Good afternoon, everyone. Thank you so much for joining us. It's my pleasure to introduce the Gilead team. We have Dan O'Day, Chairman and Chief Executive Officer, and Andy Dickinson, Chief Financial Officer. To start here, Dan and Andy, perhaps give us an overview of where the company stands today, including your core franchises, and how you're thinking about priorities, outlook, and strategy as we head into the H2 of the year and beyond.
Sure. I'll start, Andy and I can tag-team on it. First of all, thanks for having us here. We've been talking at this conference for a while now. I would say this is a really important time for Gilead. It's really just watching our strategy play out over the past seven years. What that means is kind of consistent commercial clinical execution. We have the most robust pipeline now that we've ever had in Gilead's history. I say that with a lot of admiration for the people that were at Gilead before I was. What that means is we've got three really strong therapeutic areas. Virology has never been stronger in terms of HIV.
We just launched Hepcludex now for hepatitis D. HIV, the long-acting programs, I know we'll talk about that in both treatment and PrEP, including near-term issues that are occurring. We expect BIC/LEN to be launched soon, which is a terrific opportunity to take advantage of the switch market that occurs in HIV treatment with really novel integrase and capsid inhibitor. We just got the news yesterday that the once-weekly islatravir program that we have with Merck was successful from a clinical trial perspective. We look forward to also providing the first kind of long-acting treatment regimen. We have just countless other programs within the long-acting treatment and long-acting prevention that I know we'll talk about.
Combine that with the momentum we have right now with oncology, TRODELVY® growing 37% in the Q1 of this year, anito-cel expectation towards the end of this year, the recent acquisition with Tubulis in ovarian cancer. The oncology portfolio is a meaningful part of our business today and growing significantly. I know we'll talk more about that. Finally, inflammation autoimmune. What we have today is Livdelzi. We just had a recent trial readout that showed efficacy in earlier lines of therapy that can more than double the patient population. Then we have a variety of other phase II assets that we'll report on later this year, like alpha-4 beta-7, and Roc-4. Put all that together, a very strong portfolio, both in the short, medium, and long term. We're making good decisions within the company on what to pursue and what not to pursue.
We're being disciplined about our operating expenditures. I'll just remind you, we have no patent expiries of significance until BIKTARVY in 2036. We've got a long runway of growth and diversification ahead of us, and we're going to be financially prudent about how we approach that.
Great, broadly here, maybe on the drug pricing side post the recent agreements with the administration, where do you see the industry now standing with regard to drug pricing policy?
I think the MFN agreements that we signed at the end of last year were intended to do two things. Number one, begin to address the patient affordability issue here for some medicines within the country, but make sure that the essence of the innovation ecosystem that works here in the U.S. was preserved. That certainly was the case with our agreement. It was a voluntary agreement, it allows us to make sure that we can continue to invest appropriately in medicines moving into the future. I think there's a lot of momentum in Washington to begin to address some of the fundamental issues that go into patients' out-of-pocket costs. Certainly, MFN was one aspect of that, PBM reform, additional attention on 340B.
The conversation in Washington is much broader than just innovator drug pricing now, I think that's a result of really educating people, frankly, for the past five to seven years. We have to be alert on the policy front. Anything that happens in Washington, we want to happen that helps people afford their medicines more, make sure that the type of innovation we're seeing across Gilead and other companies continues to be preserved. I'm feeling good when I talk to the lawmakers about where we're headed, we always have to be astute to that. I think there's a lot of reform that we can drive that will secure innovation, that really help people pay less for their medicines here in the U.S.
Great, how is Gilead thinking about China here from a strategic standpoint in terms of innovation? More broadly, how do you plan to interface with the country?
I'm going to invite Andy here.
Sure. Yeah, I'd be happy to.
It's not the only voice that you hear. Please, Andy.
Yeah. We spend a lot of time in China, like our peers. The amount of time that we spend in China has increased over the last five or six years. The quality and depth of assets that we're seeing has improved dramatically, even over the last couple of years. I think we said a couple of years ago that coming out of the beginning of the year, as we set our priorities, in the last couple of years, roughly 50% of the things that we prioritized on the corporate development front either are coming from China or originally came from China into the U.S. It doesn't mean that we're not spending a lot of time in Boston and across the U.S. and in Europe. We're seeing incredibly strong innovation across the entire ecosystem, which is really exciting.
