GILD - Earnings call transcript Q3 2017

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Operator

Ladies and gentlemen, thank new for standing by, and welcome to the Gilead Sciences' Third Quarter 2017 Earnings Conference Call. My name is Karen, and I will be your conference operator today. At this time, all participants are in a listen-only mode. And as a reminder, this conference call is being recorded. I would now like to turn the call over to Sung Lee, Vice President of Investor Relations. ahead. go Please

Sung Lee

and Karen; everyone. Thank good you, afternoon,

the after with Executive Robin earnings close press The and available speakers we Gilead call Washington, on quarter Milligan, today, release press release President on are slides be a on issued detailed Relations results website. Officer; The section the Just XXXX. market Investor will for John room Operations. with Officer; and for today's Jim Executive third the Also and in Chief and are President Vice Commercial the Executive Vice session Operating Chief Financial Q&A and President Vice Chief of Officer; Scientific President, Riva, Officer; us and Chief Bischofberger, Vice the Executive Meyers, Therapeutics. Young, Oncology Research President, Kevin and Alessandro Executive Development Norbert

comments, projections begin respect me of the will plans that with that these we certain statements, of prepared financial making cause documents press from description assumptions, with capital, and A SEC of expectations involve risks we candidates, and you and our the found these statements. be latest product remind forward-looking including which differ releases. are use all beyond results products, let to in recent to actual disclosure control can materially be could risks and and our uncertainties Before

now performance. as any used over help to website. well to GAAP In earnings statements the addition, company's undertake you Non-GAAP release, the provided will be The will John. Gilead are the understand does any obligation business as forward-looking update Gilead underlying call. to press to call measures not non-GAAP I made during in financial the on reconciliations turn this

John F. Milligan

patients Kite approved of the few planned after Gilead incredibly at began as days for Yescarta, an been August, In company. About for we transaction weeks therapy. with first or here enter one operating It's months CAR-T team later, acquisition Consistent begun large with relapsed FDA cancer centers the five treatment. Yescarta prepare finalize we now treatment B-cell program, collaborating and of first approval two patients refractory and XX the systemic lymphoma employees Kite Gilead. to announced completed adult we therapy are Sung. Kite requirement busy Only after the lines training and close, REMS and late received you, has exciting the of the the Yescarta Kite. together to Thank of Gilead for with to complete or academic more and the certification. working

Yescarta The and accept be expected to two centers first be soon as about the is approval in able patients to treatment approved for are XX center as will weeks each received.

achieve response are to for patients transformational essential and XX to current appreciate greatly data run for XX% be patients ZUMA-X, quickly And B-cell the with from lymphoma possible. trial. refractory a that continues, is date, population response, as partnership meeting complete or on the options this therapy of average are to of trials of those six the refractory those Yescarta shift who serves adult the supported with when have Yescarta response lines had ZUMA-X teams The diffuse course of who Yescarta work Phase will approval treated CAR-T medical of not help after care number Yescarta median transplantation a associated enrolled are leadership with with for and it manage complete lymphoblastic followed large effectively health ensure Historically, more controlled the in is patients. therapy learning will community in outcome of patients X% been for care. course. patients. study treated of may X/X pivotal a duration training months. of of the you single X.X help a patients expedite of patients helping patients the and adverse infusion and only as safety. with In therapy largely severe lymphomas centers acute of how clinical cancer. reached we fight and ASH, of Even waiting new had from with in ZUMA-X study is and the essential of to by standard events, preparation PDUFA There including who is CAR-T of a XX% Hematology a yet American December. responded proper the been reaches access studies therapy, for and of the As best who and oncology the ongoing. complicated will relapsed earlier presented patient that against though options other Once and be Yescarta planned follow-up patients out of their out median Yescarta launch Also can study, know, them sometimes who've is this Society a leukemia. who presented minimum has a to is had over to effects. ensure the FDA from months ahead months approved, ensure run the at treatments the at the follow-up patients in or the of Data be drug Kite side approve results in be of of

Additionally, receptor B-cell or clinical CAR-Ts, are or modified tumors. ongoing leukemias, T-cell malignancies, T-cells planned or of CD-XX solid in studies

response in will to I long-term forward about treatment decades. improving and and and bring in the development cancer of Gilead a is Kite short congratulate the of the order have progress employees look innovative more coming our therapy CAR-Ts these to along breakthroughs rates with safety. among cellular in bringing what studies, an with that months. new to at of advancement hope team benefit for and Beyond I to commend invest proud our take in to the And they and forward accomplished. to Belldegrun CAR-T patients. significant is goal generations and moment part to research of Arie be TCRs and would Kite most is a in Gilead future and continue like complete sharing Kite increasing

Moving our researchers continue than HCV, at product we more week abstracts, compound Liver or presented disease in to a Washington, HBV, progress make or to XX investigational other Meeting with liver including NASH. on the Gilead significant areas, featuring pipeline. therapeutic data D.C. Last

GS-XXXX demonstrated presented During liver the data placebo. combination The led in suggests liver inhibitor of to investigational with C Phase data rates Phase in agonist, potential combination The compared treatments FXR with cure role at conducting these the of ACC the in and announced has the year. GS-XXXX that X study China. diverse patients abstract of fat study improved September, important significant in studies patients that an patients a and GS-XXXX hepatitis of biomarkers in studies reductions our with patients NASH. long-term selective we of the disease. that bone to who that with in supporting populations. to received ACC researchers NASH. inhibitor, Also we Gilead's initiate on body GS-XXXX B evidence safety ASK-X Depending X larger with Vemlidy, inhibitor, hepatitis outcomes demonstrate patient the In measures X hepatitis safety Phase of placebo-controlled fibrosis late for to the with Phase randomized breaking non-steroidal in the next This patients trials, of may session, new first efficacy play important data Sovaldi results Gilead's with certain to and adding renal also among GS-XXXX, were selonsertib, presented treating an We're Gilead's therapies are treat high approval difficult treated X and in is and viral Meeting, NASH. Liver

