The operator introduces the Third Quarter 2023 Gilead Sciences' Earnings Conference Call and hands it over to Jacquie Ross, Vice President of Investor Relations. The speakers on the call will be the Chairman and CEO, CCO, CMO, and CFO. They will be joined by the EVP of Kite for the Q&A session. Forward-looking statements will be made, and non-GAAP financial measures will be used to understand the Company's performance.

Gilead has had another strong quarter, with 5% growth in their base business compared to last year. Their leading therapies in virology and oncology, such as Biktarvy and Trodelvy, are driving this growth. Important data was presented at ESMO for Trodelvy in various cancer cohorts, reaffirming its potential as a cornerstone asset. Enrollment was completed ahead of schedule for a Phase 3 trial of lenacapavir for HIV prevention, and plans were announced for a Phase 2 trial to support access in Europe.

Gilead has made significant progress in its HIV prevention efforts, completing enrollment ahead of schedule in a Phase 3 trial and announcing plans for a Phase 2 trial in 2024. The company also received approvals to extend the use of Veklury in patients with COVID-19 and hepatic impairment. With 27 programs in Phase 2 and 19 in Phase 3, Gilead is looking forward to updates from many of these studies in 2024. The company's commercial results in the third quarter show 10% growth in its base business and eight consecutive quarters of year-over-year growth. This is a result of strong commercial execution and the impact of its virology and oncology products on patient lives.

In the third quarter of 2023, total product sales, excluding Veklury, increased by 5% to $6.4 billion, with notable growth in the oncology and HIV businesses. HIV sales were up 4% to $4.7 billion, driven by higher demand and channel inventory, but offset by lower average realized price. Biktarvy sales were $3.1 billion, up 12% year-over-year and gaining market share. Descovy sales were $511 million, up 2% year-over-year, with strong demand for PrEP but less favorable pricing dynamics.

The PrEP market saw a 15% growth and Descovy for PrEP maintained a 40% market share. Sales for the liver disease portfolio decreased by 10% due to a rebate claim resolution and other pricing dynamics. HCV new starts increased in the US and Europe, but are expected to decrease over time. Veklury sales were highly variable and declined by 31% in the third quarter, but saw an uptick in hospitalizations. The oncology business had a strong quarter with sales up 33% and an annual run rate exceeding $3 billion. The company looks forward to providing more patients with new treatment options.

In the third quarter, Trodelvy sales increased by 58% year-over-year and 9% sequentially, with over 20,000 patients receiving the therapy. Cell therapy sales also saw strong growth, particularly outside the U.S., with Yescarta sales up 23% and Tecartus sales up 18%. Despite strong clinical data, only 10% of eligible patients in the U.S. are receiving cell therapy, indicating a significant opportunity for adoption. Kite is well positioned to benefit from this expansion with its differentiated overall survival data and efficient manufacturing capabilities. The company is actively working to bring therapies to patients faster, with a goal of further shortening their industry-leading 16-day turnaround time in the U.S.

The author recognizes the efforts of the commercial teams and cross-functional partners at Gilead and Kite in positively impacting more people with their therapies. They then hand the call over to Merdad for an update on their diverse pipeline of 60 ongoing clinical programs, including 10 programs with their long-acting capsid inhibitor lenacapavir. The Phase 3 studies for lenacapavir in PrEP are progressing well and they are targeting their first approval in late 2025. They are also evaluating nine candidate partners for lenacapavir, with six already in Phase 1 or 2.

The company plans to share updates on four of their programs in 2024, including data from a Phase 1 trial and a Phase 2 trial for their HIV treatment and prevention drug lenacapavir. They also expect to share results from a Phase 2 program for their lenacapavir plus bNAbs combination. In oncology, their drug Trodelvy has been delivered to over 20,000 patients and has shown promising results in clinical trials. The company looks forward to sharing more data on Trodelvy in 2024 as they continue to expand its use across different types of cancer.

The company is currently enrolling patients in a study for first line PD-L1 high metastatic non-small cell lung cancer. Preliminary data from a previous study has shown promising results, leading to plans to expand into other patient populations. Further analysis from another study will showcase the effectiveness of a combination treatment for both squamous and non-squamous histologies in these patients.

