your
eyes? It's Andy. I'll start and Joanna can jump in as well. I think it's relatively straightforward. I mean, it's a dynamic situation.
It's very difficult to forecast as we've discussed. And as I think most people understand, the rate of hospitalizations is the biggest factor that has moved around a lot over the last 6 months, and it continues to move today. So, what you're seeing is our latest estimate based on the information that we have, we're pleased with the uptake in the Q3, obviously, with the formal U. S. Approval, the joint procurement agreement in place, Joanna and her team, I think have a better sense of where we see the year, but it's still very dynamic and it's unusual compared to what we're what you have to typically forecast.
John, do you want to add anything to that?
Yes. Maybe just to add to that, Andy. I think what we're also seeing is the severity of the disease. So I think as you saw through the summer months, even though there were surges going through the U. S.
Mostly, some of those were younger patient population and therefore the hospitalization rates really dropped over the summer months. We were seeing closer to 12% to 15% late Q2. And as you go into Q3, they're closer to 5%. So we're really tracking those very closely. It's not just the incidence.
It's really to Andy's point, the hospitalization rates. And obviously, the assumption is in light of the surge this fall, both in Europe as well as in the U. S, that those numbers will pop back up a little bit. So that would be one piece of the puzzle. The other piece, I would say, is we looked at some of our assumptions around stockpiling.
And although we've seen some stockpiling, not at the level that we had originally projected. And so we're adapting to that as well.
Okay, very helpful. Thank you. Thank you. Our next question comes from the line of Michael Yee from Jefferies. Please go ahead.
Hey, thanks for the question. I wanted to follow-up a little more on filgotinib. Obviously, it's an important driver. And you said you'll have a Type A meeting and you'll make some decisions. Can you just clarify what you would actually learn from a Type A?
And if you were to, as you said, maybe keep IBD, isn't 200 milligrams really important? And so that would tie together with RA being approved at 200 milligrams? So maybe just explain a little bit where these scenarios would evolve from? And could you just make tough decisions and not go forward at all? Thank you.
Sure, Michael. Yes, I couldn't agree more. Look, I think the conversation we'll have in the Type A meeting will center around really what level of evidence, the FDA would be looking for on both of those issues, right, in terms of trying to get to a better benefit risk understanding. And so that will depend both so we need to find that out from the 200 milligram standpoint and we need to find it out from the MANTA and MANTA Ray standpoint. So those two things we will get guidance from the FDA in at the Type A meeting.
And then based on that outcome, we will make some decisions about how to go forward, whether it's whether there's a clear path, whether we have to only go forward in IBD or whether 200 milligrams is not viable until MANTA reads out, MANTA Ray read out. All those are possibilities. So it's hard to speculate what the outcome of that would be. We'll be transparent obviously as we have that discussion with how we'll proceed.
Okay. Thank you.
Thank you. Our next question comes from the line of Geoffrey Porges from SVB Leerink. Please go ahead.
Thank you very much. One question, multi part question on VICTORIA and then a quick one on TRODELBI. So on VACLURI, could you give us a sense of how many patients have been treated so far or at least in the quarter? And disclose for us what the inventory stocking was? And then a little bit of color about what proportion of hospitalized patients are getting remdesivir because we get the sense that standard of care.
And then, Murdad, could you just talk a little bit about the profile of TRYVELVI in combination? It does have some significant safety and tolerability liabilities. So which of the combinations do you think it makes the most sense to use it in? Thanks.
So let me start, Jeff, with the VACLEARY question around usage. So what we've seen is obviously in Q3, a little bit of an interesting dynamic in light of most of the supply was committed through the HHS to U. S. Patient population. So there was a bit of an inventory build through the Q3 that you're going to see play out in Q4 in the U.
S. Specifically. We're also in a situation due to the incredible work that's been done by our manufacturing teams to be in a situation where our current supply now is at a level where it is exceeding global demand. So we feel very confident in making sure we can have global demand around the world, namely in Europe right now in light of not only the Doerper Tumor agreement, but in light of the recent surge that you're seeing across countries in Europe. I think to your point about percentage of patients, it really varies across countries, but also regions.
