Gilead Sciences, Inc.

Good afternoon, everyone, and welcome to Gilead's second quarter 2026 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 1, and to withdraw your question, press star 1 again. Now, I'll hand the call over to Jacquie Ross, Senior Vice President, Treasurer, and Head of Investor Relations.

Thank you, Rebecca. Just after market closed today, we issued a press release with earnings results for the second quarter of 2026. 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 and Corporate Affairs Officer, Johanna 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, Jacquie, and thanks, everyone, for joining us on today's call. As you'll see from today's results, Gilead has delivered another quarter of commercial excellence with base business sales up 10% year-over-year, our strongest second quarter growth in three years, driven by our HIV portfolio, Tredelvi, and Livdelzi. This was also an exciting quarter of clinical execution with positive updates across our core therapeutic areas. Turning to HIV performance this quarter, sales grew 12% year-over-year, driven by impressive Bictarvy and PrEP business growth. Yes2Go has quickly become the leading long-acting PrEP option for new patient starts. Quarterly PrEP sales doubled year-over-year, exceeding $1 billion for the first time. With a $4 billion annual run rate for our PrEP business and Bictarvy's continued strength, we are raising our full-year HIV growth expectations to 9% to 10% year-over-year from prior guidance of 8% growth. We continue to advance our extensive HIV pipeline with potential new daily, weekly, monthly, twice yearly, and yearly options. Later this month, we expect an FDA decision on our once daily oral treatment combining Bictegravir and Lenacapavir. BicLen has the potential to become the first dedicated switch regimen within our treatment portfolio. expanding the options we offer for virally suppressed people with HIV and further strengthening our leadership in the switch market. We share detailed data from our positive phase three island one and island two studies at the 2026 International AIDS Society meeting. These data are expected to support the filing and potential launch of the first once-weekly oral HIV treatment regimen, Islatravir plus Lenacapavir, in 2027. In oncology, Tredelvi sales were up 26% year-over-year, reflecting strong demand across both triple-negative and pretreated HR-positive HER2-negative metastatic breast cancer. We also secured additional approvals for Tredelvi this quarter in first-line metastatic triple-negative breast cancer across PD-L1 status. The acquisition of Tubulus has now closed, providing Gilead with an industry-leading ADC platform and Promising Clinical Stage ADCs. At ASCO, we have shared encouraging Phase I efficacy and safety data for GS8824, formerly known as TUB40, in platinum-resistant ovarian cancer. In cell therapy, launch preparations are fully underway for a NitoCell with just five months to go until the PDUFA date. The completed acquisition of Arcelex has given us full ownership of a NitoCell enabling faster, more focused execution in multiple myeloma, as well as the D-domain binder platform for future opportunities in both autologous and in vivo CAR-T. This was a strong quarter for our liver disease business, with Levdelzi sales more than doubling year over year. Levdelzi continues to gain momentum as the leading second-line treatment for primary biliary cholangitis, or PBC. The recent positive Phase III ideal data further strengthened the opportunity for Levdelzi to reach more patients with PBC. We also launched Tepcludex in the U.S. this quarter as the first and only FDA-approved treatment for chronic hepatitis delta virus, or HDV. In summary, it's been a very strong first half and second quarter with impressive revenue growth across therapeutic areas Two commercial launches and three positive phase three readouts. In the second half, we expect another two commercial launches in HIV and oncology while continuing to deliver clinical and commercial excellence across the portfolio. With that, I'll hand it over to Johanna.

