Gilead Sciences, Inc.

Good afternoon, everyone, and welcome to Gilead's fourth quarter and full year 2024 earnings conference call. My name is Rebecca, and I'll be today's host. In a moment, we'll begin our prepared remarks, followed by our Q&A session. To ask a question, please press star one. To withdraw your question, press star two. Now, I'll hand the call over to Jackie Ross, Senior Vice President of Treasury and Investor Relations.

Thank you, Rebecca. Just after market closed today, we issued a press release with earnings results for the fourth quarter and full year 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, Dietmar Berger, 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. 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'm pleased to share Gilead's very strong fourth quarter and full year results, which highlight growing revenues and exceptional bottom line growth. Starting with our full year performance, total product sales, excluding VicLurie, increased 8% year-over-year to $26.8 billion, and fourth quarter 2024 total product sales, excluding VicLurie, increased 13% year-over-year to $7.2 billion. Full-year HIV sales grew 8% in 2024 to $19.6 billion, significantly ahead of our expectation to grow HIV 5% in 2024. Full-year sales for Bictarvy, the standard of care for HIV treatment, grew 13%. In recent years, our HIV business has established a track record of consistently strong growth, with 5% growth in 2022, 6% in 2023, and now 8% in 2024. This is driven by the strength of our innovation and by the consistently strong execution of our team. In 2025, while volume and demand growth will continue, we can expect to see a temporary masking of the trend with the anticipated impact of Medicare Part D reform on revenue growth. This will effectively reset the base from which our HIV business will continue to grow from 2025. We fully expect to see our leadership in HIV continue and extend beyond the 2030s based on our long-acting portfolio of which Lenacapivir is the foundation. In December, we filed for approval of Lenacapivir for twice-yearly HIV prevention in the U.S., where it has breakthrough therapy designation, and we continue to make progress on our global filings. At the end of January, we filed for approval with the European Medicines Agency and our submission will be assessed under an accelerated review timeline. Given the unprecedented efficacy in the Phase 3 Purpose 1 and Purpose 2 trials and the significant potential that exists in HIV prevention, we are looking forward to delivering on this global opportunity in 2025 and beyond. As we shared at our HIV Analyst Day in December, We have a broad and unmatched clinical program for both HIV treatment and prevention that builds on what we currently offer with Bictarvy and Descovy. We expect to deliver up to seven potential new HIV treatment options and two prevention options before the end of 2033, including new daily, weekly, and monthly orals, as well as quarterly and twice yearly injectables. We look forward to sharing a number of HIV clinical updates this year, including updates from Artistry 1 in people with HIV on complex regimens, and the Phase 2 portion of our Wonders 1 trial, evaluating a potential once-weekly HIV treatment option. Moving to inflammation, the fourth quarter of 2024 was the first full quarter since commercial launch for Livdelzy in the United States, and we are extremely pleased with the results. The strong sales of approximately $30 million for the quarter underscore the important differentiation that Levdelzi brings to people with primary biliary cholangitis, and we expect a European Commission decision later this month following the CHMP recommendation for Levdelzi in December. Our liver portfolio, which amounts to a $3 billion business today, is a steady contributor for Gilead, and we look forward to seeing it evolve with the new impetus of Levdelzi. We also continue to make progress across our early and promising inflammation pipeline. This includes the recent addition of our STAT6 program from Leo Pharma and the advancement of our bisistronic CAR-T targeting CD19 and CD20 for autoimmune diseases. In oncology, we continue to make progress on expanding the reach of our cell therapies to the many additional patients who could benefit from a one-time therapy in these challenging hematological malignancies. And at the same time, our collaboration with Arcelix on a needle cell continues to yield promising results. Data from the Registrational Phase 2 IMAGINE 1 trial were shared at the ASH meeting in December, where a needle cell demonstrated its potential to be a best-in-class BCMA CAR T therapy. We continue to target commercial launch in 2026 and have separately dosed our first patient in the Phase 3 IMAGINE 3 trial in the second to fourth line setting. Trodelvi, meanwhile, remains the only approved TROP2 ADC to demonstrate overall survival benefit in pretreated HR-positive HER2-negative metastatic breast cancer and in second-line metastatic triple-negative breast cancer. Additionally, Trodelvi has six ongoing Phase III trials with updates from the ASCENT-03 and ASCENT-04 trials in first-line metastatic triple-negative breast cancer expected this year. We also anticipate initiating another phase three trial for Tredelvi in extensive stage small cell lung cancer patients later this year. Our many near-term opportunities across HIV, oncology, and inflammation will help to drive the next wave of growth for Gilead. We have no major loss of exclusivity until late 2033, and we have significant potential across the entire portfolio. With that in mind, I'm delighted to introduce our new Chief Medical Officer, Dietmar Berger, who joined us in early January. Dietmar's exceptional leadership in global drug development, his track record in delivering transformational therapies, and the breadth and depth of his experience make him an ideal leader for taking us through the next chapter for Gilead, and I know you will all enjoy getting to know him in the months ahead. I would also like to thank Murdad Parsi for his contributions to Gilead over the last five years and wish him the very best for his retirement. Among his many achievements, Murdad developed a world-class team that has helped to build the most robust and diversified pipeline in Gilead's history, now with 54 ongoing clinical programs, up from just 32 clinical programs in 2019. With that, I'll hand it over to Joanna.

