Gilead Sciences - Q4 2025

Transcript

Operator (participant)

Good afternoon, everyone, and welcome to Gilead's fourth quarter and full-year 2025 earnings conference call. My name is Rebecca, and I'll be today's host. In a moment, we'll begin our prepared remarks, followed by our Q&A session. To ask a question, please press star one. To withdraw your question, press star two. Now, I'll hand the call over to Jacquie Ross, Senior Vice President of Treasury and Investor Relations.

Jacquie Ross (SVP of Treasury and Investor Relations)

Thank you, Rebecca. Just after market close today, we issued a press release with earnings results for the fourth quarter and full-year 2025. The press release, slides, and supplementary data are available on the investors section of our website at gilead.com. The speakers on today's call will be our Chairman and Chief Executive Officer, Daniel O'Day, our Chief Commercial and Corporate Affairs Officer, Johanna Mercier, our Chief Medical Officer, Dietmar Berger, and our Chief Financial Officer, Andrew Dickinson. After that, we'll open the call to Q&A, where the team will be joined by Cindy Perettie, the Executive Vice President of Kite. Let me remind you that we will be making forward-looking statements. Please refer to slide two regarding the risks and uncertainties relating to forward-looking statements that could cause actual results to differ materially. With that, I'll turn the call over to Dan.

Daniel O'Day (Chairman and CEO)

Thank you, Jacquie, and good afternoon, everyone. I'm pleased to share another very strong set of results for Gilead, closing out a remarkable year for the company with clinical, commercial, and operational achievements that set the stage for a very promising 2026. Starting with our full-year results, our HIV business grew 6% year-over-year, driven by 7% growth in Biktarvy and 47% growth in our HIV prevention portfolio. This was despite an estimated $900 million headwind in 2025 associated with the Part D redesign. Absent this headwind, our HIV business growth was 10% in 2025. Sunlenca, our twice-yearly HIV prevention injectable, has already exceeded our coverage goals and is rapidly gaining market share in addition to expanding the reach of HIV prevention to new users.

With its unique potential to bend the curve of the HIV epidemic, Yeztugo is a transformative medicine that we expect to drive durable, steady, and long-term growth in our HIV prevention business in the coming quarters and years. Our liver business grew 6% in 2025 compared to 2024, largely driven by the rapid adoption of Livdelzi for primary biliary cholangitis. In oncology, Trodelvy also grew 6% in 2025, driven by momentum in metastatic triple-negative breast cancer following positive phase III updates. Cell therapy was down about 7% year-over-year, largely in line with our expectations and reflecting continuing competitive headwinds.

Moving to clinical progress, following a very productive year in 2025, we have a catalyst-rich year ahead, including phase III updates from ISLAND-1 and ISLAND-2 trials evaluating islatravir plus lenacapavir, the potential first once-weekly oral treatment for people with virologically suppressed HIV. Two phase III updates for Trodelvy, including the EVOKE-03 trial in metastatic non-small cell lung cancer and the ASCENT-GYN01 trial in advanced endometrial cancer. Lastly, we expect an update on the phase III IDEAL study evaluating Livdelzi in second-line primary biliary cholangitis patients with only incomplete response to UDCA. The strength and the pace of progress in our clinical pipeline is driving a steady cadence of product launches.

And on the heels of Livdelzi in 2024 and Yeztugo in 2025, we are targeting four commercial launches this year, including Trodelvy for first-line metastatic triple-negative breast cancer, extending beyond second-line treatment, for which Trodelvy is a standard of care, following positive results from the phase III ASCENT-03 and ASCENT-04 studies, a new daily oral combination of Bictegravir and lenacapavir for HIV treatment, following positive updates from the phase III ARTISTRY-1 and ARTISTRY-2 trials, anito-cel, our potential best-in-disease BCMA CAR T for fourth-line or later relapsed or refractory multiple myeloma, and bulevirtide in the U.S., following approval in the EU for treatment of chronic hepatitis delta. These commercial and clinical milestones reflect the success of our diversification strategy that has been shaping Gilead over the last six years.

We have up to 10 ongoing and potential new launches through 2027 and the strongest pipeline in our almost 40-year history. At the same time, we remain committed to operating expense and M&A discipline, continued delivery of exceptional operating results, and growing returns to shareholders. With many of the policy-related uncertainties behind us and no major product LOEs until 2036, Gilead is entering 2026 in a position of strength. With that, I will hand it over to Johanna.

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Thanks, Dan, and good afternoon, everyone. 2025 was another strong year of commercial execution, with base business sales up 4% compared to 2024 or nearly 8%, excluding impact from Medicare Part D redesign. This underscores the durability of our base business and our sustained launch momentum, with up to 10 ongoing and potential new launches through 2027. Beginning on slide seven, fourth quarter total product sales excluding Veklury were $7.7 billion up 7% year-over-year and 9% sequentially, primarily driven by higher sales across HIV and Livdelzi. Including Veklury sales of $212 million, fourth quarter total product sales were $7.9 billion, up 5% year-over-year and 8% sequentially.

Turning to the full-year on slide eight, total product sales excluding Veklury were $28 billion in 2025, more than $300 million above the high end of our full-year guidance range, driven by outperformance in our HIV business and partially offset by lower cell therapy sales. Including Veklury, total product sales were $28.9 billion, up 1% compared to 2024 or 5% excluding Medicare Part D redesign impact, highlighting the strength of our overall business. Moving to Slide 9, our HIV business delivered record sales of $5.8 billion for the fourth quarter, up 6% year-over-year, driven by higher demand for Biktarvy and Descovy, as well as the launch of Sunlenca.

