Gilead Sciences, Inc.

Good afternoon, everyone, and welcome to Gilead's first quarter 2024 earnings conference call. My name is Rebecca, and I'll be your host for today. In a moment, we'll begin our prepared remarks. After that, we'll have a Q&A session. If you'd like to ask a question, please press star 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. I'll now hand the call over to Jackie Ross, VP, Investor Relations and Corporate Strategic Finance.

Thank you, Rebecca. Just after market closed today, we issued a press release with earnings results for the first quarter of 2024. 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, Joanna Mercier, our Chief Medical Officer, Murdad Parsi, 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 Peretti, the Executive Vice President of KITE. Before we get started, let me remind you that we will be making forward-looking statements. Please refer to slide two regarding the risks and uncertainties relating to forward-looking statements that could cause actual results to differ materially. With that, I'll turn the call over to Dan.

Thank you, Jackie, and good afternoon, everyone. I want to start by thanking the Gilead teams for delivering a strong first quarter. which you see in our commercial performance and our clinical execution. Total product sales, excluding Vicluri, grew 6% year-over-year to $6.1 billion, driven by higher demand across HIV, oncology, and liver disease. Vicluri sales continued to track with the rates of hospitalization for COVID-19 and reached a total of 555 million. Once again, sales growth for the quarter reflected the diversity of our portfolio. HIV product sales grew 4% year over year. Oncology product sales were up 18%, driven by Tordelvi, which is well established as the number one regimen for second line metastatic triple negative breast cancer, and by our transformative cell therapies. As we outlined at the recent KITE Analyst event in Maryland, we have exciting plans to build on our clear market leadership in cell therapy. such as expand into community networks in the U.S., more than double our manufacturing capacity, and move into new indications and disease areas with next generation products. From an EPS perspective, first quarter results reflect the close of the SEMA Bay acquisition with an acquired IPR&D charge of $3.9 billion, or an expense of $3.14 per share. Excluding this charge, non-GAAP diluted EPS would have been $1.82 for the first quarter, which is above expectations, driven by higher product sales. The SEMA Bay acquisition brings us an important registrational medicine, Celadelpar, which has the potential to address significant unmet need in liver disease. We have filed for regulatory approval of Celadelpar as a treatment for primary biliary cholangitis, or PBC, with both FDA and EMA, and we expect an FDA regulatory decision in August. If approved, we will leverage our industry-leading commercial infrastructure and longstanding expertise in liver disease to bring Celadalpar, a potentially transformative therapy, to people with PBC who might benefit. Moving to clinical execution, we're very pleased with the momentum in our HIV pipeline, which was reflected in our 80 data abstracts at CROI. Based on the strength of the data, we've initiated phase three trials for Bactegravir and Lenacapavir, our novel once-daily oral regimen, and plan to advance once-weekly oral programs, including Lenacapavir plus Islatravir, into phase three. Later this year, we will host an HIV analyst event to share details of how we will further shape the HIV landscape with innovative options for prevention and treatment including the next wave of long-acting therapies. Before I pass it to Joanna, I will briefly recap our 2024 milestones on slide six. We have already achieved first patient in for the Phase III Artistry I and Artistry II trials, evaluating once-daily lenacapavir in combination with bactegravir, as well as Phase II first patient in for SWIFT, evaluating GS1427, our oral alpha-4-beta-7 inhibitor. We are also on track for our upcoming milestones, including updates from three phase three clinical trials for Tordelvi and Lenacapivir. Looking ahead to the rest of 2024, this is a time of focused execution for Gilead. We will stay disciplined and agile in our approach, and we will focus the organization on both near-term execution and longer-term plans. With 54 clinical programs in play, no major patent expiries to the end of the decade, and many opportunities for growth, we have a lot of potential and a lot to deliver. My thanks again to the Gilead teams for their great work this quarter and the ongoing progress across our diverse portfolio of therapies. With that, I'll hand it over to Joanna.