Thanks, Dan, and good afternoon, everyone. 2024 was another exceptional year of commercial execution for Gilead, marking the third consecutive year of high single-digit percentage growth in our base business, with sales up 8% year over year. Gilead's commercial success underscores the dedication of so many teams across the company, and I'd like to recognize them all for contributing to another outstanding quarter and closing out a very successful year. Beginning on slide seven, with our fourth quarter results, total product sales excluding Vicklery were $7.2 billion, an increase of 13% year over year, driven by higher HIV product sales, as well as growth in our oncology and liver disease portfolios. Including Vicklery, total product sales grew 7% year over year, reflecting the impact of lower COVID-related hospitalizations on Vicklery sales. Turning to the full year on slide eight, total product sales excluding Vecluri were $26.8 billion, well above the high end of our 5% to 6% growth guidance range, reflecting strong performance in each of our core therapeutic areas. Including Vecluri, total product sales were $28.6 billion, a 6% growth rate compared to 2023. Moving to slide nine, our HIV business once again delivered very strong results for the fourth quarter with sales of $5.5 billion, up 16% year-over-year, primarily driven by demand, as well as higher average realized price and favorable inventory dynamics. Sequentially, HIV sales were up 7%, reflecting typical seasonal inventory dynamics and higher demand, partially offset by lower average realized price. In treatment, Biktarvy continues to go from strength to strength, with 21% year-over-year sales growth, Victorving now commands over 50% share in the U.S. market and maintains its position as the regimen of choice across other major G9 markets. Discovy also delivered 21% year-over-year growth and maintained over 40% U.S. market share in PrEP, despite the availability of other regimens, including generics. As a reminder, PrEP accounts for the majority of Discovy revenues. We're pleased to see payers continue to recognize the benefits of PrEP as barriers to DSCOVI coverage are removed with over 85% of lives now covered without the need for step edits or prior authorization. On slide 10, full year sales of $19.6 billion were up 8% year over year with the majority of the growth driven by higher demand as well as higher average realized price. More broadly, The HIV treatment market grew around 3% in 2024, consistent with our expectations of 2% to 3% market growth annually. In prevention, market growth accelerated and increased over 16% year over year in the fourth quarter, highlighting growing demand for HIV prevention options, which is particularly exciting to see ahead of our potential launch of Lenacapavir for prevention in the summer. Preparation activities for the US launch are well underway. and we have also recently submitted marketing authorization applications to the European Medicines Agency for Lenacapavir for PrEP across the EU. We can't wait to make this unique prevention option available as we look to redefine the PrEP market in the years ahead. On slide 11, we highlight the impact of the 2025 transition to the new Medicare Part D model. As a reminder, the changes include, first, The requirement that manufacturers provide discounts towards the cost of drugs for medicare patients during the initial coverage and catastrophic phases and second. The introduction of manufacturer discounts for people who qualify for the low income subsidy program or lia this population is disproportionately impacted by HIV, hence this impact on our business due to the larger cost sharing obligation. As these changes are implemented, our 2025 revenue will be impacted by approximately $1.1 billion, of which almost $900 million is in HIV. As a result, and consistent with prior updates, we expect HIV revenue to be roughly flat in 2025, masking the robust demand-led volume growth that we've seen consistently over the last several years in HIV and expect to continue through 2025 and into 2026 and beyond. Excluding this Medicare transition and FX headwinds, our expected HIV revenue growth in 2025 would have been at least 5%, reflecting our continued expectations for strong demand-led volume growth, but offset in part by less favorable pricing assumptions due to channel mix. With regards to the first quarter of 2025 specifically, we'll remind you to expect the normal HIV seasonal inventory drawdown, as well as the impact of the reset of patient copays and deductibles on average realized price and market growth. Combined with the projected IRA impact, we expect HIV revenue to decline in the mid-teen percentage range quarter over quarter compared to the very strong revenue delivered in the fourth quarter. Overall, performance of both BIC-TARVY and DSCOVY for both the quarter and full