Gilead Sciences Inc (GILD)

• Gilead is highly optimistic about the potential of lenacapavir for PrEP, seeing significant growth opportunities by expanding market size, reaching more consumers, and expanding globally beyond the U.S. -
• The company's HIV business shows strong durability with no significant patent expiries until 2033, and multiple new long-acting treatment options in development, aiming to maintain leadership in HIV treatment and prevention well into the late 2030s. - -
• Gilead reported its strongest quarter of the year, highlighting both commercial success and promising clinical data on key products like lenacapavir and anito-cel, indicating strong commercial and clinical execution. -

• Gilead's HIV business has significant exposure (mid- to high 20%) to Medicaid, and potential Medicaid cutbacks could negatively impact revenue. -
• Lenacapavir for PrEP may cannibalize sales of Gilead's own product Descovy, which could impact overall HIV revenue. -
• Gilead is delaying quantitative guidance on lenacapavir for PrEP, suggesting uncertainty about its commercial potential. -

1. Lenacapavir Launch
   Q: Thoughts on lenacapavir PrEP launch next year?
   A: We are very excited about the potential launch of lenacapavir for PrEP. Growth opportunities include expanding market size with more consumers using PrEP, more prescribers, and expanding beyond U.S. markets. Lenacapavir's twice-daily subcutaneous profile offers significant benefits, and we expect it to impact both Descovy and the generic oral market, which makes up 55% of the market today. Commercialization plans are well underway to ensure a seamless experience for providers and consumers. We will share more details at the HIV analyst event in December. -

2. Operating Margin Expansion
   Q: Confident you can drive operating margin expansion in 2025?
   A: We have made real progress in letting the operating margin expand in the last two quarters. We are focusing on expense management and have seen strong operating margins in both the second and third quarters. The operating margin would have been 47% this quarter if we exclude the impact of the royalty purchase from Janssen on seladelpar. Our ambition is to have an industry-leading operating margin over time. It's too early to give specific guidance on 2025, but we are pleased with the progress and will provide more details at our year-end call - ,. -

3. PrEP Market Growth
   Q: Is 600,000 on PrEP by 2030 still fair? Where will growth come from?
   A: We believe at least 600,000 people on PrEP by 2030 is a fair assumption, possibly beyond. Most of the growth will come from expanding to different consumers, including Black and Latino individuals, cisgender women, transgender people, and young adults. The introduction of lenacapavir for prevention, which doesn't require daily dosing, offers a significant differentiation and will drive growth. More details will be shared at the HIV analyst event in December. -

4. Trodelvy in TNBC Frontline
   Q: How much larger is the frontline opportunity in TNBC?
   A: Moving into earlier lines of therapy in triple-negative breast cancer, the market is quite large—probably about double the current size. We believe that our ASCENT-03 and ASCENT-04 studies can make a significant difference for patients, especially if we can show overall survival benefits. This would allow us to move up from second-line plus, where we are the standard of care, and impact patients earlier in their metastatic disease. -

5. Oral vs. Subcu HIV Treatments
   Q: Importance of subcutaneous injectables vs. weekly oral options?
   A: We are taking a broad approach by developing both oral and injectable options. There is sufficient demand in both areas. For orals, we see opportunities for weekly or monthly dosing, potentially entering the treatment market. Subcutaneous injectables offer greater durability, aiming for dosing every three months, up to six months or beyond. Our goal is to provide options that meet different patient needs, ensuring we remain leaders in HIV treatment and prevention - ,. -

6. Seladelpar Launch Insights
   Q: Early insights on seladelpar launch and payer coverage?
   A: We are very pleased with the initial launch of seladelpar since mid-August, exceeding internal expectations for patient demand. From day one, we enabled direct purchasing with a specialty distributor, which was pivotal for key academic centers. Payer coverage is in line with expectations for rare diseases, with no major barriers to access. For appropriate patients, it takes a little more time due to step edits and prior authorizations, but patients are getting access. We expect modest contribution in 2024 and more meaningful sales in 2025. -

7. Medicaid Exposure in HIV Franchise
   Q: How might potential Medicaid cuts affect your HIV franchise?
   A: Medicaid patients make up about mid- to high 20% of our total HIV business, a percentage we watch closely. Patients always have fallback options like ADAP and 340B programs, so access is not an issue. We are monitoring potential Medicaid cutbacks closely, but nothing has been announced yet. -

8. Anito-cel Neurotoxicity Data
   Q: Is lack of delayed neurotoxicity due to construct, and is data sufficient?
   A: We believe the lack of delayed neurotoxicity with anito-cel is due to its construct—a very compact DD domain. We have data on over 100 patients without observing neurotoxicity, increasing our confidence that it's the construct. We will present a larger data set at ASH, reinforcing that we have a best-in-class construct. -

9. Yescarta Competition
   Q: Impact of in-class and out-of-class competition on Yescarta?
   A: Yescarta faces in-class competition from two new indications in follicular lymphoma and mantle cell lymphoma, and increased manufacturing capacity. Out-of-class competition comes from bispecifics, accounting for about 50-50 impact. We do not believe we need to revisit our commercial strategy and are confident in our plans to build on our leadership with Yescarta and the upcoming anito-cel in 2026. -

10. Anito-cel Regulatory Filing
    Q: What's gating anito-cel regulatory filing, and how to increase penetration?
    A: Regulatory filing requires 12 months of data, as per FDA expectations. We believe we have a differentiated safety profile and will discuss the review cycle with the FDA. Currently, only 2 out of 10 patients receive CAR-T therapy, and 1 out of 10 in multiple myeloma. We need to address reimbursement and access challenges, particularly in community practices, to increase penetration. Our efforts over the next 12 to 18 months are critical to bringing anito-cel to more patients. -

11. Anito-cel Clinical Sites and Outpatient Use
    Q: How many clinical sites are enrolling, and is outpatient use expected?
    A: While we don't share the number of recruiting sites, we are working to have all 130 clinical trial sites up and running. We believe anito-cel has an outpatient profile, supported by the low rates of ICANS and CRS we're seeing. Our IMAGINE-3 Phase III program includes data generation in the outpatient setting, which we've designed into the trial. -

Annual guidance for FY 2024:

• Product Sales (excluding Veklury): $26B to $26.3B - (raised from $25.8B to $26.2B - - )
• Full year Veklury revenue: $1.8B - (no prior guidance)
• Total Product Sales: $27.8B to $28.1B - (raised from $27.1B to $27.5B - - )
• Non-GAAP product gross margin: 86% - (raised from 85%-86% - - )
• R&D Expenses: Expected to decline by a low single-digit percentage - (lowered from increase by a low to mid single-digit percentage - - )
• Operating Income: $8B to $8.3B - (raised from $7.2B to $7.6B - - )
• Tax Rate: Approximately 27% - (no prior guidance)
• Non-GAAP EPS: $4.25 to $4.45 - (raised from $3.60 to $3.90 - - )
• GAAP EPS: $0.05 to $0.25 - (no prior guidance)