Thanks, Dan, and good afternoon everyone. With the first quarter marking the ninth consecutive quarter of year-over-year growth for our base business, our teams delivered a strong start to 2024. notably navigating the seasonal first quarter dynamics and establishing a firm base on which we can continue to build this year. Beginning on slide eight, total product sales, excluding Vicklery, were $6.1 billion for the first quarter, up 6% year over year, reflecting solid growth across our HIV, oncology, and liver disease businesses. Including Vicklery, total product sales were $6.6 billion, up 5% year over year. Moving to HIV on slide nine. Sales were up 4% year over year to $4.3 billion, primarily driven by higher demand, as well as favorable pricing dynamics in Europe that are not expected to repeat. Quarter over quarter sales were down 7% driven by the typical seasonality we experienced in the first quarter of the year, partially offset by higher demand. As a reminder, Quarterly HIV growth is in general more variable and less indicative of overall trends than the full year. This is evident in the first quarter of every year, where inventory drawdown typically occurs following a build that generally happens towards the end of the prior year, and patient co-pays and deductibles reset at the start of every year, and together with shifts in channel mix, lowers average realized price in the first quarter. As always, we typically see these quarterly pricing and inventory dynamics normalized As we progress throughout the year, we continue to expect approximately 4% HIV sales growth for 2024. Supporting that outlook, the treatment market grew in line with our expectations, as shown on slide 10. Bictarvy remains the leading regimen for HIV treatment across major markets for new starts, as well as for those switching regimens, with sales up 10% year-over-year to $2.9 billion, reflecting strong demand. Quarter over quarter, sales were down 5% as the higher demand was offset by the typical seasonal factors discussed earlier. It's notable that six years after launch, Bictarvy continues to gain market share in the U.S., up three percentage points year over year to approximately 49% share, and once again outpacing all other branded regimens for HIV treatment. we continue to see BIC-TARBIE's benefit extend into broader populations of people with HIV. Most recently, BIC-TARBIE was granted FDA approval for use in virologically suppressed individuals with known or suspected M184 resistance, a common form of treatment resistance. Turning to prevention, DSCOVI sales were down 5% year-over-year to $426 million, driven by lower average realized price due to channel mix, partially offset by higher demand. Sequentially, sales were down 16%, reflecting the seasonal dynamics discussed earlier, partially offset by higher demand. While market volumes in February were temporarily disrupted by the cyber attack on change healthcare, volumes readily recovered in March. Overall, the PrEP market continued to demonstrate robust growth, up over 11% in the first quarter, with Discovery maintaining over 40% PrEP market share in the U.S. despite the availability of other regimens, including generics. This is a solid setup as we look to potentially launch lenacapivir as early as late next year as the first and only twice-yearly subcutaneous prevention option. Given Gilead's strong commercial foundation across treatment and prevention, we are well positioned to maintain leadership in HIV as we look to the evolving marketplace of daily orals, long-acting orals, and long-acting injectables. Moving to liver disease on slide 11 sales for the first quarter were 737 million up 9% year over year, primarily driven by favorable inventory dynamics and the timing of purchases by the Department of Corrections for our HCV products, as well as higher demand across HCV, HBV and HDV. Sequentially sales were up 7% primarily reflecting the timing of HCV purchases. Despite fewer HCV starts globally year-over-year, our viral hepatitis portfolio overall has remained stable and continues to be a meaningful contributor to our commercial performance. This strength is underpinned by our extensive global footprint and expertise in the treatment of liver diseases. To that end, pending approval, Gilead is excited to bring Celadal PAR to patients for the treatment of certain adults with PBC, impacting approximately 130,000 people in the U.S. and about 125,000 people in Europe. With a sales force that covers almost 80% of the U.S. prescriber base for PBC, we expect to readily make Celadelpar available to patients upon approval in the second half of this year. Celadelpar has demonstrated the potential to be best in class with a differentiated clinical profile to existing and emerging therapies, particularly on a key symptom of the disease, pruritus. Following its launch in 2024, we expect Celadelpart to contribute modestly to sales and more meaningfully in 2025 and beyond. Turning to slide 12, Vicklery continues to be the standard of care antiviral for hospitalized patients treated with COVID-19, with market share well over 60% in the United States. COVID-related hospitalizations were lower in the first quarter, with the winter wave peaking earlier than expected in the US and Europe. as compared to other regions such as Japan. As a result, Viclarie sales overall were down 3% year-over-year and down 23% sequentially to $555 million. Shifting to oncology on slide 13, sales were up 18% year-over-year to $789 million and are now firmly above a $3 billion annual runway. Having treated over 50,000 patients to date, We look forward to bringing our portfolio of medicines and future treatments across lines of therapies and tumor types to many more patients around the world. Moving to slide 14, Tredelvi sales for the first quarter exceeded $300 million, up 39% year over year, reflecting continued demand. Sequentially, sales were up 3%, primarily driven by demand outside the US, as well as unfavorable fourth quarter pricing dynamics in Europe that did not repeat. This was partially offset by inventory dynamics in the U.S., where we saw a drawdown in the first quarter. Overall, Tudelvi's strong market share reflects its awareness amongst providers and patients. In second-line metastatic triple-negative breast cancer, Tudelvi remains the leading regimen with approximately one-third share in the U.S. And in the pretreated HR-positive HER2-negative metastatic breast cancer setting, Tudelvi has demonstrated continued adoption most notably in the IHC0 setting. We are confident Tridelvi continues to differentiate itself with its safety profile and clinically meaningful survival benefits, with over 30,000 patients across tumor types already treated to date. We look forward to potentially extending Tridelvi's reach to many more patients in the years ahead, particularly in bladder cancer, earlier line breast cancer settings, and lung cancer. Turning to slide 15, And on behalf of Cindy and the KITE team, sale therapy sales were $480 million in the first quarter, up 7% year over year. Sequentially, sales were up 3% in line with our guidance of flat to slightly up. We're pleased to see continued demand for Yaskarta and Tecardis in both existing and new markets across Europe and other geographies, such as in Japan, where we've seen good progress in growing brand share and expanding our network of authorized treatment centers to over 20 to date. In the US, and consistent with our recent updates, we see opportunity for growth through expanding the number of authorized treatment centers and affiliated satellites, while also driving increased referrals from the community setting. For example, we're proud to have established our flagship community collaboration with Tennessee Oncology in the first quarter. We've identified many critical learnings on how we can partner effectively with community oncology practices for cell therapy, and we will continue to refine this blueprint so that we become more efficient at onboarding new centers over time. We expect to start seeing the impact from this initiative towards the end of 2024. Wrapping up the first quarter, we had a strong start to the year, primarily driven by higher demand across each of our core businesses year over year. We look forward to carrying this momentum through 2024, and as we bring Celadel part to market later this year following approval. I'd like to thank the commercial teams and cross-functional partners across Gilead and Kite for their strong execution as we diligently expand our therapies to new populations, positively impacting more people all around the world. And with that, I'll hand the call over to Murdad.

