Good morning, everybody. I'm Chris Schott from JPMorgan, and it's my pleasure to be introducing Gilead today. From the company, we're going to have a presentation from Dan O'Day, Chairman and CEO, and we're going to follow that presentation with a Q&A session with the broader management team. So with that, I'll turn it over to Dan. Look forward to the updates here. Thank you.
Thank you very much. Terrific. So good morning, everybody. Welcome to JPMorgan. Delighted to be here with the team and really delighted to kind of update you on the Gilead growth story in 2026 and beyond. Maybe just before I get into the presentation, I just thought back to reflect upon what an important year 2025 was for us, and I'll get into it in more detail. But obviously, the launch of Lenacapavir caught the world's attention and was extraordinarily important for us, and we feel the responsibility in that regard with ending the HIV epidemic around the world over time. But it was another year of great commercial growth.
Pipeline is the strongest and most diverse really in the almost 40-year history of Gilead, and we're in a really significant period of launch activity. We're going to get into that in more detail. I do want to continue to highlight the fact that we are quite distinct at this conference amongst big pharma in terms of not having any major LOEs now for another decade, and I just want to put that as a backdrop for you as well. We will also continue to focus on strong financial management, both on operating expenses and M&A, and I'll get into that in a little bit. But I'm really proud, I have to say, the most important thing is I'm really proud of what the team has accomplished over the course of the past around five years.
Now, before I get into the details, I do have to remind you that our presentation will include forward-looking statements, and I refer you to the disclaimer for this presentation as well as our SEC documents for a full disclosure of the risks and uncertainties associated with these statements. So we've broken our presentation really around three key things. The first one is we've talked a lot ever since I came into this role about the importance and the durability of the HIV business, and we're going to dive into that again today. I've never been more confident in that ability for that to be durable well into the 2040s.
Secondly, we will cover at a high level the clinical and launch portfolio that I just referred to, and then the last chapter is really digging into that financial discipline, in particular as it relates to enhancing and growing shareholder value over time. So with that, and I say this with a lot of understanding of how important these words are, given the fact that Gilead has been in HIV now for more than three decades, but we have never had a more robust HIV franchise in our history and in the industry than we have right now, and there's never been an opportunity to bend the arc of the epidemic that we've had right now, both in treatment and prevention. And maybe I'll start with this slide as an overview of the entire HIV business.
I think some of these numbers really speak for themselves, but we're really building that confidence on a very, very strong foundation. The HIV revenue growth through the third quarter of last year, which is what we reported so far, is 7%, and that's against the backdrop of having to offset the Part D headwind in 2025, which we still anticipate on a full-year basis to be around $900 million. But beyond the current leading therapies, we've significantly expanded and diversified our pipeline with a range of options. Because if there's one thing we know in HIV, and I think this is really amplified in HIV, patients want options. People that want to prevent HIV want options that fit their life and their lifestyle, particularly as we've transformed this disease from a death sentence to a preventable long-term chronic illness.
And the other highlight that I'll get back into is we're not resting on our laurels with the Yes2Go launch. We have a lot to do still there, but we have up to seven HIV prevention and treatment launches between now and the end of 2033, which was initially the patent expiry for Biktarvy, but of course that's been pushed back now. And this is really on the shoulders of Biktarvy. I mean, you can see the importance of this medicine to the HIV community, to people living with HIV. It remains the clear standard of care for daily treatment and really sets the bar for our future products, which is important. Quarter after quarter since launch, we've consistently delivered share gains, revenue growth, and growing global adoptions.
And then we continue to invest in Biktarvy, and you can see that across the banner at the bottom of the slide here. The long-term data continue to reinforce the efficacy and the safety profile and the uniqueness of Biktarvy. But on the backdrop of that, we have now Lenacapavir, and this slide just focuses now on treatment, and it includes Lenacapavir as really the backbone, as this incredibly novel capsid inhibitor, 17 years in the making, which has shown extraordinary properties, and it's one that we will build upon the rest of our HIV treatment portfolio. And that includes alternative dailies, weeklies, monthlies, and twice-yearly therapies. And I'm really pleased to share, actually, that based upon the progress, we expect now the FDA decision for bictegravir/lenacapavir daily oral into this year instead of into next year. So we expect it in the second half of this year.