Approximately, for estimated to in in million people that and are China, be Gilead that approval need, Harvoni a regulatory launch product first directly filings living with a are the Epclusa future. near in planned highlighting The tremendous will for the XX country. HCV

a support important MAA and products, in hiring launch the the HIV products planned needs products China, and to for of in we unmet serve to begun Vemlidy education have for medical have products. and We access. focus our HBV, of HCV with are team the addition filed a Gilead's on for number market and a filings Sovaldi future

and and turn extremely when Earlier from with expected boosted July. by regimens long-term appropriate TAF-based next Conference cellar were Paris These also regulatory Phase International a various programs liver of in of broad within HIV, at Gilead's background will demonstrating as over was performance Robin, performing quarter. our X we for of prior few FTC/TAF, known inhibitor-based B/F/TAF, for the PDUFA launches HIV. Reviews Protease As the I for are X key the our our FDA to in bictegravir, year. month, in middle people Phase driven be August, XX, also success. to studies you'll triple-therapy now, underlying business, confident announced switching integrase Descovy range on us are which of call a product the accepted XXXX. of minutes, may two underway financial advancement will of date execution successful combination dolutegravir-based February that fixed-dose a now we we're this hear with B/F/TAF, and suggest from investigational strength in demonstrating living all Jim from the disease, AIDS Society in of non-inferiority In well. therapy, with positions data data bictegravir of regimen. conclusion, strand regimens who a review well the presented by inhibitor Data transfer In toward review Europe that the in of the B/F/TAF B/F/TAF, presented non-inferiority action

Robin L. Washington

everyone. good Thanks, John; afternoon, and

our This quarter of results were the $X.X with non-GAAP revenues are non-GAAP last sequentially. quarter and compares sales share financial year. $X.X share billion $X.XX. Product pleased XXXX. X% earnings for $X.X period down of year-over-year third share were for the and of per per diluted We same third quarter Total for third to billion, to revenues down billion the XX% the for earnings of $X.XX

the As in in competition third of expected, offset revenues. declines strong impact continue portfolio, see were HCV in to HIV lower the our beginning start HCV the of quarter. increased resulting our and franchise of increased revenue by partially we The non-HCV uptake on the HCV effects patient

HCV competition. increased U.S. up regimens. were and billion, were billion, billion, and primarily of X% down Non-HCV lower year-over-year, year-over-year primarily driven to for product effects XX% third declines for sales the our sequentially. starts driven sequentially, higher X% $X.X the Product demand $X.X Turning the $X.X product quarter XX% were patient down sequentially. and by sales sales X% TAF-based were and The XX% by year-over-year

of As related regimens. a favorable TDF-based to million adjustment rebate $XXX our quarter third prior-year to a revenues benefited reminder, from reserve our primarily

grew adjustment, non-HCV this revenues Excluding XX% our year-over-year.

expected. of the decline competitive exclusivity for XX% sequentially. due and for and year-over-year lower down sales Product was year-over-year dynamics market Truvada in quarter patient due Europe. as decline loss to well to HCV starts. recognition related and second to The third in an of HCV deferred The revenue contract to HCV the XX% primarily the primarily $X.X billion, Viread Turning the as was sequential were quarter as was total

the to the the were Now, compared XXXX year. turning a $XXX were quarter, same to to in of prior with to due million period expenses. Non-GAAP R&D XX% milestone for primarily impact associated million $XXX third the million Non-GAAP expense expenses the $XXX $XXX third compared expenses year quarter down million Nimbus. for SG&A last

Moving to the sheet. balance

acquisition with operations cash and third unsecured notes. $X repurchased acquisition. $XXX dividends via quarter, of term cash the of billion an We quarter billion During stock debt we in raised portion fund of for third paid the issuance in million $X $XXX additional we Kite of investments, cash senior the a and million $X.X of a inclusive In ended from quarter. of to and flows cash for generated billion the in X shares the loans million billion in October, raised $XX.X

investing strategy growth unchanged long-term prioritize allocation the our of will for of in capital business. continue we capital and Our to use the remains

on I update slide like corporate guidance results summarize provided to our and presentation full-year July to would XX website. Finally, our you on available XX in on XXXX earnings the

$X product billion product sales to expected lower product of net of to guidance. the expected of sales now end between expect billion to range previous $XX.X are be $XX.X net in billion. $X.X $XX.X are increasing are net be Non-HCV to $XX billion. to in be the product We net billion of to our the HCV sales billion. range We range sales

to decreasing XX%. be is to the expense to to $X.X the for to expected the be billion SG&A XX% $X.X of to product is margin billion. range are gross We R&D $X.X in of in expense range $X.X range expected billion billion.

and which is for to We earnings are range our the the of during of including This outside lower-than-expected estimates the and remainder effective decreasing to of are XXXX, of in a Jim to U.S. HCV the of results introduction greater versions guidance market fixed-dose discuss over of for uncertainties price accuracy of XX%. number as the in the patient tax starts to performance generic highlighted turn FTC/TDF combination presentation, now I the on the subject will XX HIV share result quarter. erosion for the rate the to the XX% TDF and Gilead's slide commercial call