year highlight Gilead's unparalleled position in the HIV market, both in terms of the clinical profile of our therapies as well as our best-in-class HIV commercialization team. Moving to liver disease on slide 12, fourth quarter sales of $719 million were up 4% year-over-year, reflecting our strong launch of Livdelzy and PBC and increased demand for HBV and HDV products, partially offset by lower HCV sales due to fewer patient starts. Sequentially, sales were down 2%, primarily driven by lower HCV sales due to lower average realized price and the timing of purchases, partially offset by higher sales in PBC and HBV. Full year sales of $3 billion were up 9% year over year, primarily driven by higher demand across our liver disease portfolio. Viral hepatitis remains an important, steady contributor to Gilead's revenue, with our products maintaining leading share across major markets. I'm also pleased to provide an update on the early launch progress of LiveDelsey on slide 13, which received accelerated approval in the US in August for the treatment of PBC. In its first full quarter of commercial availability, LiveDelsey sales were $30 million, with demand outpacing our expectations and strong early brand share. As the only approved therapy with statistically significant improvements in both ALP and pruritus, as well as a demonstrated safety profile, we are excited to see how this positive launch momentum evolves in 2025. Outside of the US, last month the MHRA in the UK approved Livdelzy for the treatment of PBC, including pruritus. Livdelzy also received a positive CHMP opinion in December, and we expect a final decision from the European Commission later this month. We're excited for these positive steps in Livdelzy's development to bring this important treatment to patients globally. Moving to slide 14, Vicklery's fourth quarter sales of $337 million were down 53% year over year and 51% sequentially, primarily due to lower rates of COVID-19 hospitalizations and typical of the quarterly variability we've seen with COVID-19. Full year sales were $1.8 billion, down 18% from 2023 and in line with our expectations. Moving to oncology on slide 15, Full-year sales of $3.3 billion increased 12% year-over-year, reflecting our growing presence in this area of high unmet need, and we're proud to have treated over 80,000 patients to date across Tridelvi and our cell therapies. On slide 16, fourth quarter Tridelvi sales of $355 million increased 19% year-over-year and 7% sequentially, with full-year sales increasing 24% year-over-year to $1.3 billion. Year-over-year growth for both periods reflected higher demand in all regions, highlighting the important role of Tredelvi in metastatic breast cancers, including in second-line metastatic triple negative breast cancer, where it's a standard of care. In particular, Tredelvi continues to maintain market leadership in the metastatic triple negative breast cancer setting across both the U.S. and Europe, and is approved in 55 markets. Combined with ongoing adoption in the pre-treated HR-positive HER2-negative metastatic breast cancer setting, we are pleased to see continued growing demand for Tredelvi. Moving to cell therapy on slide 17, and on behalf of Cindy and the KITE team, full year sales of $2 billion and over 7,000 patients treated in 2024 demonstrate KITE's continued leadership in CAR T. As expected, the fourth quarter cell therapy sales of $488 million were flat on a sequential basis and up 5% year over year, reflecting the continued challenging competitive dynamics in the US and in Europe. These headwinds include a number of new cell therapy launches across indications both in the US and outside the US, in addition to a slower than targeted uptake of cell therapy as a class. We expect continued competitive headwinds in 2025. We are making progress on our goal to make cell therapies available to large integrated community oncology practices in the US. This involves addressing some of the hurdles for these networks to begin CAR T treatments, including that CAR T sites often need to be accredited by the foundation for the accreditation of cellular therapy or FACT, often enabling wider commercial reimbursement. We are working with industry groups and other manufacturers to address barriers through policy reform, and exploring accreditation with groups like FACT. We look forward to sharing our progress with you in future quarters. Wrapping up 2024, I'm proud of the positive impact of Gilead's compelling portfolio of medicines on millions of people around the world. As we look to 2025, the commercialization teams are invigorated to extend the reach of our potentially transformative medicines to even more patients, and we remain focused on launch activities, including for the potential launch of Lenacap Fear for PrEP this summer. And with that, I'll hand the call over to Dietmar.