Thanks, Dan, and good afternoon, everyone. This was another exceptional quarter of commercial execution across our core therapeutic areas. Starting on slide seven, Total product sales, excluding Veclury, of $7.6 billion increased 10% year-over-year, driven by strong growth in Bictarvy, Discovy, and Yes2Go in HIV, Tredelvy in oncology, and Livdelzy in liver disease. Sequentially, base business sales were up 12%, driven by strength across each of our therapeutic areas. Including Veclury's second quarter total product sales, were $7.6 billion, up 8% year-over-year, and 10% sequentially. Moving to HIV on slide eight, second quarter HIV sales of $5.7 billion were up 12% year-over-year, with strong performances for Biktarvy in treatment, as well as Discovy and Yes Tugo in PrEP, driven by higher average realized price and higher demand. Sequentially, HIV sales increased 13%, primarily driven by inventory build and higher average realized price, both typical in the second quarter following first quarter seasonal dynamics. Given the strong performance in the first half of the year, we now expect full year 2026 HIV sales to grow between 9 and 10% compared to 2025, up from our prior expectation of 8%, and driven by continued strong growth in Biktarvy, Yes2Go, and Descovy. Looking at HIV treatment in more detail on slide 9, Victarvy sales of $3.8 billion were up 7% year-over-year, driven by higher average realized price due to channel mix, in addition to inventory build and higher demand. Sequentially, Victarvy sales increased 12%, driven by typical seasonality, partially offset by lower demand due to market dynamics, including a greater than expected impact associated with changes in the Affordable Care Act. As people with HIV navigate these changes, we did see a slowing in HIV treatment market growth in the second quarter, although we expect to see this trend back to the typical 2% to 3% rate of annual growth. Victarvy continues to lead as the regimen of choice for both naive and switch patients across major markets, and once again, increased share year over year in the second quarter. We're excited to bring new potentially highly effective and differentiated therapies to further expand Gilead's leadership in the switch market. U.S. launch preparations are currently underway for Bictecrevir plus Lenacapavir, our once daily single tablet regimen, where we expect an FDA priority review decision later this month. We're also anticipating is Latrevir plus Lenacapavir, the potential first once weekly single tablet regimen to launch next year, continuing to build on Gilead's HIV leadership. Moving to slide 10, Our HIV prevention, or PrEP, business doubled year-over-year in the second quarter and, for the first time, exceeded $1 billion in quarterly sales. With our expanding portfolio of PrEP options, Gilead continues to gain market share in a rapidly growing market. The U.S. PrEP market grew approximately 14% year-over-year, marking another quarter of double-digit percentage growth on an increasingly larger base of users. Gilead PrEP sales growth of over 100% has once again significantly outpaced the market, driven by strong commercial execution. Yes2Go has already established itself as the leading long-acting injectable for PrEP-naive individuals. In the PrEP switch market, Yes2Go is now the overall leader across oral and injectable options, an impressive achievement after only four full quarters of launch. Now, with 12 months of data, we are pleased to share Yes2Go's persistency rate. More than 70% of users so far have returned for reinjection at six months and extended their protection against HIV to a full year. We're very excited to see such a high level of persistency at a rate that we believe is well above available PrEP options. Overall, we continue to be very pleased with the progress of the launch and with second quarter sales of $232 million, up 40% sequentially, and continue to target full year 2026 sales of approximately $1 billion. Moving to DSCOVI, prep sales of approximately $801 million, which accounts for around 80% of total DSCOVI sales, were up 60% year over year, driven by higher average realized price due to channel mix and demand growth. Sequentially, DSCOVI for prep sales were up 23%, We continue to expect robust full-year growth for DSCOVI, driven by pricing favorability, as well as demand growth and an expanding U.S. PrEP market. Our total PrEP business is already operating at an annual run rate of $4 billion, and with our diverse pipeline of new prevention options in development and a growing PrEP market, Gilead is well-positioned for significant long-term growth. Moving to Livdelzy on slide 11, sales of $167 million more than doubled year over year, primarily driven by increased U.S. demand as well as continued uptake in Europe. Sequentially, Livdelzy sales grew 26% driven by increased demand partially offset by lower average realized price. Livdelzy continues to be the leading second line PBC regimen, driving encouraging second quarter market growth as we move beyond first quarter seasonality. We also announced new positive results from the phase three ideal study, evaluating Livdelzy in patients with inadequately controlled disease and ALP between one and 1.67 times the upper limit of normal. We look forward to potentially expanding Livdelzy's leadership in the second line PBC population as early as next year. More broadly in liver disease, Sales of $877 million were up 10% year-over-year, reflecting increased demand across PBC, HBV, and HDV, partially offset by lower HCV starts. Sequentially, sales were up 14%, reflecting increased demand in inventory build, partially offset by lower average realized price. In the US, HEP-CLU-DEX was granted FDA-accelerated approval in May, becoming the first and only treatment for chronic HDV. We look forward to bringing hepcludex into the small but deeply underserved patient population, and it is expected to be a modest growth contributor in our liver disease business. Moving to slide 12, Tridel V delivered an exceptional quarter of growth with sales of $457 million, up 26% year over year and 13% sequentially, driven by strong demand across both triple negative and pretreated HR positive HER2 negative metastatic breast cancer. Building on Tridelvy's success in second line plus metastatic TNBC, we were thrilled to receive back-to-back FDA approvals of Tridelvy in first line metastatic TNBC across PD-L1 status. With an addressable population almost double that of the second line setting and a longer median duration of treatment, This represents an opportunity to further extend Tredelvi's reach and benefit for patients. Following NCCN guideline updates earlier this year and our recent approvals in first-line metastatic TNBC, we have seen increasing breadth and depth in the adoption of Tredelvi. We look forward to further cementing Tredelvi as the backbone of treatment in metastatic TNBC through our ongoing launch while continuing to strengthen our position in later line HR-positive HER2-negative metastatic breast cancer. Moving to slide 13, and on behalf of Cindy and the KITE team, second quarter cell therapy sales of $417 million were down 14% year over year, reflecting the expected ongoing in and out of class competition across regions. Sequentially, sales were up 2%, reflecting increased Yaskarta demand in the U.S. and internationally, Partially offset by increased competitive pressures for Ticardis. In preparation for NITO cells December 23rd, PDUCE a date in fourth line plus relapsed or refractory multiple myeloma, we have already begun extensive launch readiness activities. This includes optimizing and mobilizing our sales, medical, and access teams. conducting pre-activation work, including initiating contractual reviews and quality training at the majority of our authorized treatment centers, building momentum with KOLs around unmet medical needs, and engaging with a range of payers to ensure broad and timely access. We are confident in the profile of the NitoCell, which we believe is a compelling and differentiated option in multiple myeloma, and we are very encouraged by the strong interest we have received ahead of the potential launch. Building on momentum of the launches of Yastuko and Livdelzy, this continues to be an exciting and unprecedented period for Gilead's commercial organization. In 2026 to date, the launches of Tridelvy in first-line metastatic TNBC and Hepcludex in HDV are already underway, and we expect potential launches for BicLen in HIV treatment and InitoCell in multiple myeloma before year-end. With additional anticipated launches in 2027 and beyond, the teams are energized and focused on delivering continued commercial excellence. And with that, I'll hand the call over to Dietmar.