I just want to highlight a couple of other things on this slide. We also expect a phase I update of what's called our GS-3242, which is a twice-yearly INSTI later this quarter. And we've always said we would prioritize the most promising molecules in our very, very vast portfolio, and GS-3242 is that molecule in terms of less frequent dosing regimens. So we'll also begin to initiate a phase II study in combination with lenacapavir later this year. And for monthly oral, we'll have several INSTI products in development. We'll select which one to take forward into the clinic as a partner to GS-3107 as the year progresses. And of course, we'll continue to update you on the evolving nature of this very dynamic and progressing portfolio.
Now, if you allow me to switch to prevention for a second, Gilead was the first company with a prevention product, and we are clearly the market leader for PrEP. There's really record growth going on in the PrEP market right now, as you can see, and that's coupled with the timing and the launch of Yes2Go , which is particularly timely. And there's a new level, I think, even when we thought there was opportunity, we think there's even a greater sense of opportunity for the PrEP market moving forward. And I'd like to share again for the first time at this meeting that we've reached our guidance number for Yes2Go in 2025 of $150 million after the launch just in the middle of last year.
The other thing I just highlight on this slide is we've previously said the PrEP market was larger than the official estimates, and we've seen the CDC estimates as one example of that increase significantly over the course of the last year. So with both twice-yearly Lenacapavir and Descovy, we're able to broaden the reach and impact of the prevention market like never before. This is going to transform the progression and the trajectory of our PrEP market and also make a big difference for the epidemic over time. Just switching a little bit more color to the launch of Lenacapavir. Now, about six months in here in the United States, it's really been an impeccable launch. I have tremendous respect for the team that planned for this for years, literally, and the unique nature of this medicine for our clinical team and our research team.
Again, a new disclosure today, in addition to hitting the revenue target, I'm pleased to share that CVS has confirmed their coverage of Sunlenca as of January 1st, putting us at more than 80% coverage overall, so essentially, all major payers in the United States now have a coverage plan for Sunlenca, and you can see for about 90% of covered lives, that comes with a $0 copay. Just before I leave this, it's important to us at Gilead, I know it's important to many of you, we take our responsibility in terms of ending the epidemic very, very seriously.
So in addition to making progress in this country with the Yes2Go launch, I'm very pleased to say that lenacapavir was delivered for the first time ever in a sub-Saharan African country at the end of last year, in the same year as it was introduced in the United States. That's never been done before, and it took extraordinary planning to get to that stage. But we know with two-thirds of HIV cases in sub-Saharan Africa, if we don't stop HIV everywhere, we won't stop it anywhere. And that's really our approach and how we think about this. So we take great responsibility of that, and great pride comes from that from everybody, to our scientists, to every colleague throughout our organization. So this sums up what I mean by we've never had a more robust pipeline for our HIV business.
It's really quite extraordinary when you look at it, and it's why we have such confidence in our ability to continue to sustain our leadership in this. With Biktarvy's LOE moving out, we're really moving ahead a comprehensive life cycle plan across multiple options for patients, and I just want to say kudos to the team, because four to five years ago, if you looked at this slide, it wouldn't have looked like this, and so our ability to double down in HIV, when we talk about diversification at Gilead, we talk about diversification, of course, outside of virology and HIV, but we also talk about it within HIV, and I hope this slide gives you a sense for what we mean by that.
So with that, let me turn to the second chapter of what we'd like to speak to you about today, and that's the broader pipeline and the launch engine in and beyond HIV, and really across every therapeutic area. This is a result of a lot of hard work over the past four or five years, really disciplined execution in the pipeline, but what we have in our hands right now, either very recently launched or potentially to be launched, up to 10 new medicines or indications over the course of now and between the end of 2027, and they're all addressing serious illness, serious disease with significant changes in the potential for adjusting standard of care with many of these. I'm going to cover just a few of these today, but happy to take up your questions on others. First of all, Trodelvy.
It's now the standard of care in second-line triple-negative breast cancer, and this is really extraordinary to see the data in the first-line setting. There hasn't been something new in the first-line setting for triple-negative breast cancer for quite a long time. So following the updates of ASCENT-03 and ASCENT-04, we're preparing for the launch in the first-line setting, both PD-L1 negative and PD-L1 positive, and we expect that launch this year. But I'll remind you, in addition to the importance for the growth for the business, this provides almost double the opportunity for patients with triple-negative breast cancer to benefit from Trodelvy at an earlier stage in their illness, with an option that we hope and expect will become a standard of care in the first-line setting. Another example of our work on keeping the bar high and reaching for curative potential in any epidemics is Anito-cel.