James R. Meyers

backbone. regimens and Well, entered widespread right. we across All pleased HIV all most good Descovy XX% franchise very rapid the strong TAF-based with third now XXXX. up account on HBV reflects our In has and for an total our to been revenues you, and physician thank therapy of performance total HIV. quarter, HIV TAF-based XX% another acceptance categories, quarter, for switch everyone. migration update This third U.S., patients Robin; as afternoon, commercial provide volume, to I'm billion. treated starting with the since the $X.X regimens quarter the of Genvoya the XXXX. treatment-naïve, of of prescribed Gilead's prescription from delivered

second to on become track both and to U.S. in history HIV the product addition, behind only launch Atripla successful surpass most Descovy In Genvoya. is Truvada

strong see PrEP. We continue to Truvada uptake of for

we year. As increase this Truvada indication, taking accelerated that third people with XX,XXX the approximately there XXX,XXX there however, CDC U.S. approximately people quarter, five-fold growth, each infected estimates in the a for since representing still Even were XXXX. are January this the exited

communities use in of PrEP with for on along two the HIV PrEP. of quarter Gilead people populations in success certain hopes the new in on educating efforts during the Truvada and this media have We at of aimed prevention reducing at-risk prevention the in other impact in of U.S. awareness other infections regions, launched currently new have targeted seen And who campaigns low building

our finally, The HIV U.S., $XXX driven and down entries was year-over-year of Europe's total like account the HBV by and the total in X% as the Like switching revenues quarter-on-quarter TAF and are Europe, quarterly to Italy, the in In in for resulting Genvoya than five portfolio. over launch volume. preference of Germany, already launch throughout Physician TAF-based to TAF-based the most France, patient XX% and TDF/FTC. third as were Genvoya a TAF-based sequentially. the HIV uptake Turning of many any to months and both prescribed is the X% down more both prescription largest any revenue continues other regimen. for sequential twice regimens for in across early European million Descovy Gilead's first of markets strong launch HIV HIV quarter, TDF treatment-naïve strong, generic And regimens XX% therapy decrease of growth prior switch country. four for markets. the regimens and patients in patients Europe. market, the that Genvoya of uptake exceeded top remains In

regimen the quarter-on-quarter competition. in the began was quarter, increased we impact XX,XXX the year-over-year quarter, treatment X% gradual and starts third starts XXXX. patients decrease were the down decline of continuing that The down the down HCV Gilead we've in HCV the Odefsey. July, seen on In from XX% beginning by HCV XX% C. $X.X Total patient during since patient Hep launched the declining a quarter, prior of and revenues sequentially. to U.S. in driven Turning billion

retreatment fulfilling therapies. The the need first of patients other not single an for effective regimen cured HCV, with adults regimen for unmet be could approved who the tablet with for chronic

Odefsey patients, treatment For new option. this small group an provides important of

Europe. to Turning

regimen leading European across Epclusa, We continue is markets. major the of which to now see HCV strong the uptake

authorization Commission Germany. already granted marketing unmet to We in approximately July the reimbursement XX,XXX in in Odefsey reimbursement patient medical other the for achieved HCV Gilead with pleased acknowledge report are track starts the in were And on payers that quarter. is Overall, countries European also for as Europe need.

access expanded early in Italy Spain course access of patient fibrosis in some countries starts and broader earlier of launch the offset our lower removing partially Switzerland Over access of month, by patient score markets, granted the And France. – we observed restrictions. and have by this impact like XXXX,

a moving of impact to I from say Before about words HCV, few away wanted competition. the new

have in in starts, net variables. pricing, Patient the noted by market and revenues share, the four are past, As HCV we treatment driven market duration.

have While XXXX, across expectations eroded exceeded of and the is in net patient our competition arrival starts further pricing, has market which share similar genotypes. new Gilead's now

pricing the our But and on share changes fourth be of Some third in quarter. be those market will impact in reflected seen can more results. beginning fully the quarter

XXXX what to importantly, for results. to treatments XXXX. and of offering with Upon we on began trial of And ensure six in in believe XX with. the will rates position has all close immediately cancer access that with is the to week's to backed Harvoni cure in U.S. saw approval, in We to administer of we payers remain worked Yescarta. comparable types day. the PDUFA full HCV; Importantly, real-world clinical ahead most Epclusa by to Gilead weeks in the have that which leading Yescarta, similar we last I'd comprehensive work patients came patient began of states like centers XX approval to topic certify John

exciting an to colleagues than across new patient XX are working the eventual need, XX therapy the to institutions our train promise of actively Given with and target XX more U.S. centers CAR-T of additional

help make and as patients therapy's to working long-standing this and of to and developed to educate launch Gilead with team closing, payers on to coming the to In are is Kite them implementation this for extensively opportunity months. processes. in therapies the needs the Connect the to As and patients. stakeholders have understanding need, I is reimbursement CAR-T In seriously key look updating the in forward with the to how we would in of dedication. ensure colleagues accessible we and with to navigate you program other progress are commitment on value treating pleased that our new embark unique keeping institutions a cancer to our to cancer, well by their Yescarta We on meet collaborating the This thank place. with to approach our revolutionary at Kite take Kite customized commitment Yescarta like employees ill as

who new the with continue now call patients other to life-saving bring to for work to our to our access treatment medications breakthrough patients For Kite no hard a who have I Operator? the employees questions. been and Gilead cancer at options. able ensure colleagues to to open like have for your would

Operator

you. Thank

Our first line question comes of the from Barclays. Meacham Geoff with

Geoffrey Meacham

Hey, guys. Afternoon, for the question. and thanks

in to comments on some prepared Just follow remarks recent C. the on Hep your of

guys generally speak go much quarter the don't You to Thank success and and length I of this from the just maybe into have some now detail, new last want the dynamics of been thinking you into the market What's growing commercial product new had to late, beyond. recently too with looking of starts. public in but AbbVie. year especially and know trend And contracts you. next

James R. Meyers

Sure.