Thank you, Johanna, and good afternoon, everyone. I'm now in my sixth week as Gilead's chief medical officer, and I have been impressed with the outstanding talent we have across therapeutic areas here at Gilead and the depth of innovation across our 54 clinical programs. I'm deeply committed to working alongside my colleagues to continue executing on these potentially life-changing medicines. Let me start on slide 19 by recognizing our research and development teams for their incredible work on lanacapivir, a first-in-class capsid inhibitor that was recently recognized by science as 2024's breakthrough of the year. To put this in context, science's prior HIV breakthroughs have included the discovery of heart in 1996, and later the discovery of HIV treatment as prevention in 2011. This achievement highlights the transformative potential of lanacapavir and Gilead's commitment to help end the HIV epidemic for everyone, everywhere. Lanacapavir for prevention was granted the FDA's breakthrough therapy designation in October, and we subsequently completed our new drug application on December 19th, suggesting a possible regulatory decision in the summer. As part of our commitment to global health equity, we have filed with the EMA and are taking part in the EU Medicines for All initiative. This collaboration combines EMA's scientific review capabilities and local expertise from regulatory agencies in low and lower middle income countries to bring medicines critical to public health to communities around the world. This process could accelerate the review process for lanacapivir in up to 138 countries worldwide. The marketing authorization and EU M4ALL applications with the EMA will undergo parallel assessments under an accelerated review timeline, and we anticipate a European Commission regulatory decision in the second half of this year. Lenacapavir's unique profile could similarly transform HIV treatment. On slide 20, I highlight that we are developing seven potential new treatments using Lenacapavir or Lenacapavir Pro drug-based combinations for new daily, weekly, monthly, quarterly, and twice yearly treatment options. In 2025, we expect to share An update from the Phase 2 Wonders 1 trial evaluating the combination of GS1720 and GS4182 as a once weekly treatment regimen for virologically suppressed people with HIV. And an update from our Phase 3 Artistry 1 trial evaluating once daily Bictegravir in combination with Lanacapavir for virologically suppressed treatment experienced people with HIV. this medicine could serve as the first single tablet regimen for the six to 8% of people with HIV on complex regimens, or in other words, for people whose HIV cannot be adequately suppressed on single tablet regimens available today. Moving to liver disease on slide 21, the MHRA recently granted Liv Delsey marketing authorization in the UK as a treatment for primary biliary cholangitis or PBC, including related pruritus. In December, we received a positive CHMP opinion for Xeladelpar and we're excited to potentially bring the first and only PBC treatment shown to significantly reduce alkaline phosphatase or ALP and PBC related itch to the rest of Europe. With that said, Cellar Delpar's clinical development is far from complete. We continue to make progress on the confirmatory phase 3B4 affirmed trial designed to support a full FDA approval. Further, many PBC patients on ursodeoxycholic acid have ALP improvement, but do not normalize ALP, which is increasingly appreciated as a treatment goal. patients with a persistent elevation of ALP, but whose ALP levels are not above the threshold of 1.67 times the upper limit of normal, have historically not been studied in clinical trials of new second-line agents. We are enrolling these patients into our Phase III IDEAL trial with the hopes of demonstrating Celadelpar's capacity to normalize biochemical markers of disease activity in this previously understudied patient population with incomplete control of ALP levels. Moving to oncology on slide 22, we remain focused on clinical execution of our eight ongoing phase three programs for Tredelvia and Dombenalimab across five tumor types. This year, We anticipate providing updates from the Phase 3 ASCENT-03 trial, evaluating Tredelvi in first-line metastatic triple-negative breast cancer patients who are not candidates for anti-PD-1 therapy in the first half of 2025, and from the Phase 3 ASCENT-04 trial, evaluating Tredelvi in combination with Merck's Pembrolizumab in first-line PD-L1 positive metastatic triple-negative breast cancer patients in the second half of 2025. These trials could provide Trodelvi the opportunity to advance into the first-line setting for metastatic triple negative breast cancer as early as 2026. Additionally, we have the Phase III Ascent 07 trial in chemotherapy-naive hormone receptor-positive HER2-negative metastatic breast cancer that completed enrollment in August of last year. In lung cancer, TRODELVI continues to be evaluated in combination with PEMBRO in first-line PD-L1 high metastatic non-small-cell lung cancer in the Phase III EVOKE-03 study. Further, FDA has granted TRODELVI breakthrough therapy designation for extensive-stage small-cell lung cancer patients whose disease progressed on or after platinum-based chemotherapy. Unfortunately, most small cell lung cancer cases are diagnosed in extensive stage given the aggressive nature of the disease and median overall survival typically is between 8 and 12 months. In the small cell lung cancer cohort of the phase 2 tropics O3 trial shared at World Lung last year, Chaudelvy demonstrated a promising 13.6 month median overall survival. we plan to initiate the Phase III EVOKE SCLC trial in the first half of 2025. Moving to slide 23, and on behalf of Cindy and the KITE team, we shared several exciting updates during the ASH Congress in December. In particular, we presented preliminary results from the registration of Phase II IMAGINE I trial evaluating a NIDO cell in fourth line or later relapsed or refractory multiple myeloma, which we believe demonstrated competitive efficacy and safety data. Notably, in 86 efficacy-evaluable patients with a median follow-up of 9.5 months, a needle cell demonstrated an overall response rate of 97%, with complete response of 62%, and we expect that the responses will likely deepen over time. minimal residual disease negativity was achieved in 93% of evaluable patients. Anitocell's safety profile was generally manageable, and as of the ASH presentation, no delayed neurotoxicities have been observed across the more than 150 patients dosed in Anitocell trials, including no Parkinsonism, no cranial nerve palsies, and no Guillain-Barré syndrome. We remain confident in the potential for a needle cell to deliver a best in class profile supported by the efficacy and safety data seen to date, as well as kite globally leading manufacturing capabilities and continue to target 2026 for a commercial launch. We expect to provide further data from imagine one during the course of 2025. As we announced in December, the phase III IMAGINE III trial in second to fourth line relapsed or refractory multiple myeloma has dosed its first patients, and we look forward to providing an update on a needle cells progress in due course. Additionally, we shared updates on Yascarda and Tacardus, which included follow-up from the ZUMA5 trial evaluating Yascarda in relapsed or refractory non-Hodgkin's lymphoma, demonstrating a 69% overall survival rate at five years of follow-up. Yascarda and Tacardis continue to demonstrate durable responses and long-term overall survival that support their curative potential. We are also pleased to announce that KITE has now filed an IND application with FDA to evaluate KITE363 in autoimmune conditions. As a reminder, Kites363 is a bisistronic CAR-T product that targets both CD19 and CD20, and each CAR has its own distinct co-stimulatory domain. We believe cell therapy has great potential in meeting the substantial unmet needs of this large patient population, and we are excited to begin our clinical work. We will share more information when available. Joining Gilead, I look forward to working with Flavius Martin, our executive vice president of research on some of the most exciting science in the biopharma industry. On slide 24, you can see some of the early stage targets Gilead is working on amongst an extensive pipeline of over 100 innovative pre-IND and clinical stage programs. Finally, on slide 25, we have several interesting milestones this year, including regulatory decisions on Lenacapavir and Celadelpar, phase three updates for our Bictegravir and Lenacapavir combination, as well as Drodelvi, and phase two updates for a needle cell in fourth line plus multiple myeloma and for our weekly oral HIV treatment. We are also initiating new phase three trials, including in extensive stage small cell lung cancer, and across our long-acting HIV prevention programs that should bring forth new, exciting updates in the years to come. And now, I'll hand the call over to Andy.

