Gilead Sciences, Inc. · NASDAQ:GILD
Gilead Sciences — Q4 2019 Earnings Presentation
59 slides from Gilead Sciences's earnings presentation, Feb 4, 2020
Slide 1: Q4 2019 Earnings Results
Q4 2019 Earnings Results February 4, 2020
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 Key Highlights 4-8 Financial Performance 9 - 26 Durable Core Business 29 - 41 Three Pillars of Gilead’s Next Existing Pipeline Opportunities 42 - 48 Chapter Strategy to Drive Additional Growth 49 - 53 Appendix 54 - 58 3
Slide 4: Key Highlights
Key Highlights 4
Slide 5: Q4 2019 Earnings Call Highlights
Q4 2019 Earnings Call Highlights • Key decisions made and new corporate strategy in place to drive Gilead’s next chapter • Solid financial performance with product sales of $22.1 billion for FY 2019 (2% YoY growth), at upper end of revised guidance • Durable HIV franchise delivering all-time high of
Slide 6: Key Decisions Have Laid the Foundation for Change
Key Decisions Have Laid the Foundation for Change Made Kite Expanded Established Completed New Defined New Separate Operating Galapagos External Innovation Leadership Corporate Company Partnership Group Team Strategy Mar Jul Sep Oct Dec 2020 2019 6
Slide 7: Diverse, Highly Experienced Leadership Team
Diverse, Highly Experienced Leadership Team Daniel O’Day Andrew Dickinson Brett A. Pletcher Christi Shaw Johanna Mercier Executive Chairman and Chief Financial Officer Executive Vice President, Chief Executive Officer, Kite Chief Commercial Officer Chief Executive Officer Corporate Affairs and Gener
Slide 8: Anticipated Milestones Through 2021
Anticipated Milestones Through 2021 Axi-cel Axi-cel P3 2L DLBCL data Expected iNHL approval Filgotinib Axi-cel Expected RA approvals in U.S., Europe, Japan Expected 2L DLBCL submission Filgotinib Axi-cel P3 enrollment completion for CD P2 1L DLBCL data Axi-cel Filgotinib Capsid inhibitor P2 iNHL dat
Slide 9: Financial Performance
Financial Performance 9
Slide 10: Financial Highlights: Q4 2019
Financial Highlights: Q4 2019 in millions, except percentages and per share amounts Q4 2018 Q3 2019 Q4 2019 YoY Change QoQ Change Product Sales $5,681 $5,516 $5,796 2% 5% HIV1 4,065 4,202 4,577 13% 9% HCV 738 674 630 (15%) (7%) Yescarta 81 118 122 51% 3% Other Products2 797 522 467 (41%) (11%) 3 Non
Slide 11: Financial Highlights: Full Year
Financial Highlights: Full Year in millions, except percentages and per share amounts 2018 2019 YoY Change Product Sales $21,677 $22,119 2% HIV1 14,627 16,438 12% HCV 3,686 2,936 (20%) Yescarta 264 456 73% Other Products2 3,100 2,289 (26%) 3 Non-GAAP Costs and Expenses $10,716 $11,385 6% COGS4 3,590
Slide 12: Total Revenue
Total Revenue Q4 2019 up 1% from Q4 2018 driven by HIV and Yescarta, partially offset by HCV and other products1 in millions $5,795 $5,879 $5,685 $5,604 $5,281 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 FX impact to revenue QoQ was unfavorable by $11 million (0.2%) and YoY was unfavorable by $13 million (0.2%).