Maybe couple here. were questions deal with I a there which I'll of think mentioned. in the you contracts,

what XX-month the cycle the competition. timing that really of upon is of to, new we're became happened contractual contractual a really largely just XX-month So cycle launch based a is typically what used the

go So process that everything XXXX. working of through are balance through of finalizing terms now that will we're contracts the in right the contractual

Kevin B. Young

here. Young Kevin it's Geoff, Hey,

effect rolling as down total is share. the bit say fourth because was the Let pricing versus as pointed XXXX. entrant market on to that bigger market HCV quarter, but have impact XXXX. And as our a think and some for starts Jim there quarter a position, for Jim effect, the strong for share tiny we're down a there then you pointed add in in will I into have a out, XX,XXX and bit this still really I There in of pricing also little change out me third new were starts. quarter the The expect XX,XXX. would was a overall

D We C. Part have in XXXX for payers really preserved and commercial our options use the availability our to for Hepatitis

them do by best-in-class the were genotype. So asked therapies, think option use and we whatever our that's I really to to hepatologists it what the gives the

with are changes whilst somewhat inevitable, to So a and competition, our seeing we we're portfolio. that strong in from is still we regards position believe

Geoffrey Meacham

you. Thank Okay.

Operator

Thank question line you. from And with the our Michael Yee Jefferies. of next comes

Michael J. Yee

question. the for Thanks

patient Hep you then out. are think, I How this half the get to you the you XXXX? of in where XXXX? as words, first by realizing And the you other could so and an step-down issue, going along XXXX? market thinking that flattening you dynamics confident see and you'll are C, thinking Following Do you go think you In the think see How into people fourth to that stabilize stabilize start can share about out. out? about is in mentioned into do about want that see investors quarter starts

Robin L. Washington

I'll Robin. It's that. Mike. take Hi,

treatment To and updated February. things start Clearly, duration. As end work XXXX, into use by clearly XXXX work you complete the about But to variables back those and XXXX. to guidance not of and next that earlier through year. continue Jim provide for overall the contracting, Jim's other net this as we're guidance share starts, we the to you but are of talk mentioned. to impact factors comments, we'll we'll to we that really the pricing and – know, call go pricing, for looking going at to will patient I

Michael J. Yee

Okay. (XX:XX)

Kevin B. Young

comments. bit add to me Let just a Robin's little

Japan. put says, next be What Robin we've and terms have of that the would guidance Europe to I to think be looking like original I've our the that it between of patient seem XXX,XXX. in it's for terms higher so and that seen. volume, kind happens tracking in we numbers patient sense XXX,XXX pretty that last do of to that The said call We remains in starts. end solid of was on about year, as

of there. out So treatment on the going rates is still

Michael J. Yee

Okay.

or to a we're this stabilize and here. big then up drop way stabilized, coming see it ask be in should basically contracts change basically drop coming words, are to Let large the me step-down but then, competitor on, the here going then. after? going the that's this really quarter is new seen other there's If And do you and just the think

John F. Milligan

would fourth that fully the you'll think see I contracting competition and share. price that more new quarter Michael, say Yeah. not impact through the of process. on both I We're in the with

So XXXX as picture hope we patients of will to in again, we'll we like I what what – that closer have that tell think able looks had I we in again, get to issue complete we to guidance. be point, access strongly physicians and to for maintain Robin's more We'll can just you we a believe there. XXXX. XXXX similar to

been at far. of parity to commercial parity scenarios, to and and of access those in majority We very all particularly greatest the with and our we the so we the have maintain market remain and Medicare is disadvantaged had business when to the parity share got where remain in areas Where preferred least Again, VA. that business this Zepatier. shakes segment. access, maintained preferred in at access, with perspective. continue the we're we leader Medicaid from we payers in But a out, we replace Managed Care to either are have the confident our again, continue ability, mainly Mavyret remain seeing in of will will access and also we've with the segment, worked able major in the Medicaid books those But

Michael J. Yee

Thanks. Appreciate that.

Operator

you. line of Capital Brian question our Thank comes Abrahams Markets. next with from And the RBC

Brian Abrahams

Maybe from C. question. gears Hey, shifting away guys, thanks Hep for my much taking very

wondering changes. of a next and the therapies could that maybe present Conference. in view details Thanks. Where little of to at us manageability you relative data fit this the mechanism And your asset? the some steps GS-XXXX your risk other give of into AASLD portfolio? bit Was of could recently in lipid benefit the if there the the You terms for potentially more paradigm of

Norbert W. Bischofberger

Yeah, It's Norbert. Brian.

Not the we We done. So have XX measured dose longer that them, by fat was good weeks done MRI. there thanks because also a data the were of response. there – it biomarkers were looked was way. do couldn't by for but that supporting liver talks, data study, course. in That's markers the talks we of There of data a of presented as a now, then (XX:XX) down. fibrosis showed fibrosis certain – And question. Yeah, didn't reduction all

So remarks, his compound. it very year. will said sometime And certainly we next behaved John nicely combination prepared studies as start a was in almost

that was elevations. Now, we you effect mentioned clearly triglyceride one did that was see side drug-related

comments to that. two Now

majority, of out high started the the in large First that occurred triglycerides of with XXX patients higher. XX, XX, all, of or already

Secondly, some of these to continued with were triglyceride lesser grade reduced dosing. a elevations

to by it's So We it effect. a effect. redistribution seems mechanistic, be think an way, actually, the immediate

this high fish liver. triglycerides is first from two, You hypothesis all, or manage lipid down synthesis with We come future, have manageable. triglycerides then the the by and we we're VLDL going baseline. shut releasing how one to the That's is, that and at statins In oil, think have. that excluding of this number by those patients

either and we to time, the XX down with may beyond carefully, the go As I normal weeks. have choosing con-meds triglycerides don't data right Again, or with now over said, patients levels.

that in the will see We next study.