This is in partnership with Arcelix, of course, but we believe with the data we have in hand that this is really a best-in-class new option for fourth-line multiple myeloma. I'm pleased to say that we filed with the FDA and we're awaiting a confirmation of an acceptance letter that we expect this quarter, and we target a launch for the second half of this year. You've probably seen the data, but it's worth highlighting. The results are deep and durable responses and a really differentiated side effect or safety profile with potentially severe side effects from other medicines on the market.
I'm also pleased to say that iMMagine-3, which is a second-line plus study, is enrolling really well, most likely as a result of this type of data we've seen in the later-line settings, but it's really enrolling in record time, and it could lead to a filing as early as 2027. So you have to combine this type of results with our world-leading manufacturing and footprint with cell therapy, and we are ready, and the team is ready to bring this to patients upon approval. Finally, I really want to touch briefly on the closest next launch in our HIV innovation pipeline, and that's our Bictegravir/lenacapavir daily oral. As I already mentioned, we now are looking forward to a regulatory decision and potential launch in the second half of this year. I'll remind you, this addresses two key needs within HIV.
One is patients that are virologically suppressed that, for whatever reasons, either their physicians or the patient itself is interested in a switch. And the second one is for patients that are on complex regimens. It's the world-leading Bictegravir combined with the world-leading novel capsid inhibitor combined in one, and I think it's really an opportunity for us to provide yet another option for patients. And I'll remind you that the ARTISTRY-1 and ARTISTRY data in detail will be presented at a virology conference later this year. So summing all of this up, and it's hard to capture this in one slide, but we have a very different portfolio today than we had back in 2019. Of course, it's larger, 60% greater, but I'd point you to the discipline we've been taking around the types of targets we're going after.
In Gilead's kind of hallmark tradition, we're always going after things that really could potentially move the needle. And so you see in oncology, programs like our bicistronic CAR-Ts, our CCR8, and our PARP1, and in our inflammation, where we're kind of just getting started beyond Livdelzi, is the oral alpha-4 beta-7, the IRAK4 for inflammation, and also, again, a bicistronic from our cell therapy. So we've got a lot to execute on, and we're very excited about this, but this is why we're so confident in our ability to continue to make a difference for patients and drive growth with the portfolio we have on hand. And what should you expect from us this year? This is an example from the 2026 milestones. A couple of things I'll point out. It goes across all three therapeutic areas.
In the first half, you can expect a phase III update on our lenacapavir/islatravir once-weekly oral HIV treatment, and an FDA decision on Hepcludex for the treatment of HDV. And in the second half, you can expect FDA decisions on bictegravir/lenacapavir once-daily oral for HIV treatment, which I've communicated, Trodelvy in the first-line setting, and Anito-cel for the fourth-line plus setting for relapsed/refractory multiple myeloma. Also, in the second half, you can expect updates from our EVOKE-03 study, which is for Trodelvy plus Pembro in the first-line metastatic non-small cell lung cancer, and the ideal study for Livdelzi, which is for PBC patients with partial response to UDCA. So as we advance that pipeline, we're conscious of the fact that we have to do that with shareholder interests in mind, and we stay very focused on that throughout our year.
I can tell you the team spends a lot of time in this as they progress their innovation. Let's start with the operating margin. You can see in the first four years of our transformation journey, we're characterized by sizable investments that were intended to rebuild the pipeline. We had to make those investments at that stage to kind of reset the company for success. But you can also see that starting in 2024, we're moving into a phase of optimization. It's clearly visible in our financial results with operating margins consistently in the top quartile of peers, which we hold ourselves to. We continue to carefully prioritize our investments to support the most high-potential products and commercial launches. As one way to return to shareholders, we remain fully committed to the dividend and to dividend growth.
