Q4 2019 Earnings Call

At this time all participants are in listen only mode and as a reminder, this conference call is being recorded.

Operator: All of you are in a listen-only mode, and as a reminder, this conference call is being recorded. I would now like to turn the call over to Douglas Maffay from Investor Relations. Please go ahead.

I would now like to turn the call up at a Douglas nothing from Investor Relations. Please go ahead.

Thank you Liz and good afternoon, everyone.

Douglas Maffay: Thank you, Liz, and good afternoon, everyone. Just after market close today, we issued a press release with earnings results for the fourth quarter and fall 2019. The press release and detailed slides are available on the Investor Relations website. Speakers on today's call will be Daniel O'Day, Chairman and Chief Executive Officer, Andrew Dickinson, Chief Financial Officer, Johanna Mercier, Chief Commercial Officer, and Merdad Parsey, Chief Medical Officer. Also in the room are Christy Shaw, Chief Executive Officer of KITE, and Diana Brainard, Senior Vice President and Head of our HIV and Emerging Viruses Therapeutic Area.

Just off the market close today, we issued a press release with earnings results for full quota and full year 2019.

The press release, some detailed slides are available on the Investor Relations website.

Speakers on today's call will be done yellow day, chairman and Chief Executive Officer.

And to Dickinson Chief Financial Officer, So one of must be a chief commercial officer, and my Dad policy Chief Medical Officer.

Also in the room or Christy sure Chief Executive Officer of Kite, and Diana brain odd senior Vice President and head of <unk> HIV in emerging viruses therapeutic area.

Before we begin to begin with all prepared comments, let me remind you that we will be making forward looking statements.

Douglas Maffay: Before we begin with our prepared comments, let me remind you that we will be making forward-looking statements, including plans and expectations with respect to products, product candidates, financial projections, and the use of capital, and 2020 financial guidance, all of which involve certain assumptions, risks, and uncertainties that are beyond our control and could cause actual results to differ materially from these statements. A description of these risks can be found in the earnings press release and our latest SEC disclosure document. In addition, Gilead does not undertake any obligation to update any forward-looking statements made during the call. Non-GAAP financial measures will be used to help you understand the company's underlying business performance. However, starting in 2020, Gilead will no longer regularly exclude stock-based compensation expense from its non-GAAP financial information. The Gap to Non-Gap Reconciliations are provided in the earnings press release as well as on our website. I will now turn the call over to Dan.

Polluting plans and expectations with <unk> with respect to product product candidates financial projections and the use of capital and 2020 financial guidance.

All of which involve certain assumptions risks and uncertainties beyond our control and could cause actual results could differ materially from these statements.

A description of these risks can be found in earnings press release, and our latest FCC disclosure documents.

In addition, gilliat does not undertake any obligation to update any forward looking statements made during the cold.

Non-GAAP financial measures will be used to help you understand the companys underlying business performance.

Starting in 2020, Gilliat will no longer regularly exclude stock based compensation expense from its non-GAAP financial information.

The GAAP to non-GAAP reconciliations are provided in the earnings press release as well it's on our website I will now turn the call over to Dan.

Daniel O'Day: Thank you, Doug, and good afternoon everyone. I'll share a few opening comments before I turn the call over to Andy, and then Johanna will take you through the commercial highlights of the quarter, and Merdad Parsey, who, as you know, joined us as chief medical officer in November, will offer a few remarks before we open up the call to questions. We had a very strong quarter, capping a solid year for Gilead. Our financial results in 2019 were driven in large part by the outstanding performance of our HIV franchise. It's now been almost a year since I arrived at Gilead.

Thank you, Doug and good afternoon, everyone I'll share a few opening comments before I turn the call over to Andy and then Joanna will take you through the commercial highlights of the quarter and Murdoch parsing home as you know joined US as Chief Medical Officer in November will offer a few remarks before we open up the call to question.

We had a very strong quarter capping a solid year for Gilliat, our financial results in 2019.

Were driven in large part body outstanding performance of our HIV franchise.

It's now been almost two years since I arrived to Gilliat, we made key to session decisions and changes that have positioned us for success.

Daniel O'Day: We've made key decisions and changes that have positioned us for success. Over the past decades, the company has set a high bar, and we hope to raise that high bar over the decades to come. Today, I'm going to focus my comments on three areas.

Over the past decade, the company has set a high bar.

We hope to raise that high bar over the decades to come.

Today I'm going to focus my comments on three areas, one our strong base business to the existing pipeline opportunities and three or new strategy to drive innovation and growth.

Daniel O'Day: One, our strong base business. Two, the existing pipeline opportunities. And three, our new strategy to drive innovation and growth. So I'll begin by saying a few words about the strengths of our core business, starting with HIV, where we again achieved record revenue for both the quarter and the year. Today, approximately 80% of people living with HIV who are on therapy in the U.S. are on a Gilead-based regimen.

So I'll begin by saying a few words about the strength of our core business, starting with HIV, where we again achieved record revenue for both the quarter end the year.

Today, approximately 80% of people living with HIV, who are on therapy in the U.S. Burrata Gilliat based regimen.

Daniel O'Day: Across the franchise, we've seen the durability and sustainability of the business, which we expect to continue in 2020 and beyond. Much of this strength is being driven by BicTAR-V. Today, in the U.S., approximately one in two patients who are new to therapy and patients who are switching therapy are initiating on BicTAR-V. We're also very pleased with the early progress with DyscoV for PrEP, the strength of the launch, and the positive response we are seeing from patients and providers. Johanna will share more details shortly on that.

Across the franchise, we've seen durability and sustainability of the business what should we expect to continue in twentytwenty and be a.

Much of this strength is being driven by big Harvey.

Today in the U.S. approximately one into patients who are new to therapy in patients who are switching therapy are initiating on big Harvey. We're also very pleased with the early progress with the scobey for prep the strength of the launch in a positive response, where you're seeing from patients and providers.

Drew and I will share more details shortly on that.

Daniel O'Day: Looking to the future, we're focused on the potential of our capsid inhibitor as the anchor molecule for multiple long-acting HIV options. We may be able to dose this as infrequently as twice a year, and we're working rapidly to progress this medicine for both HIV prevention and treatment. Rounding out the antiviral picture, we continue to see sustained revenue from our HCV business. Since the introduction of authorized generics in the U.S., we've regained market share and now hold around 60% of the market through Ecegra and Gilead, up 18 points from the beginning of last year. Finally, as we look across our core business, I'd like to highlight the geographic expansion, and in particular China. During the fourth quarter, we had four medicines, Vemlidi, Abclusa, Harvoni, and Genvoya, included on China's national reimbursement drug list.

Looking into the future we're focused on the potential of our capsid inhibitor as the anchor molecule for multiple long acting HIV options.

We maybe able to doses in frequently as twice a year and we're working rapidly to progress. This medicine for both HIV prevention and treatment.

[noise] rounding out the anti viral picture, we continue to see sustained revenue from our HCV business since the introduction of authorized generics in the U.S., we've regained market share and now hold around 60% share through a segue and gilliat up 18 points from the beginning of last year.

Finally, as we look across our core business I'd like to highlight the geographic expansion and in particular, China. During the fourth quarter. We had four medicines that liddy of Crusa Harvoni and Genvoya included in China's National reimbursement drug list. This is a significant accomplishment that will enable much broader access.

Daniel O'Day: This is a significant accomplishment that will enable much broader access to these medicines in the region. So beyond our core business, our current pipeline includes several important opportunities that I'd like to discuss. We have 14 late-stage studies underway, four of which have received breakthrough therapy designation from the FDA. During the fourth quarter, we submitted a regulatory filing for filgotinib to the FDA, and it's now under priority review for rheumatoid arthritis. Fulgodnum is also under review in Japan and the EU.

Cities medicines in the region.

So beyond our core business, our current pipeline could conclude several important opportunities that I'd like to cover we have 14 late stage studies underway for of what should receive received breakthrough therapy designation from the FDA.

During the fourth quarter, we submitted a regulatory filing for forgotten them to the FDA and it's no wonder priority review for rheumatoid arthritis.

Forgotten. It was also want to review in Japan, and the you.

Daniel O'Day: We're actively preparing for competitive launches globally, which Johanna will talk more about later. I'm encouraged about the potential of Fogatinib to be best in class among JAK inhibitors and the strength of the team we have in place to market the medicine following approval. Beyond Philgottonib, we are pleased with what we see in the Galapagos pipeline and believe that the partnership has the potential to drive significant future growth. We are looking forward to the ulcerative colitis data this year, and we remain very optimistic about both our partnership with Galapagos, as well as the promising inflammation pipeline we have in hand. In cell therapy, we have a pioneering platform that is enabling us to advance new therapies with the goal of driving long-term innovation and growth.

We're actively preparing for competitive launches globally, which drew and I will talk more about later.

I'm encouraged about the potential of forgotten up to be best in class among the JAK inhibitors and the strength of the team we haven't place to market the medicine following approval.

Beyond forgotten, we're pleased with what we see into Galapagos pipeline and believed that the partnership has the potential to drive significant future growth.

We're looking forward to the ulcerative colitis data this year and we remain very optimistic about both our partnership with Galapagos.

Well, it's a promising inflammation pipeline we have in hand.

And cell therapy, we have a pioneering platform that is enabling us to advance new therapies with the goal of driving long term innovation and growth.

Daniel O'Day: To that end, our second cell therapy treatment, KITEx19, is now under review in the U.S. and Europe as a treatment for relapsed refractory mantle cell lymphoma, following the presentation of positive data at the American Society of Hematology meeting in the fourth quarter of this year. We also presented data at ASH showing that approximately half of patients treated with Yaskarta for relapsed refractory large B-cell lymphoma were still alive after three years of treatment in the Zuma 1 study, confirming Yaskarta's benefit-risk profile in the real-world setting. These long-term data speak to the durability of Yaskarta's treatment.

To that end, our second cell therapy treatment Chi X 19 is now under review in the U.S. in Europe as a treatment for relapse refractory really mantle cell lymphoma. This follows the presentation of positive data.

At the American Society Hematology meeting in the fourth quarter this year.

We also presented data at ash, showing the approximately half of patients treated with your Scott, Yes guard up for relapsed refractory large b cell lymphoma, we're still alive. After three years of treatment in the Zuma one study confirming yes, Carter's benefit risk profile in the real world setting. These long term data speak to the <unk>.

Do you have you just cartus treatment.

Finally in cell cell therapy, we look forward to sharing results from our Youre Skarda phase three seconds line Dl Bcl trial and the second half of this year.

Daniel O'Day: Finally, in cell therapy, we look forward to sharing results from our Yaskarta Phase 3 second-line DLBCL trial in the second half of this year. Merdad will offer some more color on our pipeline in just a few minutes. In addition to the programs I've described that we have in hand...