Brian Abrahams

Thanks, Norbert.

Norbert W. Bischofberger

Okay.

Operator

next question Geoff our comes you. line Thank Leerink. with Porges from of And the

Geoffrey C. Porges

seen? but you signal. for exposure cumulative these there perhaps It's been signal wondering presumably follow you're studies on comment And to or if is that or class think notified you the approximate for molecule-specific no then concerning you know signals, just you. events. the us here very drug. a could you've are And with what watching you've question give and another I blinded, whether number could Thanks I'm and a events filgotinib, up Norbert, of of much. the I'll VT sense

Norbert W. Bischofberger

Yeah, for question. Geoff. Thanks the

points one a of to patient study six the that's in So X,XXX published number where events they background at venothrombolic per years. looked RA

conditions. inflammatory but occur in does So it's it very rare,

have and also there's while Now, a evidence if too JAK pretty is way, you I look small. it's insufficient drug any published inhibitors that with of – these there across all numbers the the by variation. don't related. inhibitors, just that been JAK good that studies And believe The that we are

in in don't the So year tell of of events and very a as the has JAKX terms that patient you that we JAKX years' with the seen last end and across And Geoff, studies. It's platelet like there's all do time, have if the rate I think levels. believe filgotinib we're and exposures, I the been inhibition thing have experience believe looked per mice with – and if drug-related companies clinical higher to published mentioned the at mouse, literature. mechanism low has at that you knockout at you look And if number to what add, other want X,XXX a are would to you But paper these our I patient had small. events. we what I last very (XX:XX) these reported those that

So venous have in somehow not we number down – we see events inhibit one, have doesn't our entirely JAKX. that actually thromboembolic two, then levels, with should that number because And high filgotinib possible it's the platelets studies. the platelet do effect, to going

this of is subject. wisdom the So extent this I that have on my

Geoffrey C. Porges

appreciate I it. Norbert. Thanks,

Norbert W. Bischofberger

Geoff. Okay,

You're welcome.

Operator

you. with Thank And question comes Morgan our Stanley. line next from Matthew of the Harrison

Matthew K. Harrison

impact I'm the the so that for will could of a the going I Yescarta. to could Great. use. was impact I how sure to ask come think dynamics of total for? the are be about Thanks. for can your you sort and And don't then, the influence the you Obviously, you insight the these financial at looking could that some into little some the which cost, two are on taking how trials comment second, paid think other clinical Thanks mind that about drug's I play demand how in on me question. talk something high of going guess impact And very patients, Medicare launch. one, DRGs could you are, guess much I launch. centers, that If especially on maybe the for of the for and hospitals cover bit

John F. Milligan

Sure. Medicare, a be a Well, isn't. largely with for on they the first they I'll private remind just there's step is we feel that XX% believe, government an update policies – second. then the we some the take to the payer within think indicated this had approval maybe and I – Medicare; and will mix XX% medical confident about to me that that the portion commercial; Yescarta the – combination remember, rest, folks fairly yeah, discussions while about point, payers payers DRG-related a this All for they have part so cover and the But minute let and little back forth. will a that and Kite bit of Medicaid. and both have portion beginning believe And that Alessandro

actually that that, first do approximate of are independent a reimbursement. at these most that launch. will commercial-type Now, CAR-T-specific now years they are and on by until over anything with important so And payer is centers and we're they most new. DRG. right believe last Even think or the based are to with. Medicare a DRGs I between exist vary at using product about We hospitals a obviously. by more will again, PPS involved because, at dealing that reimbursement Every a and the remember with that have DRG like the and payers, what payer segment probably it's time reimbursement agreements of there's it's adept are that exempt, contractual to segments hospital between hospital-based not covering without which also levels reimbursed we're XX that close meaning of done launched not be the these non-CAR-T And DRG in that They about has won't third a fee-for-service well more so and DRGs in grow mix. to year difference

for having they're this like to first figure out the not it's So time.

prerequisites transplants, there's product, that hospital cancer in every I'll say was one the based just, they've it being and centers of is people centers that that them determination cancer for of for these mix. reimbursement So cell in. then feasible would CAR-T turn their this administer sufficient thing certified for to had payer a come these base And do financially to on Alessandro make last this stem to this that experienced do be

a in So we to will have, CAR-T-specific the love would of and DRG. couple we years don't obviously, have, we –

and can to We other hospitals interim. is novel sufficient in have the ground NATAP and at using adept and not are But DRGs other very we reimbursement. things get do this codes

Alessandro Riva

for because will we are the Alessandro. standard-of-care dealing I change This lymphoma that dynamics, large the the treatment. diffuse will after expect lifesaving elaborate is also become Yes. Yescarta we I'll therapy. with that And think, dramatically, B-cell oral

the together therapy. that the sure and community, And the So will think the physician, to that available we a work payers towards it is patients. is transformative making Yescarta

clinical have of done United trials the around in XX lymphoma we So States in large diffuse B-cell mainly in centers America. focusing

Europe. centers to are Now U.S. in we most also the and in expanding

trials B-cell also only but our in B-cell of terms pivotal diffuse not other malignancies. In lymphoma, large

the B-cell we clinical confident whom of have And community, support the indicated, are large trials. implement work from is we will together we'll our are diffuse patient will Yescarta sure for the that and, serve course, needs for this lymphoma, eligible very So the in regulators for patients make that be both to from trial. to we that relapsed-refractory that