Thank you, Johanna, and good afternoon, everyone. We delivered another strong quarter of clinical execution across our 53 ongoing clinical programs, reflecting both the continued growth of our pipeline and our disciplined approach to portfolio prioritization. We expanded the breadth of our innovation engine through the acquisitions of Arcelix, Tubalys, and Oromedicins, adding differentiated and potentially best-in-class cell therapy, antibody drug conjugate, and bispecific T-cell engager assets. These acquisitions further complement the broadest and most diverse pipeline in Gilead's history. Starting with HIV on slide 16, Gilead continues to expand and advance our industry-leading HIV pipeline. In treatment, we continue to evaluate six potential new daily and longer-acting orals and injectables for people with HIV. We anticipate one daily Bictegravir plus Lanacapavir or Biclen will be the first new addition to our treatment portfolio for virally suppressed people with HIV or the switch population. Combining two orthogonal mechanisms of action, each with high potency, Big Len has the potential to deliver long-term viral suppression for people with HIV, including those switching from complex regimens. As previously shared, FDA has granted Big Len priority review, and we continue to anticipate a decision by August 27th. Turning to our once-weekly oral portfolio, we are making significant progress on another novel regimen for virally suppressed people with HIV. At the International AIDS Society Conference held in Brazil last week, Gilead shared data from 54 abstracts, and highlights included oral presentations with a simultaneous publication in the New England Journal of Medicine on Gilead and Merck's once-weekly oral regimen, combining isletrovir plus lanacapivir, or ISLEN. In the Phase 3, Island 1 and 2 trials, Islen met the primary endpoints of non-inferiority versus both BIC-TARVY and physician's choice oral antiretroviral regimens, respectively. We continue to work towards global regulatory filings as quickly as possible with potential for launch of the first weekly oral in 2027. Beyond the switch population, we are developing two different potential once weekly oral combinations of lanacapavir with our investigational, wholly-owned, long-acting integrase inhibitors, or INSTIs, which we believe could be a preferred option across a broad range of people with HIV, including treatment-naive. We expect to initiate new Phase II trials in both the switch and naive populations, with the first study evaluating once weekly oral lenacapivir with oral GS3242 starting before the end of the year, and the second study testing once-weekly oral lanacapivir with oral GS1720 starting in early 2027. We are pleased that GS1720 has recently been cleared for further clinical studies by the FDA, so we are now able to move two Phase II clinical programs forward. We expect to advance the combination with the most compelling profile to Phase III. Focusing on twice yearly treatment intervals, we are now initiating our phase three trial, evaluating lanacapivir with two broadly neutralizing antibodies, TAB and ZAB. This regimen takes a novel approach targeting the HIV viral reservoir and could be the first complete twice yearly treatment regimen for virally suppressed people with HIV. We view this as a differentiated opportunity for a subset of the virally suppressed population and, with potential for launch around 2030, it could establish an important early presence in the twice-yearly treatment market ahead of our INSTI-based regimen currently in development. As you may recall, we first shared Phase I data for GS3242 injection at the CROI meeting in February. Preliminary data showed the potential for dosing intervals longer than four months, with additional data from the higher dose cohorts expected later this year. We started our first program of GS3242 injection in combination with lanacapivir in June. For HIV prevention or PrEP, we have the broadest and most differentiated portfolio in the industry that we believe is uniquely positioned to meet individual preferences and needs. At the same time, we are investing in the next generation of PrEP innovation that we believe could continue to broaden the reach of PrEP and potentially accelerate progress towards ending the HIV epidemic. In June, the FDA accepted our filing for once-weekly oral Lenacapavir for PrEP. The submission is supported by the robust and established clinical profile of Yes2Go for PrEP from the pivotal Phase 3 trials, in which more than 99.9% of participants did not acquire HIV infection. We anticipate a regulatory decision by February 2nd, 2027, and look forward to the opportunity to add the first long-acting oral prevention option to our industry-leading portfolio. Looking beyond daily, weekly, and twice yearly options, we have completed recruitment for purpose 365, evaluating one's yearly intramuscular lanacapivir for PrEP. We expect to provide an update in 2027 with potential to launch in 2028. Taken together, we believe our HIV portfolio provides a strong foundation for long-term leadership and durable growth. With multiple opportunities to expand choice across both treatment and prevention, a deep pipeline of differentiated innovations and a steady cadence of catalysts ahead, we are well positioned to create value for patients, healthcare systems and shareholders while advancing our vision to end the HIV epidemic. Turning to liver disease on slide 17, we continue to build on our long-standing commitment to advancing innovative therapies and generating additional clinical data aimed at improving the lives of people living with serious liver conditions. This quarter, We reached an important milestone in HDV with the FDA's accelerated approval of Hepcludex, the first and only FDA-approved treatment of chronic hepatitis delta virus infection based on data from the Phase III MIR-301 study. Chronic HDV is considered the most severe form of viral hepatitis due to rapid disease progression towards liver failure and liver-related death, and impacts between 40,000 and 80,000 people in the United States. As a reminder, hep-cludax has been available in the EU since July 2020. We also announced positive top-line results from the Phase III IDEAL study, evaluating Lifdalsi in patients with primary biliary cholangitis, or PBC, whose disease remains inadequately controlled with alkaline phosphatase or ALP levels