My Dad will offer some more color on our pipeline and just a few minutes.

In addition to the programs I've described that we have in hand.

Daniel O'Day: I introduced our new corporate strategy last month. This strategy will guide our work as we seek to drive innovation and growth over the next decade. In the next 10 years, we aim to introduce 10 new transformative therapies.

I introduced our new corporate strategy last month. This strategy will guide our work as we seek to drive innovation and growth over the next decade.

Over the next 10 years, we aim to introduce 10, new transformative therapies.

Daniel O'Day: To help us achieve that ambition, we will expand our access to internal and external innovation. We have already been very active in business development, with around 33 strategic partnerships and investment transactions since January 2018. We will continue to pursue a broad range of opportunities, with a clear focus on our core scientific areas of strength. Specifically, we will continue to make investments in our external pipeline, including transformative partnerships such as Galapagos and small to medium-sized bolt-on acquisitions. Andy will talk more in a few minutes about our capital allocation priorities, including today's announcement of a further increase in our dividend and an additional share repurchase authorization and our strong financial position, which gives us the opportunity to look externally as we strengthen our pipeline.

To help us achieved that ambition, we will expand our access to internal and external innovation.

We have already been very active in business development with around 33 strategic partnerships and investment transition transactions since January 2018.

We'll continue to pursue a broad range of opportunities with a clear focus on our core scientific areas of strength.

Specifically, we will continue to make investments in our external pipeline, including transformative partnerships, such as Galapagos and small to medium sized bolt on acquisitions.

And he will talk more in a few minutes about our capital allocation priorities, including today's announcement of a further increasing our dividend and additional share repurchase authorization and our strong financial position, which gives us the opportunity to look externally as we strengthened our pipeline.

Before I hand off to Andy who will delve into a more detailed financial review I'd like to say just a few words about the broadening outbreak of Corona virus.

Daniel O'Day: Before I hand off to Andy, who will delve into a more detailed financial review, I'd like to say just a few words about the broadening outbreak of coronavirus. As an organization, Gilead is committed to collaborating with global health organizations to support pandemic responses, including this one. Our investigational compound, Remdesivir, has demonstrated in vitro and in vivo activity in animal models against the viral pathogens MERS and SARS, which are structurally similar to the current strain of the coronavirus. However, there are no antiviral data that show activity against the current coronavirus strain.

As an organization Gilliat is committed to collaborating with global health organizations to support pandemic responses, including this one.

Our investigational compound Ram disappear as demonstrated in vitro and in vivo activity in animal models against the viral pathogens Mers and Sars, what's your structurally similar to the current strain of the krona virus. However, there are no anti viral data that show activity against the strain.

Daniel O'Day: We're working with government and non-governmental organizations and regulatory authorities to develop a strategy to provide remdesivir to patients with coronavirus for emergency treatment in the absence of any approved treatment options and to support clinical trials to determine whether it can safely and effectively be used to treat the current strain of coronavirus. As a reminder, Remdesivir is an investigational agent. It is not approved anywhere globally and has not been demonstrated to be safe or effective for any use.

We're working with the government a non government organizations and regulatory authorities to develop a strategy to provide run disappear to patients with Corona virus for emergency treatment in the absence of any approved treatment options and to support clinical trial to determine whether it can safely and effectively be used to treat.

The current strain of the Corona virus.

As a reminder, rem disappear as an investigational agent. It has not approved anywhere globally and has not been demonstrated to be safe for effective for any use.

Daniel O'Day: I'm proud of our teams and the work we've done to offer expertise and resources to help patients and communities fighting coronavirus. In closing, I'm very optimistic about where we are today and the future. Our base business is strong, durable, and growing, as demonstrated by our fourth-quarter numbers and year-end results. The near-term pipeline provides several important opportunities, with readouts expected later this year for Fulgatnib and Yaskarta. And over the long term, we've introduced a new strategy to drive growth by growing our pipeline internally and, importantly, also externally through our ongoing business development activities. On behalf of the leadership team, I'd like to thank all of our employees and partners around the world for the dedication and hard work that led to the success of 2019, and whose commitment is driving our success in 2020 and beyond. I remain excited about the potential of Gilead as we enter the next chapter. With that, I'll turn the call over to Andy. Thank you.

I'm proud of our teams and the work we've done to offer expertise and resources to help patients and communities fighting Corona virus.

In closing I'm very optimistic about where we are today and the future our base business is strong durable and growing as demonstrated by our fourth quarter numbers in your on results.

Near term pipeline provides several important opportunities with Readouts expected later this year with forgotten that Eneas Garda.

And over the long term, we've introduced a new strategy to drive growth by growing our pipeline internally and importantly, also externally through our ongoing BD activities.

On behalf of leadership team I'd like to thank all of our employees and partners around the world for the dedication and hard work that led to the success of 2019, and whose commitment is driving our success in 2020 and beyond I remain excited about the potential gilliat as we entered the next chapter with that I'll turn the call over to Andy.

Thank you Dan.

Andrew D. Dickinson: Thank you, Dan. I'm excited to take on the role of CFO, especially during this time as Gilead enters a new chapter. We're pleased to share our financial results for the fourth quarter and the full year 2019 and provide 2020 guidance today. I'll first review the financials, followed by comments from Johanna. Turning to our financials, total revenue for the fourth quarter was $5.9 billion, with non-GAAP earnings of $1.30 per diluted share. This compares to revenue of $5.8 billion with non-GAAP earnings of $1.44 per diluted share for the same period last year. Our non-GAAP earnings would have been $1.77 and $1.75 in the fourth quarter of 2019 and 2018, respectively, excluding unfavorable cost of goods sold impacts. These impacts were primarily driven by inventory write-downs of $500 million and $410 million, respectively, for slow-moving and excess raw material and work-in-process inventory, largely due to lower long-term demand for our HCV products. For the full year 2019, total revenues were $22.4 billion, up 1% year over year. Non-GAAP diluted earnings were $6.63 per share for the year, down from $6.67 per share for the full year of 2018.

I'm excited to take on the role as CFO, especially during this time is go ahead in terms of new chapter.

We're pleased to share our financial results for the fourth quarter and the full year 2019, and provide 2020 guidance today.

I'll first review financial followed by comments from Carolina.

Turning to our financials.

Total revenue for the fourth quarter was $5.9 billion with non-GAAP earnings of one dollar and 30 cents per diluted share.

This compares to revenue of 5.8 billion with non-GAAP earnings of $1.44 cents per diluted share for the same period last year.

Our non-GAAP earnings would have been $1.77 cents and one dollar and 75 cents in the fourth quarter of 2019, and 2018, respectively. Excluding unfavorable cost of goods sold impacts. These impacts were primarily driven by inventory write downs of 500 million and foreign.

Hundred 10 million, respectively for slow moving an excess raw material and work in process inventory largely due to lower long term demand for our HCV products.

For the full year 2019, total revenues were 22.4 billion up 1% year over year.

Non-GAAP diluted earnings were $6.63 per share for the year down from $6.67 per share for the full year 2018.

Andrew D. Dickinson: Excluding the unfavorable cost of goods impacts I mentioned previously, our non-GAAP earnings would have been $7.14 per share for 2019 and $7.01 per share for the prior year. As noted in our earnings press release, our full year 2019 GAAP diluted earnings of $4.22 per share included a total unfavorable impact of $3.30 per share from the following items. First, pre-tax up-front collaboration and licensing expense of $3.9 billion associated with our global research and development collaboration agreement with Galapagos. Secondly, a pre-tax impairment charge of $800 million, recognized in the fourth quarter of 2019, primarily related to in-process research and development in tangible assets for the treatment of indolent non-Hodgkin's lymphoma, and pre-tax write-downs of $547 million for The unfavorable impact was partially offset by a favorable impact of $1.94 per share due to a deferred tax benefit of $1.2 billion related to an intra-entity transfer of intangible assets and gains of $1.2 billion from equity securities held for investment.

Excluding the unfavorable cost of goods impacts I mentioned previously our non-GAAP earnings would have been $7 in 14 cents per share for 2019 and $7.01 per share for the prior year.

As noted in our earnings press release, our full year 2019, GAAP diluted earnings of $4 in 22 cents per share included in total unfavorable impact of $3 in 30 cents per share from the following items.

First pre tax upfront collaboration in licensing expense of 3.9 billion associated with our global research and development collaboration agreement with Galapagos.

Secondly, pretax impairment charge of 800 million recognized in the fourth quarter 2018, primarily related to in process research and development intangible assets for the treatment of indolent non Hodgkin's lymphoma.

And pre tax write downs of $547 million for slow moving an excess raw materials and work in process inventories.

The unfavorable impact was partially offset by a favorable impact of $1.94 cents per share due to a deferred tax benefit of $1.2 billion related to an intra it's the transfer of intangible assets and gains of 1.2 billion from equity securities held for investment.

Now turning to our product sales.

Andrew D. Dickinson: Now turning to our product sales. Product sales for the fourth quarter were $5.8 billion, up 5% sequentially and 2% year-over-year. For the full year, product sales were $22.1 billion, up 2% year over year, primarily due to the continued revenue growth of our HIV franchise, partially offset by the impact of loss of exclusivity on our cardiopulmonary franchise and market dynamics of our HCV franchise. In the U.S., product sales for the quarter were $4.5 billion, up 8% sequentially and 1% year-over-year. Demand for Biktarvy and Dyskovy for PrEP was the primary driver of sequential growth.

Product sales for the fourth quarter were 5.8 billion up 5% sequentially and 2% year over year.

For the full year product sales were 22.1 billion up 2% year over year, primarily due to the continued revenue growth of our HIV franchise.

Partially offset by the impact of lots of exclusivity on or cardio pulmonary franchise and market dynamics of our HCV franchise.

In the U.S. product sales for the quarter were 4.5 billion up 8% sequentially and 1% year over year.

Demand for big targeted disco Scobey for prep was the primary driver of the sequential growth.

Andrew D. Dickinson: The seasonal inventory purchases also contributed approximately $290 million to the sequential performance. In Europe, product sales for the quarter were $840 million, up 4% sequentially and 3% year-over-year. Recall that both the third quarter of 2019 and the fourth quarter of 2018 were negatively impacted by unfavorable adjustments for statutory rebates. Turning to cell therapy,

The seasonal inventory purchases also contributed approximately 290 million to the sequential performance.

In Europe product sales for the quarter were 840 million up 4% sequentially and 3% year over year.

Recall that both the third quarter of 2019, and the fourth quarter of 2018 were negatively impacted by unfavorable adjustments for statutory rebates.