Thank you, Dietmar, and good afternoon, everyone. Starting on slide 27, we closed the year with total product sales of $28.6 billion, up 6% from 2023, and well above our $27.8 to $28.1 billion guidance range, due to stronger-than-expected contributions from HIV. For the full year, total product sales excluding Vekluri grew more than $2 billion, or 8 percent, from 2023, exceeding our 5 to 6 percent guidance range and driven by growth in HIV, oncology, and liver. HIV increased 8 percent, or $1.4 billion, to $19.6 billion, driven by Biktarvy, which grew 13% from 2023. Oncology increased 12% to $3.3 billion, primarily driven by growth in Tredelvi and with a more modest growth contribution from cell therapy. And liver increased 9% to $3 billion, with growth across our portfolio of liver treatments. Full-year VicLurie revenue of $1.8 billion was right in line with our expectations and declined 18% from 2023, consistent with pandemic and hospitalization trends. Moving to slide 28, our full year non-GAAP results highlight consistent expense discipline in 2024. R&D of $5.7 billion was flat with 2023. IPR&D of $4.7 billion included $3.9 billion associated with the Simabay acquisition in the first quarter, in addition to our normal course IPR&D expenses. and SG&A of $5.9 billion was down 3% from 2023. Overall, 2024 operating income was $8.5 billion, ahead of our guidance range of $8 to $8.3 billion. Note, full-year operating margin of 30% reflects the first quarter 2024 acquisition of SimiBay. Excluding this transaction, our operating margin would have been 43% for the full year. Similarly, Non-GAAP EPS of $4.62 reflects the $3.14 per share impact of this transaction. Excluding this, our non-GAAP EPS would have been $7.75, up 15% from the $6.72 reported in 2023. Moving to our fourth quarter results starting on slide 29. Total product sales, excluding VECLURY, were $7.2 billion, up 13% from the same quarter in 2023. Including Veclury, total product sales of $7.5 billion were up 7% from 2023, with higher base business growth partially offset by a decline in Veclury sales. On slide 30, you can see that on a non-GAAP basis, product gross margin was approximately 87% compared to 86% in the same period in 2023. R&D expenses were $1.6 billion, up from $1.5 billion in the same period in 2023, reflecting incremental investments and clinical activities across our portfolio. Acquired IP R&D was negative $11 million, reflecting expenses related to the Tourette and Tubulus collaborations, offset by a favorable adjustment related to the Simabay acquisition. Note that the acquisition of certain rights from LEO's STAT 6 program will be reflected in our first quarter 2025 results. SG&A was $1.9 billion, up 16% from the same period in the prior year, partially driven by a litigation accrual for a potential settlement with the U.S. Attorney's Office for the Southern District of New York relating to our promotional speaker programs for HIV medicines. Additionally, there was higher sales and marketing spending, including launch preparation activities for Lenacapivir for HIV prevention, as well as for Liv Delsey for PBC. Operating margin was 41%, up from 39% in the fourth quarter of 2023. And the effective tax rate in the fourth quarter was 19.2%, compared to 17.1% in the same period in 2023, primarily due to prior year settlements with tax authorities. Overall, our non-GAAP diluted earnings per share was $1.90 in the fourth quarter, compared to $1.72 in the fourth quarter of 2023. Moving to slide 31, and before I get into guidance, I want to remind you of certain factors that are impacting our revenue expectations for 2025 and masking the underlying strength of our business. As previously discussed, Medicare Part D reform is expected to impact our revenue by approximately $1.1 billion, including $900 million in HIV. For this year only, This transition masked the robust demand-led volume growth that we have seen over the last several years and that we expect to continue through 2025 and into 2026 and beyond. Across our entire business, this represents about a 4% impact on revenue growth in 2025. Second, you can see that our VEC Lurie expectations are about $400 million lower in 2025 versus 2024, representing an additional growth headwind of roughly 1%. And finally, our guidance reflects a $250 million headwind from FX, given the U.S. dollar has strengthened against major foreign currencies, offsetting another approximately 1% of expected growth. You can see that, excluding the IRA, FX, and Bechlery headwinds, our guidance today would have been for total product revenue growth of approximately 5 to 6%. On slide 32, you can see our guidance for 2025, which assumes a generally stable macro environment, including FX at current rates. For the full year 2025, we expect total product sales of approximately $28.2 to $28.6 billion. We expect total product sales, excluding Vecluri, of approximately $26.8 to $27.2 billion. We expect Vecluri sales of approximately $1.4 billion, although, as always, there's greater variability in this estimate. Similar to last year, 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. Moving to the rest of the P&L, and on a non-GAAP basis, we expect product gross margin to range between 85% and 86%. We expect R&D to be roughly flat from 2024, highlighting that we believe we now have the appropriate scale of investment to support our diverse pipeline. We expect acquired IP R&D to be approximately $400 million and includes roughly $250 million associated with the acquisition of Leo Pharma's STAT 6 program announced in January. The remaining $150 million we are guiding to today reflects known commitments and expected milestone payments. Consistent with our approach over the last two years, we will highlight incremental acquired IPR&D expenses as we announce new transactions and update our guidance each quarter. And finally, we expect SG&A to decline by a high single digit percentage compared to 2024. Excluding the litigation accrual in 2024, our SG&A would decline a mid single digit percentage in 2025, reflecting our ongoing commitment to operating expense discipline. As a result, We expect our operating income for 2025 to be between $12.7 billion and $13.2 billion. We expect our effective tax rate to be approximately 19%. And finally, we expect our non-GAAP diluted EPS to be between $7.70 and $8.10 for the full year and GAAP diluted EPS to be between $5.95 and $6.35. As a reminder, For the first quarter of 2025, we expect HIV revenue to decline in the mid-teen percentage range compared to the very strong revenue delivered in the fourth quarter due to both normal inventory drawdown in the first quarter coupled with the IRA headwind. Moving to capital allocation on slide 33, our priorities have not changed. In 2024, we returned $5.1 billion to shareholders. This included $3.9 billion in dividend payments, and $1.2 billion in share repurchases. For 2025, we announced today a 2.6% increase in our quarterly cash dividend to 79 cents per share, and we remain committed to growing our dividend over time. You can also expect to see continued investments in our business both internally and externally through select partnerships and business development transactions. Finally, we will continue to utilize share repurchases to offset equity dilution as well as additional repurchases on an opportunistic basis. With that, I'll invite Rebecca to begin the Q&A.