Thank you, Joanna. We've had a busy first quarter at Gilead with a cadence of clinical readouts that will continue throughout the rest of the year. Importantly, We anticipated an FDA regulatory decision on Celadelpar and three phase three updates across HIV prevention, bladder cancer, and breast cancer. Starting on slide 17, we continued to progress our industry-leading virology pipeline, which is building momentum following a data-rich presence at CROI in March. This included robust biologic suppression data from our one steady oral combination of Bictegravir with Lenacapavir from the phase two portion of the Artistry 1 trial. This novel combination has the potential to benefit people with HIV on complex regimens. We have since started two phase three trials of this combination. One, in virologically suppressed individuals, and another, in virologically suppressed treatment experienced individuals. We expect to complete enrollment in the first half of 2025. We also have two once-weekly oral programs. First, a combination of lenacapavir with Merck's NRTTI is Latravir. and virologically suppressed people with HIV expected to advance into Phase III later this year. Second, a combination of a capsid inhibitor with GS1720, our novel oral integrase inhibitor. We're working to advance this combination into a Phase II study. The second program has the potential to be the first once-weekly oral regimen containing an INSTI agent. INSTIs are the standard of care treatment for HIV. and an important treatment option for clinicians who continue to prefer INSTI-based regimens. Finally, we presented Phase 1b data from our twice-yearly parenteral program of lenacapavir plus our two broadly neutralizing antibodies for people with HIV at CROI. And we intend to share data from the Phase 2 study in the second half of this year. Moving to PrEP, we plan to share an update from our Phase 3 Purpose 1 trial in the second half of this year. Data from Purpose 1, together with data from Purpose 2, is expected to support the filing of lenacapavir for HIV prevention. This PrEP option would not only offer a convenient dosing schedule as a first twice-yearly subcutaneous regimen, but could also be transformative in terms of adherence to HIV prevention regimens. Turning to slide 18, our Tredelvi program continues to be evaluated across a range of solid tumors with seven phase III trials currently underway across breast, bladder, and metastatic non-small cell lung cancers, with plans to start the phase III trial in endometrial cancer later this year. Abstract titles were just released yesterday for the upcoming ASCO meeting, and we're pleased to have over a dozen oncology presentations this year. from our second line plus metastatic non-small cell lung cancer trial, EVOCO-1. Updated data from first line PD-L1 high subjects in cohort A of the phase two EVOCO-2 trial will also be shared. We plan on providing updates from cohort C and D evaluating Tredelvi plus PEMBRO and chemotherapy in PD-L1 all comers at a medical congress in the second half of this year. Presentations for both the Phase II EDGE gastric trial and the Phase II ARC-9 studies will be highlighted. Depending on the timing of event accruals, we anticipate two more Phase III updates this year for Tredelvi. These include overall survival data from our confirmatory Phase III bladder cancer study, Tropix-04, that could support Tredelvi's submission for full regulatory approval in the U.S. and enable ex-U.S. filings. In TMBC, where Tredelvi is the only ADC to have demonstrated statistically significant improvement in overall survival in the second line setting, we expect to share an update on the Phase 3 ASCENT03 trial in first line PD-L1 negative patients later this year. Moving on to cell therapy, I'm pleased to share Kite's approach to the development of novel cell therapies that Cindy and the team presented at last month's investor event. As you can see on slide 19, Yaskarta and Takardas established KITE as a leader in cell therapy, and we plan to potentially extend this leadership into multiple myeloma while also paving the way for innovative next-generation constructs. On a NITO cell, in later line multiple myeloma, we expect to provide a Phase 2 IMAGINE 1 trial update in the second half of this year. This update follows the highly encouraging Phase 1 data presented at ASH last year. where NIDA cell demonstrated durable responses with median progression-free survival not yet met at 26.5 months median follow-up, and no cases of Parkinsonian symptoms observed in the trial. For our next generation cell therapy assets, we have bisystronic and optimized manufacturing constructs in phase one trials, which are aimed at overcoming resistance mechanisms, providing potentially deeper and more sustained responses, and improving product potency. Beyond that, we have early research in allogeneic and in vivo CAR with plans to expand into a range of other disease areas, such as multiple myeloma with the NIDA cell, solid tumors, and autoimmune diseases. Moving to inflammation on slide 20, we recently completed our acquisition of CimaBay and added Celadelpar, an investigational PPAR delta agonist to our portfolio. In phase three clinical trials, Cellidel PAR demonstrated significant improvement in both pruritus and markers of cholestasis related to the risk of progression for PVC. As previously announced, FDA and EMA accepted our regulatory filings for Cellidel PAR for the management of PVC in certain adult patients. We anticipate an FDA regulatory decision by August 14th and a decision from European regulators early next year. we continue to work with global regulatory authorities to expand the reach of Celadelpar for PVC patients. Further, as we look at the rest of our inflammation pipeline, we have several early phase assets that have progressed into phase two trials, including our potentially first-in-class oral TYPL2 inhibitor, a potentially best-in-class oral alpha-4, beta-7 anti-integrin, and an oral IRAC4 inhibitor. Wrapping up on slide 21, We continue to progress on our clinical milestones for the year, and we have had two first patients in and one data readout completed in the first quarter, and we remain on track for our remaining milestones. And now I'll hand the call over to Andy.