Like others, with the additional investment that you've seen in China over the last couple of decades, we're seeing a number of programs that we can add. Most of that is late preclinical, early clinical assets that we can plug in what we call ordinary course corporate development transactions. It has been a noticeable change and something that's exciting for us in terms of the ability to continue to add to our portfolio.
The thing I'd add to that, because I think that's so accurate about sourcing new innovation. The other way to look at China is doing early-stage studies fast improve probability of success. We've done that cell therapy. On the one hand, we've acquired a company called Interius in Pennsylvania that is about the constructs. We also did a deal with a company in China called Pregene. The combination of those two, in addition to having the world-leading cell therapy platform that we can plug and play onto the in vivo platform, is to be able to do trials in China at a sophisticated level that allow you to determine what may be successful and to take into later-stage trials. I think both sourcing innovation and early innovation tests are the two things we think about strategically when we think about China.
Okay. Maybe pivoting over to the HIV franchise here. A question for both of you. The Yeztugo® launch continues to be the primary focus from a commercial perspective right now, and you reported sales of about $166 million in the Q1 of the year and raised full-year guidance from $800 million- $1 billion. As we think about 2026, what are the key assumptions built into that updated guidance in terms of both new user growth and user persistency? In particular, where are you seeing persistency stabilize versus that 70% best-case scenario that you pointed to?
I'm happy to start. Look, all of the launch metrics, not just persistency. Your first question of increasing the guidance, it's really driven by every one of the launch metrics that we're looking at. We're either tracking with our expectation or ahead of expectation. That includes coverage, unrestricted coverage, awareness, and the training, bringing different practices online in terms of the progress of buy and bill versus the pharmacy. We're seeing higher buy and bill percentage of the market than we expect at this point, which is great for the long-term launch. On persistence specifically, we regimen in long-acting HIV prevention persistence based on their statements. Our expectation is that we will do better than that, and the early data is on par. Maybe back to the first part of your question is, where is most of the business coming from?
It's coming from patients moving off of other preventative therapies, typically the orals, because that's by far the biggest share of the market. Roughly 94% of the market were the daily orals when we launched Yeztugo®. You're still seeing most of the people moving from existing PrEP patients moving to the long-acting injectable. It's driven by the new to long-acting patients for the most part. The good news for us, again, other launch metrics is a share of that, roughly a third of that is coming from the generic orals. A third of it is coming from Descovy, which is our other branded daily pill for prevention, a third of them are naive patients to prevention, and then a third from the daily orals, and a third from the long-acting injectables.
All of that together gave us confidence that we're well on track to the $1 billion of revenue this year, given the strong start in the Q1.
I think to Andy's point, we're playing a multi-tiered long approach to prevention. The early Yeztugo® is really around, to Andy's point, capturing those patients that are switching or naive to care, but are currently in the concept of care. There's a whole another percentage of patients in this country that are probably still a couple of years away from us truly being able to access, but where long-acting is really the solution for them. That's where we largely see HIV incidence increasing in this country. It's around 700 new cases a week in this country, largely in the rural South amongst underserved communities that where oral PrEP is just not an option due to stigma, discrimination, and other factors. We have very targeted programs.
It's not a nationwide program, but targeted to those communities, literally down to the zip code, where we had need to educate new providers, and obviously new people that could benefit from PrEP. We think about it in a multi-tiered way. I know people are focused on the launch, rightfully so, and they should be. We are too. I think we have to think about PrEP in the short, medium, and long term, including other options for PrEP, like our once-yearly, which is almost now fully recruited and could be launched as early as 2028. The PrEP market, we think, has long, durable growth in it.
In the context of the data that was announced yesterday for your Merck-partnered weekly treatment here for HIV, maybe help us understand, I know we'll see data shortly, help us understand the commercial outlook for this asset in terms of capture when you think about where BIKTARVY® is positioned and where you could have additional growth, and then how to think about maybe pricing dynamics. It may be too early to provide that, but how to think about that commercial strategy.
Let me start on that one.
