Hello everyone and welcome to the Third Quarter 2023 Gilead Sciences' Earnings Conference Call. My name is Nadia and I'll be coordinating the call today. I will now hand over to your host, Jacquie Ross, Vice President of Investor Relations to begin. Jacquie please go ahead.

Thank you and good afternoon everyone. Just after market close today, we issued a press release with earnings results for the third quarter of 2023. The press release, slides, and supplementary data are available on the Investors section of our website at gilead.com. The speakers on today's call will be our Chairman and Chief Executive Officer, Daniel O'Day; our Chief Commercial Officer, Johanna Mercier; our Chief Medical Officer, Merdad Parsey; and our Chief Financial Officer, Andrew Dickinson. After that, we'll open the call to Q&A, where the team will be joined by Cindy Perettie, the Executive Vice President of Kite. Before we get started, let me remind you that we will be making forward-looking statements, including those related to Gilead's business, financial condition, and results of operations, plans and expectations with respect to products, product candidates, corporate strategy, business and operations, financial projections and the use of capital, and 2023 financial guidance, all of which involve certain assumptions, risks, and uncertainties that are beyond our control and could cause actual results to differ materially from these statements. A description of these risks can be found in the earnings press release and our latest SEC disclosure documents. All forward-looking statements are based on information currently available to Gilead and Gilead assumes no obligation to update any such forward-looking statements. Non-GAAP financial measures will be used to help you understand the Company's underlying business performance. The GAAP to non-GAAP reconciliations are provided in the earnings press release, in our supplemental data sheet, as well as on the Gilead website. With that I'll turn the call over to Dan.

Thank you, Jacquie, and good afternoon, everyone. I'm pleased to share that Gilead teams have delivered another strong quarter that rounds out two years of continuous growth for our base business. Our track record of commercial execution continued in the third quarter with our base business up 5% compared to the third quarter of 2022 and up 10% year-over-year for the first nine months of 2023. In the third quarter, our growth was driven by our leading therapies across virology and oncology. Biktarvy had another very strong quarter, up 12% from the same quarter in 2022 and contributing to 9% growth overall in HIV in the first nine months of 2023. Oncology is also driving growth and was up 33% in the third quarter compared to last year. Revenue is now annualizing at more than $3 billion with growing adoption of Trodelvy, the only approved Trop-2 directed ADC and our industry leading cell therapies. Our Phase 2 EVOKE-02 trial showed a strong objective response rate in the PD-L1 high cohort, which supports proof of concept for our ongoing Phase 3 EVOKE-03 trial. Important new data at ESMO for Trodelvy's Phase 2 TROPiCS-03 basket trial in our small cell lung cancer and head and neck squamous cell carcinoma cohorts. All of these milestones reinforce our conviction in Trodelvy as our cornerstone oncology asset with pan tumor potential. In HIV prevention, we completed enrollment ahead of schedule in our Phase 3 PURPOSE-1 trial investigating once every six months lenacapavir subcutaneous injection and announced plans to initiate the Phase 2 PURPOSE-5 trial in 2024 to support access in Europe. Veklury remains an important therapeutic option for hospitalized patients with COVID-19. We recently received approvals from both the FDA and the European Commission to extend use of Veklury in patients with mild to severe hepatic impairment. Looking at our pipeline overall, our aggregate progress in 2023 is such that we have already completed most of the milestone events as shown on Slide 6. Our clinical pipeline now includes 27 programs in Phase 2 and 19 in Phase 3. We are looking forward to a busy period of updates from many of these studies in 2024, including those evaluating lenacapavir, Trodelvy and obeldesivir. In summary, it's been another strong quarter of commercial and clinical execution, resulting in important progress for Gilead and the people and communities we aim to serve. With that, I'll hand the call over to Johanna to cover our commercial results.