And I do think that that percentage is increasing as we speak as the FDA approval came out last week. We're already seeing a lot more noise around that, but also in light of the fact that we have a field team, so medical and commercial that are now going out to make sure that physicians are aware and educated on where best to use Vectlery. And I think that's one of the pieces that's the most important. So that's playing out as we speak. But we have seen probably out of hospitalization rates in many countries anywhere between 40% to 50% in the U.
S. Usage of remdesivir. And of course, that number will only grow as people better understand the data now that it's been published as well as approved through the FDA.
Great. Thank you.
And maybe to myrdad on TRODELBY?
Yes. And I'll take the TRODELBY question, Jeffrey. Yeah, look, I think what we know so far, with the Trodelpi profile combo is a couple of things. One is just looking at the combos where it's been tested, there's data with the PARPs and there's data with checkpoint inhibitors. And so far those data seem to support the ability to go forward with combos.
And that obviously opens a number of doors there for us to investigate. When we look at the adverse event profile and we look at what and we talk to the investigators about what they're seeing and how they're managing it, the tox is largely the neutropenia and the diarrhea. And often that the investigators are saying that they that toxicity seems to be manageable, something they're comfortable managing. And we're getting a lot of encouragement to move earlier in lines of therapy based on that adverse event profile. The individual combinations will be dictated by the indication that we're in, right, whether it's breast, urothelial, lung, those combinations will depend.
But I think a big one will probably be the checkpoint inhibitors where I think we're optimistic and have reasonably good data about being able to combine there.
Great. Thank you.
Our next question comes from the line of Alethia Young from Cantor Fitzgerald. Please go ahead.
Hey guys, thanks for taking my question. I just wanted to talk a little bit about kind of big picture immunology. So maybe depending on what you decide with filgotinib next year based on some of the conversations, like how are you thinking about the space? Are you still committed? Would you consider doing M and A?
Or do you have an internal pipeline that continue to drive potential revenues there? Thanks.
Thanks, Alethia. I'll start and then maybe Murde can add as well. But first of all, I mean nothing's changed about our dedication to our 3 disease areas. As you know, I mean our strategy that we announced at the beginning of the year was based upon 2 really strong scientific disciplines that we have from a discovery perspective at Gilead and with our partners and that is antivirals and immunovodulation. And we've been firmly focused on that strategy in terms of how it plays out in both antivirals, inflammation and fibrosis, and then also oncology.
So, we think there's a lot of synergies associated with that science. Obviously, immunology, as you know, Alethia goes across so many disease states. Immunology plays into antivirals, for instance, particularly when we look at some of our HBV cure programs. But clearly in the field of inflammation, we've already spoken about where we stand with filgotinib. We have a variety of follow on agents within our Gilead research, with our partners with Galapagos and we'll maintain an external view on opportunities to continue to advance our inflammation portfolio in house.
And you can see, of course, what we've done in the oncology field, predominantly immuno oncology over the past year, really building up our oncology base based upon largely based upon immuno oncology. Trodelbi allows us to have a really strong footprint now into solid tumors in a pan tumor way, which we think will be very complementary to our 1st in class, immuno oncology portfolio. Bernadette, maybe you want to add as well your view on that question as well?
I think you hit all the key points, Dan. I think we the only thing I'd add is I think we really have a great team here. And I think that team is going to be really great about charting our future in immunology. But as Dan said, we remain committed to that and we'll continue to look at both near and long term opportunities there that make sense for us in the portfolio.
I mean maybe, Myrddin, it's just important to emphasize the unmet medical need in that area. It's still very significant.
Yes. We look at maybe the only other thing I'd add is that we look at it through a fairly broad lens of what immunology means. There are a lot of indications with a lot of unmet need that persist in that space and we'll be looking for that transformative profile.
Thanks, Alethia.
Thank you. Our next question comes from the line of Carter Gould from Barclays. Please go ahead.