between 1 and 1.67 times the upper limit of normal. Treatment with LIVDELSY demonstrated statistically significant composite ALP normalization. This is a particularly important finding as these patients have been underrepresented in prior randomized trials. We're looking forward to sharing the detailed results at a future medical congress this year. Moving to oncology on slide 18, we remain focused on disciplined execution of our core clinical programs and continued development of our research platforms that complement our ADC and cell therapy leadership. Specifically, we closed our acquisitions of Tubalys and Arcelix, adding Tubalys Next Generation ADC platform with its novel linker and payload technologies alongside Arcelix differentiated D-domain binder platform for future cell therapy development. At ASCO and EHA, we shared more than 25 abstracts spanning both ADCs and cell therapy that reinforce Gilead's long-term position in oncology. Focusing first on our ADC programs, we shared additional analyses from the Phase III, Ascent 03 and 04 studies which continue to strengthen the evidence supporting Trodelvy with or without pembrolizumab in first-line metastatic triple negative breast cancer. We are pleased that FDA have now approved Trodelvy for first-line treatment of metastatic triple negative breast cancer based on results from the Phase III, Ascent, O3, and O4 trials. These regulatory decisions provide a new potential standard of care for the most aggressive form of breast cancer in the first-line setting when it may have the greatest potential to provide a durable response and delay disease progression. Shortly following close of the tubalase acquisition in May, we were pleased to present updated safety and efficacy data from the Phase I NEPI-Star 101 study, evaluating TAP40, now known as GS8824, in platinum-resistant ovarian cancer at ASCO. Across select doses, GS8824 A NAPI-2B directed ADC demonstrated deep and durable responses with a confirmed objective response rate of 61%, a clinically significant median progression-free survival of 11 months, and a low rate of hematological toxicity. We believe GS-ADA24 has the potential to be transformative in ovarian cancer given these results in biomarker-unselected and heavily pretreated platinum-resistant ovarian cancer patients who have limited effective treatment options and short survival. Our pipeline now includes a Phase I-II clinical program in platinum-resistant ovarian cancer, and we continue to expect entering registrational development in platinum-resistant ovarian cancer as early as 2027. Further, we have added Phase I clinical programs in platinum-sensitive ovarian cancer and other advanced tumor types. In parallel, we are continuing to evaluate GS8823, previously known as TUP30, a 5T4-directed ADC, as well as other potential research stage candidates utilizing TuberList platform technologies. Altogether, Gilead is positioned to be a leader in ADC innovation long term. Moving to cell therapy on slide 19, and on behalf of Cindy and the KITE team, with the completion of the Arcelix acquisition in April, we now have full control of a needle cell's development, enabling us to move with greater speed and focus in maximizing the long-term potential of a needle cell, including in earlier lines of multiple myeloma, as well as the full potential of the D-domain binder platform. With its deep and durable efficacy, as well as a differentiated safety profile observed in the Phase 2 IMAGINE 1 study, we continue to believe a needle cell has best in disease potential. And we look forward to a regulatory decision later this year. We completed enrollment of IMAGINE 3 in second line multiple myeloma this quarter and look forward to potentially filing in this indication as early as 2027. Reinforcing KITE's enduring operational and technical leadership across novel cell therapies, we presented data at ASCO showing a 98% first-part manufacturing success rate and global median turnaround time of 18 days across a needle cell patient with multiple myeloma. As such, we are confident that we can quickly meet the needs of multiple myeloma patients that are awaiting potential needle cell launch. In addition to our work on a needle cell, we're excited to unlock the broad potential of the D domain binder platform, which has applications far beyond autologous multiple myeloma CAR-T. Combining Kite's extensive experience in CAR-T clinical development with strategically selected business development, we're rapidly advancing our updated in vivo CAR-T platform. We are developing a differentiated in vivo program that not only addresses class challenges of durability, safety, and manufacturability, but also provides scalability for broad expansion across oncology and autoimmune diseases. Specifically, our smaller D domain binder enables bypassing payload challenges associated with viral vectors to target multiple antigens simultaneously. The Plug and Play modular interiors platform allows KITE to optimize CAR constructs and vector targets by diseases. And our collaboration with PreGene enables Speed2Clinic, where we will start exploring our updated in vivo platform in two investigator-sponsored studies later this year. Moving now to our milestones on slide 20, I'd like to recognize our research and development teams at Gilead and KITE and our partners whose tireless efforts have contributed to the significant progress we have made across our key clinical milestones. Since our last quarterly update, we shared four phase three clinical trial updates and three FDA approvals. For the remainder of the year, we anticipate FDA regulatory decisions for Bclen in virally suppressed people with HIV and a needle cell in fourth line or later relaxed and or refractory multiple myeloma as well as a Phase III ascent GYN update for Tredelvian advanced or recurrent endometrial cancer. In addition to these milestones, we expect to share updates from our broader inflammation portfolio this year, including the Phase II SWIFT study evaluating GS1427 or Invistagrast, our investigational oral alpha-4, beta-7 inhibitor for inflammatory bowel diseases, and the Phase IIa COSMIC study Evaluating EDC-CERTIB, our investigational IREC4 kinase inhibitor in cutaneous lupus erythematosus. Taken together, these updates reflect the strength of the portfolio we have built and the opportunities that lie ahead. Now, I'll turn over the call to Andy.