Sequentially, HIV sales were up 10%, primarily driven by seasonal inventory dynamics and higher average realized price due to favorable channel mix in addition to demand. For the full-year, HIV sales of $20.8 billion were up 6% year-over-year, driven by strong underlying demand growth. Our exceptional commercial performance and higher than expected average realized price exceeded our updated guidance of 5% growth. Excluding the estimated $900 million headwind associated with the Medicare Part D redesign, our HIV business grew 10% year-over-year. Looking at HIV treatment in more detail on Slide 10, Biktarvy fourth quarter sales were $4 billion, up 5% year-over-year, and full-year sales were $14.3 billion, up 7% year-over-year, both driven by higher demand, partially offset by lower average realized price.

This demand-led growth reflects 2%-3% treatment market growth annually and continued Biktarvy share gains. In the U.S., for example, Biktarvy's share is more than 52%, with year-over-year gains every quarter since launch. It's clear Biktarvy continues to set the bar for HIV treatment and remains the number one prescribed regimen for both treatment-naive and switch across major markets. We are rapidly advancing towards the launch of Biclen, our investigational once daily oral, combining bictegravir, the most prescribed integrase inhibitor, with our breakthrough capsid inhibitor, lenacapavir, in virologically suppressed people with HIV, including those on complex regimens. Biclen could further expand our lead in the switch market following potential launch in the second half of this year. This regimen represents the first of up to seven potential HIV product launches through 2033.

Now, moving to slide 11, we've had another exceptional quarter for our HIV prevention business, which grew 53% year-over-year, driven by favorable access, strong commercial execution, and continued U.S. market growth of approximately 13% year-over-year. Our fourth quarter sales of Descovy were up an impressive 33% year-over-year. For the full-year, Descovy sales were $2.8 billion, up 31% year-over-year, driven by increased demand in HIV prevention and higher average realized price. Descovy's performance in HIV prevention, which accounts for roughly 80% of its sales, continues to exceed expectations, with record U.S. market share greater than 45%. Similarly, Yeztugo continues to perform strongly across several key launch indicators. Yeztugo fourth quarter sales were $96 million, and full-year Yeztugo sales were $150 million, in line with our guidance we shared in the third quarter.

Building upon this early success, we recently launched our Sunlenca branded direct-to-consumer campaign, highlighting Sunlenca's dosing schedule and efficacy and reflecting the broad diversity represented in our PURPOSE trials. We expect this DTC campaign to broaden awareness of Sunlenca and contribute to a consistent build in Sunlenca sales in the coming quarters. Coverage for Sunlenca continues to grow, and I'm thrilled to share that we have achieved our goal of 90% coverage well ahead of our one-year target. This includes all major payers. Additionally, approximately 90% of covered individuals can access Sunlenca with $0 copay. We continue to work on an account-by-account basis to support pull-through as quickly as possible. While we have more to do, we are making great progress here as we support clinicians and their offices navigate the new logistics associated with a twice yearly injectable regimen.

Given our expectations for a steady, durable and long-term build in sales, we expect full-year 2026 Sunlenca revenue of approximately $800 million compared to $150 million in 2025, highlighting that Sunlenca is well on its way to achieving blockbuster status. We continue to offer the most compelling HIV prevention portfolio available, including the six-monthly Sunlenca injectable, with its transformative potential on the HIV epidemic, in addition to Descovy for PrEP, the current market-leading branded oral. Our goal this year is to continue to drive rapid adoption of HIV prevention, and we expect both brands to demonstrate robust growth in 2026. For 2026, we expect total HIV sales, including both treatment and prevention, to grow approximately 6% compared to 2025, as shown on Slide 12.

Looking at quarterly trends, and as a reminder, we expect our normal HIV seasonal inventory drawdown in the first quarter of 2026. As announced in December, there are manageable headwinds associated with the drug pricing agreement with the U.S. government to lower Medicaid pricing for some of our products, including Genvoya and Odefsey. Additionally, our guidance reflects some potential shifts into lower price channels associated with proposed changes to the Affordable Care Act. In total, these headwinds are expected to impact HIV growth by about 2% in 2026 compared to 2025. Absent these headwinds, our HIV business is expected to grow 8% in 2026, highlighting the underlying strength of our HIV business.

Turning to liver disease on slide 13, full-year sales of $3.2 billion were up 6% year-over-year, primarily driven by higher demand and partially offset by lower average realized price. In the fourth quarter, liver sales were $844 million, up 17% year-over-year and 3% sequentially, driven by another quarter of continued strength for Livdelzi in primary biliary cholangitis or PBC. Livdelzi grew a remarkable 42% sequentially to $150 million, driven by strong patient demand, further accelerated by the withdrawal of a competitor product in the U.S. With much of this switching activity now behind us, we are pleased to start 2026 as the U.S. market share leader with more than 50% in second-line PBC.

Moving to Trodelvy on slide 14, full-year 2025 sales increased 6% to $1.4 billion, primarily driven by higher demand in metastatic breast cancer treatment, which more than offset the expected impact from the bladder cancer withdrawal in the U.S. at the end of 2024. In the fourth quarter, Trodelvy sales were $384 million, up 8% both year-over-year and sequentially, driven by higher demand. Building on Trodelvy's strong 2025 performance, we shared back-to-back positive phase III ASCENT-03 and ASCENT-04 readouts. These results contribute to the strong body of evidence for Trodelvy across lines of therapy in metastatic triple-negative breast cancer and continue to drive demand growth. In both these studies, the investigational Trodelvy regimens demonstrated a highly statistically significant and clinically meaningful progression-free survival benefit over the standard of care.

These potentially practice-changing data have now been published in the New England Journal of Medicine and have been recognized by the NCCN in their updated breast cancer guidelines. Trodelvy is now the only antibody drug conjugate to be recommended by the NCCN for first-line PD-L1 positive and PD-L1 negative, as well as second-line metastatic triple-negative breast cancer. As the leading regimen in second-line, Trodelvy is already well established with oncologists, and these updates build momentum for Trodelvy ahead of potential first-line launches expected later this year. Moving to cell therapy on slide 15, and on behalf of Cindy and the Kite team, full-year cell therapy sales were $1.8 billion, down 7% year-over-year, reflecting ongoing in- and out-of-class competition.