Hi, thanks for taking the question. Maybe just to follow-up on that same sort of question on portfolio construction. Historically, Old Gilead was routinely criticized for not being as disciplined with many of its mid stage assets. Clearly, the pipeline is much broader. You guys highlighted sort of a return to discipline, yet it doesn't seem to be apparent, I guess, when we look through the pipeline slides.
When you think about the size and breadth of the pipeline today, are you comfortable with that? And I guess, will we start to see some of those prioritization decisions start to manifest soon? Or if there's things you can point to today, that would be helpful? Thank you.
Yes, Carter. Again, I think the entire team here is dedicated to putting together a portfolio management process that's state of the art. I think your question is very well taken. It's a work in progress, right? So we're, first of all, we've hired a lot of new people into the organization with terrific expertise in different therapeutic areas.
We're putting processes into place across research and development into our commercial organization to help us make decisions accordingly. And I think you'll see some of those play out in the near term as well. But the philosophy that Mehrdad and Duran and the the the programs that hurdle that line are really 1st and best in class. And I'm really pleased with how the organization has progressed both from an operational perspective, but then also from a scientific perspective over the course of the past year. But as you know, I mean, this is a continual process and we need to make sure that we're constantly looking at the outside environment, looking at the unmet medical need, going back to where that line is drawn in our organization and making consequential decisions on the portfolio.
And we intend to do that. We intend to make tough decisions and fund those most attractive opportunities. I would also say the other thing we're looking very hard at is a balance in our portfolio. I think in the past, Gilead has also been seen as a company that went after a lot of high risk, high reward projects. In some cases, those were not successful in the late stages.
I think we're firmly committed to having a balanced portfolio where we're always holding the bar high for innovation, but making sure we derisk as much as possible earlier in the stages of development such that when you get into the late stage investments in Phase 3, things have been derisked and therefore your ability to succeed rises as well. So these are all very conscious things we're working on together. My dad again, I apologize if I you've trained me well. You made a very well have some things to add on that as one of the leaders in organizing this portfolio for him.
The only thing I'd add Carter, it's a really insightful question and it's something that as Dan said, we're really committed to doing. And what I would say is that you will see us exercising that discipline. That will be something that will be apparent sooner than later. And recognize that there are a lot of things that are in flight that they don't make sense to deprioritize because they're already ongoing. So we'll let those things read out.
So it'll probably take a little bit longer for everything to get taken care of in the washes, if you will. But you will definitely see that playing out with us as data get read out and as new things enter into the portfolio that we'll be exercising that discipline to make sure we're making some tough decisions.
Thank you.
Thank you. Our next question comes from the line of Brian Abrahams from RBC Capital Markets. Please go ahead.
Hey, guys. Thanks for taking my question. A question on HIV inventory and stockpiling. I'm wondering if you could quantify if what you observed in 3rd quarter was a benefit or just normalization? And as you look to Q4 and beyond, what should we expect with respect to potential stockpiling just given the newest COVID spike versus inventory drawdowns?
Thanks.
So maybe I'll take that one, Brian. I think that as we're seeing Q3 this whole year and I'm sure everybody is kind of seeing this, this whole year has been really interesting when it comes to inventory because we've seen a pattern that's very different than prior years, obviously, due to COVID-nineteen. The expectation that we have this year is, as you normally see in Q4, you actually do have a lift in product supply at the end of December that plays into our total inventory for 2020. Having said that, that's a little bit also impacted by fact that Truvada is LOE and there's now a generic on the market with Teva as of early October. And so we believe that number is a little lower than the norm that we've seen in the past.
We haven't assumed additional stockpiling to your point about COVID-nineteen because it's already usually Q4 is already on the rise versus other quarters. So we've assumed that. What we've seen in Q3 to the first part of your question, I think it's just normalization of the last couple of quarters. And you kind of if you recall, Q1 usually dropped down on Q4 supply. What we saw is a pickup in March because of COVID-nineteen that then kind of bled out in Q2 and then we saw a pickup again in Q3, which I think is really the normalization of those three quarters.
So assuming Q4 is like other quarters in the past that's what's currently in our current projection. Hopefully that addresses the thinking there for HIV.
That's really helpful. Thanks.
Thank you. Our next question comes from the line of Tyler Van Buren from Piper Sandler. Please go ahead.