Thanks, Dan, and good afternoon, everyone. I'm pleased to share the details of another strong quarter for Gilead and would like to thank the teams that have delivered 10% growth in our base business in the first nine months of 2023. Our third quarter results represent the eighth consecutive quarter of year-over-year growth in our base business, illustrated strong commercial execution and revenue growth as our virology and oncology products impact more patient lives. In the third quarter of 2023, total product sales excluding Veklury were up 5% to $6.4 billion as shown on Slide 8, with notable growth in our oncology and HIV businesses partially offset by lower HCV sales. Total product sales including Veklury were $7 billion with solid base business performance contributing $305 million of growth, offset as we expected by lower Veklury sales compared to the same quarter last year. Moving to HIV on Slide 9, the treatment market continued to grow in line with our expectations of 2% to 3% annually. As we've discussed previously, favorable pricing dynamics in recent quarters have begun to normalize with HIV sales growth more closely mirroring market and demand growth. This was evident in the third quarter where HIV sales were up 4% year-over-year to $4.7 billion, driven by higher treatment and prevention demand and higher channel inventory, partially offset by lower average realized price due to a shift in channel mix. Turning to Slide 10, third quarter Biktarvy sales were $3.1 billion, up 12% year-over-year, driven by higher demand as well as higher channel inventory. Once again, Biktarvy gained market share, up over 2% year-over-year in the U.S. to over 47% share in the third quarter. Thanks to its robust clinical profile, Biktarvy remains the number one prescribed regimen for new starts and number one in treatment switches across most major markets, including the U.S. Descovy sales in the third quarter were $511 million, up 2% year-over-year with strong year-over-year growth in demand for Descovy for PrEP offset by less favorable pricing dynamics to ensure broad access ahead of the potential launch of lenacapavir as early as late 2025. Moving to the liver disease portfolio on Slide 11, sales were down 10% year-over-year to $706 million, primarily due to the resolution of a rebate claim in HCV recognized in the third quarter of 2022, as well as other pricing dynamics. From a demand perspective, HCV new starts increased compared to the third quarter of 2022 in both the U.S. and Europe, driven by our continued efforts to link HCV patients to care. Given the curative nature of our treatment, we expect HCV new starts to trend down over time, but are pleased that we are maintaining 50% to 60% market shares in the U.S. and Europe and that our liver portfolio more broadly has stabilized from a revenue perspective. On to Slide 12, Veklury sales continued to be highly variable and declined 31% year-over-year in the third quarter to $636 million. On a quarter-over-quarter basis, sales were up 149%, driven by an uptick in hospitalizations during the third quarter. Over the last few weeks, we have seen a slowdown in COVID related hospitalization. Veklury's strong clinical profile continues to be recognized most recently by the FDA and the European Commission for use in patients with mild to severe hepatic impairment. While the COVID environment remains ever-changing, Veklury's performance in the third quarter further reinforces its established role as a key part of the standard of care for patients hospitalized with COVID-19. Moving to Slide 13, our oncology business achieved another strong quarter with sales up 33% year-over-year to $769 million, representing an annual run rate that now exceeds $3 billion. Looking at Trodelvy on Slide 14, sales were up 58% year-over-year and 9% sequentially to $283 million. Trodelvy is the only approved TROP2-directed antibody drug conjugate and to date, we have delivered this therapy to more than 20,000 patients, reinforcing the clinically meaningful benefit Trodelvy can provide across multiple tumor types. On behalf of Cindy and the Kite team, cell therapy sales in the third quarter were $486 million, up 22% year-over-year and 4% quarter-over-quarter, reflecting strong demand with particular strength outside the U.S. in the third quarter. Yescarta sales grew 23% year-over-year to $391 million primarily driven by strong growth ex-U.S. in second and third line relapsed or refractory large B cell lymphoma. Tecartus sales were $96 million, up 18% year-over-year, reflecting increased demand in both the U.S. and Europe for relapsed or refractory mantle cell lymphoma as well as adult acute lymphoblastic leukemia. Given the strong clinical data, it's surprising that only about 10% of eligible second line large B cell lymphoma patients in the U.S. are treated with cell therapy and it is clear that there is still a significant opportunity to drive adoption. As cell therapies are offered and delivered to more and more patients, we are confident that Kite remains well positioned to benefit from this expansion with its differentiated overall survival data for Yescarta and industry-leading manufacturing capabilities. We understand the importance of delivering these potentially curative medicines as quickly as possible to patients with severe and challenging diseases. To that end, we continue to identify opportunities to bring our therapies to patients faster and are actively working on initiatives to shorten even further our industry-leading 16-day median turnaround time in the U.S. Wrapping up the third quarter, I'd like to recognize the strong execution of commercial teams and our cross-functional partners across Gilead and Kite. Thanks to their efforts, our therapies are positively impacting more and more people, driven by growing market share and expanding reach, as we bring our therapies to new geographies around the world. With that, I'll hand the call over to Merdad for an update on our pipeline.

