The paragraph is an introduction to Gilead's Third Quarter 2024 Earnings Conference Call. Rebecca, the operator, welcomes participants and introduces Jackie Ross, the Vice President of Investor Relations and Corporate Strategic Finance. Jackie mentions the release of the company's earnings results and notes that detailed information is available on their website. The main speakers, including CEO Daniel O'Day, will discuss the company's impressive third-quarter performance, highlighting significant revenue growth in HIV, Oncology, and Liver Disease sectors. Daniel O'Day notes strong financial results and an increase in 2024 financial guidance, demonstrating the company's effective expense management and operational success.

In the third quarter, significant progress was made in Gilead's Virology and Inflammation programs, particularly with lenacapavir, a promising HIV prevention drug that could become the first twice-yearly subcutaneous injection if approved. The FDA granted it breakthrough therapy designation, and filing is expected by year-end. Additionally, Gilead launched Livdelzi for primary biliary cholangitis, surpassing internal demand expectations and marking the company's sixth innovative therapy launch since 2019. In Oncology, Gilead, with partner Arcellx, shared promising data from studies on Anito-Cel for multiple myeloma, highlighting its potential to transform care and progress in early-line patients with the iMMagine-3 study.

The Oncology program is adapting based on clinical data and regulatory feedback, prioritizing the most promising projects. The focus is on advancing Trodelvy in first-line PD-L1 high metastatic non-small cell lung cancer, while discontinuing its development in second-line settings. Additionally, a new program is being initiated for small cell lung cancer due to promising Phase 2 trial results. The company has achieved its 2024 clinical milestones, with important presentations scheduled for ASH and HIV Analyst Events in December. Commercially, the company had a strong quarter, with Johanna Mercier highlighting a 7% year-over-year increase in total product sales, reaching $6.8 billion, driven by growth in HIV, Oncology, and Liver Disease. HIV sales rose 9% year-over-year, attributed to higher prices and demand.

The paragraph discusses the performance of Gilead's HIV treatments, highlighting a 5% year-to-date growth in sales, exceeding their original target. Consequently, they've revised their full-year growth expectation to 5%, with anticipated flat sales in the fourth quarter due to non-recurring pricing dynamics from the third quarter. Biktarvy sales increased by 13% year-over-year and 7% sequentially, driven by demand and channel mix, solidifying its status as the leading HIV treatment in the U.S. Gilead plans to maintain its leadership in the HIV market with four new regimens by 2030, in line with projected market growth of 2% to 3% annually. Descovy sales also rose, with a 15% year-over-year and 21% sequential increase, primarily due to channel mix and higher demand.

The PrEP market is experiencing strong growth, with Descovy for PrEP leading with a 40% market share despite generic competition. Descovy's sales for PrEP make up 80% of its total sales in Q3. The company is preparing to launch lenacapavir for PrEP, highlighting its potential to change HIV prevention with its twice-yearly administration. They plan to file for U.S. approval by year-end and launch commercially in 2025, while aiming to make it available in 120 resource-limited countries quickly post-approval. Additionally, their Liver Disease portfolio saw a 4% increase in sales, driven by hepatitis demand, although it dropped 12% sequentially due to inventory and patient start issues in HCV. They also launched Livdelzi for PBC in the U.S., quickly reaching over 1,000 prescribers after training their commercial team.

The company expresses optimism about the demand for Livdelzi, an approved therapy for a rare disease, noting modest third-quarter sales due to initial onboarding challenges but expecting growth by 2025. European launch preparations are ongoing, with a regulatory decision anticipated in early 2025. Meanwhile, Veklury remains the leading antiviral for hospitalized COVID-19 patients, with sales exceeding expectations due to higher hospitalizations, prompting an increase in full-year guidance to $1.8 billion. In oncology, Gilead or Kite therapies have treated over 65,000 patients globally, with third-quarter sales reaching $860 million, driven by Trodelvy's growth. Despite a 3% sequential decline in overall oncology sales, Trodelvy sales increased by 17% year-over-year and 4% quarter-over-quarter.

The paragraph discusses the performance and positioning of Trodelvy, a TROP2-directed ADC for metastatic breast cancers, highlighting its status as the standard of care for second-line metastatic triple-negative breast cancer and its growing use in other settings. Despite competitive pressures, Trodelvy's sales have grown year-over-year. The text also addresses Kite's cell therapy sales, which remained flat in the third quarter due to competitive challenges. Kite's efforts focus on expanding CAR-T therapy access by partnering with government and healthcare organizations to overcome barriers. Only 20% of eligible U.S. patients currently receive CAR-T therapy for large B-cell lymphoma. The company aims to increase access in community settings by addressing accreditation hurdles that impede national reimbursement.