Turning to cell therapy worldwide, yes, carton sales for the fourth quarter were $122 million up 3% sequentially and 51% year over year. The year over year increase was driven by a higher number of therapies provided the patients in case continued expansion in Europe.

Andrew D. Dickinson: Worldwide yes carded sales for the fourth quarter were $122 million, up 3% sequentially and 51% year-over-year. The year-over-year increase was driven by a higher number of therapies provided to patients and KITE's continued expansion in Europe. Now turning to expenses for the full year 2019, the non-GAAP cost of goods sold was $3.5 billion, down 1% compared to $3.6 billion in 2018. The decrease was primarily due to lower royalty expenses, partially offset by higher inventory write-downs.

Now turning to expenses for the full year 2019.

Non-GAAP cost of goods sold was 3.5 billion down 1% compared to 3.6 billion in 2018.

The decrease was primarily due to lower royalty expenses, partially offset by higher inventory write downs.

Andrew D. Dickinson: During 2019 and 2018, we recorded write-downs of $547 million and $440 million, respectively, for slow-moving and excess raw materials and work-in-process inventories, primarily due to lower long-term demand for our HCV products. Non-GAAP R&D expense was $3.8 billion, up 7% compared to $3.5 billion in 2018. The increase was primarily due to higher personnel costs to support our cell therapy business.

During 2019 to 2018, we recorded write downs of 547 million and 440 million respectively for slow moving in excess raw materials and work in process inventories, primarily due to lower long term demand for HCV products.

Non-GAAP R&D expense was 3.8 billion up 7% compared to 3.5 billion in 2018. The increase was primarily due to higher personnel cost to support our cell therapy business.

Non-GAAP SGN a expense was 4.1 billion up 13% compared to 3.6 billion in 2018. The increase was primarily due to higher promotional expenses related to big Harvey and discovery for prep in the U.S. and expenses associated with the expansion of our business in Japan and China.

Andrew D. Dickinson: Non-GAAP SG&A expense was $4.1 billion, up 13% compared to $3.6 billion in 2018. The increase was primarily due to higher promotional expenses related to Biktarvy and Dyskovy for PrEP in the U.S. and expenses associated with the expansion of our business in Japan and China. Turning to our balance sheet, we generated $9.1 billion in cash from operations for the full year 2019 and $2.6 billion for the quarter. We ended the year with $25.8 billion in cash and marketable debt securities.

Turning to our balance sheet.

We generated $9.1 billion and cash from operations for the full year 2019, and 2.6 billion for the quarter.

We ended the year with 25.8 billion in cash and marketable debt securities.

Andrew D. Dickinson: During 2019, we paid $5.6 billion in connection with our global research and development collaboration with Galapagos and our equity investments in Galapagos. In addition, we repaid $2.8 billion of debt, we paid cash dividends of $3.2 billion, and we repurchased 26 million shares of stock for $1.7 billion. Earlier today, we announced an increase in our quarterly dividend from 63 cents a share to 68 cents a share, which will be effective in the first quarter of 2020. This is our fifth consecutive annual increase in our dividend. In addition, our board authorized an additional $5 billion share repurchase program in January 2020. We now have over $8 billion of share repurchase authorization. In 2020, our capital allocation priorities will remain unchanged. First and foremost, we will focus on investment to augment internal and external research and development or the internal research and external development pipeline.

During 2019, we paid 5.6 billion in connection with our global research and development collaboration with Galapagos and our equity investments in Galapagos. In addition, we repaid 2.8 billion of debt, we paid cash dividends of 3.2 billion and we repurchased 26 million shares of stock for 1.7 billion.

Earlier today, we announced an increase in our quarterly dividend from 63 cents a share to 68 cents a share which will be effective in the first quarter of 2020. This is our fifth consecutive annual increase in our dividend.

In addition, our board authorized an additional 5 billion dollar share repurchase program in January 2020, we now have over 8 billion or share repurchase authorization available.

In 2020, our capital allocation priorities will remain unchanged.

First and foremost wheel focused on investment to augment internal and external research and development, our internal research and external development pipeline.

Andrew D. Dickinson: Second, we intend to grow the dividend over time, pointing out, of course, that any dividend that is increased is subject to the approval of our board. Finally, our commitment to repurchase shares in excess of dilution from our equity compensation. And at a minimum, we expect to repurchase shares in 2020 on par with our 2019 share repurchase. Turning to guidance. Our 2020 non-GAAP financial guidance is summarized on slides 23 through 26 in the earnings presentation available on our corporate website. Before I start, I'd like to highlight three things that are important for you to understand.

Second we intend to grow the dividend over time, pointing out of course that any dividend has increased the subject to the approval of our board.

Finally, our commitment to repurchase shares an excess of dilution from our equity compensation and at a minimum we expect to repurchase shares in 2020 on par with our 2019 share repurchases.

Turning to guidance, our 2020 non-GAAP financial guidance is summarized on slides 23 through 26 in the earnings presentation available on our corporate website.

Before I start I'd like to highlight three things that are important for you to understand.

Andrew D. Dickinson: The first change is that, beginning in the first quarter, we will no longer regularly exclude stock-based compensation expense from our non-GAAP financial information. Stock-based compensation has always been an important part of how we reward our employees in a way that aligns their interests with those of our shareholders, and it's an important component of our compensation structure. As such, although it's not a cash expense, we believe it to be a cost that should be included when measuring our financial performance. For comparability purposes, full-year 2019 non-GAAP operating income and non-GAAP diluted earnings per share would have been $10.4 billion and $6.13 per share, respectively, had stock-based compensation expense not been excluded. Our second change is that we're modifying our guidance metrics for 2020, as we will now be providing guidance for earnings and operating income, in addition to the metrics that we've historically shared. Our guidance is aligned with how the management team and our board evaluate our financial performance and manage our operations.

The first changes that beginning in the first quarter, we will no longer regularly excludes stock based compensation expense from our non-GAAP financial information.

Stock based compensation has always been an important part of how we reward our employees in a way that align their interests with those of our shareholders.

It's an important component of our compensation structure as such although it's not a cash expense. We believe it to be a cost that should be included when measuring our financial performance.

For comparability purposes full year 2019, non-GAAP operating income and non-GAAP diluted earnings per share would have been 10.4 billion and six $6 at 13 cents per share respectively head stock based compensation expense not been excluded.

Our second changes that we're modifying our guidance metrics for 2020, as we will now be providing guidance for earnings and operating income. In addition to the metrics that we have historically shared.

Our guidance is aligned with how the management team and our board evaluate our financial performance and manage our operations.

Andrew D. Dickinson: Finally, our guidance excludes the impact of any future significant business development transactions, certain development milestones, and any product option exercise fees as they are contingent on various future events that have a high degree of uncertainty. With that in mind, we expect that our product sales for 2020 will be in the range of $21.8 billion to $22.2 billion. This guidance reflects robust underlying growth in our base business of approximately $800 million to $1 billion, which is expected to offset the full-year impact of the loss of exclusivity for our cardiopulmonary products in 2019 and the initial entry of a generic version of Truvada in the U.S. later this year. I would also like to highlight that as we look towards Q1 of 2020, we anticipate that total product sales will decline sequentially that quarter by a percentage similar to We also anticipate that our Q1 2020 product sales will decline in comparison to Q1 2019, primarily due to lower sales of our cardiopulmonary products, Renexa and Lateris. As a reminder, generic versions of Renexa and Lateris were launched in the first and second quarters of 2019, respectively.

Finally, our guidance excludes the impact of any future significant business development transactions certain development milestones and any product option exercise fees as their contingent on various future events, which have a high degree of uncertainty.

With that background, we expect that our product sales for 2020 will be in the range of 21.8 billion to 22.2 billion.

This guidance reflects robust underlying growth in our base business of approximately 800 million to $1 billion, which is expected to offset the full year impact of a loss of exclusivity for cardiopulmonary products in 2019, and the initial entry of a generic version of Truvada in the U.S. later this year.

I would also like to highlight that as we look towards Q1 of 2020, we anticipate the total product sales will decline sequentially that quarter by a percentage similar to what we've seen over the past three years, which has been as high as 12% to 14%, primarily driven by U.S. seasonal inventory patterns and buying patterns of public payers.

That negatively impact our payer mix. We also anticipate that our Q1 2020 products sales will decline in comparison to Q1 2019, primarily due to lower sales of our cardiopulmonary products were next and with terrorists. As a reminder, generic versions of our next and Whats Harris were launched in the first quarter and second quarter of 2019 respective.

Despite this anticipated sequential decline in total product sales in Q1, I want to underscore our confidence in the health of our worldwide HIV business from which we expect year on year growth again in 2020.

Turning to our product gross margins are non-GAAP product gross margins are expected to be in the range of 86% to 87% in 2020.

Andrew D. Dickinson: Despite this anticipated sequential decline in total product sales in Q1, I want to underscore our confidence in the health of our worldwide HIV business, from which we expect year-on-year growth again in 2020. Turning to our product gross margins, our non-GAAP product gross margins are expected to be in the range of 86% to 87% in 2020. We expect that both non-GAAP R&D and SG&A expenses will increase by mid-single-digit percentage points in support of our continued growth of ICTARVI, our DSCOVI for PrEP launch, preparation for competitive launches of Fulgotinib and RA in the U.S., Japan, and Europe, and continued investments in our pipelines, cell therapy, and external partnerships. Non-GAAP operating income is expected to be in the range of $10.1 billion to $10.8 billion.

We expect that both non-GAAP R&D and SGN expenses will increase mid single digit percentage in support of our continued growth of big Harvey Our discovery for prep launch preparation for competitive launches have forgotten had been are a in the U.S., Japan, Europe and continued investments in our pipeline cell therapy and X.

Partnerships.

Non-GAAP operating income is expected to be in the range of 10.1 billion to 10.8 billion.

For the full year, our non-GAAP effective tax rate is expected to be approximately 21%.

Non-GAAP diluted EPS is expected to be in the range of $6.05 per share to $6 in 45 cents per share, which again I will remind you no longer excludes stock based compensation.

GAAP diluted EPS is expected to be in the range of $5 in 15 cents to $5.55.

Andrew D. Dickinson: For the full year, our non-GAAP effective tax rate is expected to be approximately 21%. Non-GAAP diluted EPS is expected to be in the range of $6.05 per share to $6.45 per share, which again, I'll remind you, no longer excludes stock-based compensation. Gap's diluted EPS is expected to be in the range of $5.15 to $5.55. Finally, our diluted EPS guidance includes repurchases largely consistent with 2019. I'll now turn the call over to Johanna.

Finally, our diluted EPS guidance includes repurchases largely consistent with 2019.