Thank you, Andy. At this time, we'll invite your questions. We ask that you be courteous and please limit yourself to one question so that we can get to as many analysts as possible during today's call. To ask a question, please press star 1. If you'd like to withdraw your question, please press star 2. Our first question comes from Jeff Meacham at Citigroup. Jeff, go ahead. Your line is open.

Great. Thank you. Afternoon, guys. In HIV, I know you guys are looking at LIN and PrEP to be a big road driver over time, but I wanted to ask about the HIV treatment setting. I guess the question is, do you guys view all the different LIN treatment options that you detail on slide 20 as eventually replacing BIC-TARVY? You know, I wasn't sure how you were thinking about what the best approach is for lifecycle management and even prior to the Victara VLOE. Thank you.

Jeff, let me just welcome everybody to the call again. I'll just turn it over to Joanna, and I'll just ask the speakers as they respond to questions to just introduce themselves. So, Joanna, over to you.

Hi, it's Joanna.

Well, you don't have to do it on that.

I'm kidding. Hi, Jeff. Thanks for the question. Listen, absolutely. Our strategy is definitely an opportunity to just make sure that we meet the patient needs. And that is really now that Bicarb-E set the standard of care for HIV treatment, we believe that, you know, the only thing that's left is looking at long-acting orals or long-acting injectables. And so we will have an opportunity as we think about the BicLen daily oral to a weekly, actually two weekly orals, and then potentially even a little bit longer term with the six-month layers and whatnot, have an opportunity to look at the marketplace and it automatically will erode some of the big Harvey shares, right? As you think about a share of over 50% as the market leader, there will be opportunities for us to think about as a total Gilead portfolio well prior to the LOE in late 2033 of big Harvey. So there's a lot of optionality here as we think about what's to come and there will be opportunities as long as it, for us, it hits the standard of care that big Harvey set. plus brings optionality for patients with the long-acting administration.

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

Great. Thanks so much for taking the question. Just a two-part on guidance. I just wanted to understand what is included, if anything at all, for LEND for PrEP in the 25 Revenue Guide. And then, you know, it's great to see the margin expansion coming through again in 25 here. And based on your comments, Andy, I'm assuming we should assume that this is kind of the steady state level as we think about the forward into 26 as well. But just wanted to check there. But thanks so much.

Yeah, Terrence, it's Andy. Thanks for the question. Look, in terms of Lena Capovir, we're assuming a launch mid-year. As we've said, Joanna has said consistently that, you know, we'll We expect to have meaningful access and access will build over time. Obviously, at launch, you're working on adding to your access as quickly as possible. I think after six months, we expect to have 75% access in the US and well north of that after nine months and then a year. But we are assuming a launch in the middle of the year. So beyond that, I don't think there's much that we can say at this point in time. In terms of the expenses, you're absolutely right. I mean, we saw very strong expense control in 2024. Despite, I will also highlight, when you look at 24, there were a couple of unexpected items at the beginning of the year that actually increased our expenses. One of them is the litigation reserve that I highlighted in our prepared remarks that you saw in the fourth quarter. The second, of course, are all the operating expenses for that related to the Lib Delvey acquisition that we absorbed throughout the year. So even with that, you saw incredibly strong expense control throughout the year. And you see in our guidance that we expect to carry that forward in 25. So the last thing I'll say to your question is that we have said we are targeting holding our expenses relatively flat for the foreseeable future. and letting the leverage in our model drop to the bottom line, and that has not changed. We, of course, will provide more specific guidance on what that means for 26 and 27 when we get there. But it's a great start to the year. I look forward to updating you as we progress.

Our next question comes from Tim Anderson at Bank of America. Tim, go ahead. Your line is open.

Thank you for the question. Lynn at Capovir and PrEP, so as we approach launch, CONCERNS SOMETIMES START TO BUILD WHETHER CONSENSUS COULD BE TOO HIGH, YOU KNOW, RELATIVE TO WHAT THE PRODUCT COULD ACTUALLY DELIVER IN THEIR INITIAL FEW QUARTERS AFTER LAUNCH. SO IN AS MUCH AS YOU'VE LOOKED AT CONSENSUS, ANY COMMENT ON WHAT YOU SEE OR PERHAPS YOU CAN JUST REFRESH US ON THE RAMP DYNAMICS WE NEED TO CONSIDER. I KNOW YOU JUST TALKED ABOUT ACCESS AS ONE OF THOSE. AND WILL THIS BE A FAST, SLOW, MEDIUM-PACED LAUNCH, ANY benchmarks for similar launches you'd like to point us to?

Sure. It's Joanna. I'll take that question, Tim. So as you know, we're very excited about the potential launch of Lena Capovir this summer. We don't give product-specific guidance, so I can't help you there. What I can tell you is in line with what Andy was saying about access, we do think access will ramp up, but it doesn't mean there won't be access until six months, right? Access will play out. over the next few months of a launch. We're assuming about 75% or so access by six months, maybe about 90% by 12 months. We also think the administration, because this is an injectable, it's going to have to go through specialty pharmacy or a buy and build model. So that might just, you know, take a little bit of time in the first early months to make sure we ramp up for that administration. But we feel incredibly confident that Lenacapavir is going to have an impact in our communities in 2025 and obviously even more meaningful in 26 and beyond.