Thank you, Murdad, and good afternoon, everyone. Beginning on slide 23, it was a strong start to the year with our base business up 6% year over year. The solid growth achieved across HIV oncology and liver disease offset the decline in that glory with total product sales up 5% year over year to $6.6 billion. As expected, our base business was down quarter over quarter primarily driven by seasonal inventory and pricing dynamics in HIV. Moving beyond our revenue results to items significantly impacted our EPS performance in the first quarter, as shown on slide 24. First, our GAAP and non-GAAP results included an acquired IPR&D charge of $3.9 billion, or $3.14 per share, associated with the close of the Sima Bay acquisition. As an asset acquisition, this transaction was fully expensed in the first quarter. This was a non-deductible expense item, and as a result, impacted our effective tax rate. Excluding this expense, our non-GAAP EPS would have been $1.82 for the first quarter, above expectations primarily driven by higher sales. The second item shown on the right-hand side is an impairment charge that is included in our GAAP results and excluded from our non-GAAP results. As a reminder, this relates to the carrying value of the IPR&D indefinite live intangible assets acquired from Immunomedics. At the end of 2023, the carrying value was $5.9 billion, all associated with non-small cell lung cancer. As a result of the Evoque 01 readout in late January, we have reassessed and reduced the remaining value to $3.5 billion. This primarily reflects the smaller addressable market that Tredelvi could serve among second line plus metastatic non-small cell lung cancer patients, a delay in expected launch timing, and associated competitive activity. We remain confident that Tredelvi will deliver attractive returns over time, with sales now exceeding $1 billion a year, a strong IP portfolio, and a development program with multiple shots on goal in new indications, as well as earlier lines of therapy, including some opportunities not included in our initial deal model. In the meantime, you can see that the impairment impacted first quarter GAAP EPS by $1.46 per share. Moving to the rest of our non-GAAP results on slide 25. For the first quarter, product gross margin was down modestly to 85.4%, primarily due to product mix. R&D and SG&A were each down 2% year-over-year. This is the second consecutive quarter of operating expense declines on a year-over-year basis, reflecting our continued focus on disciplined expense management. Our effective tax rate in the first quarter was a negative 30%, reflecting the non-deductibility of the CIMA Bay acquired IPR&D charge. Overall, our diluted earnings per share was a negative $1.32, compared to a positive $1.37 for the same period last year, primarily reflecting the $3.14 per share expense related to the Sima Bay acquisition. Switching to full-year guidance on slide 26, there is no change to our revenue expectations for 2024 at this time. We continue to expect total product sales in the range of $27.1 to $27.5 billion, and we continue to expect total product sales, excluding VECLURY, in the range of $25.8 to $26.2 billion, representing growth of 4 to 6% for our base business year over year. Additionally, there's no change to our VEC Lurie guidance of approximately $1.3 billion for the full year. As discussed last quarter, we do not expect to update our VEC Lurie guidance until our third quarter earnings call, absent a very clear trend in COVID-19 infections. Mike Pratt- Shifting to the other parts of the P&L for 2024 on a non-GAAP basis, there is no change to our gross margin guidance, where we continue to expect product gross margin in the range of 85 to 86%. Mike Pratt- We now expect R&D to grow at the higher end of our previous low to mid single digit growth range, reflecting the incremental expenses associated with the SimiBay acquisition. We continue to expect SG&A expenses to decline a mid-single-digit percentage relative to 2023. On a dollar basis, SG&A is expected to be modestly higher than our previous SG&A expectations as we incorporate SIMA Bay expenses. However, we can manage this within the window of the previously issued operating expense guidance. Acquired IP R&D is now expected to be approximately $4.4 billion. due to the CIMA Bay transaction, as well as milestones anticipated throughout the rest of the year. Operating income is now expected to be in the range of $7 billion to $7.5 billion, reflecting the updated acquired IPR&D guidance and the modest increase to operating expenses associated with the CIMA Bay transaction. Given the non-deductible impact of the CIMA Bay acquisition, the effective tax rate for 2024 is expected to be approximately 30%. This includes a negative impact of approximately 11% from the one-time charge for the acquisition of Cinebay. We therefore now expect diluted EPS in the range of $3.45 to $3.85. As shown on slide 27, this has only been updated to reflect the transactions that were closed in the first quarter of 2024. Excluding these charges, you can see that we are comfortably within the range of the EPS guidance we shared back in early February. On a GAAP basis, we expect full year 2024 diluted EPS to be in the range of 10 cents and 50 cents. Moving to slide 28, our capital allocation priorities remain unchanged with sufficient flexibility in our balance sheet. Specifically, as demonstrated in the first quarter, we announced a 2.7% increase to our quarterly dividend and returned approximately $1.4 billion to shareholders. In addition, We acquired Simabay for $4.3 billion, adding Selladelpar to our portfolio. Overall, we'll continue to be disciplined in our use of capital. And while we will continue to be flexible and opportunistic, it is unlikely that Gilead will be engaging in any sizable M&A transactions in the near term. Before I wrap it up, on slide 29, a quick note on our expectations now that the Simabay transaction has closed. Pending regulatory approval We expect to launch sell del par in the U.S. before the end of 2024, as Joanna highlighted earlier, with a modest revenue contribution expected this year. Additionally, we have shared that the transaction is expected to add to operating expenses this year as we make incremental investments to support the launch, as well as other R&D efforts, all of which we are able to manage within the window of the previously issued operating expense guidance. And as we look ahead, While the transaction will be dilutive to our EPS this year, we expect the deal to be breakeven to earnings in 2025 and significantly accretive in 2026 onwards. And now I'll invite Rebecca to begin the Q&A.

Thank you, Randy. At this time, we'll open up the call for questions. We ask that you be courteous and limit yourself to one question so that we can get to as many analysts as possible during today's call. As a reminder, to ask a question, please press star 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. Thank you. Our first question comes from Chris Schott at JPMorgan. Chris, go ahead. Your line is open.