I'll now turn the call over to John.

Thank you Andy and good afternoon, everyone I'm really pleased to share the highlights of our excellent Q4 in full year commercial performance I.

I wanted to begin with a continued strength of our HIV franchise, which was driven by the continued uptake of the carvey as well the successful early launch of discovery for Pat.

Then provide an update on a CD touch briefly on our cardiopulmonary business and finally close if if you remarks as we look ahead to the forgotten of launch.

As Dan mentioned, approximately 80% of people living with HIV were on therapy in the U.S. are taking at least one gilliat job.

Johanna Mercier: Thank you, Andy, and good afternoon, everyone. I'm really pleased to share the highlights of our excellent Q4 and full-year commercial performance. I wanted to begin with the continued strength of our HIV franchise, which is driven by the continued uptake of Victarvi, as well as the successful early launch of Dyscovi for PrEP. I'll then provide an update on HCV, touch briefly on our cardiopulmonary business, and finally close with a few remarks as we look ahead to the Philgottonib launch. As Dan mentioned, approximately 80% of people living with HIV who are on therapy in the U.S. are taking at least one Gilead drug, a sign of the sustained and durable strength we see across the franchise. We reached another all-time high with our HIV product sales for both the full year and quarter. For 2019, HIV sales were $16.4 billion, up 12% from 2018. Global HIV sales for Q4 were $4.6 billion, up 9% sequentially and 13% year-over-year. This marks the seventh consecutive quarter of double-digit year-over-year growth for the franchise.

Sign of a sustained durable strength, we see across the franchise.

We reached another all time high with our HIV product sales for both the full year end quarter.

For 2019, HIV sales were 16.4 billion up 12% from 2018.

HIV sales for Q4 were 4.6 billion up 9% sequentially and 13% year over year.

This marks the seventh consecutive quarter double digit year over year growth for the franchise.

You asked HIV product sales were 3.8 billion worth of 11% sequentially and 12% year over year.

The year over year increase was primarily driven by underlying prescription demand for 10%.

We did intervention market, we're really pleased with the early progress at ASCO be for Pratt, which launched in the U.S. in Q4 2019.

Proximately, 27% of individuals on Pratt are now taking discovery and by Q4 2020, we expect that number will have risen to anywhere between 40 and 45%.

Across the prevention market, we saw growth more than 20% and the number of individual taking Pratt your figure.

There are now more than 230000 people, taking one of our HIV prevention medicines in the U.S. and this only represents approximately 20% of those who could actually benefit from it.

Turning to the U.S. HIV treatment market. The carbon sales were 1.4 billion in Q4 up 23% sequentially.

Johanna Mercier: U.S. HIV product sales were $3.8 billion in June 4, up 11% sequentially and 12% year-over-year. The year-over-year increase was primarily driven by underlying prescription demand growth of 10%. Within our prevention market, we're really pleased with the early progress of Dyscovi for PrEP, which launched in the U.S. in Q4 2019. Approximately 27% of individuals on PrEP are now taking Dyscove, and by Q4 2020, we expect that number will have risen to anywhere between 40 and 45%.

The market is continuing to consolidate around the tri be which is the number one prescribed HIV regimen in the U.S. and again noted approximately wanting to at every naive and switch patients are now initiated Ondeck Harvey.

In Europe, Q4, HIV product sales were 562 million up 1% sequentially and 10% year over here.

The year over year growth was driven by the continued strength of arbitrary launches in Europe declining impact of generic launches and unfavorable nonrecurring pricing and John adjustments in Q4 of the prior year.

Johanna Mercier: Across the prevention market, we saw growth of more than 20% in the number of individuals taking PrEP year over year. There are now more than 230,000 people taking one of our HIV prevention medicines in the U.S., but this only represents approximately 20% of those who could actually benefit from it. Turning to the U.S. HIV treatment market, BicTarvi's sales were $1.4 billion in Q4, up 23% sequentially. The market is continuing to consolidate around BicTarvi, which is the number one prescribed HIV regimen in the U.S. And, as Dan noted, approximately one in two of every naive and switched patients are now initiated on BicTarvi.

The copy is now available in 29 countries in Europe, and its number one in the even switch in Germany, France, Spain, and Italy as well.

Turning to our HCV business.

Q4, HCV sales for 630 million down, 7% sequentially and 15% year over year.

2019 sales were 2.9 billion for the full year down 20%, primarily due to lower average net selling price and declining patient star.

You asked revenues for Q4 were 337 million down, 11% sequentially and 18% year over here.

In the U.S., we now have approximately 60% market share with our gilliat branded and authorized generic partner products and are continuing to sustain revenue.

In Europe HCV product sales for Q4 were 151 million at 36% sequentially and down 20% year over year. The sequential performance was impacted by the seasonality of products sales.

Overall the seed the market continued to see a more predictable declining patient starts and performed in line with our expectation.

Johanna Mercier: In Europe, Q4 HIV product sales were $562 million, up 1% sequentially and 10% year-over-year. The year-over-year growth was driven by the continued strength of ArbicTarvy launches in Europe, the declining impact of generic launches, and unfavorable, non-recurring pricing adjustments in Q4 of the prior year. Victarvi is now available in 29 countries in Europe, and it's number one in Naive and Switch in Germany, France, Spain, and now Italy as well.

Before turning to forgotten Ed I, just wanted to make a few comments on the cardiopulmonary business, where we have seen generic competition enter the market early last year I.

As anticipated significant volume of resin has occurred and as of last December we have seen 90% of Russian for an access erosion for nexstar and 65% of resin for the carrying a trend that we expect to continue into this year.

So in closing I'm really excited to share with you a few words about the forgotten launch.

I noted our teams have now completed regulatory filings for rheumatoid arthritis anyway.

Johanna Mercier: Turning to our HCV business, Q4 HCV sales were $630 million, down 7% sequentially and 15% year-over-year. 2019 sales were $2.9 billion for the full year, down 20%, primarily due to a lower average net selling price and declining patient starts. U.S. revenues for Q4 were $337 million, down 11% sequentially and 18% year-over-year. In the U.S., we now have approximately 60% market share with our Gilead-branded and authorized generic partner products and are continuing to sustain revenue. In Europe, HCD product sales for Q4 were 151 million, up 36% sequentially, and down 20% year-over-year. The sequential performance was impacted by the seasonality of product sales.

Maybe center priority review as well as in Europe and Japan.

In December we announced the Copromotion agreement in Japan with each site. It's estimated that approximately 600000 2 million people in Japan are living with Ari and this agreement allows us to John the strength of both companies with the goal is bringing this important new medicine dosing.

As you're aware despite currently available treatment options. Many patients are still living with symptoms of inadequate.

Adequately controlled our a around the world in fact, only went out of five patients living with our rate achieved complete remission at your line, which means fortified do not.

It has a compelling and differentiated clinical profile that we believe me uniquely address the significant unmet need for patients with our right.

Weve highly experienced teams preparing for launch later this year and our focus will be on the strength of our data and the compelling risk benefit profile observed across both tested doses at this or a medicine.

I look forward to working with this great team of people to deliver on the promise of these medicines and I'll now turn the call overcome murdered thank you Jane and.

Johanna Mercier: Overall, the HCV market continues to see a more predictable decline in patient starts and performs in line with our expectations. Before turning to Fulgotinib, I just wanted to make a few comments on the cardiopulmonary business, where we have seen generic competition enter the market early last year. As anticipated, a significant volume of erosion has occurred, and as of last December, we have seen 90% erosion of Renexa and 65% erosion of Latteris, a trend that we expect to continue into this year.

Good afternoon, everyone.

It's been a pleasure meet some of you over the past few weeks I'm pleased to participate in the first earnings call Gilliat today.

He said he joined the team to extend the Gilliat story and improve the lives of patients around the world as we implement our new corporate strategy I'm confident we can leverage our existing pipeline into expand with internally and externally approaches.

Building on Gileads impressive innovation HIV, including the launch of 11 products in 17 years. Our goal is to continue to transform the lives of people affected by HIV.

Johanna Mercier: So in closing, I'm really excited to share with you a few words about Forgotten at Launch. As Dan noted, our teams have now completed regulatory filings for rheumatoid arthritis in the U.S., where it's forgotten if it's under priority review, as well as in Europe and Japan. In December, we announced a co-promotion agreement in Japan with Esai. It's estimated that approximately 600,000 to a million people in Japan are living with RA, and this agreement allows us to draw on the strengths of both companies with the goal of bringing this important new medicine to those in need. As you're aware, despite currently available treatment options, many patients are still living with symptoms of inadequate... In fact, only 1 out of 5 patients living with RA achieve complete remission at year 1, which means 4 out of 5 do not.

Our next wave of HIV innovation will be driven by long acting options for treatment and prevention, we listen to what patients want and we're committed to continuing to pursue and provide more options that meet the needs of people affected by HIV.

We believe our caps inhibitor.

Has the potential for a truly unique profile offering both orland subcutaneous dosing the potential for self administration as well as multiple dosing frequencies and options for HIV treatment and prevention.

We recently presented data from two phase one studies, demonstrating potent antiviral activity and a potential dosing interval of up to every six months.

We've initiated phase two three studies, including one of the one in heavily treatment experienced patients and we received breakthrough therapy designation for this use.

Johanna Mercier: Fogatinib has a compelling and differentiated clinical profile that we believe may uniquely address the significant unmet need for patients with RA. We have highly experienced teams preparing for launch later this year, and our focus will be on the strength of our data and the compelling risk-benefit profile observed across both tested doses of this oral medicine. I look forward to working with this great team of people to deliver on the promise of these medicines, and I'll now turn the call over to Merdad. Thank you. Thank you, Johanna.

Capsid inhibitor will be the foundation of our long acting options and we're exploring multiple partner agents to pair with it.

As Dan said, we've set the ambitious goal the bringing 10 transformative medicines to patients over the next decade. The first of these 10 transformative medicines will be forgotten, it which has a potential best in class profile.

Johanna Mercier: And good afternoon, everyone. It's been a pleasure to meet some of you over the past few weeks, and I'm pleased to participate in the first earnings call at Gilead today. I'm excited to join a team to extend the Gilead story and improve the lives of patients around the world. As we implement our new corporate strategy, I'm confident we can leverage our existing pipeline and expand with internal and external approaches. Building on Gilead's impressive innovation in HIV, including the launch of 11 products in 17 years, our goal is to continue to transform the lives of people affected by HIV. Our next wave of HIV innovation will be driven by long-acting options for treatment and prevention. We listen to what patients want, and we're committed to continuing to pursue and provide more options that meet the needs of people affected by HIV.