In fact, if you look at the slide since 2020, we've distributed more than $22 billion in dividends since 2020. The dividends grown 16% in that time, and in 2025, we paid $3.16 per share, just to give you a point in time. There's another way to return money to shareholders, of course, and that's the use of share repurchases to return capital to shareholders. At a minimum, of course, we repurchase shares to offset equity dilution, but you can see in 2025, we stepped up our opportunistic share repurchases, which go above and beyond dilution. And since 2020, just reflecting upon both the dividend and the share repurchases, our average annual shareholder return was 57% of free cash flow, or $30 billion in total.
Our commitment, and we remain committed to this, is on average, we will return at least 50% of free cash flow on an annual basis to shareholders. When it comes to business development, we're confident that the strong portfolio that I just went over, that's also diverse in nature, will support Gilead's growth plans for many years to come. And just to put that into context, our base business grew 7% and 8%, base businesses excluding Veklury, our COVID antiviral, grew 7% and 8% in 2023 and 2024, respectively. So you can see the underlying nature of our established products today and newly launched products, and we're going to feed that with the compelling pipeline of commercial launches that I spoke about as well. At the same time, we know that a company that is durable for the long term has to feed that pipeline constantly.
We're going to do that through internal innovation, but in two other ways. One is we are carefully strengthening our early pipeline. We spend about $1 billion a year on late research, early development programs. That's incredibly important. It comes in the form of licensing, partnerships, and acquisitions. You have to have that drumbeat every single year to have a portfolio that delivers for the long term, but additionally, we are today, and we will continue to be active and proactive on bolt-on value-creating acquisitions within our areas of interest that fit our portfolio, that also accelerate financial performance, and we're constantly looking at things. Our bar is high because our internal bar is high, but we'll continue to find, I'm sure, opportunities out there to supplement this pipeline.
So in closing, and just to kind of bring the message to a close before we go to Q&A, I want to just reiterate the three pillars of the growth story: a very durable HIV business and leadership, a robust pipeline, in fact, the most robust pipeline we've had in the almost 40-year history with Gilead, and we're going to be proactive and disciplined relative to operating expenses and M&A to lead to shareholder returns for the long term and the short term. So with that, I'd like to invite Chris back up here, and we look forward to taking your questions. Thank you.
Great. Appreciate the details there. Maybe just to start the discussion off, Yes2Go . Obviously, a great launch so far. Can you just talk a little bit about how that ramp has been comparing to internal expectations and just any surprises in terms of either the type of patients we're initiating or just any aspects of the launch thus far that are, I guess, just any color you might have on that?
Sure. Hi, everyone. Johanna Mercier, Chief Commercial Officer. Happy to address that. So we launched last June, and a couple of things we've been tracking incredibly closely. One is obviously pen to paper, so intakes, scripts of Yes2Go , and then tracking, of course, how that reimbursement flow plays out. So that's the access piece. And then, of course, how long it takes from a prescription to an injection. So those are the pieces that we track incredibly closely. And we're really pleased to see that the intakes have been growing substantially week over week. We've also seen access, as Dan shared, now we're at just about over 85% of access. Our goal was to get to 90% within 12 months of our launch. So very pleased, I would say we'll probably get there a little earlier than the June timeframe.
And I do think that the fact that we have all major payers in play that are currently reimbursing Yes2Go is a huge lift. I think we have a nice platform in 2025, and we'll talk more about that soon enough around how we closed out the year. As you saw, we hit our guidance at 150, but more importantly, what we've been tracking is the patients, the people that actually are getting a prescription for Yes2Go. And what does that mean as you go into 2026? And we think we have a really nice platform in light of all the moving pieces coming together.
The only thing I would add is obviously access, as much as it happens. So some plans have come in for 1st of January. It takes a little bit of time for the accounts to integrate that access and be part of their planning, and so we are going back account by account to make sure they're aware of the new access wins and making sure that gets integrated as quickly as possible, so we're excited about what 2026 has to offer.
Just on the way that, I guess, people are accessing this with the J-code now in place, how much of this is buy-and-bill? How much of it's through a pharmacy benefit? And is that mix has been as expected for you?
Actually, we always assumed that at launch, specialty pharmacy, the white bagging would be definitely the primary distribution system. What we are seeing, though, is in the last two months or so, a nice lift in the buy-and-bill model, which really means that clinics are now really seeing with the J-code that you mentioned, they feel confident that they're going to get reimbursement, which was an important piece of the puzzle.