The paragraph highlights the progress and achievements in various healthcare initiatives. It mentions the successful treatment of initial patients with Yescarta as part of a community strategy, leading to demand growth outside the U.S., particularly in Europe and Japan. The commercialization teams are commended for their efforts in a strong operational quarter. Additionally, the paragraph discusses the PURPOSE program's advancements in HIV prevention with Lenacapavir, showcasing promising results from trials, including strong efficacy in preventing HIV infections across diverse populations. This information will be further elaborated on at an upcoming conference.

The FDA has granted breakthrough therapy designation to Lenacapavir for HIV prevention, with plans for U.S. regulatory submission by year-end and global filings to follow. The company is advancing its HIV treatment pipeline, developing new regimens like a once-daily oral combination of Lenacapavir and Bictegravir, and once-weekly oral programs. Various trials, including Phase 2 PURPOSE and Phase 3 ARTISTRY, aim to provide data for HIV treatment and prevention in challenging communities. Additionally, the company is working on a combination of Lenacapavir and Merck's Islatravir, with ongoing trials and positive Phase 2 results presented at IDWeek.

The paragraph discusses updates on various drug trials and approvals. In HIV treatment, participants on Lenacapavir plus Islatravir and Biktarvy maintained high virologic suppression rates without dropout due to lymphocyte count decreases. In liver diseases, the FDA granted accelerated approval for Livdelz in treating PBC with UDCA for those with an inadequate response or as monotherapy for those intolerant to UDCA, with an EMA decision expected next year. They are recruiting for a Phase 3 AFFIRM trial to evaluate Seladelpar's impact on event-free survival and conducting a Phase 3 IDELA trial for broader PBC patient impact. In oncology, due to regulatory discussions and trial data, the company is halting Trodelvy's evaluation for second-line metastatic non-small cell lung cancer but views its combination with a PD-1 inhibitor, without chemotherapy, promising in the first-line setting. The Phase 3 EVOKE-03 study is ongoing for patients with PD-L1 high metastatic non-small cell lung cancer.

The paragraph discusses recent clinical trial updates and promising results for various cancer treatments. Trodelvy showed encouraging Phase 2 data in extensive stage small cell lung cancer and is advancing to a Phase 3 trial. Additionally, results from the Phase 2 ARC-10 trial on Domvanalimab will be presented at an upcoming conference. ARC-10 enrollment was stopped to focus on other Phase 3 studies. The paragraph also highlights the success of Anito-cel in treating relapsed or refractory multiple myeloma, with impressive efficacy results and no significant neurotoxicity observed. Further data from a Phase 1 study will be shared at a conference, showing a median progression-free survival of 30.2 months, and overall survival not yet reached.

The paragraph discusses advancements and updates from Gilead and Kite in their medical trials and treatments. They plan to share updated data on Anito-cel at the ASH conference and mention the FDA granting Kite the RMAT designation for Yescarta, which helps accelerate the development of treatments for high-risk large B-cell lymphoma. The ongoing Phase 3 ZUMA-23 study is highlighted, alongside the possible delay in reaching data cutoff for the ASCENT-03 trial. Additionally, they discuss the PURPOSE 2 data being ready ahead of schedule, plans for releasing Lenacapavir data in 2025, and the initiation of various HIV, Trodelvy, and cell therapy trials. The paragraph closes with commendations for the teams and notes a 7% year-over-year increase in their core business revenue.

In the third quarter, Veklury contributed to a 7% year-over-year increase in total product sales, reaching $7.5 billion. A GAAP financial impact was noted due to a $1.8 billion impairment charge from the reevaluation of IPR&D intangible assets acquired from Immunomedics in 2020, particularly affecting the second-line non-small-cell lung cancer indication. The remaining value is tied to Trodelvy's potential in the first-line setting. Non-GAAP results showed an 87% product gross margin, aided by product mix changes. R&D expenses decreased by 5% due to timing and expense management, despite a $505 million acquired IPR&D cost, which includes a $320 million royalty buyout from Janssen and a $35 million investment in an AI partnership with Genesis. SG&A expenses rose 8% due to new product launches and preparations, and the operating margin was 43%; without the royalty buyout, it would have been 47%.

The paragraph discusses a company's financial performance and updated guidance. It highlights a consistent operating margin above 40% and an effective tax rate increase from 7% to 18% due to changes in tax reserves. The non-GAAP diluted EPS decreased from $2.29 to $2.02 per share, mainly due to higher acquired IPR&D and tax expenses, despite increased product sales. A $320 million expense for buying out Livdelzi royalties affected EPS by $0.20 per share. The company experienced a 7% growth in base business from its core franchises, with total product sales up 6% year-over-year. The company has increased its product sales guidance, excluding Veklury, by $150 million, anticipating $26 billion to $26.3 billion in sales and expects HIV sales to grow 5% from 2023, higher than the previous 4% expectation.