Thank you, Dietmar, and good afternoon, everyone. Once again, our quarterly results demonstrated the strength and durability of Gilead's portfolio underpinned by our disciplined operational execution. As shown on slide 22, our base business grew 10% year over year to $7.6 billion, driven by continued growth across HIV products, Tredelvi and Livdelzi, partially offset by lower sales of cell therapy and HCV products. Sequentially, sales were up 12% driven by growth across HIV, liver disease, and oncology. Total product sales of $7.6 billion were up 8% year over year, reflecting the 10% growth we saw in our base business, partially offset by lower VEC Lurie sales due to fewer COVID-19 related hospitalizations. Other revenue of $176 million included $156 million related to an increase in future estimated royalties associated with a prior IP asset sale. This is a non-recurring and non-cash item reflecting an accounting change. Moving to our non-GAAP second quarter results on slide 23. Product gross margin was 87%, flat year over year, and in line with our full year guidance. R&D expenses were $1.4 billion, relatively flat year over year, reflecting lower oncology clinical study activity, partially offset by higher R&D costs associated with our newly acquired entities. Acquired IPR&D expenses were $11.2 billion, primarily reflecting our acquisitions of Arcelix, Tubulus, and Oro medicines. SG&A expenses were $1.5 billion, up 12% year-over-year, primarily due to expected promotional activities related to Yes2Go. Second quarter operating margin was negative 94%, reflecting our acquisitions of Arcelix, Tubulus, and Oral Medicines. Excluding the $11.1 billion in acquired IPR&D expenses associated with the three acquisitions, our second quarter operating margin was approximately 49%. This is consistent with the strong margins we've delivered in prior quarters and firmly in the top quartile of our peer group, underscoring our disciplined operating model. The non-GAAP effective tax rate was negative 11.4% in the second quarter, primarily driven by the acquisitions of Arcelix, Tubulus, and Oral Medicines. Excluding these acquisitions, non-GAAP effective tax rate was approximately 19%. And on slide 24, our non-GAAP diluted EPS was negative $6.75. This reflected higher acquired IPRD expenses, tax, and SG&A expenses, partially offset by higher revenue. Excluding these acquisitions and the non-recurring other revenue, non-GAAP diluted EPS was $2.27. I'll highlight that for both the second quarter and the first half, illustrative EPS has grown approximately 13% compared to the same periods last year. This compares favorably to total product sales growth of 8% in the second quarter of 2026 and 7% in the first half of the year, highlighting the leverage in our business model as we continue through this period of sustained growth. Moving to our full year guidance on slide 25. We had strong second quarter base business performance and are updating our full year sales and EPS guidance as follows. We now expect base business sales to grow approximately 6 to 7% year over year and range between $29.8 and $30.1 billion. This represents an increase of $350 million at the midpoint compared to our May guidance, and an increase of $750 million at the midpoint compared to our initial 2026 guidance. Within HIV, we now expect full-year sales to grow between 9 and 10% year-over-year, up from 8% previously, driven by continued strong growth in Biktarvy for HIV treatment, as well as Yeztugo and Descovy for PrEP. We continue to expect approximately $1 billion for Yes to Go sales for the full year. And we now expect cell therapy to decline mid-teens percentage year over year. Moving to total product sales, we have raised the lower end of our range and now expect total product sales in the range of $30.1 and $30.4 billion. Included in total product sales, we now expect Vecluri sales of approximately $300 million compared to approximately $600 million previously, reflecting lower COVID-19 related hospitalizations. With regards to our non-GAAP P&L, we now expect acquired IPR&D of $11.5 billion, reflecting $300 million lower second quarter expenses associated with the accounting treatment of potential future milestones related to the tubulous acquisition. We continue to expect both R&D and SG&A expenses to increase a mid-single-digit percentage on a dollar basis compared to 2025. Moving to tax, we now expect full-year 2026 effective tax rate to be between 140 and 115%, reflecting the non-deductible acquired IPR&D expenses associated with the Arcelix, Tubulus, and Oral Medicines transactions. Excluding these transactions, Our effective tax rate would be 20%, no change from our February guidance. Overall, we expect full-year non-GAAP EPS between negative 65 cents and negative 30 cents. Turning to slide 26, excluding approximately $9.15 per share relating to the acquired IPR&D expense and full-year financing costs associated with the Arcelix, Tubulus, and Oral Medicines transactions, as well as non-recurring other revenue. Our full year non-GAAP diluted EPS would be $8.50 to $8.85, raised 5 cents on the bottom end from our May illustrative guidance due to higher base sales partially offset by lower VEC LURie sales. On slide 27, we returned close to $1.4 billion to shareholders in the second quarter of 2026, including $355 million of share repurchases. Combined with our dividend, we have returned approximately 49% of our free cash flow to shareholders in the first half of 2026. As we look ahead, and given the acquisitions completed during the first half of 2026, our near-term priorities are centered on integrating the new programs and platforms into our business. Therefore, we do not currently anticipate pursuing additional sizable M&A transactions this year. That said, We will remain opportunistic and continue to assess strategic opportunities to further enhance our portfolio and create value. In summary, Gilead has delivered another quarter of strong clinical and commercial execution and continued operating discipline. We believe Gilead is well positioned for both near-term and long-term growth, and we remain fully focused on executing on our strategic commitments. 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 limit yourself to one question so we can get to as many analysts as possible during today's call. Again, to ask a question, press star 1, and to withdraw your question, press star 1 again. Our first question comes from Tyler Van Buren at TD Cowen. Tyler, go ahead. Your line is open.