For the fourth quarter, cell therapy sales were $458 million, up 6% sequentially due to higher-than-expected patient treatments in advance of holidays, in addition to one-time pricing adjustments. Year over year, fourth quarter cell therapy sales were down 6%, consistent with the trends we have discussed throughout 2025. For 2026, we continue to expect these competitive headwinds, including in several countries outside the U.S., where we expect new entrants this year. Additionally, cell therapy volumes are being impacted by a growing number of clinical trials, which is exciting for our industry and for the patients who could benefit from innovative new therapies from Kite and others. That said, this represents another near-term headwind. Overall, we expect Kite revenue to decline approximately 10% in 2026 compared to 2025.

Looking to the second half of the year, the team is preparing for the potential launch of anito-cel in fourth line and later relapsed or refractory multiple myeloma. We believe anito-cel's potential best-in-disease profile, combined with Kite's exceptional manufacturing capabilities and industry-leading turnaround times, puts us in a favorable position ahead of a potential commercial launch. Wrapping up our fourth quarter and 2025 on slide 16, I'd like to highlight the exceptional strength of our existing commercial portfolio, as well as our robust launch pipeline with the potential for four launches later this year. We are committed to remaining focused on our ongoing launches of Livdelzi and Sunlenca, in addition to ensuring that we are prepared to have an immediate impact with the potential launches of anito-cel in multiple myeloma, Trodelvy in first-line metastatic triple-negative breast cancer, Biclen in HIV treatment, and Bulevirtide in chronic hepatitis D.

The addition of these potentially transformative therapies to our portfolio is incredibly energizing for our teams. We look forward to extending the reach of Gilead's therapies to many more patients who can benefit from them in 2026. With that, I'll hand the call over to Dietmar.

Dietmar Berger (Chief Medical Officer)

Thank you, Joanna, and good afternoon, everyone. I'd like to start by reflecting on 2025 and thanking the research and development teams and partners for an exceptional year of clinical execution. As shown in our 2025 milestones on slide 18, we received regulatory approvals for lenacapavir, our first-in-class capsid inhibitor for HIV prevention in the U.S., EU, and 12 other countries. Additionally, we provided updates on seven phase III or pivotal phase II trials, including positive updates for Bictegravir plus lenacapavir, Trodelvy, and anito-cel. Looking ahead to 2026 and beyond, we are well-positioned to progress our clinical programs across our three core therapeutic areas. Starting with HIV on slide 19, we continue to advance a comprehensive pipeline with lenacapavir as the backbone.

Our HIV pipeline could support up to seven additional daily, weekly, monthly, twice yearly, or yearly HIV product launches by the end of 2033. In the fourth quarter, we announced positive top-line results from ARTISTRY-1 and ARTISTRY-2, evaluating once-daily Bictegravir, the most prescribed integrase inhibitor, with lenacapavir, our breakthrough capsid inhibitor. We expect to share detailed results from our positive phase III trials at the CROI meeting in February with a potential FDA decision by the end of the year. Looking at our long-acting programs, we plan to share phase III updates from our ISLAND-1 and ISLAND-2 trials, evaluating Islatravir plus lenacapavir in the first half of 2026, and for our twice-yearly treatment program, we plan to initiate our phase III trial evaluating lenacapavir plus broadly neutralizing antibodies in the second half of the year.

Further, we have now completed our evaluation of the phase I data for our long-acting INSTI candidates, GS-3242 and GS-1219, as well as GS-1614 and islatravir prodrug. Consistent with the timeline shared during our HIV analyst event in December 2024, we have identified GS-3242 as the most promising program with lenacapavir and prioritized its development as a potential twice-yearly HIV treatment. As a result, and as a reminder, we have discontinued the development of a twice-yearly regimen with GS-1219 and a quarterly regimen with GS-1614. Turning to liver disease on slide 20, we remain committed to further evaluating Livdelzi to potentially improve the standard of care for more patients with PBC. At the liver meeting in November, we presented late-breaking real-world data showing that Livdelzi is an effective and well-tolerated alternative for PBC patients switching from Obeticholic Acid.

Later this year, we expect to provide an update from our phase III IDEAL study evaluating Livdelzi in PBC patients with ALP levels between 1x and 1.67x the upper limit of normal, patients typically excluded from phase III studies. If positive, these data could support the expansion of Livdelzi to incomplete responders to UDCA and potentially enable even more second-line PBC patients to achieve better biochemical and symptomatic control of their PBC. Moving to oncology on slide 21, Trodelvy has demonstrated clinically meaningful survival benefit in two phase III trials, establishing it as a leading regimen in its approved indications. Most recently, Trodelvy has demonstrated highly statistically significant and clinically meaningful progression-free survival benefit across first-line metastatic triple-negative breast cancer patients.

Full data from the phase III ASCENT-03 and ASCENT-04 trials were published in the New England Journal of Medicine in October 2025 and January 2026. We expect FDA decisions for Trodelvy in first-line metastatic TNBC patients who are not candidates for PD-1 inhibitors and for Trodelvy plus pembrolizumab in first-line PD-L1 positive metastatic TNBC in the second half of 2026. Ahead of the FDA decisions, the NCCN updated their breast cancer guidelines to reflect the practice-changing nature of these results, reinforcing our confidence in Trodelvy's clinical profile. We also have four phase III studies that continue to evaluate Trodelvy's potential in additional tumor types.

Notably, we expect updates from two of the phase III trials this year, including ASCENT-GYN01, evaluating Trodelvy in second-line metastatic endometrial cancer in the second half of this year, as well as EVOKE-03, exploring Trodelvy plus pembro in first-line metastatic PD-L1 high non-small cell lung cancer. Moving to cell therapy on slide 22, and on behalf of Cindy and the Kite team, I will touch upon some of our updates on our anito-cel program. Notably, we have filed anito-cel based on our update from the phase II IMAGINE-1 trial in fourth line or later relapsed or refractory multiple myeloma at ASH in December. Anito-cel demonstrated clinically meaningful efficacy with 96% overall response, including 74% complete response and 95% measurable residual disease negativity.