Slide 13: Total Product Sales
Total Product Sales Q4 2019 up 2% from Q4 2018 By Therapeutic Area By Geography in millions in millions $5,681 $5,796 $5,681 $5,796 $5,607 $5,516 $5,607 $5,516 $122 $81 $5,200 $120 $5,200 $440 $118 $467 $398 $512 $797 $96 $604 $513 $522 $630 $813 $522 $840 $696 $842 $674 $1,041 $804 $738 $882 $790 $
Slide 14: Non-GAAP Product Gross Margin
Non-GAAP Product Gross Margin 87.3% 87.3% 86.2% ● Q4 2019 decrease from Q3 2019 primarily 77.9% 75.7% due to higher inventory write-downs − Excluding unfavorable COGS impact primarily from inventory write-downs, non- GAAP product gross margin would have been ~87% in Q4 2019 ● Q4 2019 decrease from Q
Slide 15: Non-GAAP R&D Expenses
Non-GAAP R&D Expenses Q4 2019 up 10% from Q4 2018 primarily due to higher personnel costs to support our cell therapy business and increased investment in research projects in millions $1,029 $939 $954 $916 $871 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 For the periods presented, non-GAAP R&D expenses exclude a
Slide 16: Non-GAAP SG&A Expenses
Non-GAAP SG&A Expenses Q4 2019 up 10% from Q4 2018 in millions $1,132 $1,032 ● Q4 2019 increase from Q4 2018 primarily $1,015 $962 $967 due to higher Biktarvy and Descovy for PrEP U.S. promotional expenses and Japan business expansion expenses ● P&L impact of BPD fee (in millions) − 2019 actual $247
Slide 17: Non-GAAP Operating Margin
Non-GAAP Operating Margin 52.8% 53.5% 52.2% 44.3% 39.3% ● Q4 2019 non-GAAP operating margin would have been ~50% excluding unfavorable COGS impact primarily from inventory write-downs ● Q4 2018 non-GAAP operating margin would have been ~51% excluding unfavorable COGS impact from inventory write-down
Slide 18: Non-GAAP Diluted EPS
Non-GAAP Diluted EPS Q4 2019 down 10% from Q4 2018 $1.82 2 $1.761 $1.75 • Q4 2019 unfavorable ($0.47) due to COGS, primarily driven by inventory write-down $1.44 $1.30 − Excluding unfavorable COGS impact primarily from inventory write-downs, non- GAAP EPS would have been $1.77 • Q4 2018 unfavorable
Slide 19: Other Select Financial Information
Other Select Financial Information in millions, except days sales outstanding Sep 30, 2019 Dec 31, 2019 Cash, Cash Equivalents & Marketable Securities $25,051 $25,840 Operating Cash Flows During the Quarter $2,645 $2,581 Inventories1 $2,557 $2,067 Days Sales Outstanding (Accounts Receivable) 41 41 S
Slide 20: Q4 2019 Shareholder Return
Q4 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 21: 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 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Senior Unsecured Notes and Floating Rate Borrowings, $27.32 $26.58 $26.08 $24.59 $24.59 net Debt Discounts, Premiums and Issu
Slide 22: 2020 Financial Guidance
2020 Financial Guidance 22
Slide 23: Updated Guidance Approach
Updated Guidance Approach • Guidance metrics for 2020 now include EPS and operating income • Starting in 2020, Gilead will no longer regularly exclude stock-based compensation expense from its non-GAAP financial information • For comparability purposes, full year 2019 non-GAAP operating income and n
Slide 24: Full Year 2020 Guidance
Full Year 2020 Guidance Starting in 2020, Gilead will no longer regularly exclude stock-based compensation expense from its non-GAAP financial information For comparability purposes, full year 2019 non-GAAP operating income and non-GAAP diluted earnings per share would have been $10.4 billion and $6