Yeah
Andy can add. It's important to put this readout from yesterday, the pending FDA approval of BIC/LEN into context. When we think about HIV treatment, we think about providing people with novel options for their therapy. Obviously, BIKTARVY® is currently the standard of care. In this country alone, it's got a market share globally of around 52% overall. But around 72% of naive patients start on BIKTARVY®. That continues to be, without a doubt, the premier medicine within HIV treatment today. It's hard to improve upon BIKTARVY® on a daily basis because of the level of efficacy and the resistance profile. What you can offer people is when they do decide to switch, an option to switch to. Some of that is going to be true long-acting, like once a month or once every six-month treatments.
Some of it is going to be just the opportunity for people to try something different or try something new. Actually, around 20%, on average, of people on treatment switch on an annual basis. Largely, they switch because Gilead has such a prominent position. They switch today overwhelmingly to non-Gilead regimens. What the news from yesterday and our BIC/LEN approval provide is an opportunity to capture some of that switch that is currently going out of Gilead with more novel options that meet people where they are. In the case of BIC/LEN, it's a novel capsid inhibitor combined with the number one integrase inhibitor. It's very attractive to some people, even if they're doing well on their current regimen. With the islatravir and lenacapavir data from yesterday, which, Bob, you're right, we'll show you a little bit later this year, but did show non-inferiority to BIKTARVY®.
It allows people to go on a less frequent dosing once a week. We will also have other options for longer acting, including our own wholly owned once weekly, which we expect to take into the clinic later this year. We're still working on once monthly and once every six month injectables. There is a lot to come in our treatment landscape, and we just want to provide people with options that allow them to stay adherent to their therapy, and reduce the likelihood of spreading it to others and living long, healthy lives. Remember, in this country alone, there's still around 30% of people that have HIV that are not virologically suppressed in this day and age in the United States. There is opportunity both to transition people that are well-maintained, but also an opportunity to address those people that aren't virologically suppressed today.
Maybe they struggle with a daily oral pill. That's where once weekly may help, once monthly, once every six months may help. That's the broader context of what we're achieving here.
That's great. Could you put it in the context just with regard to the overall move here for the long-acting treatments across both PrEP and treatment, and the competitive dynamics that are playing out as well? How do you think of where you feel confident with leadership into the next decade, and which segments of the market do you see the most risk as you think about expansion versus cannibalization?
I'm happy to start. We'll maybe start with the treatment market. Picking up on what Dan said, we are developing long-acting treatments at every reasonable treatment interval that patients may want. That includes, in addition to the daily orals that are available today and BIC/LEN that we're launching later this year, the weekly orals, including the Merck-partnered combination that you were just discussing, as well as monthly oral combinations, every three-month or every four-month injections, and then probably every six-month injections. We'll have phase II data on our long-acting injectable integrase inhibitor later this year that we believe should demonstrate that we can get to six months and pair that with lenacapavir.
The biggest opportunities in the market for treatment when you do the market research suggest, as you'd expect, that every six-month or longer injections and the monthly orals are the largest opportunities beyond the daily orals. When you look down the road based on where we are today, we've developed, I should say, multiple programs for each of those areas of opportunity. If one of our programs, for any reason, doesn't move forward, we have another, for instance, integrase inhibitor that we can slot into any of those programs. We have a high degree of confidence that we're going to get there across the board in terms of delivering these long-acting therapies for patients that currently have HIV. You should see that over the next five or six years.
There are some programs that are more advanced, including the phase II data that I just discussed with the every six-month injectable, there are others, including our wholly owned weekly orals that we should be moving into phase II later this year. Of course, you'd see then launches early in the 2030s. In terms of treatment, given where we are today, we feel great about the breadth and depth of the program and expect that we'll continue to be a market leader over time. In prevention, we're already there today, as you know, with the every six-month approved, the DESCOVY approval a year ago for every six-month subcutaneous injection. We also have a yearly intramuscular formulation of lenacapavir that builds on the PURPOSE data from DESCOVY. We're just doing a simple PK bridging study that's underway.