Additionally, anito-cel demonstrated a predictable and manageable safety profile with no delayed or non-ICANS neurotoxicities and no immune effector cell-associated enterocolitis. Based on these exciting data, we are energized to potentially bring anito-cel to patients in the second half of this year. Longer term, we see additional opportunity for anito-cel with our phase III IMAGINE-3 study in second, third, and fourth line relapsed or refractory multiple myeloma, enrolling in record time. We are also planning a pivotal program in newly diagnosed multiple myeloma. With our broader and rapidly advancing clinical development program, we expect anito-cel to potentially reach more patients earlier in the treatment paradigm.

Wrapping up on slide 23, our key milestones for 2026 include five phase III readouts, as well as five FDA decisions for bulevirtide for chronic hepatitis delta, Biclen for virologically suppressed people with HIV, Trodelvy in first-line PD-L1 positive and negative metastatic triple-negative breast cancer, and anito-cel in fourth-line and later relapsed or refractory multiple myeloma. While these pipeline milestones reflect some of our later-stage catalysts, I would like to remind you, we have 53 ongoing clinical programs and will continue our progress across our portfolio, including KITE-753, our next generation CD19/CD20 bicistronic CAR T, enrolling for its pivotal trial for third-line large B-cell lymphoma, GS-1427, a once daily oral alpha 4/beta 7 inhibitor for inflammatory bowel disease, and GS-1811, our ITK inhibitor for cutaneous lupus erythematosus. And with that, I'll turn over the call to Andy.

Andrew Dickinson (CFO)

Thank you, Dietmar, and good afternoon, everyone. Starting on slide 25, full-year 2025 total product sales of $28.9 billion were up 1% from 2024 and above our $28.4 billion-$28.7 billion guidance range, driven by demand-led HIV sales growth that more than offset the $1.1 billion headwind related to Part D redesign and $900 million lower Veklury revenue. Excluding the Part D redesign impact, our total product sales grew nearly 5%. Base business revenue, which reflects total product sales excluding Veklury, was $28 billion, up nearly $1.2 billion or 4% from 2024, exceeding our $27.4 billion-$27.7 billion guidance range. Excluding the impact of the Part D redesign, our base business grew 8%.

Our strong revenue results reflected HIV growth of 6% or $1.1 billion to $20.8 billion, driven by strong growth for Biktarvy and Descovy, which grew 7% and 31% respectively from 2024, as well as the launch of Yeztugo. Our liver business grew 6% to $3.2 billion, reflecting growing demand, primarily driven by Livdelzi. full-year 2025 Veklury revenue was $911 million, a decline of $900 million or 49% from 2024, and mostly in line with our expectations, given lower COVID-19 related hospitalization trends. Moving to our full-year non-GAAP results on slide 26. Product gross margin was 86.4%, in line with our guidance of 86%.

R&D expenses of $5.7 billion were down 1% compared to 2024 and in line with our guidance of R&D flat on a dollar basis for 2025. Acquired IP R&D expenses were approximately $1 billion, in line with our expected annual investment in earlier stage opportunities that are part of our normal course of business development. SG&A expenses of $5.6 billion were down 5% compared to 2024, within our guidance range, reflecting lower general and administrative expenses, partially offset by sales and marketing investments to support Yeztugo's launch. Overall, our operating margin for full-year 2025 was 45%. Excluding acquired IP R&D and the $400 million non-recurring other revenue related to the IP asset sale in the third quarter, our operating margin was roughly 48% for the full-year.

This underscores our ability to continue expense discipline while increasing investment in new and ongoing launches. The non-GAAP effective tax rate was 18.3%, roughly in line with our guidance of approximately 19% and down from 25.9% in 2024, primarily driven by the prior year non-deductible acquired IP R&D charge for the acquisition of CymaBay. And finally, non-GAAP diluted EPS was $8.15, in line with our 2025 guidance of $8.05-$8.25, and driven by lower acquired IP R&D expenses, higher revenues, and lower SG&A expenses. Excluding the approximately $3.14 per share impact related to the CymaBay transaction, non-GAAP diluted EPS increased by $0.40 compared to 2024.

To quickly recap the fourth quarter on slide 27, total product sales were $7.9 billion, up 5% year-over-year, with base business growth partially offset by the expected decline in Veklury sales... excluding Veklury, total product sales were $7.7 billion, up 7% from the same period in 2024, primarily driven by higher sales for our HIV and liver disease products. Moving to the fourth quarter P&L on slide 28. R&D expenses were $1.6 billion, down 3% relative to the same period in 2024, and SG&A expenses were $1.7 billion, down 9% year-over-year, primarily due to lower G&A expenses.

Overall, our non-GAAP diluted earnings per share was $1.86 in the fourth quarter of 2025, compared to $1.90 in the same period in 2024, primarily due to higher acquired IP R&D expenses, partially offset by higher product sales and lower SG&A expenses. Looking at our full-year guidance on slide 29, we expect 2026 total product sales between $29.6 billion-$30 billion. We expect total Veklury sales of approximately $600 million, highlighting a $300 million headwind that we expect to more than offset in our base business. We therefore expect base business sales between $29 billion-$29.4 billion, growth of 4%-5% compared to 2025.

Moving to the non-GAAP P&L for the full-year 2026, we expect product gross margin of approximately 87%, R&D expenses to increase a low single-digit percentage from 2025, acquired IP R&D investments of approximately $300 million, reflecting known commitments associated with prior collaborations and partnerships. Consistent with our approach in 2025, we will highlight incremental acquired IP R&D expenses as we announce new transactions throughout the year. SG&A expenses to increase by a mid-single-digit percentage relative to 2025, reflecting higher investments in sales and marketing to support our commercial launches, offset in part by lower G&A expenses.