Slide 25: 2019 - 2020 Product Sales Guidance
2019 - 2020 Product Sales Guidance in billions $22.1 ($0.1) ($0.8) - ($1.0) $0.8 - $1.0 $21.8 - $22.2 • Adjustments for • U.S. Letairis and • U.S. HIV statutory rebates Ranexa Patent Treatment and related to Expiry Impact Prevention Europe (full year impact) • U.S. and China • Truvada generic Vemlid
Slide 26: GAAP to Non-GAAP Reconciliation of Full Year 2020 Guidance
GAAP to Non-GAAP Reconciliation of Full Year 2020 Guidance1 Starting in 2020, Gilead will no longer regularly exclude stock-based compensation expense from its non-GAAP financial information For comparability purposes, full year 2019 non-GAAP operating income and non-GAAP diluted earnings per share
Slide 27: Three Pillars of Gilead's Next Chapter
Three Pillars of Gilead’s Next Chapter 27
Slide 28: Three Pillars of Gilead's Next Chapter
Three Pillars of Gilead’s Next Chapter Durable Core Existing Pipeline Strategy to Drive Business Opportunities Additional Growth + + 28
Slide 29: Building from Durable Core Business
Building from Durable Core Business Durable Core Existing Pipeline Strategy to Drive Business Opportunities Additional Growth + + 29
Slide 30: Robust Growth of HIV Business Despite Competitor Launches
Robust Growth of HIV Business Despite Competitor Launches • Antiviral world-leader HCV ‒ 15 launches in 10 years1 Other HIV • Robust HIV growth ‒ 14% CAGR since 20112 ‒ 13% growth Q4’18 – Q4’19 2011 2019 Prepared for • Treatment - 90-95% Gilead patients expected on F/TAF-based regimens by Q4’203 Tru
Slide 31: HIV Franchise is Robust and Sustainable
HIV Franchise is Robust and Sustainable Highly effective single tablet Statistically significant safety regimen for treatment improvements for prevention5 • Zero cases of treatment-emergent resistance • ~20% at-risk individuals on PrEP today6 and rapid start recommended1,2 • ~27% PrEP scripts are fo
Slide 32: Total HIV Product Sales
Total HIV Product Sales Q4 2019 up 13% from Q4 2018 in millions $4,577 $4,202 $195 $4,065 $4,041 $151 $187 $210 $562 U.S. $3,618 $511 $558 ● Biktarvy was the most prescribed HIV regimen $219 $623 across all patients with sales of $1.4 billion in Q4 $569 2019 Europe $3,820 $3,403 $3,231 $3,434 ● Bikt
Slide 33: Descovy (FTC/TAF)-Based HIV Worldwide Product Sales
Descovy (FTC/TAF)-Based HIV Worldwide Product Sales Q4 2019 up 32% from Q4 2018 driven mainly by Biktarvy uptake in millions $3,525 $125 $3,140 $2,925 $435 $104 $2,680 $84 $436 $2,613 $437 $37 $387 $66 $448 $397 $363 $358 $411 $342 $958 $978 $980 $1,015 $1,206 $1,570 $1,116 $1,259 $793 $578 Q4 18 Q1
Slide 34: Top Prescribed HIV Regimens
Top Prescribed HIV Regimens U.S. EU5 Naïve Switch All Patients Naïve Switch All Patients (Q4 2019) (Q4 2019) (Q4 2019) (Q4 2019) (Q4 2019) (Q4 2019) 1 Biktarvy Biktarvy Biktarvy 1 Biktarvy Biktarvy Other STR STR containing 2 Genvoya Genvoya 2 Other STR Other STR Odefsey Gilead product STR containing
Slide 35: Continued Adoption of Descovy (FTC/TAF)-Based Regimens
Continued Adoption of Descovy (FTC/TAF)-Based Regimens ~87% of Gilead’s U.S. HIV Treatment Prescription Volume Comprised of Descovy (FTC/TAF)-Based Regimens 100% 90% ~87% 80% % of Gilead’s Prescription Volume for HIV Treatment 70% TDF-based Regimens 60% 50% 40% 30% Descovy (FTC/TAF)-based 20% Regime
Slide 36: PrEP Use Continues to Grow in the U.S.