The company is excited about the potential of Trodelvy and pembro in treating first line metastatic non-small cell lung cancer patients. They are currently enrolling patients in a Phase 3 study and preliminary data has shown promising results. The company also has ongoing trials for cell therapy in various tumor types and is exploring different types of cell therapies in their early stage pipeline. They are also working towards achieving key clinical milestones by 2023.

The company has discontinued two programs evaluating magrolimab due to futility, but remains on track for other clinical milestones in 2023. They also expect to have updates and potential regulatory filings for several other drugs in 2024. Some programs, such as the 222 inhibitor for ulcerative colitis, are expected to begin later this year. Not all programs will be successful, as seen with the discontinuation of the ENHANCE and ENHANCE-2 programs, but the company continues to evaluate the progress of other programs.

In the third quarter, Gilead had a solid performance with total product sales up 5%, driven by growth in oncology and HIV. However, total product sales were flat due to lower Veklury sales. R&D expenses increased by 24% due to ongoing clinical trial activities and wind down costs for discontinued studies. The company also made acquisitions and payments related to partnerships. They are on track to meet their milestones for 2023 and will share more details for 2024 in the future, with potential updates and regulatory filings for various products.

In the third quarter, SG&A expenses increased by 7%, primarily due to investments in oncology. The effective tax rate was 7%, but would have been 16% without a tax settlement. Non-GAAP diluted earnings per share were $2.29, driven by growth in the base business and lower taxes. Year-to-date, base business revenue has grown by 10%, with strong performance in virology and oncology. The company expects a moderation of expense growth in 2024 and beyond. Updated guidance for total product sales is in the range of $26.7 billion to $26.9 billion, with an increase in the base business range and expected Veklury sales of $1.9 billion for the full year.

The company's financials are expected to be highly variable and correlated with COVID hospitalizations. Non-GAAP gross margin is expected to be around 86%, and R&D expenses are projected to grow by 15% in 2023 due to accelerated enrollments and discontinuation expenses. Acquired IPR&D expenses are estimated to be around $1 billion in 2023, and SG&A expenses are expected to increase by a high single digit percentage. Non-GAAP operating income is expected to be between $10.5 billion and $10.8 billion, and the non-GAAP effective tax rate is projected to be around 16%. The company's non-GAAP diluted EPS is expected to be between $6.65 and $6.85 per share, showing the strength of the business despite higher R&D expenses.

Gilead expects their diluted EPS to be between $4.55 and $4.75 per share on a GAAP basis. They have returned $1.3 billion to shareholders in the third quarter and have repaid $2.25 billion of senior notes while issuing $2 billion in new notes. The company is preparing for a catalyst-rich 2024 and is excited for their key programs to start reading out data. There is a question about the derm path of their competitor's product, but Gilead believes their DDI profile is well-characterized and in their label.

The speaker notes that lenacapavir, a drug metabolized by CYP3A, has been available and labeled for some time and no changes to the clinical development program are anticipated. Lenacapavir has been launched for heavily treatment experienced patients and has no contraindications for opioids or ED drugs. The company is excited about the potential for lenacapavir for PrEP and is continuing its plans for that. At recent conferences, there has been a lot of talk about the benefit of Trop-2 data, particularly in lung cancer, and some competitors have modified their studies to focus on non-squamous patients.

The speaker discusses the benefits of their Trop-2 ADC drug compared to others in terms of safety and efficacy. They mention enrolling both squamous and non-squamous patients in their trials and are confident in their approach. The next question is about barriers to uptake of CAR-T in second-line large B cell lymphoma and the speaker discusses the need for more demand in earlier lines of treatment for both large B cell lymphoma and multiple myeloma.

The article discusses the barriers to the uptake of CAR-T therapy in different healthcare systems. In Europe, where there is socialized medicine, uptake is quick and efficient. However, in the US, the fragmented healthcare system poses challenges in treating patients where they are. To address this, the company is working on opening more authorized treatment centers in the community. Another barrier is convincing physicians to use CAR-T in place of stem cell transplants, and the company is focused on educating them on the benefits. Lastly, the growing number of multiple myeloma patients seeking CAR-T treatment is causing strain on authorized treatment centers.