We expect full-year 2026 non-GAAP operating income of between $13.8 billion and $14.3 billion, a tax rate of approximately 20% and non-GAAP diluted EPS in the range of $8.45 and $8.85 per share. As Johanna mentioned, and as shown on slide 30, we expect an approximate 2% headwind to growth in 2026, primarily associated with the impact of the drug pricing agreement announced in December 2025 and the expected impact of updates to the Affordable Care Act. I'll note that absent these updates, our full-year growth would be in the range of 6%-7%. Additionally, we expect HIV to grow approximately 6% in 2026, and within HIV, we expect 2026 Yeztugo revenue of approximately $800 million.

In cell therapy, we expect full-year 2026 revenues to decline approximately 10% compared to 2025, reflecting continued competitive headwinds related to our Kite portfolio. On slide 31, we returned $5.9 billion to shareholders in 2025, and we remain committed to returning, on average, at least 50% of our free cash flow to shareholders. In 2025, this included $1.9 billion of share repurchases, primarily intended to offset equity dilution at a minimum, in addition to opportunistic repurchases. Combined with our dividend, we returned approximately 63% of our free cash flow to shareholders in 2025. In terms of business development, we are confident that we have built a robust and diverse portfolio that can support Gilead's growth.

At the same time, we are carefully strengthening our early-stage pipeline to position Gilead well for the long term, typically investing about $1 billion annually in smaller licensing deals, partnerships, and acquisitions. Additionally, we are proactive and disciplined in our approach to later-stage acquisitions that support our strategic goals and add new growth opportunities. Overall, we are pleased with Gilead's consistent strong performance, highlighted by our clinical and commercial execution and supported by our disciplined operating model. We continue to be well-positioned for near-term and long-term growth, and we remain focused on delivering on our strategic commitments. With that, I'll invite Rebecca to begin the Q&A.

Operator (participant)

Thank you, Andy. At this time, we'll invite your questions. Please be courteous and limit yourself to one question so we can get to as many analysts as possible during today's call. Again, to ask a question, press star one, and to withdraw your question, press star two. Our first question comes from Chris Schott at JPMorgan. Chris, go ahead. Your line is open.

Chris Schott (Managing Director)

Great. Thanks so much. Just wanted to kick off with a question on Yeztugo. Can you just elaborate a little bit more on the assumptions driving the $800 million guidance? And maybe as part of that, as we start to think about patients now needing to be redosed on the drug, what type of refill rates are you anticipating as we think about kinda going through 2026 and beyond? Thank you.

Daniel O'Day (Chairman and CEO)

Yeah, thanks, Chris. Dan O'Day, welcome to the call. I'd invite Johanna to cover that point. Thank you.

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Thanks, Dan, and thanks, Chris, for the question. So yeah, so one, let me start with how excited we are with Yeztugo. I think as we closed out 2025 and really building momentum coming into 2026, all of our key launch indicators are basically tracking or exceeding our expectation, and that includes, of course, access, which is where it starts, with about 90%, payer coverage. So all major payers are now covering Yeztugo, about 90% of those with $0 copay. So that's really important for people that want to have access to this medicine. I would just remind everyone that, you know, as we pull through this great access, it takes a little bit of time, right?

Because you do it by account, by account, and you're basically navigating logistics for HCPs and their clinics around an injectable versus a very oral market to begin with. So that's scheduling, coordination, administration. So that just takes a little bit of time, and the teams are working diligently to make sure that happens as quickly as possible. We also launched, you may have seen, a very recent DTC campaign. Our whole campaign is one to two PrEP campaign, which is really meant to increase awareness for HIV prevention. And of course, brand recognition for Yeztugo, as it really differentiates itself, both from its efficacy as well as its dosing, and really intended to appeal to a much broader audience than past HIV prevention campaigns. And hopefully, folks are seeing that.

It's a very consumer-friendly campaign, and we expect that to kind of pull through as well and make sure that people are talking to their physicians about the potential opportunities of Yeztugo. So all of our indicators, intakes, access, HCP awareness, conversion rates, are all tracking in the right direction, so we're excited about that. And looking ahead, we really expect to drive very durable, sustained, long-term growth of Yeztugo. So that's not just 2026 continued growth and momentum quarter on quarter we'll build on that, but also well beyond 2026 as we expand the HIV and normalize HIV prevention for everyone. To your point around persistency, we don't have an assumption at this point in time because it's still really quite early.

As you think about a late launch in June of last year, with very little access as we launched and building access into Q3, there's really only a small number of individuals that are eligible for that second dose or second injection. But we're really quite encouraged by early data. We're tracking it closely and continue to focus on ensuring that individuals return for their second injection, and then well beyond that.

We have a lot of activities planned, that are ongoing and have started ever since we started the launch of Sunlenca, around making sure HCPs are thinking about that auto refill script, making sure that our specialty pharmacy partners are reaching out proactively to all of their individuals that are on PrEP, and making sure they're reminding them, as well as the work that we do here at Gilead, both with digital reminders as well as proactive outreach with our access programs. So more to come on that, but we're excited about what Sunlenca has to offer for individuals looking or wanting to need, and need HIV PrEP. So more to come.

Operator (participant)

Our next question comes from Louise Chen at Scotiabank. Louise, go ahead. Your line is open.

Louise Chen (Managing Director)

Hi, thank you for taking my question. I wanted to ask you what type of share gains you expect for anito-cel in the fourth-line setting if you're approved, especially in light of competition from entrenched players? Thank you.

Daniel O'Day (Chairman and CEO)

Thanks, Louise. Dan here. I'll turn it over to Cindy, who's with us here.

Cindy Perettie (EVP)

Thanks, Louise. Just as a reminder, our expectation is that we would be launching this second half of this year. Once we have approval, there's a period of time where we turn on our qualified authorized treatment centers so that they're able to treat. So there's that component right after approval. The market for fourth line multiple myeloma is a $3.5 billion market. We expect, because the launch is the second half of the year and we need to turn on our authorized treatment centers, modest contributions in 2026. However, in 2027, we will have a full-year of sales. We expect over time to become the market leader, given our excellent efficacy profile and differentiated safety profile, in particular with the delayed neurotoxicities and enterocolitis.

