Gilead Sciences, Inc. · NASDAQ:GILD
Gilead Sciences — Q2 2019 Earnings Presentation
50 slides from Gilead Sciences's earnings presentation, Jul 30, 2019
Slide 1: Q2 2019 Earnings Results
Q2 2019 Earnings Results July 30, 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 - 11 Financial Performance 12 - 24 Financial Highlights 13 - 18 Expenses and Other Financial Metrics 19 - 22 2019 Financial Guidance 23 - 24 Commercial Performance 25 - 37 HIV 26 - 34 HCV 35 - 36 Cell Therapy 37 Research & Development 38 - 44 Appendix 45 - 4
Slide 4: Q2 2019 Earnings Call Highlights
Q2 2019 Earnings Call Highlights • Biktarvy sales surpassed the $1 billion mark and was the #1 prescribed regimen for all patients in U.S. • Total HIV product sales: $4.0 billion, 12% Q-Q growth, 10% Y-Y growth. Fifth consecutive quarter of double-digit year-over-year growth • Yescarta sales: $120 m
Slide 5: Business Update
Business Update 5
Slide 6: Transformative Global R&D Collaboration with Galapagos
Transformative Global R&D Collaboration with Galapagos • Access to pioneering target and drug discovery platform, complementary scientific capabilities and outstanding team to drive innovation • Establishes a strong research base in Europe • Strengthens our pipeline with first-in-class compounds • C
Slide 7: Galapagos Collaboration Current and Future Programs Summary
Galapagos Collaboration Current and Future Programs Summary Discovery Platform Revised filgotinib GLPG1690 (IPF): GLPG1972 (OA): All other clinical collaboration license for ex- option on U.S. programs European rights rights after Ph2b •Access to pioneering •50/50 global •$325M milestone •$250M opt-
Slide 8: International AIDS Society Conference (IAS) 2019
International AIDS Society Conference (IAS) 2019 15 Gilead presentations included: • New analyses from the DISCOVER trial, further examining the pharmacologic benefits of Descovy over Truvada for PrEP and demonstrating Descovy has a more rapid onset and longer sustained duration of HIV protection co
Slide 9: U.S. NDA for Filgotinib for Rheumatoid Arthritis to be Filed in 2019
U.S. NDA for Filgotinib for Rheumatoid Arthritis to be Filed in 2019 • Gilead recently took part in a pre-NDA meeting with the U.S. FDA regarding the investigational, oral, selective JAK1 inhibitor filgotinib • Based on this discussion, a path forward has been established to submit the NDA for filgo
Slide 10: Annual European Congress of Rheumatology (EULAR) 2019
Annual European Congress of Rheumatology (EULAR) 2019 17 Gilead presentations included: • Efficacy and Safety of Filgotinib for Patients with Rheumatoid Arthritis with Inadequate Response to Methotrexate: FINCH1 Phase 3 Primary Outcome Results (Oral LB0001) • Efficacy and Safety of Filgotinib for Pa
Slide 11: Welcoming Two New Leaders to Gilead
Welcoming Two New Leaders to Gilead Christi Shaw Johanna Mercier Kite CEO Chief Commercial Officer 11
Slide 12: Financial Performance
Financial Performance 12
Slide 13: Financial Highlights: Q2 2019
Financial Highlights: Q2 2019 in millions, except percentages and per share amounts Q2 2018 Q1 2019 Q2 2019 YoY Change QoQ Change Product Sales $5,540 $5,200 $5,607 1% 8% HIV1 3,665 3,618 4,041 10% 12% HCV 1,000 790 842 (16%) 7% Yescarta 68 96 120 76% 25% Other Products2 807 696 604 (25%) (13%) 3 No
Slide 14: Financial Highlights: Six Months Ended June 30
Financial Highlights: Six Months Ended June 30 in millions, except percentages and per share amounts 1H 2018 1H 2019 YoY Change Product Sales $10,541 $10,807 3% HIV1 6,835 7,659 12% HCV 2,046 1,632 (20%) Yescarta 108 216 100% Other Products2 1,552 1,300 (16%) 3 Non-GAAP Costs and Expenses $5,021 $5,
Slide 15: Total Revenues
Total Revenues Q2 2019 up 1% from Q2 2018 in millions $5,795 $5,685 $5,648 $5,596 $5,281 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 FX impact to revenues was unfavorable $24 million QoQ (-0.4%) and unfavorable $12 million YoY (-0.2%). 15
Slide 16: Non-GAAP Diluted EPS
Non-GAAP Diluted EPS Q2 2019 down 5% from Q2 2018 $1.91 $1.84 $1.82 1 $1.76 $0.15 4 $0.09 3 $0.10 $1.76 $1.44 2 $1.67 $1.71 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 1 Non-GAAP diluted EPS in Q2 2018 benefited $0.15 from a favorable settlement of a tax examination. 2 Q4 2018 EPS unfavorably impacted ($0.31) due