The company has provided updated financial guidance for the full-year 2024, expecting total product sales to be between $27.8 billion and $28.1 billion, which is a $650 million increase at the midpoint compared to previous estimates. They anticipate a product gross margin of approximately 86% and have revised their R&D expenses to decline slightly instead of growing. Operating income is now projected to be between $8 billion and $8.3 billion, up from their prior estimate, and the full-year tax rate is expected to be about 27%, lower than the previous 30% estimate, partly due to an acquisition charge. Consequently, earnings per share (EPS) guidance has been increased to between $4.25 and $4.45, compared to the previous $3.60 to $3.90, reflecting strong revenue and disciplined expense management. GAAP EPS is expected to be between $0.05 and $0.25.

In the earnings call, Gilead discussed their shareholder returns, highlighting $1.3 billion returned in the third quarter and $3.7 billion over the first nine months of the year. They remain focused on their capital allocation and anticipate a strong 2024, especially with progress in managing operating expenses. During the Q&A, when asked about the CAR T space and Yescarta's performance amid competition from Breyanzi, Cindy Perettie explained that the competition arises from new indications in follicular and mantle cell lymphoma and increased manufacturing capacity, as well as bi-specifics as out-of-class competition. Despite this, Gilead believes no change in their commercial strategy is needed.

The paragraph discusses the oncology sector's tendency for physicians to adopt new therapies once approved and the expectation for this trend to continue. It highlights the focus on increasing both class and brand share, specifically for YESCARTA and TECARTUS, and mentions the anticipation of anito-cel's arrival in 2026. The conversation then shifts to Mike Yee's question about the prospective launch of lenacapavir for PrEP. Johanna Mercier expresses excitement about the potential growth opportunities, emphasizing market expansion through increased usage and prescription of PrEP, expansion beyond the U.S., and inclusion of more diverse demographics such as Black, Latino individuals, young adults, cisgender women, and transgender individuals.

The paragraph discusses the current state and future potential of the HIV treatment market, particularly focusing on Lenacapavir for PrEP (pre-exposure prophylaxis). The speaker believes Lenacapavir's twice-yearly subcutaneous administration offers a distinct advantage and will likely impact the market, including Descovy, a daily oral treatment, and the generic oral segment. Efforts are underway to ensure a smooth experience for both providers and consumers, with emphasis on distribution and reimbursement processes. Gilead anticipates expanding its market share in HIV prevention, largely driven by Lenacapavir, and plans to share more insights at an upcoming HIV analyst event.

In the paragraph, Umer asks Cindy Perettie about the reasons for not observing delayed neurotoxicity, whether it’s due to the construct or trial design, and if there’s enough Phase 1 data to rule out delayed neurotoxicity in larger Phase 3 trials. Cindy attributes the absence of delayed neurotoxicity to the construct, specifically a compact DD domain, and expresses confidence in their findings. She mentions having data from over 100 patients and looks forward to sharing more at ASH. Tyler Van Buren then congratulates the team on their results and asks about the ability to scale Anito-cel upon its expected market launch in 2026.

The paragraph discusses the successful application of experience from Yescarta and Tecartus to the manufacturing process of Anito-cel, leading to efficient production and scaling without concerns or specific FDA feedback requiring a different approach. Additionally, Johanna Mercier addresses a question about seladelpar's launch and payer coverage, expressing satisfaction with the initial launch outcomes and noting that initial patient demand has exceeded expectations. She highlights the swift and effective mobilization of their team after FDA approval.

The company achieved over 1,000 of their key targets within the first two and a half weeks after launching their product, leveraging their history and credibility in Liver Disease to gain access to key stakeholders for Primary Biliary Cholangitis (PBC). They implemented a strategy for reimbursement and distribution, enabling direct purchasing with a specialty distributor, which is crucial for both academic centers and community settings. The coverage with payers aligns with their expectations for rare diseases, and access to their products, seladelpar and Livdelzi, is being obtained despite typical barriers. They anticipate a modest sales contribution in 2024 with more significant growth expected in 2025. Daina Graybosch from Leerink Partners then asks about regulatory filing and market building for anito-cel in myeloma, beyond the current 20% penetration in the NHL second-line setting, to which Cindy Perettie responds.