PrEP Use Continues to Grow in the U.S. Individuals Taking PrEP ~1.1 million individuals in thousands 234 in U.S. could benefit 224 from PrEP1 213 201 189 ~27% individuals on PrEP ~20% currently on Descovy on PrEP today 40-45% individuals on PrEP expected to be on Descovy by Q4’20 2 Q4 18 Q1 19 Q2 19
Slide 37: Total HCV Product Sales by Geography
Total HCV Product Sales by Geography Q4 2019 down 15% from Q4 2018 in millions $842 $790 $738 $210 $674 $194 $630 $140 • U.S. retail market share at ~60%, up 18 $183 percentage points from January 2019 $142 $188 $203 $277 • Lower sales in Q4 2019 compared to Q4 2018 $111 $151 primarily due to compet
Slide 38: HCV Patient Initiations on Sofosbuvir-Based Regimens in U.S., Europe and Japan
HCV Patient Initiations on Sofosbuvir-Based Regimens in U.S., Europe and Japan Key market leadership with ~60% U.S. market share today1 in thousands 45 41 41 42 40 15 15 18 18 18 28 25 21 22 22 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 U.S. Europe Japan 1 Combined retail market share of Gilead branded or author
Slide 39: Additional Opportunities to Grow Antiviral Business
Additional Opportunities to Grow Antiviral Business Accelerate HBV Drive China Growth Achieve $1bn+ franchise by 2022 through 8 products approved since 2017 U.S. and China Vemlidy growth 4 listed on NRDL for Jan 2020 reimbursement1 1 8 products approved in China since Sept 2017 including Sovaldi, Ep
Slide 40: Cell Therapy Business Update
Cell Therapy Business Update • Sales of $456 million for FY2019 (73% growth) and $122 million in Q4 2019 (3% QoQ growth) • 3-year survival data showing longest term outcomes in 3L+ DLBCL in pivotal study • ~2,500 R/R 3L+ DLBCL patients treated with Yescarta • >168 centers authorized worldwide KTE-X1
Slide 41: Key Drivers of Expected 2020 Cell Therapy Growth
Key Drivers of Expected 2020 Cell Therapy Growth Pioneering cell therapy platform to advance new therapies and drive long-term growth Reimbursement Expanded Patient Access Yescarta Differentiation • NTAP improvement (Q4 2019) • Implementation of Yescarta • 3 year Zuma 1 efficacy data and outpatient
Slide 42: Executing on Existing Pipeline Opportunities
Executing on Existing Pipeline Opportunities Durable Core Existing Pipeline Strategy to Drive Business Opportunities Additional Growth + + 42
Slide 43: Overview of Clinical Pipeline Today
Overview of Clinical Pipeline Today Phase 1 Phase 2 Phase 3 NDA/BLA/MAA Viral Clinical Stage Diseases2 40 Programs1,2 Inflammatory Diseases NDA/BLA/MAA, P3 and 14 Registrational P2 trials Fibrotic Diseases NMEs via in-licensing, 14 options, and product acquisitions Oncology Breakthrough Therapy 4 De
Slide 44: Reinforcing Commitment to HIV Leadership With Innovative Long-Acting Programs
Reinforcing Commitment to HIV Leadership With Innovative Long-Acting Programs Capsid Inhibitor as the Foundation • Weekly oral potential Current Clinical Programs • Monthly 6 month SQ with self-admin potential HTE2 P2/3 • Breakthrough Designation1 Virologically Suppressed P2 Treatment • Registrati
Slide 45: Filgotinib Marks Expansion into Inflammation with Potential for 5 Launches in Next 4 Years
Filgotinib Marks Expansion into Inflammation with Potential for 5 Launches in Next 4 Years Filgotinib RA P3 Selective JAK-1 inhibitor with potential best-in-class profile UC P3 Strong efficacy for remission and demonstrated safety CD P3 at both doses; favorable benefit/risk profile at high dose PsA
Slide 46: Building a Broad Inflammation and Fibrosis Portfolio with Galapagos Beyond Filgotinib
Building a Broad Inflammation and Fibrosis Portfolio with Galapagos Beyond Filgotinib GLPG-16903 – IPF P3 GLPG-1972 – OA P2 GLPG-12054 – IPF P2 8 clinical GLPG-16903 – Systemic Sclerosis P2 programs1,2 GLPG-0555 – Inflammation P1 GLPG-39705 – Inflammation P1 GLPG-33125 – Inflammation P1 GLPG-3667 –