Been impressed with the strength of the till gotten of data and speaking with key opinion leaders, there's real appreciation for the results in an excitement for the potential combination of efficacy and safety of this selective oral JAK one inhibitor.

Across the fence studies, we've seen consistently strong efficacy and demonstrate the state safety profile that is highly favorable from a benefit risk standpoint.

And this is true both doses tested.

We've now filed two gotten had been three regions the U.S. Europe in Japan, and as Diana mentioned, we're gearing up for the launch.

Forgotten it has the potential for five new indication launches in the next four years and we look forward to the upcoming ulcerative colitis data. This year. This timing could give forgotten it one of the first labels in ulcerative colitis for JAK inhibitor.

We've also had I've also had the opportunity to meet the Galapagos team and discuss opportunities that are being pursued beyond forgotten it.

Merdad V. Parsey: We believe our capsid inhibitor has the potential for a truly unique profile, offering both oral and subcutaneous dosing, the potential for self-administration, as well as multiple dosing frequencies and options for HIV treatment and prevention. We recently presented data from two Phase I studies demonstrating potent antiviral activity and a potential dosing interval of up to every six months. We've initiated Phase II-III studies, including one in heavily treatment-experienced patients, and we received breakthrough therapy designation for this use. The capsid inhibitor will be the foundation of our long-acting options, and we're exploring multiple partner agents to pair with it. As Dan said, we've set the ambitious goal of bringing 10 transformative medicines to patients over the next decade. The first of these 10 transformative medicines will be Fulgotinib, which has a potential best-in-class profile.

This remarkable partnership has a potential to double our research footprint footprint has a number of programs that could add to our inflammation portfolio.

Turning to oncology, we have a broad portfolio today, including kite and have a total of 15 clinical stage programs.

Our approach is to build transformative therapies across complimentary immuno oncology platforms, including both cell therapy and non cell therapy.

We're actively pursuing and evaluating and innovative programs and technologies.

Externally to build our presence in oncology.

In total across our current pipeline, we have 40 clinical stage programs.

Dan mentioned that these programs 14 or either being registered right now or in label, enabling trials and for these programs have breakthrough therapy designation.

As we pursue external opportunities will continue to build around antiviral therapies inflammation fibrosis, and and immuno oncology.

I'm excited to work with Dan entire Gilliat team to expand on the great things that have been done to date and go further for people living with HIV and the patients we serve.

Merdad V. Parsey: I've been impressed with the strength of the Filgotinib data, and speaking with key opinion leaders, there's a real appreciation for the results and excitement for the potential combination of efficacy and safety of this selective oral JAK1 inhibitor. Across the Finch studies, we've seen consistently strong efficacy and demonstrated a safety profile that is highly favorable from a benefit-risk standpoint. And this is true of both doses of the tests

This work internal and external will enable us to grow in the mid to long term I look forward to sharing more with all of you better progress on future calls. Thank you very much and now we'll open the call for questions operator.

Today's question and answer session will be conducted electronically anyone wishing to ask a question may signal us by firmly pressing the star key followed by the digit one on his or her touchtone telephone.

Merdad V. Parsey: We've now filed for GATT and IB in three regions, the U.S., Europe, and Japan, and as Johanna mentioned, we are gearing up for the launch. Fulgotinib has the potential for five new indication launches in the next four years, and we look forward to upcoming ulcerative colitis data this year, which could give Fulgotinib one of the first labels in ulcerative colitis for a JAK inhibitor.

We will call on you and the order that you signal us.

If you find that your question has been asked you may remove yourself from the roster by pressing the pankey.

As a reminder, we will be taking a maximum of one question per person at the time. If you have further questions you're welcome to rejoin the queue.

Merdad V. Parsey: I also had the opportunity to meet the Galapagos team and discuss opportunities that are being pursued beyond Philgotton. This remarkable partnership has the potential to double our research footprint and has a number of programs that could add to our inflammation portfolio. Turning to oncology, we have a broad portfolio today, including CHITE, and have a total of 15 clinical stage programs. Our approach is to build transformative therapies across complementary immuno-oncology platforms, including both cell therapy and non-cell therapy. We're actively pursuing and evaluating innovative programs and technologies externally to build our presence in oncology. In total, across our current pipeline, we have 40 clinical stage programs. As Dan mentioned, of these programs, 14 are either being registered right now or are in label-enabling trials, and four of these programs have breakthrough therapy designations.

Pause for a moment the compiled acuity roster.

Our first question comes from Michael You with Jefferies. Your line is now open.

Hey, guys. Thanks for the question and.

Thanks for all the color on the guidance I guess I just wanted to ask about your perspective on guidance for 2020, and thinking about but the revenue guidance, which is seemingly flat to down issue versus 19, and an E. S M backing out the.

It seems to be flattish to down ish, maybe you can just comment about your perspective, if 2020 is that an investment here.

Maybe a growth here both on on on revenue and EPS and how do you think about it has 2020 versus saying what you think about probably speak for 21. Thanks.

Yes, Thanks, a lot Michael for the question.

And I would say again.

Based upon the strong results coming off of 2019 that are our base business. Our HIV business is really robust and continues to grow and of course.

Merdad V. Parsey: As we pursue external opportunities, we'll continue to build around antiviral therapies, inflammation, fibrosis, and immuno-oncology. I'm excited to work with Dan and the entire Gilead team to expand on the great things that have been done to date and go further for people living with HIV and the patients we serve. This work, internal and external, will enable us to grow in the mid- to long-term. I look forward to sharing more with all of you about our progress on future calls. Thank you very much, and now we'll open the call for questions. Operator?

We need to offset as Andy mentioned in his comments the full year effective the cardiopulmonary franchise and just the beginning of the Truvada.

[noise] expiration.

And we feel confident in our ability to be able to do that our guidance reflects the revenue.

That is essentially flat year on year and of course, we'll keep you updated.

As we go throughout the year based on a for a variety of events on the commercial side.

Operator: Today's question and answer session will be conducted electronically. Anyone wishing to ask a question may signal us by firmly pressing the star key followed by the digit 1 on his or her touchtone telephone. We will call on you in the order that you signal us. If you find that your question has been asked, you may remove yourself from the list by pressing the pound key.

On the investment side I would say, yes, absolutely we feel that we need to invest.

On the commercial side to make sure that we are.

Preparing ourselves well for the for the most recent launches that have gone out and that's Victor RV and.

And the scobey, but also well prepare ourselves for a very competitive launch for forgotten, where you've heard US say, we really think we have a unique medicine with a best in class profile and we want to make sure as we know there's only one chance to get a launch right. We want to make sure we're well prepared for that now we have obviously.

Operator: As a reminder, we will be taking a maximum of one question per person at a time. If you have further questions, you're welcome to rejoin the queue. We'll pause for a moment to compile the Q&A roster. Our first question comes from Michael Yee with Jeffreys. Your line is now open.

Operator: on guidance for 2020 and thinking about both the revenue guidance, which is seemingly flat to downish versus 19, and EPS, when backing out, seems to be flattish to downish. Maybe you could just comment about your perspective on 2020. Is that an investment year? Is it potential to be a growth year, both on revenue and EPS? And how do you think about it in terms

Right you know looked hard at our expense base on the commercial side reallocated resources from cardio pulmonary and are well prepared to put our investments on the growth drivers and as you can see in our qualitative guidance feel we need to increase.

Slightly from year on year for the FDA guidance Likewise with the with the investments that we've made both in our internal pipeline.

Daniel O'Day: Yeah, thanks a lot, Michael, for the question. And, you know, I would say, again, based upon the strong results coming out of 2019, that our base business, our HIV business, is really robust and continues to grow. And, of course, we need to offset, as Andy mentioned in his comments, the full year effect of the cardiopulmonary franchise and just the beginning of the Trivada. And we feel confident in our ability to be able to do that. Our guidance reflects revenue that is essentially flat year on year.

The expansion of lifecycle programs around medicines like Filgotinib and others.

That we need and including external innovation that we brought in over the past two years, including 33.

Different collaborations and our acquisitions, we want to make sure we invest appropriately in those to take them to the next decision point and decide about future investment Accordingly, and we'll continue to work on that portfolio as we move forward. Andy do you have some other things you want it I would just yes. Thank you Mike Michael Thanks for the question I'd, just add two things again.

As many of you've heard our primary focus is on building a predictable sustainable top line growth profile.

Daniel O'Day: And, of course, we'll keep you updated as we go throughout the year based on a variety of events on the commercial side. On the investment side, I would say, absolutely, we feel that we need to invest on the commercial side to make sure that we are preparing ourselves well for the most recent launches that have gone out, and that's BicTarvy and Descobee, but also well prepared ourselves for a very competitive launch for Filgotinib, where you've heard us say we really think we have a unique medicine with a best-in-class And we want to make sure that, as we know, there's only one chance to get a launch right.

You would expect to see if a company like Gilliat. So.

At the times requires investment it has in the history of Gilliat as you go back to the the pharmacy that acquisition and the investments that were made following that and it will going forward. So that is our primary focus as you know.

And then I'd also add that we also felt that it was important to provide additional transparency and accuracy in measuring our financial performance and that's why you're seeing additional guidance that helps give you a fuller picture of how we see the business for the coming year and I think the guidance speaks for itself and Dan's points are right on right on.

Hi, guys I appreciate that.

Our next question comes from Brian Abrahams with RBC capital markets. Your line is now open.

Daniel O'Day: We want to make sure we're well prepared for that. Now, we have obviously looked hard at our expense base on the commercial side, reallocated resources from cardiopulmonary, and are well prepared to put our investments in the growth drivers. And, as you can see in our qualitative guidance, we feel we need to increase slightly from year to year for the SG&A guidance. Likewise, with the investments that we've made both in our internal pipeline, the expansion of lifecycle programs around medicines like Filgotinib and others that we need, and including external innovation that we've brought in over the past two years, including 33 different collaborations and or acquisitions, we want to make sure we invest And we'll continue to work on that portfolio as we move forward. Andy, do you have some other things you want to add to that? Yeah, thank you. And Michael, thank you for the question. I would just add two things.

Hi, there. Thanks, so much for taking my question.

As you look across your mid stage portfolio into new corporate strategy I was wondering if could elaborate a little bit more on the areas of most interest to build out were to wind down we have gileads team stand today to most after only take advantage of external opportunities and how do you guys balanced potential versus risk as you look and investing in assets both internally.

And externally thanks.

Great. Thanks, a lot Brian I'll start and then elastomer dad to comment on the portfolio because one of the big efforts that we have underway is with my dad coming to the organization is breadth of experience in building World class portfolios, that's exactly what he's involved in right now and really leveraging the strengths accordingly.

Across the portfolio. So I'd say a couple of things Brian I think you know as you know we've kind of elevated.