So we're seeing that kind of play out, and we'll see that continue in 2026. You're going to see a nice ramp on that just because it takes a little bit of time. Some do it update with their J-code on a monthly basis. Some do it quarterly. Some do it every six months. So we'll start seeing those kinds of things play out. But we've seen a nice lift of buy-and-bill, a little bit of an acceleration actually in the last couple of months. But the mix is still a little bit more heavily specialty pharmacy, but we're seeing that kind of balance itself out as time goes on.
And just to kind of bigger picture from the volume ramp perspective from here, you've got now CVS in place. The J-code's been in place. It seems like a lot of education work's been going on. Should we be thinking about kind of accelerating script trends as we go through the first part of 2026, or is this going to be more gradual in that it just takes time to get this all?
I think it's going to be a mix of both. I think you're going to see, obviously, we've built a nice platform in 2025 so the patients that have received Truvada or Descovy should most of them come through again in 2026, so that's a nice platform to jump off from, and then with the access wins that we've gotten and the awareness that is increasing daily, I do think you should see a nice ramp, but it's not going to be a hockey stick.
I think it's going to be a continuous ramp as you go forward as we get all the pieces in place to make this successful, and I would also say this. I think it's important to think about the growth in Descovy as well, not just Truvada. I think it's really Gilead Prevention. We are ensuring that whether someone wants the option for an oral, a daily oral, or wants an option for yes, to go, both are available to them, and I think that's what's going to help us truly win in this marketplace and continue to grow this marketplace as it should.
As a follow-up, maybe answer that a bit. And yes, to growth ramps, is it reasonable to think about Descovy continuing to grow, or at some point, is there some cannibalization to think about?
I think what we're thinking about is a total Gilead share, which is important to continue to grow, and that's how we see it. But I will say Descovy surprised us. Descovy continues as it gets additional access last year, earlier in the year. The teams have pulled it through. I think the commercial excellence has been quite impressive, and we've pulled it through. We're at the highest share Descovy has ever seen, north of 45% share of the market and growing, yes, to go at the same time. So I think you might see a little bit more of that.
Yeah. Excellent. Maybe just pivoting to the treatment pipeline. Maybe just big picture, confidence at this point that that treatment pipeline is going to, I guess, deliver assets that could largely mitigate Biktarvy as we look out to the mid to late 2030s. And it seems you got a lot going on, but just a level of confidence overall.
I'm Merdad Parsey, CMO. Yeah, you heard from Dan that this is the deepest and most robust pipeline that we had over the last years, right, or maybe any time at Gilead, and that absolutely extends to the treatment pipeline in HIV. And you've seen some of that in the slides, right? We are actively working on all these from a daily, weekly, monthly, all the way to once every six months, different types of treatments. What you see on these slides is really only the surface, right?
Behind that, for each and every one of those options, whether it's the weekly, the monthly, the once every six months, there are other molecules that we have in our portfolio, in the research portfolio that we can easily bring in and really modulate the approach that we had. And you've seen that we're actively doing that, right? You see that GS-3242 is the selected long-term INSTI that we've chosen versus other molecules in our portfolio, and that's going to be the strategy moving forward. So all of that really leads me to have a lot of confidence in the treatment pipeline at this point in time, and I'm very confident that we will deliver on the seven molecules in the next seven years in HIV treatment and prophylaxis.
As I think about this year, we're going to get the Lenacapavir/islatravir weekly combo. Just help us just factor that one and the importance of that combo versus some of the other agents that you're developing, given that it doesn't have an INSTI as part of it.
Yeah, sure. So maybe just from a strategic standpoint, how we see it. Obviously, as Dan mentioned, Biktarvy has set the standard of care for daily oral market. And I think we have an opportunity with the Bic/Len launch first towards the second half of this year to really think about the complex regimen. That's about 5%-6% of the total population that are still taking multiple HIV pills and to replace that, but also in the switch market where people aren't satisfied with their current medicine for safety or any tox reasons. And so we think really bringing in the highest barrier to resistance with Bictegravir with something like lenacapavir, which is the number one capsid, novel MOA, bringing those two pieces together.