Slide 47: Oncology Strategy Focused on Immuno-Oncology
Oncology Strategy Focused on Immuno-Oncology Building transformative therapies across complementary Immuno-Oncology platforms Cell Therapy Non-Cell Therapy Pioneering platform Transformative therapy Apply small molecule and biologics to advance new therapies and with potential for earlier lines deve
Slide 48: Oncology Pipeline Consists of 15 Clinical Programs and Growing
Oncology Pipeline Consists of 15 Clinical Programs and Growing Building transformative therapies across complementary Immuno-Oncology platforms Cell Therapy Non-Cell Therapy KTE-X19 CD-19 r/r MCL BLA/MAA Oral PD-L1 inhibitor (GS-4224) Solid tumors P1 Axi-cel CD-19 2L DLBCL P3 Anti-CD73/TGFβ TRAP (GS
Slide 49: Strategy to Drive Additional Growth
Strategy to Drive Additional Growth Durable Core Existing Pipeline Strategy to Drive Business Opportunities Additional Growth + + 49
Slide 50: New Corporate Strategy to Drive Future Growth
New Corporate Strategy to Drive Future Growth Long-Term Ambitions Bring 10+ Transformative Be the Biotech Employer and Deliver Shareholder Value in a Therapies to Patients by 2030 Partner of Choice Sustainable, Responsible Manner Strategic Priorities Strengthen Portfolio Expand Internal and Increase
Slide 51: Focused on Growing from Core Areas of Strength
Focused on Growing from Core Areas of Strength Core Strengths Disease Areas Viral Inflammatory Diseases Diseases Immuno- Antivirals modulation Deep Expertise Emerging Expertise Fibrotic Oncology Diseases 51
Slide 52: We Will Continue to Pursue Tailored Transactions That Drive Strategic Value
We Will Continue to Pursue Tailored Transactions That Drive Strategic Value Guiding Principles for Future Deals 33 • Focus on high quality science that build upon core areas of strength • Prioritize clinical and commercial opportunities • Pursue and execute: Strategic Partnerships & Investment Trans
Slide 53: Three Pillars of Gilead's Next Chapter
Three Pillars of Gilead’s Next Chapter Durable Core Existing Pipeline Strategy to Drive Business Opportunities Additional Growth + + Well positioned to maximize near-term opportunities and achieve long-term success 53
Slide 54: Appendix
Appendix 54
Slide 55: Viral Disease Pipeline
Viral Disease Pipeline Pre-Clinical Phase 1 Phase 2 Phase 3 Biktarvy HIV treatment pediatric1 Capsid inhibitor (GS-6207) HIV HTE Registrational for HTE2 Capsid inhibitor (GS-6207) HIV virologically suppressed Vesatolimod (GS-9620, TLR-7 agonist) HIV cure HIV Elipovimab (GS-9722, bNAb) HIV cure Capsi
Slide 56: Inflammatory Disease Pipeline
Inflammatory Disease Pipeline Pre-Clinical Phase 1 Phase 2 Phase 3 NDA/BLA/MAA Filgotinib (GS-6034, JAK-1 inhibitor) Rheumatoid arthritis NDA/MAA Filgotinib (GS-6034, JAK-1 inhibitor) Ulcerative colitis Filgotinib (GS-6034, JAK-1 inhibitor) Crohn’s disease Filgotinib (GS-6034, JAK-1 inhibitor) Psori
Slide 57: Fibrotic Disease Pipeline
Fibrotic Disease Pipeline Pre-Clinical Phase 1 Phase 2 Phase 3 Cilofexor (GS-9674, FXR agonist) PSC GLPG-16901 Idiopathic pulmonary fibrosis Fibrotic Disease Cilofexor (FXR agonist), Firsocostat (ACC NASH inh.), Selonsertib (ASK1 inh.) combinations Selonsertib (GS-4997, ASK1 inhibitor) DKD GLPG-1690
Slide 58: Oncology Pipeline
Oncology Pipeline Pre-Clinical Phase 1 Phase 2 Phase 3 NDA/BLA/MAA KTE-X19 MCL BLA/MAA Axi-cel 2L DLBCL Axi-cel Indolent NHL Pivotal Axi-cel 1L DLBCL Axi-cel DLBCL (+rituximab or lenalidomide) Pivotal Cell Therapy KTE-X19 Adult ALL Pivotal KTE-X19 Pediatric ALL Pivotal KTE-X19 CLL Axi-cel DLBCL (uto
Slide 59: Q4 2019 Earnings Results
Q4 2019 Earnings Results February 4, 2020