Thank you, Johanna. The clinical highlight of our third quarter was the release of our promising Phase 2 data for Trodelvy in combination with pembrolizumab in first line metastatic non-small cell lung cancer, highlighting Trodelvy's potential to bring a much needed treatment alternative for patients. More broadly, we continue to progress our increasingly diverse pipeline of 60 ongoing clinical programs spanning virology, oncology, and inflammation. Starting with our virology programs on Slide 17, we have 10 clinical programs with our long-acting capsid inhibitor lenacapavir including two Phase 3 studies underway in PrEP. I'm pleased to share that we have completed enrollment earlier than anticipated for our Phase 3 PURPOSE-1 trial evaluating lenacapavir for prevention in adolescent girls and young women. Our Phase 3 PURPOSE-2 trial in men and trans women continues to enroll well and we could have an opportunity to share data from one or both PURPOSE trials in late 2024 ahead of schedule. We are targeting our first approval for lenacapavir in production in late 2025, potentially making lenacapavir the first six-monthly dosing regimen available for PrEP. Turning to treatment, we continue to make strong progress on evaluating nine candidate partners for lenacapavir. Of the remaining candidates, six are already in Phase 1 or 2. We expect to share updates on at least four of these in 2024, including data from our Phase 1 trial of GS-1720, our once weekly long-acting oral integration inhibitor to be combined with lenacapavir and from our Phase 2 ARTISTRY-1 trial evaluating a once daily oral combination of lenacapavir and bictegravir for virologically suppressed treatment experienced people living with HIV. We plan to share results from both trials at a conference in early 2024, and we look forward to advancing these programs into the next phase of development. Our data continues to support our confidence that lenacapavir has the potential to transform HIV treatment and prevention globally. Turning to oncology, to date, Trodelvy has been delivered to more than 20,000 patients across three approved indications since our launch three years ago. Trodelvy remains the first and only marketed TROP2-directed antibody drug conjugate to achieve a meaningful overall survival benefit in two of its indications. With that said, we're seeing both growing real world evidence and clinical trial data supporting not only the approach we're taking for Trodelvy's clinical development across tumor types, but also Trodelvy's unique ADC construct. In particular, Trodelvy is the only ADC to have a high 7 to 8 drug to antibody ratio that's able to deliver a highly potent SN-38 payload directly into the tumor microenvironment through its hydrolyzable linker. As a result, in our studies to date, Trodelvy has shown a potentially differentiated safety profile with regards to ILD and stomatitis. We look forward to sharing more emerging Trodelvy data in 2024 as we continue to expand Trodelvy across tumor types and lines of therapy. Finally, before I hand over to Andy, the teams' progress on key 2023 clinical milestones is shown. As is expected with the diverse and large clinical portfolio, not all our programs will benefit patients the way we hope they will and the ENHANCE and ENHANCE-2 programs evaluating magrolimab have both been discontinued based on futility analyses. The ENHANCE-3 study remains under partial clinical hold in frontline unfit AML and we continue to evaluate the progress of this and other Phase 2 solid tumor trials for magrolimab. As referenced previously, we look forward to sharing data from ARTISTRY-1 at a medical conference in 2024. For our HIV prevention studies, we continue to expect to have our first patient in for the PURPOSE-3 and PURPOSE-4 clinical trials by the end of this year. Additionally, we remain on track to initiate our Phase 2 PALEKONA trial evaluating our potential first in class 222 inhibitor for ulcerative colitis later this year. Looking beyond 2023, we will share our target 2024 milestones in due course, but it’s clear that it will be a rich year for data updates for Gilead, including potential updates or regulatory filings for Obeldesivir, lenacapavir, Trodelvy and CAR-T ddBCMA. With that, I'll hand the call over to Andy.