Hey, good afternoon and thanks for taking the questions. I was just hoping to get a little bit more precision on the Vectlery guidance. I guess if you take the midpoint of the updated guidance relative to the guidance in the beginning of the year and the Q3 sales, it could suggest that sales could be down significantly in Q4 quarter over quarter. So but then obviously, the core business has been impacted a bit by the pandemic, which could offset and make it more flat. So wanted to understand what you're modeling for Vectluria in Q4, what your guidance incorporates?
And then the second part of the question is on the outpatient and the inhaled studies, can you give any more granularity on when we should expect that data and how much you think demand could increase if those studies are successful?
Great. Thanks, Tyler. So Andy, why don't you handle the guidance and maybe go to Diana for the updates on VACLARI's next generation?
Sure. Hi, Tyler. Thanks for the question. I appreciate it. We're not providing specific product guidance, as you know, and we typically don't.
But as you suggested and as we mentioned earlier, the revision in guidance is tied, not entirely, but almost entirely to expectations around VACLURI. Joanna also mentioned that there was some excess inventory in the channel as a result of the terrific work that our manufacturing team did. And you'll see in our materials that we're on track to meet the expectation that we had set in terms of 2,000,000 treatment courses by the end of the year. So as inventory was moving into the channel in the Q3, at the same time that hospitalization rates and the severity of the outbreak in the U. S.
At least at that time was coming down. There was less demand in the Q3 than expected. And then you see that play through in the Q4. So we didn't recognize revenue for all of the Vectlery that was shipped in the Q3 to be clear. Some of that was constrained and then you see that playing through in the Q4 and the full year guidance.
So we can't be more specific than that. Happy to provide any additional color that we can, but we're not going to provide specific product level guidance. Maybe over to Diana.
Hi, Tyler. So our outpatient study is ongoing. We're recruiting actively. And in terms of our predictions, we think that that study will wrap up early next year and we should have results in the Q1. It is harder than is typical to predict the dynamics of trial enrollment for COVID-nineteen so much depends on the number of cases, the competition for it with other clinical trials.
So, we're going to have to kind of take it month by month and see how the dynamics go. As you know, we're approved with VACLURE for hospitalized patients or patients in an equivalent inpatient setting. So in terms of then what that does for us once we have the trial results, if it were successful, we would then look to getting an expanded label for that population. So that would be further down the line. But our first step is to get the study enrolled and see how VEGLARE performs in the outpatient setting where we're trying to prevent hospitalization rather than hasten recovery in the hospital.
Thanks so much.
Thank you. Our next question comes from the line of Umer Raffat from Evercore. Please go ahead.
Hi, guys. Thanks for taking my question. Just two very quick ones. First on Biktarvy perhaps, the IMS trends don't appear particularly encouraging for the last 6 months or so. I know it's growing, but not the way it was in the past.
I just I would love to get your take on that. And secondly, on the capsid inhibitor, Mirdad, how are you thinking about possible candidates for a combo? I know there are other companies with HIV candidates as well and this has been an ongoing question. Where are you guys headed at?
Sure. Joanna can start and then take it from there. Joanna, do you want to start?
That's good. Yes. Thanks, Umer. So listen, we're really proud of actually the Biktarvy growth. And I think that if you look at the share growth, it's basically 8 points of share year on year when you think about as Q3 'nineteen to Q3 'twenty.
And when you look at Q2 to Q3, it's a point of share. So we do think that the growth continues. Where we've seen a little bit more of an impact is from a market standpoint because if you think about the impact of COVID-nineteen, it's had a larger impact in our HIV treatment business really when it comes to switches. And so it will impact disproportionately newer agents in the market because physicians aren't switching to newer agents, but obviously Biktarvy is part of that pool. The overall share of Gilead still remains really strong because of that, because we more than 75% of patients are actually on a Gilead compound.
And so therefore, they're just remaining. There's less switches. We've seen that rebound a little bit in Q3. We expect that to continue through Q4. But I think overall, if you think about it in the U.