And then you have Lenacapavir/islatravir weekly oral, which is really, as you think about the switch market population, an opportunity for those who want something not to think about a pill every single day, but still want to be on an oral. And I think the weekly oral is a great opportunity for some of these patients. And I think the fact that we have optionality across a daily oral, across the switch market, and then, of course, with a weekly oral, I think will bring a lot to this. And it goes back to driving the Gilead share, right, of Lenacapavir. And that's really the backbone to all of the different opportunities we have, both in treatment and prevention. So we're excited about the launch.
And maybe on the weekly side, just your wholly owned weekly. I know there was a little bit of a setback. Is that a program we can expect an update, whether it's later this year or early next year, as I think about that, I guess, next quarter?
We don't have an update for you at this point in time and obviously, we did see some decreases in CD4 counts. We're still working to understand what exactly the reason was for that. The current hypothesis, it was due to the metabolites of one of the two components. So we're doing the work to further understand that. At this point in time, we expect a three- to six-quarter delay, as we had spoken about earlier but once again, right, besides 1720 and 4182, which are the two components of exactly that wholly owned combination, we have other molecules in the portfolio that we can place into that slot of a weekly wholly owned combination so we're working on those in parallel, and we will give you updates as soon as we can.
Can I just ask how weekly fits in the portfolio? Now, I guess you've had a little bit of a delay here, but also you're longer acting or moving forward. At some point, do those longer acting programs become a higher priority versus weekly, or is the goal just to have lots of different options and let the market figure it out?
I think the goal is to have optionality for sure, but I think you're right. I think if you can get to a Q6 monthly, I think that would be better than a Q3 monthly, for example, and so I think as we look at the market research, in HIV treatment, a little different than in prevention. In prevention, definitely frequency is because you're not sick. You're trying to prevent a disease. I think less frequency, better. I think in HIV treatment, you have a bit of a mix, and we believe that the oral market will be sustainable with a growth of the longer acting, so I think it's going to be important to play in both, and that's what we want to bring.
Great. Maybe just pivoting over to Anito-cel, just as we're approaching that launch as we go into this year, latest on how you see that product positioning in the market versus your competition here?
Yeah, so we're excited to bring Anito-cel to patients with fourth line multiple myeloma. We know there's still a very large unmet medical need there. The overall market in fourth line plus is about $3.5 billion. I think our positioning as we think about coming forward, today we have the largest footprint around the globe with our existing business in leukemia. So we will plan to leverage that footprint. We have 177 centers in the U.S., and that grows every year. We really feel strongly about the differentiated profile of Anito-cel and see it not just as a best-in-class therapy, but the best option for fourth line plus myeloma patients based on both the efficacy data and the safety data, and being differentiated substantially on the safety data as well as our world-class manufacturing, we think this is going to be a great option for patients.
Can I just thoughts on the role of bispecifics? We're coming off of ASH, where we saw the TEC-3 data. Just what do you think that means for the positioning and role of CAR-T within the space?
Yeah, so the data at ASH was very interesting. We don't always comment on competitors. What I would say is the study population that it was studied in is DARA-naive, and that's a very small population. The studies that we're conducting today is an example with iMMagine-3. And as we move into even earlier lines, we are looking at those DARA-exposed patients. So we feel like coupled with the safety and efficacy, we have a real opportunity.
Just coming to this initial kind of approval, just elaborate a little bit more on how you're thinking about the ramp here. Obviously, the company has a lot of experience in CAR-T. At the same time, you've got a competitor that's been in the market a few years. Is this something we should think is gradual until we get the earlier lines, or could it be substantial?
Yeah, so fourth line, we still feel is a high unmet need. I think the piece to think about is we have a very large footprint in the U.S. today. As I said, 177 authorized treatment centers. We're working with those centers today to start looking at what onboarding would look like. Our goal is to have a majority of those centers onboarded within the first 30 days. There'll be a subset that may take a little bit longer, but we're in those conversations now.
Excellent. Andy, just over to you. Maybe to start the conversation, just 2026 kind of pushes and pulls in the P&L we should kind of keep in mind as we think about the year.
Yeah, thanks, Chris. Hi, everyone. Andy Dickinson. I'm the Chief Financial Officer. Look, you've seen a lot of momentum in the business that Dan highlighted in his prepared remarks in 2023, 2024, and 2025. Very strong growth in the base business, really strong expense control. Our expenses have largely been flat or declined. We're really happy with where we are. I think last year I said that we really liked the financial setup. You saw that play through the year, and the same thing is true now. We really liked the financial setup. We have a number of launches that are either underway or coming.