Kevin B. Young

market that the a is FDA-approved a said, Alessandro treatment RA Kite a there's have of Hey, remember experience base as with an far to versus Alessandro about early that Yescarta. for need worry. I kind demand patients worry always upon introduce Kevin. be trial always Matthew. my with there There's clinical the And was It's always new biggest start clinical as high from product. the in But commercial patients, says, of which will by of trials. a days

have So that's commercial really that with clinical had some centers for experience base a the XX actually introduction. strong

Matthew K. Harrison

Perfect. Thanks. helpful. Very

Operator

with from Cowen Phil Company. Nadeau comes our And and you. Thank question line of the next

Phil Nadeau

more taking on Good bit afternoon. want HCV two-part to Thanks pricing question. down for a with did the a drill question. I my

you price in Second, somewhat patient if how entirely The first is, situation aren't it QX? will where of average is a quarter-over-quarter have X%, average – give appreciated. per tell would over of change Whatever of QX revenue in the if XX%? you of Is us understanding, an in could it patient QX? can do somewhat change understand the sure us does revenue fluid be like you change? some you wondering was itself you would could I yet a yourselves magnitude Or how per sense Gilead quarter-over-quarter

James R. Meyers

would – process it's still We've it's Yes, say progress, now. complete. a no, made in we mentioned, but again, of as not the lot good we're I right

about you'll that pricing in it again, you to now. genotypes But, So to is fourth is has quarter. again, gravitated see And, quarter we're pricing. fully signal in general during process more fully what in one right genotypes that we they of and down reflected the speak that a similar although the not position X-weak XXXX as this can across said, towards contracting is not complete

Kevin B. Young

It become X-point Jim quarter this and says, a XX% just that going Phil, to three driven was effect versus bigger of tad, will difference in it a was was as by patient from far a two, QX. quarter for little by But, It starts a share. was Hey, just quarter, XX%. it pricing.

Phil Nadeau

you. helpful. Thank That's

Operator

And with line our my Suisse Thanks Securities Alethia from taking Credit Alethia Young question. next Hey, you. (USA) you, the for for Thank Suisse. question - Young of comes guys. It's Credit Norbert. probably LLC

Just to bit about the readout interim in wanted talk PSA GS-XXXX. you (XX:XX) a little

general to lipids the guess, your will different general things. also, just wanted around get tolerability I the efficacy the community in and Ocaliva, discussion some we then, I liver thoughts some Norbert, Just and get FXRs thoughts, after and just Thanks. of of around on with

Norbert W. Bischofberger

- LLC the ACC FXR it, both? Alethia, Credit FXR. Young (USA) Alethia or Securities was this or in Suisse about question

John F. Milligan

Yeah, Young The LLC - Securities Suisse (USA) GS-XXXX. GS-XXXX. FXR. Alethia Credit

Norbert W. Bischofberger

And so data We a to X Okay. study, at soon. fairly study the Phase probably have be should EASL. of data by a XX-week ending. kind you then you FXR? have we – No, will see presented going way. so will see That's

those. we're that haven't with no have tolerated. well-thought. FGFXX, that think been releases going what effect; it's published. well have where we we We – has yet seen, really We I to it's it go There's disclosed think But decided

to as, physically the in same have haven't deliver, come agonist then is instance, That efficacy that will the goes the we with the to only FXR gets yet. So study. That's X for that to is Phase the deliver. FGFXX actually question question is, GI-generated that answered enough

years agonist have we'll those a has NEJM. it's have, OCA. was FXR, probably downsides. that. But with some drawbacks. a we clearly, with hope FXR some OCA solve we could Again, we that potentially So proven study some think few The the on of a FLINT And in published gut-restricted data mechanism we ago

Operator

question of next our line Robyn with from the Thank you. Citi. And Karnauskas comes

Robyn Karnauskas

follow guys. I around on made the you just that. they're – just of for reimbursement up reimbursement that one CAR-T. you're there's right, Hi, Thank hospitals environment that have training a a you. believe want comments I to valuable the about, question

be that incorporated four per the And patient? at like about is first how is, mean you they'll pricing more do think very comfortable, hospital? to environment? the at to guess, all we the that means reimbursement? are I any so get worrying patients incorporating and fully price Does Or CAR-T the So, treat not Thanks. the me value-based to these tell Is want know for going to they're reimbursement you that trying more comfortable that pairs? what just second about more with still model

John F. Milligan

Thank you. Robyn. Sure,

degrees really active ongoing commercial and including payer. you touching And of does contracts. pricing payers, first, varying value-based there execute truly government all to It in Just are vary I on CMS. we to are convey value-based by discussions and can interest at with ability and

a being least, be end It's we're to current operational and pricing, But open any There's knowledge, don't to value-based we're – But to up value-based there's addition to may solutions what to could have regulations. not it all openness in something that. lot price this payer just But of it. to communicated why different. government we patient aware segments. access our of implementing haven't open be complexities It may they our You reason barriers at historically, a to improve in to not easiest under we pricing – we solutions seen the considering to regardless may across execute all this be. very oncology.

going said lot having to are do vetting is, stem where these hospitals – patient; same thing that hospitals the part think to to process who's where at at get what remember used these the a a get going that I reimbursed at cell with transplants; of Medicare very process level. are the this a patient, I am am to that commercial certification I level; understanding that and I who's reimbursed

why reasons is of can of the here. they up conducting feel type work one really the coming make end they them. And they they calculus same this So for onboard are

Kevin B. Young

Yeah.

just out I modeling the just for $X.XX patient. take price per think, would Robyn, (XX:XX) I as purposes,

that's it about good think think you. way I probably to a for

Robyn Karnauskas

what needed. That's I Thanks. actually really Great. That's helpful.