Thank you, Merdad, and good afternoon, everyone. We had another solid quarter as shown on Slide 24, with total product sales excluding Veklury up 5% year-over-year, driven by growth across oncology and HIV, partially offset by lower HCV sales. Total product sales were $7 billion, flat year-over-year, with lower Veklury sales offsetting more than $300 million of growth in our base business. Our non-GAAP results are shown on Slide 25. Product gross margin was 86%, down 85 basis points from last year. R&D was $1.5 billion, up 24% year-over-year, reflecting ongoing clinical trial activities. Third quarter R&D expenses also reflected some sizable wind down costs related to the discontinuation of two Phase 3 magrolimab ENHANCE studies and faster than anticipated enrollment in our Phase 3 PURPOSE-1 and OAKTREE studies, both of which have recently completed enrollment and could accelerate timelines for data readouts in due course. Acquired IPR&D was $91 million, reflecting the Tentarix collaboration announced in August, in addition to other payments associated with ongoing partnerships. SG&A was $1.3 billion, up 7% year-over-year, primarily driven by increased commercial investments, namely in oncology. Moving to tax, our effective tax rate in the third quarter was 7% primarily reflecting a decrease in tax reserves as a result of reaching an agreement with a tax authority on certain tax position. Excluding the settlement, our non-GAAP effective tax rate would have been approximately 16%. Our non-GAAP diluted earnings per share were $2.29 compared to $1.90 for the same period last year. This was primarily driven by growth in our base business, lower tax and lower acquired IPR&D expenses compared to the third quarter of 2022, partially offset by lower Veklury sales and higher R&D and commercial investments. Moving to Slide 26, year-to-date base business revenue has grown 10% year-over-year, highlighting strong performance across virology and oncology. From an OpEx perspective, the investment we have made this year in R&D is notable with a robust and diverse clinical pipeline and with our commercial sales and marketing organization scaled to meet growing demand for our on-market oncology portfolio. We continue to expect a moderation of expense growth in 2024 and beyond. Moving to Slide 27, we are updating many of our guidance ranges to reflect our year-to-date performance and our expectations for the rest of the year. Total product sales are now expected to be in the range of $26.7 billion to $26.9 billion, up from $26.3 billion to $26.7 billion previously. We are increasing total product sales excluding Veklury at the midpoint. We now expect the range to be between $24.8 billion to $25 billion, up from $24.6 billion to $25 billion previously. This range represents growth of 7% to 8% for our base business year-over-year and an increase of $650 million at the midpoint from the initial guidance we issued in February. On Veklury, based on our results year-to-date, we now expect full year Veklury sales of approximately $1.9 billion. As always, this remains highly variable and correlated with COVID related hospitalizations. Moving to the rest of the P&L, we continue to expect non-GAAP gross margin to be approximately 86%. On R&D, reflecting the accelerated enrollments and magrolimab discontinuation expenses, our full year non-GAAP R&D expense is now expected to grow approximately 15% in 2023 compared to 2022. Excluding these items, our full year R&D expense is consistent with our prior guidance in the low double digits. Reflecting the Tentarix collaboration closed in the third quarter, as well as previously committed acquired IPR&D amounts and known milestone payments from existing collaborations, we now expect non-GAAP acquired IPR&D of approximately $1 billion in 2023. Similar to prior quarters, we will update expected acquired IPR&D expenses if they are incurred during the fourth quarter. We continue to expect non-GAAP SG&A expenses to increase by a high single digit percentage compared to 2022. As a reminder, this includes the one-time legal settlement accrual of $525 million in the second quarter. Excluding this, we continue to expect non-GAAP SG&A expense for 2023 to be down a low single digit percentage compared to 2022. Non-GAAP operating income is expected to be $10.5 billion to $10.8 billion as compared to $10.4 billion to $10.9 billion previously, driven by higher R&D expenses offset by higher product sales. Given certain one-time tax benefits in 2023, we now expect our non-GAAP effective tax rate to be approximately 16% for the full year. Altogether, we now expect our non-GAAP diluted EPS to be between $6.65 and $6.85 per share as compared to $6.45 and $6.80 per share previously. On a GAAP basis, our diluted EPS is expected to be in the range of $4.55 and $4.75 per share. Moving to Slide 29, our capital allocation priorities remain focused and unchanged. In the third quarter, we returned $1.3 billion to shareholders through our dividend and repurchase of shares totaling $3.7 billion year-to-date. Overall, the third quarter was another solid quarter of commercial and clinical execution in an extremely strong 2023 for Gilead so far. Our planning for 2024 is well underway and we've taken steps in the third quarter to continue to evolve our business model and expense structure to set us up for strong execution next year. 2023 has been a year of considerable investment, notably in R&D and we are excited to finally be at the point where many of our key programs will start reading out data. With that in mind, we are preparing for a catalyst-rich 2024 and we look forward to sharing more early next year. With that, I'll invite the operator to open the Q&A.