Slide 17: Total Product Sales
Total Product Sales Q2 2019 up 1% from Q2 2018 in millions By Therapeutic Area in millions By Geography $5,540 $5,681 $5,607 $5,681 $5,607 $5,455 $5,540 $5,455 $5,200 $120 $398 $5,200 $466 $451 $512 $807 $797 $96 $604 $751 $813 $522 $696 $738 $842 $1,005 $873 $1,041 $1,000 $902 $882 $790 $4,470 $4,0
Slide 18: Non-GAAP Product Gross Margin
Non-GAAP Product Gross Margin Key Metrics 85.9% 87.3% 87.3% 84.2% 77.9% ● Higher Non-GAAP Product Gross Margin in Q2 2019 compared to Q2 2018 due to product mix and impact from a Q2 2018 inventory and supply chain rationalization Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Non-GAAP product gross margin excludes a
Slide 19: Non-GAAP R&D Expenses
Non-GAAP R&D Expenses Q2 2019 down 1% from Q2 2018 in millions Key Metrics $921 $939 $916 $871 ● Expenses decreased slightly in Q2 2019 $844 compared to Q2 2018 primarily due to the 2018 impact of Gilead’s purchase of an FDA Priority Review Voucher, largely offset by higher investments in 2019 to su
Slide 20: Non-GAAP SG&A Expenses
Non-GAAP SG&A Expenses Q2 2019 up 21% from Q2 2018 in millions Key Metrics $1,032 $1,015 $962 ● Expenses increased in Q2 2019 compared to Q2 2018 due to greater promotional $840 $852 investment in the U.S. and expenses associated with the expansion of Gilead’s business in Japan and China ● P&L impac
Slide 21: Other Select Financial Information
Other Select Financial Information in millions, except days sales outstanding Mar 31, 2019 Jun 30, 2019 Cash, Cash Equivalents & Marketable Securities $30,125 $30,234 Operating Cash Flows During the Quarter $1,444 $2,221 Inventories $898 $884 Days Sales Outstanding (Accounts Receivable) 40 41 Share
Slide 22: Q2 2019 Shareholder Return
Q2 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 Dividend Re
Slide 23: Full Year 2019 Guidance
Full Year 2019 Guidance in millions, except percentages and per share amounts Initially Provided on Updated on February 4, 2019 July 30, 2019 Reiterated on May 2, 2019 Product Sales1 $21,300 – $21,800 $21,600 – $22,100 Non-GAAP2 Product Gross Margin 85% – 87% 85% – 87% R&D Expenses $3,600 – $3,800 $
Slide 24: 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 February 4, Updated on 2019, Reiterated on May 2, 2019 July 30, 2019 Projected product gross margin GAAP to non-GAAP reconciliation: GAAP projected product gross mar
Slide 25: Commercial Performance
Commercial Performance 25
Slide 26: Total HIV Product Sales
Total HIV Product Sales Q2 2019 up 10% from Q2 2018 in millions Key Q2 2019 Metrics $4,065 U.S.: $4,041 $3,727 $151 ● Biktarvy sales exceeded $1 billion in Q2 2019 $3,665 $3,618 $187 $162 $138 $511 $219 $623 $584 Europe: $642 $569 ● Biktarvy was the #1 prescribed regimen for treatment-naïve and swit
Slide 27: Biktarvy Launch Performance
Biktarvy Launch Performance • $1.0 billion of U.S. Biktarvy sales in Q2 2019 – Biktarvy is the most prescribed HIV regimen across all patients • Biktarvy launched in >20 European markets – Biktarvy was the #1 prescribed regimen for treatment-naïve and switch patients in Germany, France and Spain – B
Slide 28: Top Prescribed HIV Regimens
Top Prescribed HIV Regimens U.S. EU5 Naïve All Patients Naïve All Patients 1 Biktarvy Biktarvy 1 Biktarvy Other STR 2 Genvoya Genvoya 2 Other STR Genvoya 3 Stribild Other STR 3 Genvoya Odefsey STR containing Gilead 4 Stribild 4 Odefsey Atripla product 5 Complera Atripla 5 Atripla Biktarvy Gilead STR
Slide 29: Descovy (FTC/TAF)-Based HIV Worldwide Product Sales
Descovy (FTC/TAF)-Based HIV Worldwide Product Sales Q2 2019 up 36% from Q2 2018 in millions $2,925 $2,680 $2,613 $84 $2,413 $66 $2,146 $578 $1,116 $386 $793 $185 $406 $411 $403 $342 $358 $423 $448 $385 $397 $387 $1,160 $1,176 $1,206 $1,015 $980 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Genvoya Odefsey Descovy B
Slide 30: Continued Adoption of Descovy (FTC/TAF)-Based Regimens
Continued Adoption of Descovy (FTC/TAF)-Based Regimens ~83% 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% ~83% 70% TDF-based Regimens 60% 50% 40% 30% Descovy (FTC/TAF)-based 20% Regime
Slide 31: Descovy (FTC/TAF)-Based Portfolio Uptake in the U.S.