We expect to report out that data later this year or next year and launch the yearly intramuscular HIV prevention therapy in 2028. Finally, in terms of oral long-acting therapies for prevention, that's another area of active exploration on our end. You can imagine that any oral small molecule that we develop for treatment could also then be developed for HIV prevention. I'm happy to provide updates on the totality of the programs over time. We feel great in terms of where we are.
I'll just say one thing about cannibalizing to add to Andy's comments. Let's just take prevention, for instance. When we cannibalized DESCOVY, there's obviously a net benefit for the person because the compliance rate of daily DESCOVY and TRUVADA is quite low. It's not just a one-for-one cannibalization. You're assuring six months of compliance with Yeztugo®. Eventually, it could be one year of compliance. That's a very big difference for people, but it's also a big difference for our business and how we account for that. The same thing, as I mentioned before, even in the treatment market, whereas people are largely compliant, because if they're not, they obviously develop disease again, and they fall into that 34% virologically suppressed.
As we develop long-acting, of course, we will cannibalize, if you like, BIKTARVY over time, which is part of our strategy, of course, is to give people an even better option than BIKTARVY prior to its patent expiry in 2036. You also then get to people that are in an unaddressable market with daily orals today. It's a combination of both cannibalizing, then getting to portions of the market that don't exist today. That's how we think about the totality of HIV care as we introduce these new options.
Yep. On the oncology front, you have a December 23rd PDUFA for anito-cel here. Walk us through how you're thinking about the launch in multiple myeloma, including the initial sales trajectory next year and the ultimate size of the fourth-line-plus opportunity.
We're very enthusiastic about anito-cel. Obviously, we've doubled down on the acquisition of Arcellx because we know that therapy better than anybody. The reason we're so enthusiastic about it is that it kind of strikes the best in disease profile category that we see as needed in multiple myeloma today. Multiple myeloma, a lot of products and a lot of competition. If you just boil down the guidelines at the end of the day, what I've heard also as I go and visit our customers, is that what people really want is the opportunity to have a one-and-done therapy early in the course of the disease that will allow them not to go through constant therapy. I mean, to forget about their disease for a little while. Now, anito-cel, we believe, has that profile over time.
We'll start in the fourth-line-plus scenario, a very late line scenario, but even there, it's about a $3.5 billion market of the $20 billion multiple myeloma market. We are very well prepared to go into that disease with a differentiated product profile in anito-cel and being a cell therapy that has strong durability and a better side effect profile in terms of not having neurotoxicity and low ICANS, which allows it to both be used perhaps more so in the community setting than the current offering, but also to avoid having that dilemma in a physician's mind. Do I give somebody a long, durable response, but is there a percentage chance that somebody develops another disease, parkinsonisms or others? In the fourth-line plus, that's important, but you can imagine how much more important that becomes when you're talking about second line or potentially first line.
We want to have a strong start. This anito-cel goes upon our world-leading cell therapy backbone. What I mean by backbone, fast turnaround time in manufacturing, about 14 days. It's the same platform as YESCARTA. We're supplying that for the clinical trials today, so we know we can do that. We've got capacity to meet demand. We have a very sophisticated system of high touch with the customer base out there. We're going to be launching with five times the number of ATC centers that others have launched with in the past, just because we have a very broad ATC coverage, and then we'll eventually move into the community. We feel really well positioned for this launch and over time to move up in lines of therapy.
Our second-line trial is essentially almost completely enrolled now. We could be filing that as early as 2027 for a 2028 launch. It won't be too long to remove that up in the lines of therapy. The last thing I'll say is because we feel this medicine, this therapy is so differentiated, the domain aspect of anito-cel is something that we can also use in our in vivo platforms for the future as well. It gives us a lot of optionality and functionality. I don't know if there's anything else on that.
I think you hit the key point.
Maybe to follow up.
I get excited when I talk about everything but also anito-cel.
When you think about a return to growth strategy here for this cell therapy vertical, how much of that do you think will play out from anito-cel and then really this effort you're making now in in vivo?
Yeah, I think certainly for the next decade, it's largely driven by anito-cel. As Dan highlighted, the multiple myeloma market is really large, by far the largest market for CAR T today. We think anito-cel is positioned to be the best in class, best in disease asset. We see very significant growth for anito-cel as an autologous cell therapy over the next decade. I think as you look down the road, whether it's eight years from now, 12, 15 years from now, you likely will see in vivo CAR T treatments. This is an area that we started focusing on well over five years ago. We made one of the early investments in a private company that was sold recently. We've actually made some additional selective investments.