The speaker discusses the importance of expanding the number of beds and opening new treatment centers in academic medical centers to serve both lymphoma and multiple myeloma patients. The next question is about the dynamics of HIV channel mix and how it will progress in the future. The speaker explains that there has been a favorable pricing trend due to channel mix, but it is expected to normalize in the next quarter and continue into 2024. This is due to post-COVID stabilization in employment rates and inflation.

The speaker discusses the growth of HIV sales and the market demand for treatment and prevention. They mention the success of BIKTARVY and DESCOVY in the competitive market and the potential impact of competitor data on Trodelvy, a breast cancer treatment. However, they believe that Trodelvy's proven efficacy in second-line treatment and beyond will continue to drive its success.

The company is a leader in TNBC and IHC 0 populations, and they are pleased with their positioning in the market. They do not believe that the data they have seen so far will have a direct impact on their position. They are expanding their programs and working to get their drug to as many patients as possible. In terms of the pipeline, they are optimistic about the TIGIT data presented at ASCO and see potential for continued momentum. The data for multiple myeloma is also promising and they will continue to work towards market approval and competitive positioning.

The data presented for TIGIT and ddBCMA in the ARC-21 study is promising, but it is still early and single-arm data. The company plans to continue monitoring the data and conducting a Phase 3 trial to compare to standard of care. The ddBCMA molecule has shown a 100% overall response rate in 38 patients, with a potential for differentiation in efficacy and a favorable safety profile. The company believes there is room for multiple competitors in the multiple myeloma market and that their molecule, Arcellx, will be differentiated.

The company is excited to share more data about their research at ASH. They are also prepared to launch their myeloma treatment and expect it to be better than their previous launch. The long acting HIV combos are progressing well and they are considering using them in earlier lines of treatment.

The paragraph discusses the development of lenacapavir and bictegravir as potential options for patients who are virologically suppressed and may need to switch from Biktarvy due to tolerability issues. The focus is on providing optionality for patients and meeting their needs for longer-acting oral and injectable options. The company also plans to expand into the weekly oral market to meet the requests of patients who prefer not to use injectables. Their development program is based on feedback from people living with HIV and those seeking PrEP options.

The speaker discusses the importance of the new antiretroviral drug Lena for people living with HIV and the company's goal to provide a variety of options for treatment and prevention. They mention two programs, 1720 and islatravir, lenacapavir, and express satisfaction with the progress made. When asked about 2024 spend or margins, the speaker says they will provide specific guidance in late January or early February, but that expenses have increased as they have developed a strong pipeline in virology, oncology, and cell therapy. They expect more moderate growth in expenses going forward and are actively managing them.

The speaker discusses the company's recent R&D expenses and how they have remained relatively flat in the third quarter, signaling a moderation of expense growth. They attribute this to their numerous clinical programs and express excitement for the company's future. The speaker also mentions the company's strong performance in the commercial market and their commitment to following the science in their investments, particularly in virology.

The company is committed to diversifying its portfolio and investing in various areas such as virology, oncology, and inflammation. They believe their strength in virology is critical to their success and growth, but they are also focused on developing their other areas of research. They will allocate capital based on where the best data and opportunities are, and they make these decisions daily.

Joe Catanzaro of Piper Sandler asks about the potential impact of Padcev's EV-302 data on Trodelvy sales in bladder cancer. Johanna Mercier, from a commercial standpoint, sees an opportunity to move up Trodelvy lines of therapy with the change in standard of care in first-line treatment. Merdad Parsey, from a clinical standpoint, also believes the data will change the paradigm for bladder cancer and mentions the potential for combining Padcev and Trodelvy.

The speaker is reflecting on the success of Gilead in 2023 and their plans for 2024. They are excited about the upcoming clinical trials and milestones, particularly for Trodelvy and Lenacapavir. They will provide more details on their 2024 clinical milestones in the future. The speaker encourages listeners to reach out to the IR team at Gilead for any questions or feedback. The call has now ended.

The speaker is giving permission to disconnect the lines, indicating that the task or conversation is now complete.

This summary was generated with AI and may contain some inaccuracies.