The full disclosure.

And openness on our portfolio, we started that of JP Morgan you can expect us to continue to be very transparent about the portfolio. The decisions we taken we make.

Andrew D. Dickinson: As many of you have heard, our primary focus is on building a predictable, sustainable, top-line growth profile that you would expect to see from a company like Gilead. And that, at times, requires investment. It has in the history of Gilead, as you go back to the Pharmacet acquisition and the investments that were made following that, and it will going forward.

But I think you know just a very fact that we have 40 clinical stage programs 14 of Watcher and Registrational trials.

As something that I think maybe under appreciated as we.

From the outside enough you asked about what are the things that are most interest and go let me give that as well, but I remind you that you know our strengthened viral diseases will continue to be invested in and that's the discussion around capsid and really truly providing kind of next generation therapies that we think patients and customers, while we know patients income.

Andrew D. Dickinson: So, that is our primary focus, as you know. And then I'd also add that we also felt that it was important to provide additional transparency and accuracy in measuring our financial performance, and that's why you're seeing additional guidance that helps give you a fuller picture of how we see the business for the coming year. And I think the guidance speaks for itself, and Dan's points were right on. Thank you, guys. I appreciate that.

Summers are asking for out there having said that I think the you know the the extension of our inflammatory disease portfolio with the Galapagos transaction.

It's something that excites me I think theres lots of potential shots on goal is there there's ways to think about between Gilliat and Galapagos building.

Combination approaches in the future and I think we've really got strengthened inflammatory diseases that is building fibrotic diseases is something that we have a depth of expertise in and we understand the you know the challenges associated with that disease state and so as much that builds a portfolio I think your covenants, we have to make sure.

Operator: We always appreciate that. Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is now open. Hi there, thanks so much for taking my question.

Operator: As you look across your mid-stage portfolio into your new corporate strategy, I was wondering if you could elaborate a little bit more on the areas of most interest to build out or to wind down. Where do Gilead's teams stand today to most optimally take advantage of external opportunities? And how do you guys balance potential versus risk as you look at investing in assets both internally and externally? Thanks.

We're putting the right level investment in there that makes sense for the big unmet medical need, but all SCO also the risk associated with with some of the natures of those diseases and then finally, there's been significant effort lumber former debtor I joined on oncology of course, the kite acquisition provide us with the immediate step up and knowledge and know how.

And a breadth of portfolio there, but the non kite portfolio is something that's really built up over the past couple of years, both internally and through our collaboration as we know it's early and we know that we're going to have to continue to pursue those programs and build on it so.

Daniel O'Day: Great. Thanks a lot, Brian.

Daniel O'Day: I'll start and then I'll ask Merdad to comment on the portfolio, because one of the big efforts that we have underway is with Merdad bringing to the organization his breadth of experience in building world-class portfolios. That's exactly what he's involved in right now and really leveraging the strengths accordingly across the portfolio. So I'd say a couple of things, Brian.

My two cents a mirror that you have a deeper.

And.

Kind of a refresh view because you've just entered not too long ago. So good to hear your reaction, yet and I won't belabor, what what Dan said I think I think he hit on the main themes, which is sort of making sure. The capsid molecule looks really interesting and I think we're pretty excited about that one and building a partner for that for both treatment and prevention is going to be.

Daniel O'Day: I think, as you know, we've kind of elevated full disclosure and openness in our portfolio. We started that at J.P. Morgan. You can expect us to continue to be very transparent about the portfolio, the decisions we take, and the decisions we make. But I think just the fact that we have 40 clinical stage programs, 14 of which are in registrational trials, is something that I think may be underappreciated from the outside. Now, you asked me about what the things that are most interesting are.

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Important goal of ours, and then in inflammation getting to fill go launch right and then supplementing filled fill go in aren't forgotten theyve been are.

Pipeline is going to be an important task for us to focus on as well to to build around the inflammation.

Daniel O'Day: I'm going to let Merdad do that as well, but I remind you that our strength in viral diseases will continue to be invested in. And that's the discussion around capsid and really truly providing the kind of next-generation therapies that we think patients and customers are asking for out there. Having said that, I think the extension of our inflammatory disease portfolio with the Galapagos transaction is something that excites me. I think there's lots of potential shots on goals there.

Portfolio and to enable broader reach.

As we as we develop there and then oncology you know I think that that that scenario, where we're going to.

Spend time.

Building out looking for opportunities, especially in immuno oncology and working with our colleagues at kite to make sure that we're finding the right balance.

And.

Bringing the non cell therapy.

Portfolio to complement the cell based therapy.

Daniel O'Day: There are ways to think about between Gilead and Galapagos building combination approaches in the future. And I think we've really got strength in inflammatory diseases that is building. Fibrotic diseases are something that we have a depth of expertise in, and we understand the challenges associated with that disease state.

Anymore more qualitatively, maybe I'd say you know I think what you're hearing is this idea about focus for us.

Making sure that were really.

Thoughtful about where we focus and where we build our expertise that we can build the portfolio around those areas of focus as you've heard me and Dan layout and also that we find the balance to address your other question around risk to find balance around how we approach. The overall portfolio. So that we have a mix in there.

Daniel O'Day: And so as Merdad builds a portfolio, I think he'll comment, we have to make sure that we're putting the right level of investment in there that makes sense for the big unmet medical need but also the risk associated with some of the natures of those diseases. And then, finally, there was significant effort long before Merdad or I joined oncology. Of course, the KITE acquisition provides us with an immediate step up in knowledge and know-how and a breadth of portfolio there. But the non-KITE portfolio is something that's really built up over the past couple of years, both internally and through our collaborations. We know it's early, and we know that we're going to have to continue to pursue those programs and build on them. So that's my two cents. Merdad, you have a deeper and kind of refreshed view because you just entered not too long ago. So it'd be good to hear your reactions.

Some high risk reward programs balanced with some other programs that are less risky and have more.

Higher likelihood of success and so we are going to.

Approach the portfolio that way and broadly across the entire portfolio inclusive of oncology inflammation fibrosis JV.

Thanks, Brian Hope, we got to your question. Thanks, very much thanks, Dan Thanks Barnett.

Our next question comes from Geoff Meacham with Bank of America. Your line is now open.

Afternoon, guys. Thanks, so much the question Andy Thanks for the clarity on guidance.

I wanted to ask you a couple on HIV, so the discovery and prep targets.

Merdad V. Parsey: Yeah, and I won't belabor what Dan said. I think he hit on the main things, which is sort of making sure that, you know, the capsid molecule looks really interesting, and I think we're pretty excited about that one. And building a partner for that, for both treatment and prevention, is going to be, you know, an important goal of ours. And then in inflammation, getting the PhilGo launch right and then supplementing PhilGo in our pipeline is going to be an important task for us to focus on as well, to build around the inflammation portfolio and to enable broader reach as we develop there. And then oncology, you know, I think that's an area where we are going to spend time building out, looking for opportunities, especially in immuno-oncology, and working with our colleagues at KITE to make sure that we're finding the right balance.

What what gets you there to 40, 45% and how you doing so far.

With generics the grab share and then when you look at the Big Pari franchise, obviously pretty dominating share there, but what populations have you seen of late.

That are going to continue to add to the to the switch dynamic.

I guess the questions how many of the switches that you've seen thus far in the U.S. or kind of laggards, and maybe where they're coming from thank you very much.

Okay. Thank Jeff So maybe I'll hit your discovery question first and then go to the carbon.

We exited the year about 27% with disco the and what we're seeing is really nice uptake, but if you recall that the there's a real fragmented market in the prevention market versus the treatment market in the treatment market. You have 3000 4000 prescribers in the prevention market, it's much larger than that like bye.

Unfold.

Merdad V. Parsey: [inaudible]

And so so therefore, it's really how do we get there is making sure we focus on the higher volume, which is the same folks that actually our prescribing and prevention are also.

Merdad V. Parsey: bringing the non-cell therapy portfolio up to complement cell-based therapy. I think more qualitatively, maybe I'd say, you know, I think what you're hearing is this idea about focus for us, making sure that we're really thoughtful about where we focus and where we build our expertise so that we can build a portfolio around those areas of focus, as you've heard me and Dan lay out, and also that we find a balance, to address your other question about risk, to find balance around how we approach the overall portfolio And so we are going to approach the portfolio that way and broadly across the entire portfolio, including oncology, inflammation, fibrosis, and HIV.

Prescribing in the treatment HIV treatment road and those are acquisitions that truly understand the benefit of going from a tdf agent to tasks with all the boat immunoassay T that comes with it and so we believe that we've actually seen that share of that segment increased very rapidly. We also have another big piece of the pie that it's about 2020, 5% of the volume.

That our folks that have never prescribing HIV treatment and so these are folks that we are visiting and obviously using different means of communication to make sure. There educated around the fact the benefits for attack agent like discovery and so what we're seeing is that increase month to month and we're very pleased with where we are today after only three months.

Launch.

Having said that.

We believe that's going to continue with some challenges potentially on the payer side and that's how we get to the 40, 45%.

Towards the end of year in light of the fact that should that is losing it patent and later this year in October and so some payers are RV planning ahead of a little bit on that one and so we're working with them very closely to make sure that patients get the back most appropriate compound for them.

Daniel O'Day: Thanks, Brian. I hope we got your question.

Daniel O'Day: Thanks very much. Thanks, Dan. Thanks, Merdad. Our next question comes from Geoff Meacham with Bank of America. Your line is now open. Afternoon, guys. Thanks so much for the question, and, Andy, thanks for all the clarity on guys.

And and so I guess, where we believe that that's where we're going to adapt about 40, 45% as conversion by.

By October of this year.

So that's the disk Govi and story from a big Harvey standpoint.

Operator: Thank you for joining me on Guidance.

Operator: Joanne, I wanted to ask you a couple questions on HIV. So, the Dyscovian PrEP targets, what gets you there to 40, 45%, and how are you dealing so far with...

I think you know what you were saying good quarter and I think I would say, it's an excellent quarter for big Harvey.

You think that myself I'm very proud of the team on that front and it's been obviously very active very competitive in the market space as you well now the because he is really being used for with the majority of patient and that's really the profile of the target and what it brings to the table in light of the combination of convenience tolerability the high barrier to add viral.

Operator: with generics to grab share and then when you look at the Big Tari franchise, obviously, pretty dominating share there, but what populations have you seen of late that are going to continue to add to

Resistant and so that kind of what big Harvey has to offer what I would say if as you think about.

Operator: I just wanted to add to the switch dynamic.

Operator: I mean, I guess.

