Gilead Sciences, Inc. · NASDAQ:GILD
Gilead Sciences — Q3 2019 Earnings Presentation
47 slides from Gilead Sciences's earnings presentation, Oct 24, 2019
Slide 1: Q3 2019 Earnings Results
Q3 2019 Earnings Results October 24, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements The projected financial results presented in the following slides represent management's estimates of Gilead’s future financial results. Statements included in this press release that are not historical in nature are forward-looking statements within the meaning of the Pri
Slide 3: Table of Contents
Table of Contents Pages Business Update 5-9 Financial Performance 10 - 23 Commercial Performance 24 - 34 Research & Development 35 - 41 Appendix 42 - 46 3
Slide 4: Q3 2019 Earnings Call Highlights
Q3 2019 Earnings Call Highlights • Biktarvy YoY growth offsetting impact of products that have lost exclusivity ― Total HIV product sales reached an all-time high for HIV quarterly revenue: $4.2 billion, 4% QoQ growth, 13% YoY growth • Non-GAAP diluted EPS: $1.75 • Product sales guidance range narro
Slide 5: Business Update
Business Update 5
Slide 6: Descovy for PrEP Approved in the U.S.
Descovy for PrEP Approved in the U.S. • Descovy demonstrated non-inferior efficacy and statistically significant advantages with respect to bone and renal safety parameters compared with Truvada in the Phase 3 trial DISCOVER • Descovy can be used in appropriate individuals with estimated creatinine
Slide 7: Global Regulatory Submissions of Filgotinib for RA
Global Regulatory Submissions of Filgotinib for RA Europe Japan U.S. European Medicines Agency NDA submitted to Japanese On track to submit NDA to validated MAA and application is Ministry of Health, Labor and U.S. FDA this year now under evaluation Welfare 7
Slide 8: Recent and Upcoming Conference Presentations
Recent and Upcoming Conference Presentations IDWeek 2019 (5 Presentations) AASLD 2019 (Upcoming - 39 Presentations) • Descovy for PrEP bone and renal outcomes in DISCOVER trial • NASH – validation of novel endpoints (noninvasive tests and • PrEP significantly reduces rate of new HIV diagnoses histol
Slide 9: New Gilead Leadership Appointments
New Gilead Leadership Appointments Andrew Dickinson Merdad Parsey, MD, PhD Chief Financial Officer – Effective Nov 1 Chief Medical Officer – Effective Nov 1 9
Slide 10: Financial Performance
Financial Performance 10
Slide 11: Financial Highlights: Q3 2019
Financial Highlights: Q3 2019 in millions, except percentages and per share amounts Q3 2018 Q2 2019 Q3 2019 YoY Change QoQ Change Product Sales $5,455 $5,607 $5,516 1% (2%) HIV1 3,727 4,041 4,202 13% 4% HCV 902 842 674 (25%) (20%) Yescarta 75 120 118 57% (2%) Other Products2 751 604 522 (30%) (14%)
Slide 12: Financial Highlights: Nine Months Ended September 30
Financial Highlights: Nine Months Ended September 30 in millions, except percentages and per share amounts 2018 2019 YoY Change Product Sales $15,996 $16,323 2% HIV1 10,562 11,861 12% HCV 2,948 2,306 (22%) Yescarta 183 334 83% Other Products2 2,303 1,822 (21%) 3 Non-GAAP Costs and Expenses $7,488 $7
Slide 13: Total Revenues
Total Revenues Q3 2019 flat from Q3 2018 in millions $5,795 $5,685 $5,596 $5,604 $5,281 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 FX impact to revenue was favorable $6 million QoQ (0.1%) and favorable $5 million YoY (0.1%). 13
Slide 14: Non-GAAP Diluted EPS