Hey, guys. Thanks so much for the presentation and for taking my question. It's impressive to see the continued performance of the PrEP franchise overall between both the SCOBY and Yes2Go. But to be specific, can you help us better understand the growing delta in recent Yes2Go prescription trends versus sales that are being reported by outlets like IQVIA? And then maybe outline what you believe are the biggest growth drivers for Yes2Go through the end of the year.

Thanks, Tyler. It's Johanna. I'll take that question. Yeah, we're really excited about the performance thus far in the first half of the year for the overall PrEP franchise, right? At this last quarter, just about over a billion dollars run rate for $4 billion for the year. So that's very exciting. In your question about IQVIA, now that we're about a year into the launch, we won't be commenting on how IQVIA captures the data. We'll obviously be commenting on our data, which has all the pieces of the puzzle pulled in together. For Yes2Go, as you think about the back half of this year, really building on a really strong first half. And I would say that we expect strong continued launch momentum because we're still in launch mode. And that's really driven by the strong uptake we've been seeing in both Naive and Switch Market, the growing confidence that we're seeing with our healthcare professionals with access pathways, logistics, experience with Yes2Go, of course, The PrEP market itself growing at 14% and building on a larger base. And that's not by chance, right? That's a lot of the work that Yes2Go and DSCOVI teams are ensuring around education awareness across many different communities. And last but not least, as we've shared, is the more than 70% persistency that we've been seeing as people return for their second injection and get protection for a full year. So we're really excited about the numbers we're seeing, The numbers we've shared today and obviously, you know, very much confident in our guidance of approximately about a billion dollars for Yes to Go this year.

Our next question comes from Evan Sigerman at BMO Capital Markets. Evan, go ahead. Your line is open.

Kyle, thank you so much for taking my question. One more on PrEP, specifically talking about US2Go and your once-weekly option. The value proposition for US2Go was built around eliminating the need for multiple pills every week, yet now you're investing behind a once-weekly oral PrEP option, which, yes, is better than Descovy. I'm curious as to what has changed. Are you seeing that people just aren't as enthusiastic about a twice-yearly injection as you originally thought, or is there something else going on here that we should be

Thanks, Evan. Johanna again. I would say nothing has changed. On the contrary, I think what we're seeing is incredible excitement for the long acting. We've always suggested that we felt that long acting options, longer was better in a prep setting especially. What we do know, however, is that you still have about 80, 85% of the total market that are daily orals, both discosi as well as generic and so there's still a huge opportunity and with a weekly oral so not having to think about it every single day and moving to a once weekly is a really nice opportunity for us to make sure that we capture the market of folks that do want to be on an oral maybe don't enjoy an injectable and want to make sure that they don't have to think about it every single day. and so we think that's a huge opportunity and I don't think one substitutes the other. On the contrary, there's an opportunity for a market expansion in light of this, especially if you think about, you know, there's still 40% or more folks on generics as well. So there's a real nice opportunity here for patient optionality, not only with the Q6 monthly, the Q weekly oral, potentially the full year as well, injectable by 2028. So all of those pieces come together to support that leadership for Gilead in HIV prevention.

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

Great, thank you. Just thinking about the strength of years to go, I think, Johanna, you mentioned there's a 70% compliance. How are you thinking about things that you could do to get it higher? Are there things that you're seeing in the channel and in the marketplace in patient feedback? And what are the factors that could consider making it lower? Thank you.

Thanks, Michael. I think it's about making it higher. I totally agree with you. Over 70% is definitely by far the strongest persistency rate that we've seen across all the options in PrEP. And to your point, of course, the team is trying to make sure that we continue to challenge ourselves. We've done a lot of programs already at the HCP level to make sure that the right reminders, the leveraging the EMR system, the HR system, to make sure that they're part and parcel of your logistics. The team has just recently launched in the last month or so a support program for individuals on PrEP. It's actually called Ready to Go. And this program was actually designed with PrEP consumers. So it's really taking in their input as to what would be helpful. And this program basically is really focused on making sure that Yes To Go individuals start but also stay on Yes To Go for long term. And so it'll include SMS reminders, educational resources, links to patient support, friendly nudges along the way, and probably the most important piece of the puzzle is having a nurse inbound and outbound call center so that people can actually have somebody to talk to. So that's what the team has actually just launched in the last month or so to continue to drive forward the Yes To Go persistency. And I think all the pieces coming together in addition to all the campaigns that are out there around awareness about HIV PrEP and the long term of a Q6 monthly and what the protection that it offers you, I think are all going to be very positive to continue to support our persistency rates.

Our next question comes from Jeff Meacham at Citibank. Jeff, go ahead. Your line is open.

Great afternoon, guys. Thanks for the question. I had a bigger picture one for Dan or perhaps Andy. When you look at Gilead's core therapeutic areas, you guys have clearly diversified the business today in terms of pipeline, but you're not really there yet with respect to sales. You guys used to talk about this a lot, but is lowering the concentration of HIV still an intentional long-term goal at Gilead, or has that become less of a priority as long as you just have strong growth, cash flow, improving margins, et cetera? Thank you.

Yeah. Thanks, Jeff. I'll start, and I'll invite Andy Give some quantification to it as well. Clearly, our objective is still to diversify the business, but in two different ways, just to clarify. One is within virology, and the second one is outside of virology. So I think that's developed over time, and I think clearly what we've talked about on the call here today within HIV, for instance, to be able to diversify our HIV business across multiple different options. The treatment area, of course, is going to start with this. We expect approval by the end of this month. Another daily oral option to kind of capture the switch market within Gilead. And then, of course, once weekly, once monthly, once every six months, and once a year across the treatment and PrEP portfolio, which we think is durable and long-lasting well into the end of the next decade. So that's job number one is to diversify that. and then secondly to diversify in oncology and immunology and you've seen some of that work obviously with Tredelvi and our cell therapy business but now expanding with acquisitions like tubulus as Dietmar mentioned in his remarks as well and then finally we're going to be giving you a lot more on our inflammation portfolio coming up over the course of the rest of this year and into next year and that's developing really nicely so we'll continue to follow the science Well, we believe that our diversification strategy is progressing Very well. Andy, I don't know if you want to give any figures.