Descovy (FTC/TAF)-Based Portfolio Uptake in the U.S. Launch Aligned Monthly TRx1 120,000 100,000 80,000 TRx / Month 60,000 40,000 Triumeq (ViiV) 20,000 Juluca (ViiV) Dovato (ViiV) 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Months Post Launch Source: Based on data derived from IQVIA NPA Monthly. 1
Slide 32: U.S. HIV Market Dynamics
U.S. HIV Market Dynamics Estimated Patient Numbers in thousands 1,123 954 802 644 ~85% ~84% ~80% HIV Infected Diagnosed On Antiretroviral Treatment On a Gilead HIV Product Sources: CDC and Ipsos Healthcare U.S. HIV Monitor & Scope Study Q2 2019. 32
Slide 33: Gilead U.S. Share in HIV Treatment Naïve Patients
Gilead U.S. Share in HIV Treatment Naïve Patients 100% 88% 90% 81% 80% % of Naïve Patients Initiating Therapy 70% 60% 50% 45% 40% 30% 20% 8% 8% 6% 10% 6% 6% 4% 3% 3% 0% On a Gilead Gilead STR Biktarvy Genvoya Stribild Symtuza Complera Atripla Descovy Truvada Odefsey HIV Product Q2 17 Q2 18 Q2 19 Bas
Slide 34: PrEP Use Continued to Grow in U.S.
PrEP Use Continued to Grow in U.S. Number of Individuals Taking Truvada for PrEP in the U.S. in thousands 213 201 189 180 168 • Truvada is the only drug currently indicated for the prevention of HIV • CDC estimates ~1.1 million people in the U.S. could benefit from PrEP1 • sNDA submitted to FDA for
Slide 35: Total HCV Product Sales by Geography
Total HCV Product Sales by Geography Q2 2019 down 16% from Q2 2018 in millions Key Metrics $1,000 • Lower sales in Q2 2019 compared to Q2 $902 2018 primarily due to competitive dynamics, $842 including a decline in U.S. Medicare prices $221 $790 and lower patient starts. The decline was $215 $738 $2
Slide 36: HCV Patient Initiations on Sofosbuvir-Based Regimens
HCV Patient Initiations on Sofosbuvir-Based Regimens in thousands 50 2 40 40 41 42 1 1 1 1 22 16 18 18 18 26 23 21 22 23 Q2 18 Q3 18 Q4 18 Q1 19 Q2 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 37: Cell Therapy Business Update
Cell Therapy Business Update • Yescarta sales of $120 million in Q2 2019 up 25% from Q1 2019 • Steady adoption of Yescarta anticipated to continue − Ongoing engagement with Centers for Medicare and Medicaid Services (CMS) for improved CAR-T specific reimbursement − Awareness initiatives driving pati
Slide 38: Research & Development
Research & Development 38
Slide 39: Pipeline Milestones Anticipated in 2019 – 2020
Pipeline Milestones Anticipated in 2019 – 2020 2019 2020 2Q 3Q 4Q H1 H2 HIV Submitted sNDA for PrEP Descovy Anticipate sNDA approval Submit MAA for PrEP Vesatolimod (GS-9620) Complete Phase 1 studies in HIV cure GS-6207 (Capsid inhibitor) Data from Phase 1b study GS-9131 (NRTI) Data from Phase
Slide 40: Pipeline Milestones Anticipated in 2019 – 2020
Pipeline Milestones Anticipated in 2019 – 2020 2019 2020 2Q 3Q 4Q H1 H2 Inflammation Submit MAA and NDA for RA Data from SELECTION Phase 3 study in UC Q2 Filgotinib Complete enrollment of DIVERSITY Phase 3 study in Crohn's Disease Q3 Initiate Phase 3 study in ankylosing spondylitis Initiate Phase 3