We, of course, will provide more specific guidance as we go into 2026 at the beginning of next year, but just like last year, you've seen this year the leverage in our model, and over time, we expect you'll continue to see the leverage in our model. I'd highlight in the third quarter, we had a 50% operating margin, and you see how quickly our operating margin recovered from the investment period as we moved into this optimization period that Dan highlighted starting a couple of years ago.
I guess to follow on to that, you've got a growing number of late-stage pipeline assets. The company's got nice visibility on growth. How are you thinking about balancing? Should there be another investment cycle to come here to really accelerate that growth, or do you stick on the path of trying to?
Yeah, I'll start, and Johanna may want to comment as well. Look, we're going to make the right investments in all the launches that we have underway and that we're coming. And our model is so efficient that you see with the two launches that are underway how we can do that in a differentiated way. We've brought our SG&A expenses, especially our G&A expenses, down meaningfully over the last couple of years.
Johanna and her team have been making trade-offs on the commercial side. So we have a lot of confidence that we can invest at the right level, both on the R&D side and the commercial side, and continue to have a top quartile, top tier financial profile. And again, I think it's just the beginning of this next cycle of growth that Dan highlighted, and we'll continue the expense discipline. So we have a kind of a decade in front of us at least that looks really good from a financial perspective.
It's fair to think about continued margin expansion for the business from here.
Yeah, to a point. I mean, I've always said when I joined Gilead, we had such an extraordinarily high operating margin. It actually signaled we probably weren't investing enough in the business. So when we look at our 50% operating margin today, and that includes IPR&D, that's an incredibly strong operating margin. There's certainly the potential for that to continue to kind of go up over time. And as a team, we will always make sure that we're making the right investments on the R&D side and the SG&A side to make sure that we have a very sustainable business model.
Then on the business development front, I think it's been about two years since the CymaBay acquisition. What is the appetite and kind of priorities right now as you think about that piece of the capital allocation story?
Yeah, I mean, we've been very active on the M&A side. So Dan highlighted the $1 billion a year of ordinary course, corporate development, business development, licensing, small acquisitions. But even on CymaBay type deals or deals, whether they're bigger or smaller than that, we've been very active. I mean, the need today is very different than it was when we all joined the company in terms of building out the portfolio, but that doesn't mean that we're not going to do things.
So a number of the deals that have printed here recently are deals that we've looked at closely, we've been involved in, and they just haven't been the right deals or at the right value for us. So we are focused on expanding our portfolio with de-risked late-stage synergistic assets. I expect that we will continue to do that, whether in 2026 or beyond. But again, when you take everything that Dan highlighted in our prepared remarks, we expect to add to it over time, and that will further kind of turbocharge the growth that you're seeing.
Is there a size constraint we should think about for the company?
No, I mean, again, we ended the year with an exceptionally strong cash balance. We generate a lot of free cash flow. We have the ability to return cash to our shareholders, as Dan highlighted through both the dividend and share repurchases, and do those deals that we need to do. So we're focused more on the small to medium-sized deals. We think that, again, CymaBay is a great example, but I'm not trying to be too specific. But we have a lot of flexibility given the free cash flow that we generate.
Great. And just last question here. Gilead recently signed an announcement with the administration on MFN. Seems like a very attractive deal from our seat. But talk a little bit about what that means to the company and the ability to manage through that set of agreements.
Yeah, so look. I think the important thing, remember, these are voluntary agreements, but the voluntary word that's important. I think we believe strongly in working with the administration on two key things. Number one, addressing the fundamental root cause of affordability of medicines here in this country, and there's a lot of work to do there. There's systemic work to do around the nature of what people pay for their medicines and how and why, and how our savings may not get passed on to patients.
So we're firmly focused on that, but the second thing is, and I think every conversation we've had with the administration has been around, they understand the importance of this industry to the United States. As a U.S. company that reinvests more than 80% of our profit back into the United States, I think we are in dialogue a lot with the administration. One example of that is the work with the State Department, for instance, on Lenacapavir. I mean, so I think there are a variety of things that we'll continue to work with the administration on. The MFN piece of it is, as we've said, very manageable as we go into the next year and beyond.
Excellent. I think we're out of time. But congrats on all the progress and thanks for the comments today.
Thank you.