Great. Thanks so much for the question. I just had a question on the HIV franchise. and the impact from the Medicare redesign as we think about 2025, and this is coming from more and more conversations. Can you just talk a little bit about how you're thinking about that impact to your franchise, and maybe just more broadly, can we directionally still think about top-line growth and margin expansion for Gilead next year despite this headwind? So any color you can provide there would be appreciated. Thank you.

Great, Chris. Welcome, everybody. This is Dan. I'm going to have Joanna cover this question. Thank you.

Thanks, Chris, for the question. So we do expect an impact of the Part D redesign to be weighted towards our HIV business and expect our HIV growth in 2025 to be offset by the Part D redesign impact. So as a result, we expect our HIV sales to be roughly flat year on year in 2025. Having said that, overall, we expect our total business to grow despite the impact of the Part D we design in 2025 with the top line building momentum beyond 2025, right, 26 and beyond. So we do expect growth in 2025, but our HIV business, the demand of HIV will offset the impact of Part D. Chris, it's Andy.

I'll take the question on margin expansion. As you know, we don't provide TAB, Mark McIntyre, More specific guidance for 2025 beyond what Joanna just mentioned what we have said, historically, and I underscore is that. TAB, Mark McIntyre, We are very focused on discipline expense management that will be true in 2025 as it is today you've seen that in the last two quarters. I think on a non-GAAP basis for this quarter, if you look at our operating margin, if you strip out the Sima Bay transaction, you see an improvement in our operating margin, and we expect that to continue over time. So we do expect broadly for our operating margin to improve over time as you see the continued top line growth and the disciplined expense management. So thanks for the question. More details, of course, to be provided early next year when we provide our 2025 guidance specifically.

Our next question comes from Dana Graybosh at Lee Ring Partners. Dana, your line is open.

Great. Thanks for the question. It's for Kite. FDA's ODAC recently had two important meetings of relevance for multiple myeloma and CAR-T there. One dealt with the early death risk from CAR-VICT and abecma, and the second was to recommend MRD as an intermediate endpoint for accelerated approval in multiple myeloma. And I wonder how you're thinking about both of these ODACs in relation to a NITO cell in your earlier line trial design. Thank you.

Thanks, Jane. We've got Cindy Peretti here, so we'll go right over to her.

Thanks, Dana. So, if I start off with the early-line ODAC, I think, you know, we believe this is positive for everybody. What it's shown is that people recognize the value of having CAR T therapies earlier in their disease. They value the disease-free intervals that they get from that. So, we were very happy to see that. I think we were equally as excited to see the second ODAC around MRD, minimal residual disease, as a secondary. as an additional endpoint. I think the piece around this is that we're really encouraged that the ODAC decision is going to open up the door for us to potentially bring a needed cell to market faster for patients. And we're in the process right now of understanding how the MRD surrogate endpoint can be used with regulatory agencies and the application of our program, and so more to come on that front.

Our next question comes from Umar Rafat at Evercore ISI. Umar, your line is open.

Hi, guys. Thanks for taking my question. I just thought I'll spend a quick second on Simabay, given the recent deal. My question is, did Gilead, during the diligence process, deploy independent pathologists to evaluate the cases of, quote-unquote, possible liver pathology that happened in the NASH trial previously, as well as the paired liver biopsy data from the PBC trial at the lower dose where Simabay didn't think it would need safety adjudication? I'd be very curious how you guys did that and if you would ever publish that. Thank you.

Thanks, Sumer. Mirdad's here, so we'll let him answer.

Thanks, Sumer. Let me start by saying that we think Celadelpar is one of those medicines that will bring a lot of benefit to patients and really some near-term expansion of our liver portfolio and what we think will synergize with many of the other, much of the other work that we're doing in liver disease overall. We obviously did thorough diligence in our approach to Celadilpar and CimaBay. We didn't do a third party. I think your question was around whether we did an independent third party review of the pathology. We did not do that. However, we did a lot of thorough diligence on the data itself and the outcomes, and we are confident around the outcome and what it means for patients over time. Obviously, we're awaiting right now our upcoming PDUFA date and also the file in the EMA, which we are optimistic about, and following the questions and all those sorts of items that we're in. So we're looking forward to providing an update on that as those filings

Our next question comes from Tyler Van Buren at TD Callen. Tyler, your line is open.

Hey, guys. Good afternoon. Thanks very much for the question. I was hoping you could help set expectations for the Evoque 01 and 02 presentations at ASCO. For Evoque 02, the late breaker tag is interesting. So is that related to the three-month OS benefit in the PD-1 refractory patients? Tyler Stokes- Could we or should we be expecting something more and for a vocal to what should we hope to see with the cohort a data that should leave us confident in the vocal three readout next year.

Tyler Stokes- Thanks Tyler smart out again here, so you know it's it's a little challenging because I can't share too many details now because we're under embargo for both of those and and obviously happy to. fill in a lot of the blanks once the data are released and we can talk about them at ASCO. I think for EVOCA-1, we think there are a number of pipeline updates in our ASCO presentations that we have upcoming, which we see as a real change for us and a real evolution of our pipeline overall and our ability to build our oncology pipeline. and bring new options for patients. As part of the late breakers session for EVOCA1, as you mentioned, we will include data on overall survival on PFS, ORR, and duration of response, as well as the safety profile, of course. And I wish I could give you more details, but I can't at this point. As you say, we will also be providing other updates there, including the EVOCA2 Cohort A data looking at the PD-L1 high non-small cell population. And again, I can't really talk about the details of those data, but we are looking forward to sharing those results with everyone and, you know, talking about the implications of that for our broader lung cancer and especially the frontline lung cancer EVOCO3 study that we are conducting right now is underway with our partners at Merck.