I think the last piece I would add is that we are bringing forward our world-class manufacturing, and so we are ready for launch. We will have the ability to serve the market at launch with 99% reliability and 16-day turnaround times, which again, is very differentiated from the existing, products on the market today.

Operator (participant)

Our next question comes from Tazeen Ahmad at Bank of America. Tazeen, go ahead. Your line is open.

Tazeen Ahmad (Managing Director in U.S. Equity Research)

Okay, great. Thanks for taking my questions. On Yeztugo, how should we be thinking about the growth outlook? Are you expecting to begin to see cannibalization of Descovy PrEP sales as early as this year? And then connected to that, how should we be thinking about the evolution of net price for Yeztugo throughout the launch? Should we expect to see a decay over time like we've seen with other HIV therapies? Thanks.

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Sure. Hi, it's Johanna again. Thanks, Tazeen, for the question. So we do expect as we come into 2026, we have strong growth momentum already.

So Q1 will be, we'll start with modest growth and then kind of build on that quarter after quarter in light of all the different pieces, including access, including the DTC awareness campaign, including a lot of the work that we're doing in the field to drive Yeztugo awareness. So all of that will build on that growth momentum. In addition to that, we're also doing market expansion strategies as well with very targeted communities. And so we do believe that Yeztugo is going to be the strong performer. And over time, we believe that Yeztugo will be the market leader in HIV prevention, just because of the incredible profile that it offers for folks. Having said that, in 2026, we believe that Descovy continues to grow through in 2026.

As you saw in 2025, we had the highest performance share for Descovy we've ever seen. This is driven by many factors, namely, commercial execution, really strong market, of course, but also unrestricted access. So all the pieces are coming together and all the boats are rising, and it has a lot to do with the awareness in HIV PrEP because of the PURPOSE 1 and PURPOSE 2 trials for Yeztugo, really building up the market. So we believe Descovy will continue to grow through 2026, and over time, of course, that will erode as Yeztugo takes the leading share in HIV prevention. I think the final point you were asking about was gross to net.

We obviously don't discuss gross to net, for our products, but I would say that Sunlenca's value proposition is quite differentiated, and we feel strongly that that is being recognized, and that's in line with the 90% access in less than six months, that we've been able to achieve. So really, pleased so far with what we've been seeing and making sure that value continues to get recognized, for HIV PrEP users. Thank you.

Operator (participant)

Our next question comes from Michael Yee at UBS. Michael, go ahead. Your line is open.

Michael Yee (Global Head of Biotechnology Research and Managing Director)

Great. Thank you, guys. Maybe a question for Dietmar or the team. Your long-acting six-month treatment drug, which I guess could be a super big bictegravir, long-acting, GS-3242, I think you said entered phase II. Can you tell us a little bit about the profile of that drug and what you're seeing in phase I to get you excited? Is that gonna be at CROI, I guess, coming up in a week or two? And how do you compare that to, I think, Shionogi's product, which, or their investment in ViiV? And I'm sure you're aware that they're also excited about their six-month as well. So maybe compare and contrast, and, and what gets you excited about your, product? Thank you.

Dietmar Berger (Chief Medical Officer)

Yeah. Thank you, Michael, for, for the question. I mean, first of all, I, I really want to say that, you know, I'm, I'm excited about the rest of the program that we have, right? Not only the, the Q6 month, also the, the upcoming, for example, weekly treatment that we have with, with islatravir and then the lenacapavir, and really the options, you know, between the daily, weekly, monthly, and then every six months, treatments that, that we're developing. Specifically for the ones every six months, I also wanna point out that we have two programs in development. One is for lenacapavir, plus broadly neutralizing antibodies. Obviously, that is an, an infusion and, but, and comes with, you know, everything that you, that you need to do from an, from an infusion perspective.

However, there's a real unmet need, and the study, the interest in the study is really high, so we feel that will be an important addition, and that will come even a little earlier than the 32, 42-based combination. Now, 32, 42 is obviously a long-acting INSTI. We firmly believe that an integrase inhibitor is important in this combination, and I think that also sets it apart from some of the other options that are out there. And you know all the benefits of the INSTIs, you know, starting with, for example, the tolerability, but then also really the resistance profile and the forgiveness. And then we feel that that translates also into the once every six months treatment.

Then obviously the combination with lenacapavir, so you have the INSTI again, plus the capsid inhibitor, which we feel is a really important combination. So yes, you will see more data, more information about 32, 42 during the year, and we're really looking forward to detail that. I don't wanna go too much into the comparison to the competitors, but please keep in mind that, you know, they cannot base once every six months treatment on one product only. They also need a combination. So we need to look at the overall development program that they have and that they'll put together to then really bring their products forward as compared to the two options that I've laid out that we have in development.

Operator (participant)

Our next question comes from Brian Abrahams at RBC Capital Markets. Brian, go ahead. Your line is open.

Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)

Hey, guys. Congrats on the quarter, and thanks, thanks for taking my question. I notice a little bit more detail on your once-yearly injectable lenacapavir for PrEP on the slides today, and I was wondering if you could maybe just talk about what you need to show out of Purpose 365 in order to support approval, and how you're planning to position that in the market if successful? Thanks.

Daniel O'Day (Chairman and CEO)

Thanks, Brian. Go back to Dietmar.

Dietmar Berger (Chief Medical Officer)

Yeah. I'll start with the profile, and really what, what is so great about lenacapavir is that it's such a versatile product, right? And we do understand the pharmacokinetics and the target coverage and some of the scientific, you know, underpinnings of lenacapavir for prevention really well. So the study, PURPOSE 365, is a PK-based study. It's a smaller study. Obviously, it has been recruiting very well and continues to recruit very well. But it's a smaller study where we basically need to demonstrate target coverage and the right pharmacokinetics, saying peak levels, trough levels, et cetera, so that we can demonstrate effective prevention. That's how the study has been designed. Obviously, we're looking forward to see the data, by looking at PK, looking at safety.