Okay, great. Hi everyone. Thanks for the question. I guess this is for maybe Johanna or for Merdad. Just on lenacapavir, your competitor has highlighted some of the drug-drug interactions and I wanted to get your perspective on what you've seen in clinical studies, really as well as the early commercial experience. I wasn't sure if you guys view that as a non-issue or something to navigate as you develop lenacapavir for PrEP or various doublets and HIV treatment. Thank you.

Sure. Hey, Geoff, this is Merdad. Thanks for the question. I would say that our drug-drug interaction profile has been pretty well characterized and is in our label and laid out. As you noted, lenacapavir is metabolized by CYP3A, and like many other drugs in the class, that's been available and labeled for quite some time. We don't anticipate any changes to our programs based on that. There are no adaptations that we are making in our clinical development program based on that. As you know, we're well on our way in our PURPOSE 1/2 lenacapavir for PrEP studies and have the approval and highly treatment experienced patients and have not made any modifications based on any DDI concerns in those trials. I encourage folks to take a look at the label; you can see what's laid out fairly clearly there.

Yes. And maybe just to add to what Merdad said, so we launched Sunlenca, lenacapavir for heavily treatment experienced patients earlier this year. As per Merdad's comments, the label has no contraindication specific to what you were referring to, to opioids or erectile dysfunction drugs, and the launch thus far is well underway and access is increasing every day across the U.S., but also in other markets including Japan and Europe, and we're excited to have an option for these patients that unfortunately have really no other option at this point in time. So very small market opportunity today with the potential for lenacapavir for PrEP as early as late 2025, so very excited as we continue our plans for that.

Thanks, great. And appreciate the question. Maybe from Merdad coming away from ESMO and some of the recent conferences, obviously a ton of Trop-2 data, and there's a lot of talk around the benefit, particularly in lung, for non-squamous versus squamous. And some of your competitors have modified their studies to be more focused on non-squamous. Can you maybe just talk about how you see the benefits here in the different populations and whether you would consider emphasizing or modifying to be a non-squamous as well to improve probability of success? Thank you.

Thanks, Michael, for the question. Yes, look, we had a really interesting ESMO, I think, for all concerned, and I think something that we've been saying for quite some time, is that not all Trop-2 ADCs are equivalent. It's really important to note that there are differences between Trodelvy and the other Trop-2 ADCs in all three components. The affinity of the antibody is two orders of magnitude better. We have a different linker and we have a different payload. That has played out in many ways along the safety spectrum, where we have different adverse event profiles of the two drugs that have clearly emerged, and it's possible now that we're starting to see divergence on the efficacy side as well. Recall that we have shared our EVOKE-02 data, which comprise both squamous and non-squamous patients. We have enrolled both squamous and non-squamous patients in our trials, and as one would expect, we do stratify those patients in the studies and we’ll continue to do so. But we're very confident in our approach and with what we've seen so far and look forward to being able to share more data from EVOKE-01 next year.