Our next question comes from the line of Jeff Meacham at Bank of America. Jeff, your line is open.

Great afternoon, everyone. Thanks for the question. Murdad, question for you. On the cell therapy front, you know, you obviously have the Anita Cell update later this year, which is big. But beyond that, you know, I wasn't sure what the priority was among the next-gen CAR assets that you've got kind of cartooned on slide 19. There's a lot of competition in this space, but you guys are among the only players that have, you know, real scale, and you could move the next-gen stuff, I think, pretty fast. But if you had to pick sort of a priority list, it would be good to know. Thank you.

Thanks, Jeff. This is Dan. We're going to have Cindy Pretti answer that question, if you don't mind. So, Cindy, over to you.

Hi, Jeff. So, we have three products right now, or three constructs that are in Phase I A and B clinical trials. The first one is a bisestronic CD19, CD20 that has 4,1 dB and CD28. The second one is that same construct with fast manufacturing, three-day manufacturing. And the other one is a CD19 like Yaskarta with three-day manufacturing. So we're looking at all three of those in parallel with the goal of picking the winner to advance that rapidly into our pivotal trials. So that's what's coming up next. Obviously, we've shared a lot around the NIDA cell as well. With the NIDA cell, we have the IMAGINE 1 readouts, and we expect to move quickly into earlier lines as it relates to a NIDA cell, and you'll hear more about that later this year. Hopefully, that answers your question. We certainly have a number of plays in early research, but we would plan to advance our next-generation lymphoma asset quickly and obviously with the scale that we have at KITE, as well as the integrated fact that we can create the vector as well as the construct in-house.

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

Hi, guys. Thanks. Following up on the Tridelvi data coming at ASCO and your enthusiasm for Frontline, can you just remind us, A, do you believe that your data in Evoque second line that will be at ASCO is at least as competitive or better than Astra, and that is why you're excited about frontline? And B, if you are, do you have a triple therapy on top of chemo combo, or is your whole first-line strategy just on top of PD-1? Thank you.

Thanks, Michael. This is Murdad again. As we've noted, I think, and as you talked about, the EVOCA-1 data in second line will be something that we discuss at ASCO and show those data. And the full data set does motivate us to go forward in lung cancer and including discussions with regulators. The unmet need in this population is great, and the data give us options, including discussions with health authorities and conducting follow-up trials. We'll be able to share more once the data are provided at ASCO, and so we'll look forward to having those deeper discussions once we can speak directly to the data. Sorry, and the second part of your question was around the front line. Again, I think once we are able to share the EVOCO2 data, the update on EVOCO2 data, we'll be able to talk more, but it does continue allow us to think about the frontline and our confidence around Aboco3. And then the last part of your question on other combinations, we do think about our intra-portfolio combinations. For example, we have a combination of Dombinilumab and Tredelvi in a trial where we're looking to see if we can get additional efficacy from those sorts of combinations. So we do continuously look at our portfolio and look for opportunities for moving the needle with combinations from within our portfolio.

Our next question comes from Salveen Richter at Goldman Sachs.

Salveen, go ahead. Your line is open. Good afternoon. Thanks for taking my question. So you currently have about $5 billion in cash and noted leverage is back to pre-immunomedic steel levels. How are you thinking about meaningful or bolt-on BD post the SEMA Bay acquisition, and is there any preference now between virology, INI, and oncology? Thank you.

Hey, Salveen. It's Andy. Maybe I'll start with that one. In our prepared remarks, I highlighted that in the near term, we don't expect sizable M&A. So we have a lot of execution ahead of us. We have a deep portfolio. a lot of growth drivers, including Selladelpar. So we're very clearly highlighting that in the short term, we will continue to do ordinary course business development, the standard licensing deals. You saw a couple of those in the first quarter, but it's unlikely that we'd pursue any meaningful M&A in the near term. We've also said historically that deals like Cimebay are exactly what we're looking for and that we should do deals like that on a regular basis over the cycle. And whether that's every two years on average or more or less, that's a general ballpark. So I think you're appropriately highlighting we generate a lot of operating cash flow. You saw that again in the first quarter. We will rebuild our cash over time. We're going to continue to invest in the pipeline. But at least in the short run, we don't expect any meaningful M&A in the short run.

And, Sylvine, just to answer the end of your question, I mean, we're always therapeutic area agnostic when we approach these. I mean, first of all, we've got very robust portfolios around both virology and oncology and a building portfolio in inflammation. So, we look, frankly, across those spectrums. Celadalpar is a great example of finding an opportunity within our liver disease or franchise and being able to use that channel. But equally, we'll look for opportunities and synergies that complement our portfolio across therapeutic areas. And that's our approach. We think that makes sense. We look for the most attractive science. And as Andy said, we have a lot in our hands right now to work through and to execute on. And so, we'll keep the bar very high.

Our next question comes from James Shin at Deutsche Bank. James, your line is open.

Hi. Thanks for my question. I wanted to ask on Tredelvi's efforts in HR positive, HER2 negative. Destiny Breast 06 is going to have data pretty soon, it seems, and then you also have Ascent 07. Sort of sounds familiar to Destiny Breast 04 versus Tropics 02. Can you share, like, how you think this landscape will play out with these two trials?