Non-GAAP Diluted EPS Q3 2019 down 5% from Q3 2018 $1.84 $1.82 $1.76 $1.75 3 2 $0.10 $0.09 $1.71 $1.44 1 $1.67 2 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 1 Q4 2018 EPS unfavorably impacted ($0.31) due to inventory reserve. 2 Non-GAAP diluted EPS benefited $0.09 from favorable settlements with taxing authorities
Slide 15: Total Product Sales
Total Product Sales Q3 2019 up 1% from Q3 2018 in millions By Therapeutic Area in millions By Geography $5,681 $5,607 $5,681 $5,607 $5,455 $5,516 $5,455 $5,516 $5,200 $120 $398 $5,200 $118 $512 $797 $96 $604 $451 $513 $751 $522 $813 $522 $696 $842 $674 $873 $1,041 $804 $738 $902 $882 $790 $4,202 $4,
Slide 16: Non-GAAP Product Gross Margin
Non-GAAP Product Gross Margin Key Metrics 85.9% 87.3% 87.3% 86.2% 77.9% ● Higher Non-GAAP Product Gross Margin in Q3 2019 compared to Q3 2018 due to product mix Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Non-GAAP product gross margin excludes acquisition-related, stock-based compensation and other expenses. 16
Slide 17: Non-GAAP R&D Expenses
Non-GAAP R&D Expenses Q3 2019 up 13% from Q3 2018 in millions Key Metrics ● Expenses increased in Q3 2019 compared $939 $954 to Q3 2018 primarily due to increased $916 $844 $871 investment in Gilead’s oncology programs, HIV programs and research projects Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Non-GAAP R&D ex
Slide 18: Non-GAAP SG&A Expenses
Non-GAAP SG&A Expenses Q3 2019 up 14% from Q3 2018 in millions Key Metrics $1,032 $1,015 $962 $967 ● Expenses increased in Q3 2019 compared to Q3 2018 primarily due to higher $852 promotional expenses in the U.S. and expenses associated with the expansion of Gilead’s business in Japan and China ● P&
Slide 19: Galapagos - Option, License and Collaboration Agreement and a Subscription Agreement
Galapagos - Option, License and Collaboration Agreement and a Subscription Agreement Total cash consideration paid $5.05 billion Ordinary shares acquired at closing, recorded in Other long term assets1 $1.13 billion Remaining amount, recorded in GAAP Research and development expense $3.92 billion 1
Slide 20: Other Select Financial Information
Other Select Financial Information in millions, except days sales outstanding Jun 30, 2019 Sep 30, 2019 Cash, Cash Equivalents & Marketable Securities $30,234 $25,051 Operating Cash Flows During the Quarter $2,3411 $2,645 Inventories $884 $882 Days Sales Outstanding (Accounts Receivable) 41 41 Share
Slide 21: Q3 2019 Shareholder Return
Q3 2019 Shareholder Return Dividend Dollar Repurchase Total Shareholder Dividend Average Amount Dollar Amount1 Shares Return (in millions) per Share Purchase Price (in millions) (in millions) Q1 2019 $817 $0.63 $833 12,372,891 $67.35 $1,650 Q2 2019 $800 $0.63 $588 8,940,430 $65.72 $1,388 Q3 2019 $80
Slide 22: Full Year 2019 Guidance
Full Year 2019 Guidance in millions, except percentages and per share amounts Initially Provided on February 4, 2019 Updated on Updated on Reiterated on May 2, July 30, 2019 October 24, 2019 2019 Product Sales1 $21,300 – $21,800 $21,600 – $22,100 $21,800 – $22,100 Non-GAAP2 Product Gross Margin 85%
Slide 23: GAAP to Non-GAAP Reconciliation of Full Year 2019 Guidance
GAAP to Non-GAAP Reconciliation of Full Year 2019 Guidance in millions, except percentages and per share amounts Initially Provided on Updated on Updated on February 4, 2019, Reiterated on May 2, 2019 July 30, 2019 October 24, 2019 Projected product gross margin GAAP to non-GAAP reconciliation: GAAP
Slide 24: Commercial Performance
Commercial Performance 24
Slide 25: Total HIV Product Sales