We bought a company called Interius in Philadelphia that has in vivo CAR T, both data in humans as well as technology. We did a partnership with a company in China called Pregene, back to your earlier question, that has both a technology angle, but more the ability to do early proof of concept clinical studies that Dan alluded to. Then we've been developing our own non-integrating in vivo cell therapy programs as well. We're taking kind of a dual approach in developing in vivo cell therapies. Like many people believe, based on the early data, where there's good proof of concept, not only with our programs, but with others, that eventually we're likely to see cell therapies that have similar efficacy and durability to the autologous. That's years and years down the road. Between now and then, anito-cel will be the biggest growth driver.
We also have our own CD19, CD20 bicistronic CAR Ts that we're developing as follow-ons. Think of them as better versions, next generation versions of YESCARTA and TECARTUS that are in late-stage clinical studies that could add growth. Then finally, we acquired from another company in Philadelphia that had been spun out of Penn called Tmunity, a glioblastoma CAR T that has some encouraging early clinical data that also could drive additional growth. We really like where the CAR T business is going with the anito-cel launch and all the other ones from there. Obviously, we have a very solid foundation to build upon. Dan highlighted the manufacturing, and then we will be making the investments needed in vivo to stay at the forefront of cell therapy.
You've announced several notable acquisitions this year from Arcellx to Tubulis and Ouro Medicines. Walk us through the strategic rationale really underlying these deals and what key assets, apart from Arcellx, which we discussed, that we should be paying closest attention to in the near term.
Yeah. Well, first of all, we're really excited about all three of them, and that comes on top of my comments at the beginning, which is this is the strongest portfolio we've had across all three therapeutic areas in Gilead's history. The bar was high for these acquisitions to come into our space. We've been looking at everything like most companies, but the last large transition we did was actually seladelpar, and it was about two years ago. Although we've been looking, we haven't really found anything that kind of met our bar of being proactive but also disciplined. Remember, we don't have any large patent cliffs until the end of 2036, our sense of urgency is different than other companies or the calculus we have. All three of these hit our sweet spot. We've already talked about Arcellx.
The other two, and they fit into really all three of our therapeutic areas, of course. With Tubulis, maybe I'll cover that one, then I'll hand it over to Andy to talk a little bit about Ouro because I think it's equally interesting and exciting when we talk about our I&I approach and B cell depletion. On Tubulis, maybe just to frame that one, ever since we acquired Immunomedics, we've been looking and scanning the world for kind of what's the next generation, really step change, if you like, in ADC technology. We feel we found it in Tubulis in that it has a proprietary linker that is very different than anything else we've seen, and the capability to have all different types of payloads. I mean, beyond just cytotoxics.
It could be antivirals, it could be degraders, it could be a variety of different payloads. It gives us a lot of optionality. While the lead program GS-040 is targeting NaPi2b in ovarian cancer, potentially both platinum resistance and platinum sensitive, first of all, NaPi2b is expressed in multiple different cancer types, we could take that into other tumor types. The second program that's in a phase I basket trial now is targeting 5T4, which is again overexpressed in different cancers. We can really look at this as a broad platform to kind of build from moving forward. We're maintaining Tubulis, the innovation center in Munich, where it's at, and they're going to work really closely with our scientists in California. I think there's just a tremendous amount of optionality that that provides us and fits into our portfolio context.
Maybe I'll ask Andy because he took a lead role in Ouro.
Sure. The Ouro acquisition, like the Tubulis acquisition, really bolsters our mid-stage pipeline. Part of the Gilead story this year, as Dan talked about the three therapeutic areas, we have developed internally a number of really exciting, albeit relatively early, kind of mid-stage I&I programs. The Ouro acquisition is a great complement to that. It brings a CD3/BCMA bispecific that depletes B cells. It's one of the many programs out there that are focused on deep B cell depletion in I&I conditions. This is an asset that came from China, a company called Keymed that was partnered with venture capital firms in the U.S., and they did a really nice job over the last year of developing some really compelling clinical data in large orphan I&I indications where deep B cell depletion can be beneficial.