Thanks for the question, James. Well, it's... I've learned to try to keep away from prognostication, so that's harder to do. We, you know, look, maybe the way I would put it is we are proud of the fact that Tredelby is still the only TROP2 ADC that is approved, and that is in large part driven by the important role that Tredelby plays in breast cancer right now for patients. continue to want to push that along with Ascent07. You know, we have a number of other trials ongoing to expand our footprint in breast cancer. You know, I think we are right now in TMBC the leading regimen, and as we are continuing to advance our HR-positive HER2-negative, and in particular in the IHC0, population, and I think we remain confident around our place there. We've shown benefit in randomized clinical trials there, and that's been the basis for our regulatory filings and approvals. So, you know, I don't think we can assume success. We'll have to see what the data are, but looking forward into the year that's coming with Ascent 03 coming up, I think that will provide us additional information to further expand our potential in breast cancer. Maybe, yeah, Joanna, do you want to add?

So maybe just to add to that, I would also say that, you know, the more options these patients have, these women have an HR-positive in earlier lines of therapy instead of cycling through chemotherapies, the better. So with DBO6 results and moving potentially that compound up earlier, it actually allows for Tredelvi to also play a more important role in a bigger population than it is today because of the profile of the tropics O2 label. And so we do believe that there's opportunities for this trope 280C to move up. and also differentiate itself versus other ADCs in this marketplace, depending on the side effect profile, the safety profile, not only on the efficacy. And so in light of the IHC0 setting being really our strong foothold in HR-positive, HER2-negative, we believe that'll continue, whether that's in later lines of therapy or earlier lines as these studies play out.

Our next question comes from Mohit Banzal at Wells Fargo. Go ahead, your line is open.

Great. Thank you very much for taking my question. Maybe a big picture question, if you think about medium to longer term, because I mean, yes, you do not have an LOE, but I mean, HIV growth is somewhere around low single digits. And oncology, I mean, again, I mean, with TROP2 and all, the expansion opportunities seem limited at this point. So just trying to understand, how do you turn this low single digit to more like a high single digit kind of growth for overall company? Some of it is definitely an addition, but how are you thinking about it from medium to long term, which probably people like us are missing?

Yeah, Mohit, maybe I'll start and then have others add. First of all, you know, I think just stepping back and thinking about, you know, the portfolio that we've built over the past four years now more than doubling the size of the portfolio. and with significant advances in our HIV portfolio and oncology within and with outside of cell therapy. So as we think about growth moving forward, I mean, first of all, I would say on the HIV side of the business, you know, we have to constantly remind ourselves and others that in addition to the treatment market and the potential for long-acting treatment that we have a very robust program on, and we'll update you a little bit more on towards the second half of this year with an analyst event. we've got the PrEP market that is just beginning to kind of be dimensionalized. And that is, I think, that provides significant growth opportunity when you think about your timeframe, which you mentioned, which is until the end of the decade. So I think it allows us to think about accelerated HIV total growth prevention and treatment as we head towards the second half of the decade. On top of that, then, we have the entirety of the oncology portfolio. So both Tom Frantz, Cell Therapy within the large B cell lymphoma area, as well as you know, potentially the multiple myeloma entry with the needle cell and then, on top of that, a very robust oncology portfolio that has both travel. Tom Frantz, and other novel agents that will read out over the course of this this this decade i'll just remind you, you know again we've got close to 20 readouts this year of which three of those are in phase three, including. Lenny Capovir for PrEP in the second half of this year, two TRODELVI phase three readouts. And then importantly, we've added Celadelpar to the mix with a PDUFA date in August. And then finally, just the opportunity to update you on the NIDOSEL at the end of the year as well. So we'll be providing more guidance as we continue to look at the entirety of our portfolio, but We really think we have within the company today, by the way, I'll just mention in addition to, you know, complimenting where needed from the outside, but within the company today, we have what it takes to drive a substantial growth in our business over the course of the next decade with focus on expense management as well to produce good returns for investors.

Our next question comes from Simon Baker at Redburn Atlantic. Go ahead, Simon. Your line is open.

Thank you for taking my question. One on Selladelpa, if I may. And a question really around the competitive dynamics at launch. If all goes according to plan, you'll launch in August and Ipsen will launch Alaphibranor in June. So I was wondering if that really makes any difference. You've obviously got far greater infrastructure than Ipsen. Is it too early for them to steal and march? Or paradoxically, does having somebody else on the market promoting PBC actually raise disease awareness and help the situation. So any color around the dynamics at launch would be very helpful. Thank you.

Thanks, Simon. It's Joanna. Let me take that one. And I think you're absolutely right. I think the fact that there is one, you know, more than one competitor hitting the market is great for patients, namely around increasing disease awareness around PBC and the fact that there are true options available. Having said that, I also feel incredibly confident that cellulose delpar is well differentiated to potentially be best in disease when you think about the significant impact and clinically meaningful impact we have with the ALP normalization in the clinical phase three clinical trial we've seen, as well as the improvement in pruritus, which is a key symptom of the disease. And today, there really is no effective anti-pruritic options for PBC patients. And so all of that put together in addition to the fact that we believe our footprint, both commercial and medical, is incredibly well established when it comes to liver disease. It already covers about 80% of all US PBC prescribers. And with that strong differentiate profile we were just referring to, I don't think those three months make a difference. I think really it's about best-in-class launch and that potential with Celadelpar that we look forward to for our PDUFA date.

Our next question comes from Brian Scorney at Bayard. Brian, go ahead. Your line is open.

Hi. Thanks for taking the question. This is Charlie on for Brian. So, again, to ask something about Philadelphia PAR, just wondering if you have any ambitions for potentially looking at a label for first line in the future, considering there's a lot of unmet need with pruritus there, as well as Any potential synergies you may be considering with the remainder of your liver portfolio? Thank you.