It will be an intramuscular injection, which is also an important differentiation that we're looking forward to demonstrate. But we feel it can really bring in a very important benefit with a longer-term interval to patients. I'll hand over to Johanna for the market.

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Yeah. Thanks, Brian. I would just add to what Dietmar was saying, is the fact that it's 12 months, we've been very clear with the market research that we've seen, that frequency or less frequency in the HIV PrEP setting specifically, is the most important, and that's why Yeztugo being such an important innovation to this marketplace every six months, let alone the potential of going to every 12 months, really would potentially attract a larger population, if you were thinking that you just had to go to the physician's office once a year for that injection. So I think there's an opportunity to broaden the addressable population, as well as there are some folks as well, that might have unstable housing or situations, that once a year would also be ideal for them.

It's a real market expansion opportunity for us as we see this, with that potential, with three, six, five.

Daniel O'Day (Chairman and CEO)

Great. And Brian, I would just remind what we've already stated, which is this could be available as early as 2028. The trial is recruiting well. Thank you.

Operator (participant)

Our next question comes from Umer Raffat at Evercore ISI. Umer, go ahead. Your line is open.

Umer Raffat (Equity Research Analyst of Biotech, Pharma-Major, and Specialty Pharma)

Hi, guys. Thanks for taking my question. I was quite intrigued by your mention of the Trodelvy phase III in endometrial, perhaps in second half of this year, which makes me wonder, it's probably an interim analysis you're effectively guiding to. Well, can you speak to your confidence overall heading into this interim? And is it fair to say that the size of the indication is generally similar to triple negative breast? Thank you.

Dietmar Berger (Chief Medical Officer)

So let me just talk about the study, and then later on, Johanna can chime in. Thanks for the question, Umer. Obviously, we are primarily intrigued about endometrial because of the earlier study, right? Because of the phase II TROPICS-03 study, the basket trial that we did, where we saw a median OS of 15 months in that population. That data was published at ESMO 2024. We feel, you know, with data like that, this would be a really important addition to the treatment options for second-line endometrial cancer patients. We're not providing details regarding the exact evaluation that we're gonna do, but we're really looking forward to seeing the data later this year.

I wanna say second-line endometrial cancer is, of course, more of an incremental opportunity, but I'll hand over to Johanna if she wants to comment on that, further.

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Yeah, sure. So I think you're right, Umer. It's basically in line with second-line metastatic TNBC, so more or less about 5,000 or so addressable population in the U.S. So, so small opportunity, but very important unmet medical need as well for us. So, this is where the focus and just the breadth of data for Trodelvy just expands. In addition to ASCENT-GYN01 that Dietmar was talking about, we also have a potential with EVOKE-03, earlier this year in our PD-L1 high non-small cell lung cancer setting as well, which would be a much larger market expansion for Trodelvy as well, if that was to play out. So we're excited about what's to come for Trodelvy.

Operator (participant)

Next, we have Geoff Meacham at Citibank. Geoff, go ahead. Your line is open.

Geoff Meacham (Managing Director and Senior Analyst of Biotech and Pharma)

Oh, great. Hi, guys. Afternoon. Thanks so much for the question. I had a bigger picture, one for Andy or Dan. You guys have done a ton of phase III CAR T's of turnover this year and also some launches. You know, you haven't done a larger scale deal in a while. So I guess I wanted to get a sense from you guys as to what voids you think you need to fill. Is it further diversification of key therapeutic areas? Is it a new product cycle looking to the maybe mid-2030s, or is there no real BD urgency from you guys at this point? Thank you.

Daniel O'Day (Chairman and CEO)

Thanks a lot, Geoff. I'll start and certainly invite Andy to add. You know, I, I think we've all been reflecting here at Gilead about the progress that's made over the past five or six years, and I think some of the greatest evidence to that is, is the fact that, you know, we have up to 10 launches now, either ongoing or, to be, to be introduced over the between now and 2027. That includes four additional launches this year that have already been articulated and five phase III readouts. And, and importantly, back to your question, Geoff, that's across really all therapeutic areas, which is exactly the design. So we're building this very robust internal portfolio that's been built through original research, early-stage partnerships and collaborations, and, and, and M&A.

So yeah, what I would say is that as we approach additional partnerships in M&A, there's two pieces to that, of course. The first one is that we have to stay active in what we call a kind of earlier stage transactions, sometimes referred to as normal course. And we spend roughly around $1 billion every year on that. Again, we can be agnostic to the three therapeutic areas and go for the most interesting science, and that's what we've been doing to build this portfolio that is now coming through to us. And as we approach later stage acquisitions, we do it in the context of the fact that we have the most robust clinical and launch pipeline in our company's history, with no major LOEs until 2026. So we're uniquely positioned.

We're very ready, we're very proactive and disciplined, but we may not have the urgency of other companies in this sector, so we're gonna be disciplined around that. But I would say that we very much want to continue to add to our pipeline with appropriate, M&A over the course of the coming years as well. And if I haven't said everything, Andy, would you like to add anything to that?

Andrew Dickinson (CFO)

No, I think you covered it well. I mean, if you look at the growth that's ahead of us and the cycle that we're entering with all of the launches that are underway or the additional launches that are coming, you know, a reasonable portion of that is driven by our corporate development activities historically. And we continue to want to supplement both, as Dan said, the early stage late preclinical, early clinical pipeline through more of the ordinary course deals. And we would like to add synergistic de-risk late-stage assets that will further, you know, I define it as turbocharge our top-line growth and drive even more outsized bottom-line growth. And, you know, we will be disciplined in that.

But we've been very active in this space, we'll continue to be active, and I'm confident that we'll add exciting new products over time when we find the right ones.