Yeah, Jeff, maybe just a couple of things to reiterate that you heard in the prepared remarks. One, just within HIV itself, the PrEP business being at a $4 billion run rate and growing is very exciting. And when you look at the HIV franchise overall, where we are today is the result of an incredible amount of work from the clinical development of the commercial teams over the last five or six years to really build out the long-acting portfolio. So we're thrilled with the growth that you're seeing. and we're really happy with the progress that we're making outside of HIV and other areas of virology. So, you know, for instance, Tredelby, you saw that Tredelby grew 26% year over year in the quarter. It is approaching a $2 billion run rate with $450 million, you know, plus or minus of sales in the quarter. You know that we have a lot of, there's a lot of excitement for NeatoCell and the launch there as well as the other acquisitions that we just did. So I think we can do both. We can continue to diversify and grow the HIV business, including in PrEP, but also in treatment. And then we can continue to build out in oncology and inflammation. And we look forward to sharing more information later this year. Dietmar mentioned some of the inflammation data, for instance, that'll be presented later this year. So we look forward to sharing that and discussing it at that time.

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

Hey, good afternoon. Thanks so much for taking my question. So it sounds like the earlier line of NIDOSEL study enrolled really quickly and filing could happen as early as next year. I know there's been a lot of changes in FDA leadership, and it's some of the principles put forth around CAR-T registrational requirements for the position paper a few months back and then the recent backtracking by the current acting commissioner. I'm just curious how consistent your regulatory interactions have been, at least in late line, and maybe your latest impressions of what the filing requirements might be for the earlier second line to fourth line patients. Thanks.

Thanks a lot, Brian. So we continue to have interactions with the FDA as part of normal course of business and questions during a filing and have not seen major changes at this point. I think the components that you're referencing on the earlier lines of therapy, again, we have a dual primary endpoint of both minimal residual disease and PFS. continuing to progress those endpoints and would plan to file based on the dual primary with FDA and haven't had any conversations that would indicate differently.

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

Hi, team. Thanks so much for squeezing in a question from us. I really wanted to just understand a little bit more about the HIV treatment strengths, specifically, kind of looking at Victavi, we saw performance beyond consensus expectations. And this is in the context of insurance coverage losses in the U.S., and so wanting to get your context around how we should think about the drivers of those different volume dynamics relative to the mix and other pricing dynamics that are playing out for a product like Victavi.

Sure, Courtney, this is Johanna. So the Tarvey sales were about $3.7 billion for Q2, growing year on year about 7%, and quarter over quarter at 12%. What you're referring to, I believe, is what we've been watching very closely since January of this year is with the ACA tax subsidies being eliminated, there's some folks that have basically fallen out of So, most of those are health exchange plans where the patients are actually either now become uninsured or underinsured, and they're kind of navigating the channels to understand where they go next. And so, there's a little bit of a transition. And so, we kind of saw that directly impact the HIV treatment market. So, it was a little softer in Q2. We believe that'll bounce back. to the 2% to 3% that we've seen in the past and that we expect to see in the future. So that was definitely what was going on there. Having said that, that would have had a bit of an impact on the volume in Q2. We think that bounces back. And of course, as you've seen by the guidance being raised to 9% to 10% for HIV overall, that's really driven by the strength of Biktarvy and, of course, our PrEP business. So those are the kind of the pieces that played together for Q2. Hopefully that was helpful.

Our next question comes from Simon Baker at Rothschild. Simon, go ahead. Your line is open.

Thanks so much for taking my question. One on GS8824, if I may. You alluded to the fact that it is under evaluation in non-small cell lung cancer. Just wondering if you could give us your thoughts on the potential there in the non-squamous setting because it looks a particularly interesting application given that NIPI-2B expression seems to be disproportionately in areas where checkpoint inhibitors perform less well, namely women and non-small cell, never smokers. So any thoughts on that would be great. Thanks so much.

Yeah, Simon, this is Dietmar. Thank you for the question. You're exactly right. It's one of those targets that is expressed in non-small cell lung cancer in the non-squamous setting specifically. Obviously, this is early days for us, but what we've seen with top 40 in ovarian cancer really encourages us quite a lot. The efficacy that we see, the tolerability that we see, we really feel there is an opportunity for GS8824 or top 40 in non-small cell lung cancer. But as I said, it's early days, and we need to generate more data.

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

Okay, great. Thanks. A quick one for me. Are you still planning on sharing a Phase II update for your Alpha 4, Beta 7 program in IBD? And if you are, what level of data should we expect to see there, and how could it differentiate from other programs? that are looking at the same indication using the similar mechanism.

Thanks. Yeah, thanks for the question. Yes, of course, we're planning to share an update at a medical conference later this year. Expect kind of a, you know, phase two normal type of update, you know, with data on clinical remission, with data on histological remission. et cetera, just IBD endpoints. Obviously, as you know, Alpha 4, Beta 7 is a validated target. So we hope to show you data that are really demonstrating the potential there. But wait for the update later this year.

Our next question comes from Greg Rinza at Truist Securities. Greg, go ahead. Your line is open.

Hi, thanks so much for taking our question. This is for Greg. I have one question on HIV. How should we think about Iceland's net economics relative to VicTavi or your next-gen VicLan? Could migration from wholly owned regiments be dilutive for patients and requiring competitive share gains to create value? Thank you so much.