Total HIV Product Sales Q3 2019 up 13% from Q3 2018 in millions Key Q3 2019 Metrics $4,065 $4,202 U.S.: $4,041 $3,727 $151 $210 ● Biktarvy was the most prescribed HIV regimen $3,618 $187 $558 with sales of $1.1 billion in Q3 2019 $138 $511 $219 $623 $584 $569 Europe: ● Biktarvy now launched in >25 m
Slide 26: Descovy (FTC/TAF)-Based HIV Worldwide Product Sales
Descovy (FTC/TAF)-Based HIV Worldwide Product Sales Q3 2019 up 30% from Q3 2018 in millions $3,140 $2,925 $104 $2,680 $2,613 $84 $2,413 $66 $578 $1,259 $1,116 $386 $793 $406 $411 $342 $358 $363 $423 $448 $397 $387 $436 $1,176 $1,206 $1,015 $980 $978 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Genvoya Odefsey Desc
Slide 27: Top Prescribed HIV Regimens
Top Prescribed HIV Regimens U.S. EU5 Naïve All Patients Naïve All Patients (as of Q3 2019) (as of Q3 2019) (as of Q3 2019) (as of Q2 2019) 1 Biktarvy Biktarvy 1 Biktarvy Other STR 2 Genvoya Genvoya 2 Other STR Genvoya STR containing Gilead 3 Other STR 3 Genvoya Odefsey product 4 Other STR Odefsey 4
Slide 28: Continued Adoption of Descovy (FTC/TAF)-Based Regimens
Continued Adoption of Descovy (FTC/TAF)-Based Regimens ~86% of Gilead’s U.S. HIV Treatment Prescription Volume Comprised of Descovy (FTC/TAF)-Based Regimens 100% 90% % of Gilead’s Prescription Volume for HIV Treatment 80% ~86% 70% TDF-based Regimens 60% 50% 40% 30% Descovy (FTC/TAF)-based 20% Regime
Slide 29: U.S. HIV Market Dynamics
U.S. HIV Market Dynamics Estimated Patient Numbers in thousands 1,123 954 824 653 ~85% ~86% ~79% HIV Infected Diagnosed On Antiretroviral Treatment On a Gilead HIV Product Sources: CDC and Ipsos Healthcare U.S. HIV Monitor & Scope Study Q3 2019. 29
Slide 30: Gilead U.S. Share in HIV Treatment Naïve Patients
Gilead U.S. Share in HIV Treatment Naïve Patients 100% 90% 87% 80% 80% % of Naïve Patients Initiating Therapy 70% 60% 49% 50% 40% 30% 20% 9% 10% 6% 5% 4% 4% 4% 4% 3% 0% On a Gilead Gilead STR Biktarvy Genvoya Symtuza Stribild Atripla Descovy Complera Odefsey Truvada HIV Product Q3 17 Q3 18 Q3 19 Bas
Slide 31: PrEP Use Continued to Grow in U.S.
PrEP Use Continued to Grow in U.S. Number of Individuals Taking PrEP in the U.S. in thousands 224 • CDC estimates ~1.1 million people1 213 in the U.S. could benefit from PrEP 201 189 180 • Descovy for PrEP approved in the U.S. on October 3 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Source: IQVIA NPA/NSP, SHA Pat
Slide 32: Total HCV Product Sales by Geography
Total HCV Product Sales by Geography Q3 2019 down 25% from Q3 2018 in millions Key Metrics $902 $842 • Lower sales in Q3 2019 compared to Q3 $790 2018 primarily due to competitive dynamics $215 $738 $210 $674 $194 • Q3 2019 sequential performance impacted by $140 statutory revenue clawback reserve $
Slide 33: HCV Patient Initiations on Sofosbuvir-Based Regimens
HCV Patient Initiations on Sofosbuvir-Based Regimens in thousands 42 41 41 40 40 1 1 2 1 1 15 16 18 18 18 25 23 22 22 21 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 U.S. Europe Japan Graph illustrates the estimated number of patients that started therapy with a Gilead HCV drug for each quarter. Patient numbers ar
Slide 34: Cell Therapy Business Update
Cell Therapy Business Update • Yescarta sales of $118 million in Q3 2019: (2%) QoQ, 57% YoY • Recent updates: − Increased reimbursement of up to 65% under New Technology Add-On Payment (NTAP) system for Medicare patients effective October 1, 2019 − Survival data at three-years and safety data based
Slide 35: Research & Development
Research & Development 35
Slide 36: Pipeline Milestones Anticipated in 2019 – 2020