The paragraph discusses a regulatory filing with the FDA for a product with a differentiated safety profile, emphasizing challenges in expanding patient access to CAR T therapies for conditions like lymphoma and multiple myeloma. It mentions strategies to improve reimbursement access, focusing on a product called Anito-cel. A question then shifts the discussion to HIV, asking about expectations for an upcoming analyst event. Daniel O’Day responds by expressing enthusiasm for the event where they aim to share commercialization plans for Lenacapavir related to PrEP, hinting at a mix of qualitative and possibly quantitative insights being presented.

The paragraph outlines the company's strategy for the Lenacapavir for PrEP market and highlights their focus on both qualitative and quantitative analyses of the market opportunities. They plan to provide guidance on peak sales and strategies for 2025 and beyond early next year. Additionally, there's an emphasis on their progress with long-acting HIV treatment combinations, which will be detailed in future disclosures. The company is developing multiple long-acting treatment options, including orals and injectables, and plans to update on R&D progress and timelines. They assure that their HIV business is secure until at least 2033, with new treatment modalities expected before then, ensuring sustained business strength into the late 2030s.

In the given discussion, an unidentified analyst named Chris asked Andrew Dickinson if he is confident about expanding the operating margin in 2025, excluding in-process research and development (IPR&D). Andrew Dickinson responded that while specific guidance for 2025 will be provided later, the company's recent efforts in building its portfolio and managing expenses have led to strong operating margins in the past two quarters. While it's too soon to give exact predictions for 2025, the company aims for an industry-leading operating margin over time. Following this, Chris Schott from JP Morgan asked about the role of subcutaneous (SUBQ) injectables in HIV treatment compared to weekly oral options, noting that many programs in development seem to focus on oral treatments by 2030.

The paragraph discusses the company's strategy for developing HIV treatments, emphasizing a dual approach with both oral and injectable options. Merdad Parsey explains that the company aims to provide flexibility by offering oral medications with weekly or monthly dosages and injectable options administered every three to six months, leveraging the success of lenacapavir. Johanna Mercier adds that the strategy is patient-centric, focusing on accommodating diverse patient preferences, as some prefer oral pills while others opt for infrequent injections to manage their HIV treatment.

The paragraph discusses the future of HIV treatment and prevention, emphasizing the company's commitment to maintaining its leadership in the field through its robust pipeline of products. Andrew Dickinson and Johanna Mercier address projections for long-acting HIV pre-exposure prophylaxis (PrEP) products, noting that current estimates show about 400,000 people on PrEP, which could increase to 600,000 by 2030. They plan to provide more information at an upcoming HIV analyst event in December. The company has used social media and direct-to-consumer strategies to grow the market to its current size.

The paragraph discusses the potential growth opportunities in the HIV PrEP market, noting that while the majority of current users are white MSM, there is potential to expand to other groups, including Latino, Black individuals, women, cisgender women, transgender individuals, and young adults. This expansion is expected to be driven by Lenacapivir, a new prevention option that doesn't require daily dosing. The speaker emphasizes the importance of investment, education, and awareness to expand the market by 2030. The subsequent section transitions into a discussion led by Operator about the ASCENT-03 trial and its implications for the frontline opportunity in triple-negative breast cancer, suggesting that this market could be approximately double the size as treatment moves to earlier lines of therapy.

The paragraph discusses the development and potential impact of two clinical trials, ASCENT-03 and ASCENT-04, which focus on PD-L1 negative and positive TNBC (triple-negative breast cancer) patients. The speaker expresses optimism that the results of these trials, particularly if they demonstrate improved overall survival, could significantly impact treatment by establishing the therapy as the standard of care in earlier stages of metastatic disease. The conversation then shifts to logistical aspects of another study, iMMagine-3, concerning clinical trial site participation and the potential for anito-cel therapy to be administered in outpatient settings. The speaker confirms that their Phase 3 programs are designed with outpatient settings in mind, considering the early onset of cytokine release syndrome (CRS) observed. The operator then prompts a question from Brian Abrahams.

The paragraph involves a Q&A session where Johanna Mercier addresses concerns regarding potential Medicaid cutbacks affecting their HIV franchise. She explains that Medicaid accounts for about 20-30% of their HIV business, and they closely monitor any changes. Mercier mentions alternative support systems like A-DAPT and the growth in 340B settings that help ensure access for HIV patients, even if Medicaid cuts occur. The operator then concludes the Q&A, and Daniel O'Day provides closing remarks, highlighting a strong quarter driven by commercial success and promising clinical data on drugs like Lenacapivir and seladelpar.

The paragraph focuses on the team's dedication to strong commercial and clinical execution, prioritizing resources, and managing operating expenses. It highlights two upcoming events: an HIV analyst event in December and a presentation at ASH. The speaker, Jackie Ross, notes they plan to release their Q4 and full-year 2024 earnings results on February 11, 2025, but this date is provisional. The company commits to updating stakeholders on confirmed dates and progress.

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