Operator

next our the line question of And you. comes Flynn from Goldman with Thank Sachs. Terence

Terence Flynn

following I Thanks year, of to share capture the just the bictegravir in obviously, wondering take launch was the regimens. Hi. question. addition some other for next from

actually rate TAF Just would last if step-up do here? you expect few to a conversion years? expect of as from rate wondering that Thanks. your in meaningful the to over continue Viread seen see regimens the you'd the we've Or

James R. Meyers

rapid Yes. be comment, since It would less than since years the Maybe two more TAF the in first in. see a a than the we've – to really seen to hard conversion jump of just anyone years launch Genvoya. two

that As considering would around the B/F/TAF be date we mid-February PDUFA said, by two-third. anticipate could that we're XX%. We we at for

So that has our exceeded expectations.

for there be remaining at a will on we by again, – folks still Truvada that PrEP will So only that XXXX, anticipate largely be point. the TDF

what believe we'll on have that them see for of think at pill. TAF significant opportunity and switch importantly trade-offs. do single It's What very and obviously the without seen only before we're a – plus but is the patients for B/F/TAF. in business launches. is business quarter of tell starting been see regimen point so in we So lot them, there preparation to really conversion first last them an to of uptick will the but a expect physicians on to more cases, next us dolutegravir. of that lot TAF that that quarter they get is what already And to us, first recently logical Descovy yet, is to or And in in to what isn't a this as TAF in we to already not them, what is, year. have I going Particularly, we on even really culmination, B/F/TAF to conversion the see TAF obviously, we a

and So an that that I'm think very not in that surprised B/F/TAF. seeing uptick well for we're I bodes

Kevin B. Young

are Yeah, give colleagues in doing. how our for well shout-out Terence, just Europe I a would

also already Descovy, that's says, regimens, Jim HIV in already point. of it's makes Germany's that Jim As as but our business Genvoya. across XX% great Terrific TAF-based a

uptick supplied And a at look look going and you B/F/TAF. is some at slides, for Italy, the the terrifically. platform we've great If you in uptick you Descovy with that's

couldn't we this year be our HIV about doing we're with happier how So portfolio.

Terence Flynn

lot. Thanks Great. a

Operator

Thank you.

Kasimov the Our comes JPMorgan. with Cory next of from line question

Cory W. Kasimov

taking afternoon, for question. the Good Thanks guys. Hey.

now you So now an types fold. the M&A. that greatest quickly I'm platform mindset product it, your that appetite commercial you do additional where curious have up you wrapped Kite of this be interest you would And for deal, relatively to if is Thanks. at point in have the and regarding assets potential of a what new

John F. Milligan

It's for Milligan. Cory. question. Hey, John Thanks the

our of how of So to we a at the now with time are technology couple was to things and and, a quite best of rapidly, to generations to next done say. bringing Kite. in move forward The enhance spending are course, Kite that lot very had interested figuring CAR-T that they out acquisition in our say CAR-T. work we I will – can ability colleagues

continuous the acquisition, had we that when require when will the Kite, platform acquired that on see mentioned this we we we call as As innovation. announced a

that, the top an to Having we said or it's so line to is M&A Gilead, in be forward. where activity technologies, constant will revenues enhance active move be future. technologies of of will bringing portfolio in true And we that our state bring quite us that help we are in a our going opportunities also this and evaluation help CAR-T will think for which ongoing in at

can might say looking is internally we've and our with very, group And you I are But at. we good. can very we're together I'm going to we that constantly very, the very board. what be I put hints as not give active. tell evaluating stuff So you

I us So expect to would coming in be the years. continue quite to active

Cory W. Kasimov

Great. you. Thank

Operator

Peters Andrew our the Thank with from you. question comes And next line of Bank. Deutsche

Andrew Peters

dip I guess on Thanks saw was it start kind quarter new more. a side wanted my for drill the bit quarter bit the patient to we more on One we kind first now. quarter, a questions. third at a flattish more of I to into start patient new of second taking If of then the look just side. and

that consistently patients Just kind fourth quarters? therapy? has quarter that or historically, year, of just there's really is wanted fewer on new patient start prior more to relative if to seasonality Thank starting you. say, are actually seasonality within And the any understand side, look component, performed to you how the last if it

James R. Meyers

I'll what the quarters. start. part relative the Obviously, year drop we Yeah. say that had the to This the Epclusa, looks the it would of agree, is was of year. early a into larger in I helped that carryover quarter it like and midyear us third had Jim. was some fact obviously beginning of in earlier the launch the I

actually pretty fairly I'd holidays weeds since I but The into year to trading holidays which the based days say companies we've normalize IMS say seen start days, and there's numbers other area. in here, do but lot I the Again, other again, thing and each decline mean upon much and will different of don't starts a will for you, you steady this the just that routinely don't a patient do, get of the when and year. of X% basically month-on-month in –

than steady less consistent point The we of we decline. just been thought. that started the saw drop thought it's were we a from higher and reality, at correctly levels to starts of quarter saying was in second the more and So we higher very third than actually reason we a

starts first relatively that expect change to in fourth throughout the thought. since year the the really And of don't been we in general declining So than has quarter. there place the trend consistently of in more was January. starts half the year we patient But