That like Tubulis, the efficacy that you're seeing in these early phase I, II studies is really impressive, and you'll see it, like Tubulis again, at scientific conferences later this year, and we can talk about it in greater detail. It's a great addition to kind of what we were already developing internally. The other thing that we like is as we think about over time, thoughtfully and selectively building an inflammation commercial organization beyond what we have today for PBC and Livdelzi, these large orphan indications offer a really nice strategic entry point for us to build. Then gives us the ability to build on that over time when we launch, presumably other therapies, including hopefully some that we have in mid-stage development, including our oral alpha-4 beta-7 small molecule that was developed internally.
We have a couple of STAT6 degrader programs, and an IRAK4 small molecule, amongst others. It's an emerging area for us in I&I, and this acquisition just fit really well quality of the early data, and then strategically, what it would allow us.
These combined three transactions accounted for about $13 billion in deal value. Where does your appetite stand from here with regard to sizable M&A?
Yeah. I think the primary focus in the short run is on integrating and really making sure that we don't miss a beat in terms of moving forward these programs in clinical development. These are competitive areas, as you highlighted, and we have a lot going on. They were all right size for us, so we're really happy with the progress that we're making into all three of the deals are closed now. The integrations are growing really well. We've always said that we want to add programs on a somewhat regular basis, every two to three years, more sizable deals, which to us typically means the small to medium size M&A deals similar to these. We will continue to add to the portfolio over time.
Maybe just circling back to where Dan started, the company has never been in a better position in terms of both the launches that are underway. We've talked about seladelpar and the Yeztugo® launch, the growth in the HIV prevention business. You have anito-cel humming, TRODELVY in first-line triple-negative breast cancer. There's all sorts of existing late-stage assets that are going to drive growth, BIC/LEN, islatravir / lenacapavir. We are really developing nicely this mid-stage pipeline that can drive longer term growth that we talked about. We don't have the same need today, certainly, that we had seven years ago when Dan joined the company to add to the portfolio, or when I joined, but we will selectively add over time, and we have the financial flexibility to do it even after doing $13 billion in deals.
We just took our debt levels back up to our historic debt levels. Our net debt and total debt to EBITDA ratios are very attractive for a company of our size. We really like where we are in terms of financial flexibility, the primary focus is on making sure that we do the integrations right.
You reported about 47% in operating margins in Q1. As you absorb these deals here, how are you thinking about the trajectory there for 2027 and [inaudible].
There's a modest increase in operating expenses in 2026 and 2027. Most of that in the existing portfolio. The other thing that's important to highlight as we are building out our mid-stage pipeline is that as we looked at our long range planning, we were going to have room in our R&D budget in 2027, 2028 and beyond as we roll off a lot of the large phase III programs that we've run over the last many years. These programs fit perfectly, both scientifically with the quality of data and the room that we are going to have in our R&D budget. When we did the deals, we said it's modest, manageable increase in 2026 and 2027. We'll do everything we can to cover that in our existing portfolio.
You've also seen the outperformance in the Q1 of the commercial portfolio that allows us to increase slightly the investment, but not impact our EPS growth and the EPS we can deliver for shareholders. I think we're very comfortable that these fit nicely, and maybe to your question, allow us to maintain the top quartile or industry-leading operating margins. We don't expect that to change. We are very focused on disciplined expense management and maintaining those strong margins throughout the cycle.
Great. Dan, anything?
Well, I would just add, I just want everybody to know that what does all this mean? It means we can do more for patients out there across the world, in this country. It also means we have a good, consistent ability to deliver top quartile growth on the revenue side. We're very committed, Andy and I, to top quartile operating margins. We feel we still have a lot of leverage in the business to get there. Obviously, EPS accretion that's faster than sales over time is exactly our goal, and our capital allocation priorities will remain investing in the business, appropriate M&A, a growing dividend, opportunistic share buybacks in that order. We're firmly committed to what we can do for patients, but also the attractiveness for shareholders as well.
Great. Well, with that, thank you so much.
Thank you.
Thank you.
Thank you for having us.