Thank you. A question about Kite. I wonder if you can talk through the specific barriers that are limiting uptake of CAR-T and the second-line large B cell lymphoma indication. What do you think will be required to upshift the earlier line demand for cell therapy in a large B cell lymphoma, and maybe even in multiple myeloma as well?

Thank you very much for the question, Daina. I think some of the specific barriers that we're observing are more in the U.S. So I might first talk about what we're observing in Europe where we have socialized medicine. We're seeing uptake as soon as we are granted access and reimbursement. It goes very quickly into the system, because it's a non-fragmented healthcare system. In the U.S., things look a little bit different given the fragmentation of the healthcare system. So the barriers that we're observing in the U.S. are really our ability to treat patients where they are, so moving into community oncology. Today, 80% of oncology patients are seen in the community. Most of our authorized treatment centers exist in large academic hospitals. We're working to open up new treatment centers in the United States, and this year we should end with around 140 treatment centers in the U.S. and that will continue to grow in 2024. The second barrier is converting stem cell transplants. Physicians who are transplanting patients will have a better outcome based on the data if they have CAR-T. We are working with transplanters on education to ensure that those patients have access to CAR-T in the earlier lines. I think those are two of the larger barriers that we're observing today.

Great. Thanks so much for the question. Can you elaborate a little bit more on HIV channel mix dynamics this quarter and how you're thinking about that for Q4 and beyond? I know channel has been a bit of a tailwind over the past year or two. It seems like we're now starting to see some headwinds, at least sequentially. I just wanted to know how you think about that progressing from here? Thanks so much.

Sure, Chris, thanks for the question. So you're right, as expected. We've seen some of those favorable pricing dynamics that we had in the last couple of quarters, including in 2022, begin to normalize, and you should expect to see kind of the same trend from Q3 into Q4. One of the reasons for that had to do with some of the channel dynamics, specifically around the channel mix. We believe a lot of that had to do with stabilization post-COVID around employment rates, inflation, etc. So we had benefits that we saw over the last four to six quarters. As we shared in Q2, we are seeing that normalize out for the second half of this year, and you should expect that not only for the next quarter, but going into 2024. We believe that our HIV sales growth is closely mirroring market and demand growth, where we're seeing real strength in treatment and prevention.

Yes, I would just add that we continue to expand our programs and continue to want to generate additional data for Trodelvy. So we are very comfortable with where we are. I think our ability to interact with our caregivers and patients now having been on the market for quite some time is really helping us make sure we get Trodelvy to as many patients who could benefit from it as possible.

Nadia, may we have our next question, please?

Hi everybody. Appreciate you taking my question. I actually had one on Trodelvy within bladder cancer and appreciate this is a smaller proportion of Trodelvy sales, but just wanted to ask about the potential impact of Padcev's EV-302 data and it moving into the front line and what you could potentially see there with Trodelvy, both in the near term and longer term. Thanks.

So maybe I'll start and then throw it over to Merdad from a clinical standpoint. The standard of care is going to change in first line clearly, with that data, and we see that as a potential opportunity to actually move up Trodelvy lines of therapy. Right now in the U.S., we do have accelerated approval in the U.S., and we're seeing about 15% to 16% share in bladder cancer, but later lines of therapy. With the opportunity to have Padcev move up in the first line setting, it'll be interesting to see how Trodelvy kind of moves up; we've seen a lot of sequencing from ADCs here as well. Merdad, do you want to comment on the clinical development?

Yes, I think it's great news for patients with the data that's come out and we think it does change the paradigm for bladder cancer. We’re certainly hearing about sequencing. The data shown at ESMO around combining Padcev and Trodelvy looked good and demonstrated a positive tolerability profile and responses. We think there continues to be opportunities there for us, and having this clarity will help us design where we're going to go from here after our confirmatory trial in second line completes.