All the ending the epidemic initiative, that's been a rapid start with big Harvey is becoming a really increasingly point of differentiation and very important wind for physicians and I think thats really helping to pick Harvey growth as well as as you move forward. So so the fact that you know what attitude patients are actually starting on the tardy, whether that's at night.

Operator: I guess the question is how many of the switches that you've seen thus far in the U.S. are kind of laggards and maybe where they are coming from. Thank you very much.

Johanna Mercier: Okay. Thanks, Geoff.

Johanna Mercier: So maybe I'll hit your DSCOVI question first and then go to the CARVI. So we exited the year around 27% with DSCOVI, and what we're seeing is a really nice uptake. But if you recall, there's a real fragmented market in the prevention market versus the treatment market. In the treatment market, you have 3,000, 4,000 prescribers. In the prevention market, it's much larger than that, like by tenfold. And so, therefore, it's really how we get there is making sure we focus on the higher volume, which is the same folks that actually are prescribing in prevention are also prescribing in the treatment world. And those are physicians that truly understand the benefits of going from a TDF agent to TAF with all the bone and renal safety that comes with it.

Patient or switch patients.

That is really where you're seeing how the market is consolidating round big Harvey and we believe that will just continue.

Not only in 2020, but beyond that just because of what the carvey have to offer for patient.

Hopefully that answered your question Jeff.

Thank you.

Our next question comes from Jefferies targets with FCB Leerink. Your line is now open.

Thank you very much I appreciate the question.

I have to us want about room does severe which is.

Being any other.

Anecdotal reports of responses rather than the one that was in the journal.

Weekend, and do you have manufacturing capacity.

But you could scale up quickly.

I just wondered if I.

Good talk a little bit about probably brought a disease.

Obviously still involved in Nash, but there are a lot of other fibrosis diseases and I just wonder if your ambition span all fibrosis diseases or still pretty much confined to Nash sorry about that problem.

Johanna Mercier: And so we've actually seen that share of that segment increase very rapidly. We also have another big piece of the pie that is about 20%, 25% of the volume that are folks that have never been prescribed an HIV treatment. And so these are folks that we are visiting and obviously using different means of communication to make sure they're educated around the benefits of a TAF agent like DSCOVI. And so what we're seeing is an increase month to month, and we're very pleased with where we are today after only three months of launch. Having said that, we believe that this is going to continue with some challenges potentially on the payer side, and that's how we get to the 40-45% towards the end of the year in light of the fact that Truvada is losing its patent later this year in October. And so some payers are already planning ahead a little bit on that one, and so we're working with them very closely to make sure that patients get the best, most appropriate compound for them. And so I guess we believe that that's where we're going to see about 40-45% of conversion by October of this year.

Thats all right that's all right. Thanks for the question.

On rent severe we have not had any other anecdotal reports.

To date.

And so we'll obviously keep an eye on that very closely and see how that progresses in terms of manufacturing. Our team has really been working night and day, it's been very impressive to watch this team over the past.

Couple of weeks really ramp up to the extent that we can.

If our capacity is going up everyday we're looking at all the options we have.

Expecting.

To be prepared for four or what may come.

Lastly, we are waiting for data both in vitro and then in people to ensure that the drug actually works.

It's important just for everyone to keep that in mind that this is still investigational and.

And we are still waiting for more data to know, but at risk. We are investing pretty heavily to make sure that were prepared as best as we can.

Johanna Mercier: So that's the DSCOVI story. From a Victarvi standpoint, I think, you know, what you were saying, a good quarter, and I think it's an excellent quarter for Victarvi, if I do say so. I'm very proud of the team on that front, and it's been obviously very active, very competitive in the market space, as you well know.

Okay.

In terms of fibrotic diseases.

We we.

We think of it fairly broadly, but I guess from my perspective, when when I think about fiber optic disease to your point.

We Nash as you know we've had programs in diabetic kidney disease, we have a program any idiopathic pulmonary fibrosis right now.

Johanna Mercier: The Victarvi is really being used for the majority of patients, and that's really the profile of Victarvi and what it brings to the table in light of the combination of convenience, tolerability, and the high barrier to antiviral resistance. And so that's kind of what Victarvi has to offer. What I would say is as you think about all the ending the epidemic initiatives, that's where the rapid start with Victarvi is becoming a really increasing point of differentiation and a very important one for physicians. And I think that's really helping the growth of Victarvi as well as you move forward. So the fact that, you know, one out of two patients are actually starting on Victarvi, whether that's a naive patient or a switch patient, that is really where you're seeing how the market is consolidating around Victarvi. And we believe that will just continue not only in 2020 but beyond that, just because of what Victarvi has to offer patients. Hopefully, that answered your question, Geoff. Thank you.

And those are you know biologically related and one other things that we are always have in our mind is to think about where.

Where do apply particular mechanism, which disease to apply particular mechanism and so what I would say is as we you know as we see the readouts on the IPO study as they come forward as we have the discussions with the agency about the Nash program and as we see a novel mom.

Kills it come through will do those into gated way fibrosis is challenging area and we don't underestimate how how difficult that is going to be.

I hope that address your question Jeffery Yep. Thank you.

Our next question comes from Matthew Harrison with Morgan Stanley. Your line is open.

Great. Good afternoon, and thanks for taking the questions I was hoping you could address.

Operator: Our next question comes from Geoffrey Parkins with SVB Larynx. Your line is now open. Thank you very much.

What you see is the opportunity in China, you, obviously mentioned that prevent muddy and then pointed out.

Operator: I appreciate the question. I have one about remdesivir, which is, have there been any other anecdotal reports of responses other than the one that was in the journal over the weekend? And do you have manufacturing capacity that you could scale up quickly?

Some of your HCV medicines or our proved there, but I don't think you've talked about how big you think that could be or how much true contributor you think that could be over the next couple of years. Thanks.

Thanks, Matt people hub Joanna addressed thanks, yes.

In kind of we're excited about the fact that this is really our first opportunity with reimbursed compound. So I think Dan mentioned, which one but just to highlight for hepatitis C standpoint, it's harvoni and Epclusa and the only other product is with a tender process in China and the only other product approved the separate here reimbursed I should say.

Merdad V. Parsey: And then I just wondered if Merdad could talk a little bit about fibrotic diseases. You're obviously still involved in NASH, but there are a lot of other fibrotic diseases, and I just wonder if your ambitions span all fibrotic diseases or are still pretty much confined to NASH. Sorry about that.

And so I mean of course this is more of a volume opportunity than anything else and this is one that we believe you know many patients are in need and we have a real opportunity to help those patients.

Merdad V. Parsey: That's all right. That's all right.

Merdad V. Parsey: Thanks for the question. On Remdesivir, we have not had any other anecdotal reports to date, and so we'll obviously keep an eye on that very closely and see how that progresses. In terms of manufacturing, our team has really been working night and day. It's been very impressive to watch this team in the past couple of weeks really ramp up to the extent that we can. Our capacity is going up every day. We're looking at all the options we have, expecting to be prepared for what may come. Obviously, we are waiting for data both in vitro and then in people to ensure that the drug actually works. It's important just for everyone to keep that in mind, that this is still investigational, and we are still waiting for more data to know. At risk, we are investing pretty heavily to make sure that we're prepared as best as we can.

That's in hepatitis C. In hepatitis B them Lady also got reimbursement, which of course as you know hepatitis B biggest market.

The patient standpoint is also in China, and then last one is genvoya, an HIV, which HIV is can be the first time that actually products will get reimbursed in China in HIV the class and so we believe you know that that's also one that were cautiously optimistic that more patients can really get that that treatment that they need on.

So we are cautiously optimistic about our China business opportunity you can appreciate that with everything going on right now in China.

The focus is not on.

Some of these new products that got reimbursement the focus is really on the people and what's going on with the current of Iris.

And so we do think that might be a little bit delayed in 2020, as we see kind of that play out but I do think from a longer term standpoint. This is how we should be thinking about China and the opportunity moving forward.

Hasn't the patient pool that is so predominant in specific disease areas that we offer potential solutions for patients.

Merdad V. Parsey: What's that?

Merdad V. Parsey: In terms of fibrotic disease, we think of it fairly broadly, but from my perspective, when I think about fibrotic disease, to your point, NASH, as you know, we've had programs in diabetic kidney disease. We have a program in idiopathic pulmonary fibrosis right now. And those are biologically related. And one of the things that we always have in our mind is to think about where to apply a particular mechanism, to which disease to apply a particular mechanism. And so what I would say is that as we, you know, as we see the readouts from the IPF study as they come forward, as we have discussions with the agency about the NASH program, and as we see novel molecules that come through, we'll do those in a gated way. This is a challenging area, and we don't underestimate how difficult that's going to be. I hope that I have addressed your question.

I think thats, great Matthew the only thing I've answered Joanna captured really well is that we kind of put this into the the durable based part of our strategic story and I think thats because it is a volume game I think there is real opportunity here, obviously for patients in China, but also for our business, but it helps us kind of stabilize and navigate.

Durable base over the course of the years to come and.

And it's important for patients and also for our business to build out and then we have the inflection points on top of that.

You know with discard a business, but forgotten the.

With a variety of things that are in our hands right now in a larger portfolio to inflect for the for the for the referred to provide our confidence in the mid to long term growth. Thanks.

Merdad V. Parsey: Geoffrey Meacham. Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open. Great. Good afternoon. Thanks for taking the question. I was hoping you could address what

Our next question comes from a line of him or is that with Evercore ISI. Your line is now open.

Hi, Thanks, so much for taking my question, perhaps first one for Joanna Gena I know you worked in.

Operator: What you see is the opportunity in China. You obviously mentioned that for Vemliti and then pointed out some of your HDV medicines are.

And your prior rule you headed a commercial organization, which was best in class in oncology and a very established organization and primary care would be I look with.

Operator: I don't think you've talked about how big you think that could be or how much of a contributor you think it could be over the next couple of years. Thanks.

Johanna Mercier: Thanks, Mandy. We'll have Johanna address that.

And my question to you as as you look at Gilead, where it stands today, how prepared as the organization to compete with Abbvie and Pfizer to companies very well entrenched in the in there with their Jack's respectively.

Johanna Mercier: Yeah, so in China, we're excited about the fact that this is really our first opportunity with reimbursed compounds, so I think Dan mentioned which one, but just to highlight, from a hepatitis C standpoint, it's Harvoni and Epsclusa, and the only other product, this was a tender process in China, and the only other product approved is Zepatier, which is reimbursed, I should say. And so, I mean, of course, this is more of a volume opportunity than anything else, and this is one that we believe, you know, many patients are in need, and we have a real opportunity to help those patients. That's in hepatitis C. In hepatitis B, Vamlidy also got reimbursement, which, of course, as you know, hepatitis B, the biggest market from a patient standpoint, is also in China. And then the last one is Genvoya in HIV, which is going to be the first time that actual products will get reimbursed in China, in this class.