Operator (participant)

Our next question comes from Daina Graybosch at Leerink Partners. Daina, go ahead. Your line is open.

Daina Graybosch (Senior Managing Director and Biotechnology Analyst of Immuno-Oncology)

Yeah, one on anito-cel for me. I wonder, and maybe I'm being presumptuous, but what gives you confidence in a second half launch? Does that assume priority review for FDA for anito-cel? And then for your 2027 filing from IMAGINE-3, is that gonna be on the MRD endpoint, or on a survival endpoint? Thank you.

Cindy Perettie (EVP)

Thanks, Daina. It's Cindy. So for the confidence in anito-cel second half launch, we can't say today if we have priority review or not. Obviously, that would come with the BLA acceptance, and we'll be sure to let you know as soon as we can on that. But we have confidence in our conversations with the agency around the filing, and look forward to being able to share more soon. The second component you asked about around IMAGINE-3, we have a dual endpoint, which is both MRD and PFS on the IMAGINE-3 study. That's in line with the guidance that you heard from the FDA not too long ago.

Operator (participant)

Our next question comes from Tyler Van Buren. Tyler at TD Cowen. Tyler, go ahead. Your line is open.

Tyler Van Buren (Managing Director and Senior Biotech Equity Research Analyst)

Great, thanks so much. For Trodelvy, are you guys starting to see off-label use in the front line in advance of formal approval, given the very positive readouts and the NCCN recommendation in particular? And what do you expect the opportunity in the front line to be versus the current indication?

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Yeah, sure, Tyler, I'll take that one. It's Johanna. Yeah, so, so post-ASCO 2024 presentation at ASCO last June, that's when we started actually seeing a little bit more spontaneous use of, of Trodelvy, both in the first-line setting, but also strengthening our position, our, our leadership position in the second-line setting as well. So that's been kind of building. Obviously, that's spontaneous use. There's no promotion against, first line. There's only education from our medical team, field teams, around, the data publications in the New England Journal of Medicine, and you highlighted as well the NCCN guidelines. We are, Trodelvy is now the only ADC that is recommended both in, first-line PD-L1-positive and PD-L1-negative metastatic TNBC, as well as second-line setting.

So we're excited about that and the impact it can have on patients because this disease is such an aggressive form of breast cancer. To your market opportunity, it's about double or so. If you think about the second line setting into the first line setting, there's about 10,000 or so women in the first line setting that are looking for care and, and really an opportunity for Trodelvy to have an impact here, both in PDL1 negative and PDL1 positive with pembro. The other opportunity, of course, if you think about it, is DOT. Your duration of treatment basically doubles, right? Second line setting, because of the aggressiveness of this disease, is four to five months, and so therefore, as you think about first line, it's about double it. It's nine to 10 months, which gives a little bit more hope to these women.

Definitely an important advancement in triple-negative breast cancer with Trodelvy at the lead.

Operator (participant)

Our last question comes from Courtney Breen at Bernstein. Courtney, go ahead. Your line is open.

Courtney Breen (Senior Research Analyst of U.S. Biopharma)

Hi, Gilead team. Thanks so much for squeezing me in at the end. I'm going to point us back to Sunlenca again, and just kind of really trying to get our arms around the 2026 guide. By our calculations, you have to believe that there's no growth in new patient starts compared to what we've seen kind of through January for the rest of this year, and a more than 10% price cut year-over-year, to kind of get to that $800 million guide for 2026. Given that, should we be thinking about the $800 million as a floor or, or as kind of a guide for 2026? Thanks so much.

Johanna Mercier (Chief Commercial and Corporate Affairs Officer)

Thanks, Courtney, for your question. I'm not sure I'm tracking your modeling because we are definitely assuming continued strong momentum for Sunlenca. I know y'all of you are looking at weeklies. We're obviously looking at weeklies, but we're also looking at monthlies and making sure that we're creating new growth numbers month to month, and so we do see that as an acceleration of our growth as we go into 2026. A lot of those pieces are supported by making sure that we're adding new patients on Sunlenca, new individuals on Sunlenca, and also bringing back people for their second injection. So those two pieces are considered in that guidance. I think we're excited thus far about where we stand today with Sunlenca, and all the pieces are coming together.

We are just making sure that as much as the access is strong right now, and I'm really proud of the team that pulled that through, we also need to pull it through at an account level. So we're doing that account by account and making sure people are navigating the logistics of an injectable in an oral market, and all of that takes a little bit of time. But the intent is we expect strong, consistent, durable growth for the long term for Sunlenca. So we're excited about what's to come, and I guess DTC will also have a pretty big impact, we believe, to bring people in asking and talking about Sunlenca.

Operator (participant)

That completes the time that we have for questions. I'll now invite Dan to share any closing remarks.

Daniel O'Day (Chairman and CEO)

Thanks, everybody. First of all, let me thank the Gilead teams again. It's such a pleasure to work with them and to see them deliver these really strong full-year performance measures and reinforcing that this is a time of impact and growth for the company. You know, our performance from last year gives us a really strong foundation for the coming year, where we have a lot to deliver for the patients and communities we serve. Coming off of a year where we had just, you know, a really strong Yeztugo launch. As Johanna mentioned, several key launch indicators have exceeded our expectations. We're firmly committed to continuing to drive that launch. But in addition, we have four potential launches this year and five pivotal phase III readouts across all three therapeutic areas: HIV, oncology, liver disease.

You can expect us to show the same strong commercial and clinical execution you've seen in the past, and disciplined focus on expense management, as you've seen from us quarter after quarter. With no major LOEs until 2036, the next 10 years, and a really proactive approach to business development, Gilead's business is secure, growing, and with the potential for much more to come. So thanks again for your time today. We look forward to keeping you informed on our progress. As usual, if you have any follow-up questions, our investor relations team is very happy to support you with the answers to your questions. Thank you, everybody. Have a good rest of your day.