Sure. I'll start. I'll take that one. So we're excited about ISLEN and the potential launch in 2027. We just shared phase three data at IAS, and I think position response was incredibly positive for our first once weekly oral option. And of course, this is in partnership with Merck, as you pointed out. We believe that this is an opportunity in the switch market where we do have leadership today with BigTarvey, but obviously When you have the lion's share of the naive market, you can't really switch back to BIC-TARVY if you've already started on BIC-TARVY. And so this is an opportunity with Izlatavir, Lenacapavir, as well as with BIC-LEN to be honest, to really expand or switch leadership in this space. And that's why we believe this is an incredible opportunity for us to continue to drive that leadership in HIV treatment. Islatavir, Lenacapavir is an exciting one, and it's something that we've already started working with our partner with Merck to prepare for the launch.

Our next question comes from Chris Schott at JPMorgan. Chris, go ahead. Your line is open.

Great. Just a two-parter on Descovy, obviously seeing very healthy sales growth and pricing dynamics here. So just maybe the first part, as we think about the rest of the year, Should we think about this level of year-over-year price benefit we've seen in the first half of the year continuing? And then as we look forward on Descovy and with the weekly Yes2Go coming to market next year, do you see weekly Yes2Go as a product that can more meaningfully cannibalize Descovy? And it seems like so far the injectable's not been cannibalizing as much. I'm just wondering if that dynamic changes next year with the weekly. Thank you.

Yeah, sure. Hi, Chris. It's Johanna. So a couple of things. On Descovy, we have been seeing really nice growth, right, 60% year over year. That's driven by a couple of different pieces. One is favorability in price, as you mentioned, due to the channel mix. Also, of course, demand driving with Descovy. So I do think as Yes2Go has come into the marketplace, really driving the overall market and growing the market at 14%, 15%. You also have all the other boats that are rising with it. And so it's just helping further support DSCOVI demand. So we do believe that we will be able to maintain that as we move forward with DSCOVI to a point, right? Obviously, I do think Yes2Go, to your comment, I would just say Yes2Go is picking up from a source of business is picking up in the naive market slowly but surely. Our focus has obviously been switch. And from that switch, we're seeing probably roughly about a third, a third, a third across Apertude, Descovy, and Generics, maybe a little bit more heavily weighted towards the daily earls, which you would assume because that's the biggest proportion of the market. And that's exactly our focus. To your point about the opportunity with the Q Weekly Oral, we do believe the Q Weekly Oral for people that have been on Dyscovy and comfortable with the daily oral and not necessarily seeking to go for a longer acting in an injectable setting, we do believe the Q Weekly Oral is going to be a really nice opportunity for both Dyscovy but also for generics to move over to to the Q Weekly Yes To Go option. So we're excited about that, and that's why we see it as a real complementary opportunity as we think about this launch.

Our next question comes from Terrence Flynn and Morgan Stanley. Go ahead. Your line is open.

Thanks so much for taking the question. On 3242, your long-acting integrase, can you just confirm the dosing interval in the Phase 2 trial? I was a little unclear based on your comments if it's exploring four months or six months or if there's still more data you're waiting on to expand to a six-month interval. Thank you.

Yeah, Terrence. Thanks for the question. This is Dietmar. Obviously, there's a lot going on with 3242. We got both the oral application as well as the injectable. That shows you how versatile this is as an integrated inhibitor. What we've always said, the ambition here is to bring this to once every six months, but we're going to have to increase the dose, and it's currently in a dose escalation study. At this point in time, we're sure that this can be dosed once every four months. We're currently testing the higher doses in the phase one study, and we're confident that after the completion of those higher doses, we can take it up to the six-month level. But of course, we need to see the data from the phase one study first. The ambition is absolutely to take this to a once every six-month dosing paradigm.

Our last question comes from Salveen Richter at Goldman Sachs. Salveen, go ahead. Your line is open.

Great. Thanks for the question, and congrats on the quarter. This is Matt on for Salveen. Maybe on the HIV pipeline, specifically the weekly orals, As we think about the profile of your Merck Partnered Program and how that compares to available treatments or some of the newer daily options hitting the market, is there anything you all would flag outside of the dosing difference, of course, either with regard to the molecules or the mechanism or anything in the full Phase 3 data we saw this week, either pros or cons that may factor into patient or physician preferences when considering switching to this treatment? Thank you.

Thanks, Matt, for the question. This is Dietmar again. Obviously, we're excited, as you heard from Johanna as well, about the first weekly oral that we have together with Merck, the Isletrovir-Lenacapivir combination. But we are also excited to share about these two new weekly oral options that we're exploring, which combine Lanacapivir with either GS1720 or GS3242. Both integrate inhibitors, right? We feel combining our breakthrough Capsid inhibitor With really today's standard of care backbone, which is an integrase inhibitor, could be a preferred option. Everything we've learned from physicians based on the HIV treatment guidelines, INSTI-based regimens are really important to people based on, you know, the mechanism is well understood. They have strong safety profiles. They have high barriers of resistance. That's where we are really encouraged by the possibility to develop these two different phase two regimens. forward, and then selecting the most compelling one and bringing that into phase three.

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

Well, first of all, I'd like to thank the Gilead teams for a very strong second quarter in the first half of the year. Hopefully, you can all see that we continue to deliver against our strategy with significant progress and impact across really all of our therapeutic areas, driven by both the clinical and commercial excellence that we spoke about today. and the second half of the year promises to be just as productive actually you expect We look forward to keeping you informed on our progress. Please continue to reach out to our investor relations team on any additional questions you may have. And thank all of you for joining us today. And I know it was a very busy day. Thank you.