S, which is our largest business, right now, 1 out of 2 actually, more than 1 out of 2 patients starts on Biktarvy. We have about a 56% share or so naive patients. And when you think about the switches, although the market for switches are a little bit lower, we're still roughly about 1 in 2 patients, going to Biktarvy and they're going to Biktarvy from a non Gilead single treatment regimen, which I also think is a great place to be. So we continue to feel extremely confident in Biktarvy's continued growth because you're seeing it happen across all of the markets around the world to really consolidate around Biktarvy. In addition to the fact that COVID-nineteen is actually for naive patients, a real advantage with Biktarvy because of the rapid start.
And that's something that even guidelines are recognizing in light of the fact that you don't need to there's no genotype testing, there's no HLA testing, etcetera. So that's also helping to continue to grow our share in the naive patient population. So with that, Murdat or Diana on the capsid?
Yes. I have to take that. Hey, Emert. As you mentioned, look, we have both internal candidates for combining with Lenacaprevir and we remain open. As you said, there are other agents out there that could potentially be combination partners.
And we remain definitely open to figuring out what's in the best interest of patients and we'll continue to be diligent on that front. So I think both possibilities remain there.
Thank you, guys.
Thanks, Omar.
Thank you. And I show our last question comes from the line of Geoff Meacham from Bank of America. Please go ahead.
Hey, guys. Thanks so much for the question. I just had a couple on remdesivir. Dan, you've talked about likely not making a major long term contribution. So I just wanted to ask are the investments in nebulized or next gen programs still a priority in the near term?
And the second one related is how do you manage inventories for when the infection step down happens, which is hopefully sometime next year?
Thank you. Yes. Thanks, Jeff, for the question. That's really helpful, I mean, to hear your context on that. I mean, let me say a couple of things.
First of
all, I mean, we think VICULARI RENDESYR will make a significant contribution certainly to Gilead. I mean, it already has, as you've seen in the sales to date and we think through the end of this year and into 2021. And potentially on a seasonal basis beyond, I mean, one has to there's a lot we still don't know about the pandemic, of course, but I think what we do know is that in order to get us all back to normal, this is going to take a variety of approaches. Of course, it's going to take vaccines, it's going to take therapeutics in the hospital, it's going to potentially take combinations of therapies in the hospitals and then it's going to need therapeutics pre hospital. So I think we're proud to be at the front end of this with a very potent antiviral, which is a bedrock, I think, of any approach to a pandemic.
But it will continue to need investment. We're fully committed to the investments in line extensions here and in seeing where else we might be able to play in that continuum from pre hospital setting to hospitalized patients. Obviously, we're not going to play in the area of vaccines, but in the area of therapeutics. We think there's a very good return on that investment. I think the challenge we have, by the way, we used to have a Tamiflu when I was at Roche, is it becomes difficult to predict, and you've seen it already in our at the half year, of course, we gave quite wide guidance to give us opportunities to understand where the pandemic was going and exactly how remdesivir would play a role in it.
And now what we've done is we reaffirmed that guidance, but we've narrowed it. And I think as we go into next year and the year after, we're just going to need to stay adaptable and flexible on how much of a contributor VACLEARY is to us. But we do feel very strongly that VACLEARY will contribute to our overall sales, be an important source of cash for our business and allow us to pay down debt and make sure that we continue to invest in the routine part of our business in antivirals and beyond. I think the other statement I would make though, Jeff, is that as a result of both the internal and external portfolio development over the past year and in particular the Immunomattox and Trevelvie transaction, excluding VACLURE, we're now very confident in our ability to grow in the short and mid term. So I think VACLEARY will come on top of that and may have year to year variability.
But I think that's really the story of today's call and the evolution of the course of the past year. And thanks for giving me the opportunity to kind of put that into context.
Thank you. Thank you. This concludes the Q and A session. At this time, I'd like to turn the call over to Douglas Mote for closing remarks.
Thank you, Duhem, and thank you all for joining us today. We appreciate your continued interest in Gilead, and the team here looks forward to providing you with updates on our future progress.
Ladies and gentlemen, thank you. This concludes today's presentation. Thank you for participating. You may now disconnect.