Slide 41: Pipeline Milestones Anticipated in 2019 – 2020
Pipeline Milestones Anticipated in 2019 – 2020 2019 2020 2Q 3Q 4Q H1 H2 Hematology/Oncology ZUMA-1 Preliminary data from study cohort evaluating early steroid intervention ZUMA-5 Data from registrational study in indolent NHL axicabtagene ZUMA-6 Data from Phase 1 / 2 combination study with atezoli
Slide 42: Pipeline Product Candidates
Pipeline Product Candidates Phase 1 2 3 Descovy PrEP GS-9131 (NRTI) HIV HIV GS-6207 (capsid inhibitor) HIV Vesatolimod (GS-9620, TLR-7 agonist) HIV GS-9722 (bNAb) HIV Selonsertib (ASK-1 inhibitor) DKD NASH Cilofexor* (FXR agonist) PBC Liver PSC Diseases Firsocostat** (ACC inhibitor) NASH GS-9688 (TL
Slide 43: Pipeline Product Candidates
Pipeline Product Candidates Phase 1 2 3 Rheumatoid Arthritis Crohn's Disease Filgotinib (JAK-1 inhibitor) Ulcerative Colitis Inflammation Inflammatory Diseases Sjogren's Syndrome GS-9876 (Syk inhibitor) Lupus GS-4875 (TPL2 inhibitor) Inflammatory Bowel Disease 43 * Formerly called GS-5806.
Slide 44: Pipeline Product Candidates
Pipeline Product Candidates Phase 1 2 3 ZUMA-5 Indolent NHL ZUMA-6 DLBCL (PD-L1 mAb) axicabtagene ciloleucel ZUMA-7 2nd line DLBCL ZUMA-11 DLBCL (41BB) ZUMA-12 1st line DLBCL Hematology/ ZUMA-2 MCL Oncology ZUMA-3 Adult ALL KTE-X19* ZUMA-4 Pediatric ALL ZUMA-8 CLL KITE-718 (MAGE A3/A6) Solid Tumor K
Slide 45: Appendix
Appendix 45
Slide 46: Non-GAAP Operating Margin
Non-GAAP Operating Margin 55.9% Key Metrics 53.3% 52.8% 53.5% ● Slightly higher Non-GAAP Operating Margin 44.3% in Q2 2019 compared to Q2 2018 primarily due to higher Non-GAAP gross margin, partially offset by an increase in operating expenses Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Non-GAAP operating margin
Slide 47: European Product Sales
European Product Sales Q2 2019 up 4% (4% excluding FX) from Q2 2018 in millions Q2 18 Q2 19 YoY Excl FX $1,041 $1,005 Genvoya $207 $177 -14% -14% Epclusa $168 $156 -7% -6% $873 $882 Odefsey $77 $111 44% 43% $813 Biktarvy $2 $73 NM NM Eviplera $103 $72 -30% -31% Descovy $78 $69 -12% -11% AmBisome $55
Slide 48: Outstanding Adjusted Debt
Outstanding Adjusted Debt in billions where applicable Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Adjusted Debt1 (Senior Unsecured Notes $29.25 $27.50 $27.50 $26.75 $26.25 and Floating Rate Borrowings) Total Adjusted Debt to Adjusted EBITDA2 ~2.46x ~2.55x ~2.86x ~2.75x ~2.66x 1
Slide 49: 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 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Senior Unsecured Notes and Floating Rate $29.06 $27.32 $27.32 $26.58 $26.08 Borrowings, net Debt Discounts, Premiums and Issu
Slide 50: Q2 2019 Earnings Results
Q2 2019 Earnings Results July 30, 2019