Our next question comes from Umar Rafat at Epicor ISI. Go ahead. Your line is open.

Hi, guys. Thanks for taking my question, and huge congratulations to Dietmar on joining. I wanted to focus very briefly on some of the InitoCell data you guys have shared. Obviously, a ton of very good color on the non-ICANNs side. I thought I would focus for a quick second on ICANNs more specifically, the nine cases of ICANNs that happened in the IMAGINE ONE trial. And my question is, how many of those nine cases of ICANNs had tremors, bradykinesia, or any other motor dysfunction? And did any of the cases happen more than a couple of weeks after the administration? Thank you.

Cindy Peretti Thanks, Umar. This is Cindy Peretti for the question. I'm not going to be able to answer probably at the level of detail you're looking for for each one of those ICANNs, and I know we can come back with you, but we did not see cases of tremors in those patients, and I can come back on the other two.

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

Great. Thanks. Looking ahead to the approval of Len for PrEP, Can you just comment about your recent interactions with the FDA and the perspective of the FDA and HHS with the incoming administration with the U.S. and that there should be no issues with a fast approval and simultaneously in Europe that has never really gained significant revenue. So you highlight that as an approval and do you somehow see that reimbursement is going to be different there? Thank you.

We'll just start and hand it over to either Joanne or Dietmar. Thanks, Michael, for the question. Everything is on track for the Lenacapavir for PrEP interactions with the agency and HHS, so we're continuing all preparation accordingly and getting ready for the approval this summer, as we discussed before. On Europe, I don't know, is that more of a market question?

Yeah, it's more of a commercial question. I would just add, we also got breakthrough designation from the FDA in the U.S. for Lenacapavir.

Thank you.

And so we're excited about the potential for this launch this summer. And everything's on track for that. And our plans are obviously, all the teams are working through to make sure we are ready for that launch. In Europe, two things. One is the approval for Europe, the potential approval, I should say, for Europe is one that we find exciting and one that we realize that prevention in Europe is really specific to certain markets more so than others. We are obviously going to do that in a tiered approach and make sure that we're really targeting all key stakeholders. That includes government health ministers, government stakeholders, KOLs, investigators with the Purpose 5 trial that we have running right now in the UK and in France, and making sure that we work together really across different stakeholder groups to make sure that there's an opportunity for Lenacapavir to have access in these countries and really make a difference for those markets. So more to come on that. We also think that the EU filing is an important one because of EU for all. And that really is around providing access to those over 138 countries for low and lower middle income countries as well. And so that's in line with the work that we're doing to ensure access everywhere around the world. So more to come on that as we as we progress.

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

Hi. Thank you for the question. This one's for Desmar. I wonder, as you come in new to the organization, if you could give us your reflections on the competitiveness of the late-stage oncology portfolio, particularly what you think about TIDGET and DOM and TROADLV as we come to more phased-free readouts. Thank you.

Thanks, Dana, for the question, right? As I join Gilead, right, Gilead is in a unique situation at this point with a well-diversified clinical pipeline, no major LOEs before 2033, really upcoming key launches and strong news flow that I'm looking forward to and an exciting research portfolio and really deep scientific expertise that I consider critical, right, in these areas. whether it's virology, whether it's a longstanding history, or whether it's immunology and oncology. Your specific question with regards to the later stage portfolio, look to Delvey. The key studies are set up at this point, and we're looking forward to seeing the ASCEND-03 and ASCEND-04 studies in triple negative breast cancer, you know, coming up. um during this year basically so so that question will be answered very soon we also have the lung cancer studies um in the first line um setting you know really set up at this point and let me just remind you that that fidelity is the only drop to adc that has demonstrated overall survival um in some of those studies right so so i think it's really differentiated molecule and a lot of it will uncover itself in the very near future. For TIGID, I've always believed TIGID is an interesting immuno-oncology target. There's potential for differentiation given the fact that dombenalimab has the FC silent design. There were some encouraging early phase two data like the ARC-7, the ARC-10 study, the But those were, of course, small early data sets. So, again, we're awaiting the data. There are two ongoing phase three studies, STAR-121 and STAR-221, which really will define our path forward there.

Our next question comes from Mohit at Wells Fargo. Mohit Bansal, your line is open.

Great. Thank you very much for taking my question, and welcome, Geetmar, to Gilead. So my question is regarding the sales growth for HIV quarter over quarter. It seems like you're calling out favorable inventory dynamic year over year as well. So just wanted to understand, did you see more than normal inventory buildup in fourth quarter? Because you're calling out year over year as well. Thank you.

Thanks, Mohit. Joanna. So what we did see is obviously really strong demand. in both the quarter-over-quarter as well as the full year-on-year Q4, over Q4 of the prior year. We also did see seasonal inventory dynamics, and we see that on a quarter-on-quarter basis, but also a little bit year-on-year. And what we had seen in 2023 is actually that inventory bill across Q3 and Q4. In 2024, we saw it heavily in Q4 instead of across two quarters. And so that's probably the biggest difference that we've seen from a year-on-year basis. But really, the number one driver across the board for HIV, first and foremost, has been that demand that has come through, namely on Biktarvy, but also Dyskovy.

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

Hey, guys, congratulations on the quarter. Thanks for taking my question. Maybe shifting gears to Liv Delsey, I'm curious if you could elaborate a little bit more on what you're observing in terms of just use pattern, prescriber-based, the types of patients where this early uptake is coming from, and maybe how we should at least qualitatively be thinking about the trajectory this year, just given the high demand you're seeing off the bat. Thanks.