Thanks, Charlie. This is Murdad. You know, frontline is a challenge given the, you know, what is currently the background standard of care, but as you note, we think that Cella del Par is going to bring a lot of benefit to a lot of patients, especially given the pruritus. And the potential for getting to patients earlier in their course will be really important for us. And so, you know, we have to see how the market starts to respond to the presence of salidelpar in the second line. And recall, I think the other thing to recall or think about is that how long people actually get frontline therapy before moving on to second-line therapy. Given the efficacy profile of the frontline therapies and the fact that there haven't been any options, one could anticipate that patients are moved to second-line therapy relatively early in their treatment course and making moving up formally for registrational trial to the frontline potentially, you know, superfluous. So I think we'll see how that plays out in the market and once we see our label and all those sorts of things. So we'll be able to update more after that.

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

Hi. Good afternoon. Thanks so much for taking my question. Purpose 1 is obviously an important upcoming readout, so I wanted to clarify some elements of its unique design. Specifically, what's the sensitivity of assessing when HIV infection occurred to accurately project the control infection rate? And then, how do you control for potential intrinsic differences in risk behavior that the screened-out group serving as the control may have versus individuals who make it into the trial? Thanks.

Brian, thanks. This is Murdad again. And I could talk about this for a long time. Let me, I'll try to give a very concise answer. The recency assay that's been developed for HIV, it has been studied very thoroughly. And we can, based on the diagnosis at the time of screening, create a profile for anyone who's potentially HIV infected at that time as to how recently they were infected, and I think that's a key part. And that relates to the second part of your question in that we don't, in a sense, need to compare risk behaviors before and after randomization in that we'll be looking at the overall incidence of HIV at the time of screening and then comparing in this counterfactual design with what happens after people start therapy. So, I think between those two elements, you know, and all the discussions we've had with the regulators and the experts in the field, we're confident in that the design will provide the information necessary to get us to approval and for adoption.

Our next question comes from Terrence Flynn at Morgan Stanley. Terrence, go ahead. Your line is open.

Great. Thanks for taking the question. Just a two-part on the CAR-T franchise. So just was wondering, high level, your commitment to a needle cell, if it proves there is Parkinsonism, so meaning it's less differentiated. And then the second part is, curious where your progress stands with respect to developing the CAR-T for immunology. Obviously, a lot of focus here amongst a number of other companies in the industry. So just curious on Gilead's thoughts on the forward. Thank you.

Thanks, Terrence, for the question. So on the commitment to NitaCell, as it relates to Parkinson's, we absolutely feel that we're differentiated potentially on both safety and efficacy. As we noted earlier, we have not observed the neurotox that some of the other constructs have observed, and we'll continue to monitor it, but we feel great about the profile right now. And then the efficacy profile early signals are we think we will be equivalent or could be best in class, so we're 100% behind the NIDA cell, and we're looking forward to bringing those data soon. The second question around autoimmune space, so we continue to monitor the autoimmune space, and as you've heard from Andy and others before, we will play in that space. We're taking time to take a look at what's in the space versus what we have in our portfolio, and we'll be, I don't have any updates further than that today.

Our last question comes from Carter Gould at Barclays. Carter, go ahead. Your line is open.

Great. Good afternoon. Thanks for squeezing me in. Maybe just to round things out on cell therapy, Amy, you flagged the same dynamics that have been kind of persisting in the U.S. as far as some of the constraints at the ATCs. I also saw the Tennessee oncology reference, but I guess, you know, putting that all together, just, you know, your level of confidence, you sort of hit that return to more meaningful growth in the second half of the year. I didn't hear that mentioned, and clearly that's a point of focus. Any commentary there would be appreciated.

Yeah, no, we feel very confident that we're going to return to growth the second half of the year, as we stated. I think just as a reminder, we had shared in quarter four, our guidance was that we would be flat to slightly down in quarter one. And part of that is due to the restructure. So we are putting our strategy into play. We feel very confident about the approach we're taking in the US. And we now are looking at having almost a fully staffed sales team back out and working hard. I think a piece that We need to talk about as well as the market dynamics of the things we're observing. We're observing out of class competition with the bite specifics, the ATC constraints that we've spoken about in the past based on multiple myeloma constructs coming in. But what we're seeing is a lot of the hospitals and ATCs are working through those constraints and we feel really confident about the second half of this year.

Thank you, Cindy. This is Dan again. So appreciate all of you joining. Maybe just a bit of a summary statement. I want you all to know we at Gilead are very focused on the near-term execution and the long-term plans. We'll continue to stay disciplined and agile in our approach. And just as highlights, we've got 54 active clinical programs, no major patent expiries to the end of the decade, a variety of opportunities for growth, and a lot more to deliver. And on top of that, you know, we are on track to provide updates from three Phase III clinical trials for Tredelvi and Lenacapavir. We've got the Celadel PAR-PREDUFA data in August, and the update on the ANIDA Cell Phase II update with IMAGINE-1 at the end of the year. So rest assured that we are firmly focused on the many opportunities we have, and we have a lot more potential to deliver. With that, I'll hand over to Jackie for closing comments.

Thank you, Dan. To close, just one housekeeping item. I can share that we are tentatively planning to release our second quarter 2024 earnings results on Thursday, August 8. Please note that this date is provisional and could be changed to accommodate scheduling conflicts that arise between now and then. As always, we will announce our confirmed date following the close of the second quarter. We appreciate your continued interest in Gilead and look forward to updating you on our progress throughout the quarter. With that, we'll close our call for today. Thank you.