Kevin B. Young

don't a and seasonality, than quarter a lot there. little Jim there's third if I bit fourth quarter therapy, Europe. in is is as and although U.S. is and quarter, in down quarter seasonally orientated. genotypes there's France Europe bit between third to all stronger out, of opening there's fourth little Italy strong, typically, see quite lot across a bigger as sort now think the nicely, Typically, not HCV more was because good come Spain really patients access of general untreated Andrew, there in points We did much the third a

Andrew Peters

Thank the additional color. Great. for you

Operator

Evercore. comes our Raffat line Thank of question Umer from with you. the And next

Umer Raffat

these just sounded guys. to And my Hi, drill I so more. sure in. Thanks on actually a sure much question. thinking locked to make just wanted I want because I've taking about little correctly I'm them make I – for numbers to down C want this Hep

end So C $X for high the of billion. run the have fourth a Hep of XXXX rate somewhere will quarter your between that $X.X and implies billion guidance

And the So math about doing am there? is we right that I number head the we XXXX? as starting think should into

Kevin B. Young

for numbers and Umer, kind to again, start XXXX. can't we you jump give ahead of

really As we're Harvoni, Jim of there now. the are use because to thing of variable, our one off there said, that's table and is use a And is pretty duration, the come pricing still three starts, there continues now the variables: which of is share. be all patient the is contracts. big Epclusa The standardized finalizing the

guidance quarters three our HIV the really you don't So you can took do any go further that's are XXXX our have of guidance. wish original variable. hepatitis from than our first get Yes, C really a that the with, when we think, to maths to Robin But we'll we get over-exceeding through. away XXXX where we taking a done on XXXX. and that not But in delivered I superbly with we to guidance

Umer Raffat

you. Thank

Operator

with of our And next Blair. William comes question you. Xu line from Katherine Thank the

Yu Katherine Xu

guys the wondering afternoon. Hi. although XX just million. considering people have infected, Good potentially the of drum I China XX about could business million Yeah. there, HCV number that up I'm you

potentially the a third market. of pocket, of them Let's just could say of out pay XX% that U.S. could be

thoughts be quite your could that overall wonder market. So on substantial. that what's I

Kevin B. Young

Well, Katherine, nervous here. you're making me

think regulations that What's launch is these changed viral products XX months last particularly I the China. for think motivated the come very, the to and, – staged their China how are see I market. FDA it'll got have products we've to area, be in in a remarkable very in

the have a right organization We've and the haven't even Chinese for therapies our responsibly highly a though will opinion in compliant office the market. relatively we actually and in to time, We China. deliberate. That's leaders want thing be very known bring to do an long We China. Chinese quite small had really

upon to and us the gave to confidence that in So our which start platform put the organization.

have private Manager. with. be, seasoned market a It launch to We General as will say, a you very begin

next into when in will We closed the then national in national national to listings, and from bridge XXXX, have the the reimbursement Vemlidy, missed we very matter, Harvoni, round is a for that now opens, listings. try disease but HBV of and Sovaldi, the get are because and market to which private authorization trying provincial be coming year, we prevalent China Epclusa will for onto

So can no But to walk China. are run. our infection we in much want doubt there's we before antivirals needed the rates that for

Operator

time have we And you. for one more Thank question.

Our Bank today America comes final question line with for Ying ahead. of Merrill of the from Lynch. Please go Huang

Ying Huang

TRx. Hi. we take billion one I dip I slide on $X.XX blip Genvoya, a if year, your get in behind teal or XX HCV, $X high for about leaf in secondly Thanks have of for I guidance there's see the something my for billion, the taking too much? question. I in market? just this to Or last XQ. the reading on end then And month, one dip Am

in the XX% well Thank you. HCV? XQ. or think because drop from a countries U.S. drop-off the of seeing mostly also you're for that's dynamics Europe Do still and you So as that's other market

John F. Milligan

any based forth. the there fluctuations of wouldn't seasonality, in start has of two-thirds but I is be TAF. Yes. to XX% – Genvoya Genvoya, B/F/TAF on the uptake by the all about not are as the time not the just get the seeing with presented and shown and no, month-to-month Again, – we of launch of to expect said, just couldn't number But Maybe going attenuation anything. call terms we at so it we stronger. There's holidays of

there. worries no So

of where more both in terms the the the C just on fully, – first fourth drop-off that's was will impact question the the Hep of Again, see the in more second The quarter across spoke down where is impact share. again, of more eight-week come in it consistent genotypes of And we dynamics one levels. the genotype about and also, has pricing, now quarter. towards

the things in provided again, call. earlier in those was of And that. reflected both this of updated guidance reflective So that were that's

Kevin B. Young

in country-by-country. will in see Europe Ying, is that's doing into market. will that be the the some European effects C And, have well really is Europe, used competitive to Epclusa a number we Hepatitis all across I being that genotypes X and running really, product, say

believe we've So we got in very the competitor a market entrant Epclusa. able to new

John F. Milligan

revenue higher. were in starts four different share, the we reiterate, fall play from to will just that as original HCV out dynamics that maybe year, issued exactly guidance least, drive again, the the it last didn't and thought. were Price lower. And revenue within Patient at was February. But later XXXX

we good So about very feel that.

Ying Huang

much. Thanks very

Operator

And concludes like closing remarks. our I'd turn that session Sung floor you. Thank to for question-and-answer back the for over Lee today. any to

Sung Lee

and all progress. Karen, the We joining you your here appreciate looks forward Thank updates on future in and with to for team today. continued us thank providing our you, Gilead, interest you

Operator

program, Ladies now and Everyone, gentlemen, great thank you conclude you for your day. a the participation have in today's and conference. disconnect. This does may

Gilead Sciences (GILD) 26 Oct 172017 Q3 Earnings call transcript