Sure. Thanks for the question, Brian. It's Joanna. Yeah, so with Liv Delsey, we're really excited about how not only are we seeing the progression, but it's definitely exceeding our internal expectations. We've heard some really positive feedback on the differentiation of efficacy, but also safety, not just the ALP, but also just the overall biochemical response, the ALP normalization, and of course the pruritus and the safety components to this. We are seeing strong continuous week-over-week growth And so that's creating momentum as we go into 2025. So we're very much looking forward to that. And I think it has a lot to do with the experience, the heritage that we have in liver, the credibility that we bring with key stakeholders. So very pleased about that. The payer access we're seeing is also in line with our expectations for rare disease. We're not seeing any major barriers to getting access for appropriate patients. To your question about what type of patients, Obviously, these are second line patients in line with our indication. Generally speaking, these are naive to second line, and what I mean by that is obviously they're inadequate responders to UDCA and moving into the second line setting, but it's not, we're not seeing much of a shift between second line setting at this point in time if that's what you were referring to. trajectory is incredibly strong, and we believe 2025 is going to be where it really comes through from a momentum standpoint. So we're excited to see what the future holds.

Our next question comes from Tyler Van Buren. Tyler, go ahead. Your line is open.

Thanks very much. Nice quarterly results. Joanna, I have another one for you. Just what led to the 16% year-over-year prep market growth and acceleration for 2024 that you highlighted? Specifically, can you elaborate on some of those factors and whether you think those might serve as lasting tailwinds for the upcoming one-a-cap-of-year launch?

Yeah, thanks for the question, Tyler. Yeah, we were excited to see, right? We closed out the quarter at about 16% market growth. That reflects a couple of things. Number one, just the value and the noise around purpose one and purpose two, I think, is giving some momentum to this market and prevention and what's to come. But I would also say we doubled down from a market development standpoint. So the team has really focused across many functions in our organization to really make sure that we were developing the prevention market and making sure it was set up for success, not only with the current agents today in the marketplace, but as a setup as you think about the potential launch for Lenacapavir. So we do think that is something that will carry through. for the launch of lenacapavir and could actually accelerate it as well.

Our next question comes from Ellie Merle at UBS. Ellie, go ahead. Your line is open.

Hey, guys. So, for Liv Stelsby, how is the enrollment and the ideal study in the partial UDCA responders going? And I guess, how are you thinking about how this study in the context of a potential label expansion and what this can mean for the size of the eligible patient population long-term. Thanks.

Yeah, thank you, Ellie, for the question. This is Dietmar. For the IDEAL study, you know, it's on track at this point, so no further comments on that. It does assess a separate second-line population to those to those patients partially responsive to UDCA, basically the ALP1 to 1.67, which then would clearly extend if there is reach to an additional patient population, especially in the U.S. here, so we're really looking forward to seeing those data.

Yeah, maybe just to add to Dietmar's comments, a third of the patients today are actually partial responders, so basically in line with what Dietmar was suggesting. And that that volume is about 20 to 25,000 people in the US and about the same number in Europe. So we are excited about the opportunity to expand our reach beyond second line.

Our last question comes from Courtney Breen at Bernstein. Courtney, go ahead. Your line is open.

Hi, all. Thank you so much for taking my question today. What I really wanted to focus on was small cell lung cancer. Obviously, you spoke about the Tredelvi study that you're initiating here. And Deepma, I would love your thoughts on kind of how you think kind of TROP2, DLL3, B7H3, and all the other kind of targets that are being chased after in this space might stack up relative to one another and how you think this market might shake out over the long term.

Thanks for the question, Courtney. I mean, first of all, I'm really glad to see progress in small cell lung cancer. You know that, you know, for more than 30 years, these patients were treated with chemotherapy with less advancements, basically. Now we do have those different tools available. TROP2, when you look at the Phase II data, they've actually been really impressive. There's clear TROP2 expression. We've received breakthrough therapy designation from the FDA. We're planning to start the study during the first half of the year, and I think this would be a really meaningful additional treatment option, you know, with the ADC, with stroke two targeting. When you look at some of the other targets, I mean, obviously, these are competitive. I hope they will be. basically adding more also to the benefit for patients. I think TROP2 has the potential to be foundational in the second line setting here, and then we'll need to see the data there. There have been mixed data on B7H3, and DLL3 is certainly an interesting target also in this space.

That completes the time that we have for questions. I'll now invite Dan to share any closing remarks.

Thank you, Rebecca. I appreciate all of you joining today. Let me close by thanking the Gilead teams for another exceptionally strong quarter and for driving the momentum that we are carrying into 2025. You know, the consistent revenue we've seen quarter after quarter and the strong demand across all three of our therapeutic areas is the foundation we are building from as we deliver on our potential in the months and years ahead.

That potential comes from having the most robust and diverse pipeline in Gilead's history. And with recent and imminent launches across our therapeutic areas, no major LOEs on the horizon, and disciplined expense management, we're set to deepen impact for patients that we serve and deliver compelling returns for our shareholders. We look forward to updating you on your progress in the months ahead. And with that, I'll turn it back over to Jackie.

Thank you, Dan, and thank you all for joining us today. One final housekeeping item. I can share that we are tentatively planning to release our first quarter 2025 earnings results on April 24, 2025. 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 quarter. We appreciate your continued interest in Gilead and look forward to updating you on our progress throughout 2025. Thank you.