Pipeline Milestones Anticipated in 2019 – 2020 2019 2020 3Q 4Q 1H 2H HIV sNDA for PrEP approved Descovy Submit MAA for PrEP Initiate Phase 2/3 study in highly treatment experienced patients and GS-6207 (Capsid inhibitor) Phase 2 study in treatment-naïve patients NASH, DKD and PSC Selonsertib (GS-4
Slide 37: Pipeline Milestones Anticipated in 2019 – 2020
Pipeline Milestones Anticipated in 2019 – 2020 2019 2020 3Q 4Q 1H 2H Inflammation Submitted MAA for RA Submit NDA for RA Data from SELECTION Phase 3 study in Ulcerative Colitis 2Q Filgotinib Complete enrollment of DIVERSITY Phase 3 study in Crohn's Disease 3Q Initiate Phase 3 study in Ankylosing S
Slide 38: Pipeline Milestones Anticipated in 2019 – 2020
Pipeline Milestones Anticipated in 2019 – 2020 2019 2020 3Q 4Q 1H 2H Hematology/Oncology ZUMA-1 Primary analysis from study cohort evaluating early steroid intervention ZUMA-5 Data from registrational Phase 2 study in indolent NHL axicabtagene ZUMA-6 Data from Phase 1 / 2 combination study with atez
Slide 39: Pipeline Product Candidates
Pipeline Product Candidates Phase 1 2 3 Descovy PrEP GS-6207 (capsid inhibitor) HIV HIV Vesatolimod (GS-9620, TLR-7 agonist) HIV Elipovimab (GS-9722, bNAb) HIV Selonsertib (ASK-1 inhibitor) DKD NASH Cilofexor* (FXR agonist) PBC Liver PSC Diseases Firsocostat** (ACC inhibitor) NASH Selgatolimod (GS-9
Slide 40: Pipeline Product Candidates
Pipeline Product Candidates Phase 1 2 3 Rheumatoid Arthritis Crohn's Disease Ulcerative Colitis Filgotinib (JAK-1 inhibitor) Psoriatic Arthritis Ankylosing Spondylitis Inflammation Inflammatory Diseases Idiopathic Pulmonary Fibrosis GLPG-1690 Systemic Sclerosis Sjogren's Syndrome GS-9876 (Syk inhibi
Slide 41: Pipeline Product Candidates
Pipeline Product Candidates Phase 1 2 3 ZUMA-5 Indolent NHL ZUMA-6 DLBCL (+PD-L1 mAb) ZUMA-7 2nd line DLBCL axicabtagene ciloleucel ZUMA-11 DLBCL (+4-1BB) ZUMA-12 1st line DLBCL DLBCL (+rituximab or ZUMA-14 lenalidomide) Hematology/ ZUMA-2 MCL Oncology ZUMA-3 Adult ALL KTE-X19* ZUMA-4 Pediatric ALL
Slide 42: Appendix
Appendix 42
Slide 43: Non-GAAP Operating Margin
Non-GAAP Operating Margin 55.9% Key Metrics 52.8% 53.5% 52.2% ● Non-GAAP Operating Margin decreased in 44.3% Q3 2019 compared to Q3 2018 primarily due to an increase in operating expenses Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Non-GAAP operating margin excludes acquisition-related, up-front collaboration and
Slide 44: European Product Sales
European Product Sales Q3 2019 down 8% (excluding FX) from Q3 2018 in millions Q3 18 Q3 19 YoY Excl FX $1,041 Genvoya $203 $152 (25%) (25%) Epclusa $136 $118 (13%) (14%) $873 $882 Odefsey $95 $111 17% 16% $813 $804 Biktarvy $11 $108 NM NM Descovy $81 $63 (22%) (23%) AmBisome $59 $57 (3%) (2%) Eviple
Slide 45: Outstanding Adjusted Debt
Outstanding Adjusted Debt in billions where applicable Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Adjusted Debt1 (Senior Unsecured Notes $27.50 $27.50 $26.75 $26.25 $24.75 and Floating Rate Borrowings) Total Adjusted Debt to Adjusted EBITDA2 ~2.55x ~2.86x ~2.75x ~2.66x ~2.55x 1
Slide 46: GAAP to Non-GAAP Reconciliation of Outstanding Adjusted Debt and Adjusted EBITDA
GAAP to Non-GAAP Reconciliation of Outstanding Adjusted Debt and Adjusted EBITDA in billions where applicable Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Senior Unsecured Notes and Floating Rate $27.32 $27.32 $26.58 $26.08 $24.59 Borrowings, net Debt Discounts, Premiums and Issu
Slide 47: Q3 2019 Earnings Results
Q3 2019 Earnings Results October 24, 2019