I'm just trying to understand the level of organizational preparedness, especially in light of which I think it's probably something like 200 million plus or minus the year over year incremental issue any expense, possibly heading into the full gotten them launch.

And one for me that I.

I know the Filgotinib you see trial selection ones do you any day.

Also understand that there is inadequate responders to interview in there. So those patients in particular, what percentages that of the trial and do you expect full gotten up to be active in interior nonresponders. Thank you.

So maybe I'll kick it off and we are weak your first part of your question.

So so specific to forgotten that I think that you're right. Obviously, we are very well aware that it's going to be a very competitive environment theres no doubt about that but I think we're being really smart about it.

Johanna Mercier: And so we believe, you know, that's also one that we're cautiously optimistic that more patients can really get the treatment that they need. So we are cautiously optimistic about our China business opportunity. You can appreciate that with everything going on right now in China, the focus is not on some of these new products that got reimbursement; the focus is really on the people and what's going on with the coronavirus. And so we do think that might be a little bit delayed in 2020 as we see how that plays out. But I do think from a longer-term standpoint, this is how we should be thinking about China and the opportunity moving forward because of the patient pool that is so predominant in the specific disease areas that we offer potential solutions for patients.

And what I mean by that is because I think what we're thinking about is making sure where we're going to bring focus to the table. So we are going to be we're very clear about wherever you want to play and where we play we win.

Not about commercial excellence and medical excellent to be honest with you because medical and commercial art and need to partner very closely and we are already around the clinical data and the profile of this compound and how that really needs to be at the center everything we do with still got Mad.

I would also say that you know if I take other disease areas, where we had similar competitive dynamics and similar competitor to be honest and we've done actually quite well in that space and Acds. A great example, that where we've regained share now we're at 60% share on in HCV and across the market.

Place, which I do think shows others, including internally and externally that we can be very content as.

Daniel O'Day: I think that's great, Matthew. The only thing I would say, and Johanna has captured it really well, is that we kind of put this into the durable base part of our strategic story, and I think that's because it is a volume game. I think there is real opportunity here, obviously for patients in China but also for our business. But it helps us kind of stabilize and navigate that durable base over the course of the years to come. And it's important for patients and also for our business to build that in. And then we have the inflection points on top of that, you know, with Yaskarta Business, with Philgottonib, with a variety of things that are in our hands right now and a larger portfolio to inflect, to provide our confidence in mid- to long-term growth. Thanks.

When we need to be and I think thats exactly what you can see with forgotten that we are preparing the team.

We are making sure that we are hiring the right people.

With the right level of experiences to making sure that and we are absolutely ready for unexpected launch later, this year and and I think that.

Really excited about it to be honest with you I think the team has really come up.

A line and I think we brought in some really good external talent that we already had some very good internal talent as well and building that you together I think we'll make for a very successful launch moving forward.

And yet and so over this is Brad maybe I'll start by clarifying the timing because I think you may have given given my team a heart attack I don't think it's any day now I think we've guided to too little bit later in the first half of the year or so.

Operator: Our next question comes from the line of Umer Raffat with Evercore ISI. Your line is now open.

Please be patient with us, we'll we'll get it out there as quickly as we can.

In terms of.

Operator: Hi, thanks so much for taking my question. Perhaps the first one for Johanna. Johanna, I know you worked for, in your prior role, you headed a commercial organization that was best in class in oncology and a very established organization in primary care with Eliquis. And my question to you is, as you look at Gilead where it stands today, how prepared is the organization to compete with AbbVie and Pfizer, two companies very well entrenched in their JAX, respectively? I'm just trying to understand the level of organizational preparedness, especially in light of, which I think is probably something like 200 million plus or minus, the year over year incremental STNA expense possibly heading into the Felgottenib launch. And one for Merdad, I know the Felgottenib UC trial selection ones are due any day. I also understand that there are inadequate responders to antivio in there. So those patients, in particular, what percentage is that of the trial? And do you expect Felgottenib to be active in antiviral non-responders? Thank you.

The interior nonresponders.

Well no the precise proportion until after we see the demography of this study afterwards after the trial is done.

So I I I'm, not going to I'd be speculating as to sort of where we land on that so I'm going to beg your patience on that one as well, but in terms of expectations of response, you know I think if you you look at this.

This population as you know they cycle through a variety of medications and while the response rate when they cycle to the next medication isn't usually as robust as a naive patients there are good.

Theres good evidence that going from let's say Antonio to a TNF inhibitor or vice versa. You have you you still have a good proportion of patients who respond in that so I think our expectations are fairly realistic about what the response that we'll have responders in there too too to feel gotten it.

Thank you very much.

Our next question comes from Cory Kasimov with JP Morgan Your line is now open.

Johanna Mercier: So maybe I'll kick it off, Umer, with your first part of your question. So, specific to Phil Gottlieb, I think that you're right. Obviously, we are very well aware that it's going to be a very competitive environment. There's no doubt about that. But I think we're being really smart about it. And what I mean by that is, I think what we're thinking about is making sure we're going to bring focus to the table. So we're going to be very clear about where we want to play, and where we play, we win.

Hey, good afternoon, guys. Thanks for taking my question wanted to ask you on the corporate strategy fraught with everyone's pretty clearly waiting for the company to engage in more substantial business development, but how much of a sense of urgency do you have on this front given kind of new management team all coming together now and how successful do you think gilliat can.

Be without outside help basically relying on the first two pillars of your strategy.

Johanna Mercier: And that's about commercial excellence and medical excellence, to be honest with you. Because medical and commercial are going to need to partner very closely, and we already are, around the clinical data and the profile of this compound and how that really needs to be at the center of everything we do with Phil Gottlieb. I would also say that, you know, if I take other disease areas where we had similar competitive dynamics and similar competitors, to be honest, we have actually done quite well in that space. And HCV is a great example of that, where we've regained share. Now we're at 60% share in the HCV marketplace, which I do think shows others, including internally and externally, that we can be very competitive when we need to be. And I think that's exactly what you're going to see with Phil Gottlieb.

Yes, Thanks Corey.

Give us starting if.

Andy what that as well so look I think.

You know first of all I believe we're coming out this from a position of strength that position of strength now that we have a complete management time team with depth of experience of course, we're still building experience in some of our new therapeutic areas, but we have now a team that is accomplished that understands what good looks like that understands how to take.

Appropriate risks.

And then the that's relatively recent that we have this team together like this so it allows us if you like when we look at external opportunities in our areas of expertise, which is not unimportant, because we really decided to focus there.

I think it allows us to tip to move faster than we know that moving fast is important and being first to the table.

Johanna Mercier: We are preparing the teams. We are making sure that we are hiring the right people with the right level of experience to make sure that we are absolutely ready for an expected launch later this year. And I think that I'm really excited about it, to be honest with you. I think the team has really come up the line, and I think we've brought in some really good external talent, but we already had some very good internal talent as well. And building the two together will make for a very successful launch moving forward.

At the right time, some cases, that's more risks and taste cases that less risk depending on the nature of what we're looking at but I think we're well prepared to be able to pivot to be first at the table or close to first of the table and to make things happened. So we have a solid pipeline, but we have a sensible.

Urgency of course around building this.

I think we've been clear about the areas, we intend to build in.

Merdad V. Parsey: And, yeah, and so, Umer, this is Merdad. Maybe I'll start by clarifying the timing because I think you may have given my team a heart attack. I don't think it's any day now. I think we've got it a little bit later in the first half of the year. So, please be patient with us. We'll get it out there as quickly as we can. In terms of the antivio non-responders, you know, I won't know the precise proportion until after we see the demography of the study after the trial is done. So, I'm not going to, I'd be speculating as to sort of where we land on that. So, I'm going to beg your patience on that one as well.

We'll also be disciplined you know, we're not going to.

You know, we're going to take we're going to take appropriate risks, but I think risk that will help us build the shape of the portfolio very much like my dad mentioned before and you know we'll take that into account too. So it's not just about an individual target or asset.

It's also about how that fits into the complementary nature of that therapeutic area and or other therapeutic areas and that's that's where we will pivot and move with but rest assured our sense of urgency around is high.

Merdad V. Parsey: But in terms of expectations of response, you know, I think if you look at this population, as you know, they cycle through a variety of medications. And while the response rate when they cycle to the next medication isn't usually as robust as a naive patient, there is good, there's good evidence that going from, let's say, antivio to a TNF inhibitor or vice versa, you still have a good proportion of patients who respond to that. So, I think our expectations are fairly realistic about the response, that we'll have responders in there to feel gotten. Thank you very much.

But so is now our expertise I would say as well and did you want to add to that I mean did the only thing I would add I agree that there is a sense of urgency will be disciplined I'd say to some extent Corey the best proxy is looking at the past couple of years I mean, we've outperformed commercially the last two years, we've given very clear guidance for 2020, obviously.

We will work incredibly hard to outperform again, we see.

We see opportunities.

Things that we can potentially do better we would like to find external assets to supplement our pipeline, but we also feel that the durability of our existing business and our existing pipeline are both under appreciated. So to answer. Your second question on can we compete without doing large business development deals absolutely I mean, and we think that we can.

Merdad V. Parsey: Our next question comes from Corey Kazimov with J.P. Morgan. Your line is now open. Hey, good afternoon guys. Thanks for taking the time to answer the question. I wanted to ask you on the corporate strategy front. Well, everyone's pretty clearly waiting for the company to engage in more substantial business development, but how much of a sense of urgency do you have on this front, given the new management team all coming together now, and how successful do you think Gilead can be without outside help, basically relying on the first two pillars of your strategy?

Continue to build a sustainable business would we like to supplement it with outside assets, especially the to build our late stage pipeline yes.

And we are actively working on that but to reiterate what Dan said, we're going to be thoughtful and disciplined and how we do it.

All right that's helpful. Thanks, guys.

Daniel O'Day: Yeah, thanks, Corey. I'll give it a start, and if Andy wants to add anything as well.

Thanks.

Our next question comes from Mohit Bansal with Citi. Your line is open.

Daniel O'Day: So look, I think, you know, first of all, I believe we're coming at this from a position of strength, a position of strength now that we have a complete management team with depth of experience. Of course, we're still building experience in some of our new therapeutic areas, but we have now a team that is accomplished, that understands what good looks like, that understands how to take appropriate risks, you know, and it's relatively recent that we have this team together like this. So it allows us, if you like, when we look at external opportunities in our areas of expertise, which is not unimportant, because we've really decided to focus there, I think it allows us to move fast, and we know that moving fast is important, you know, and being first to the table at the right time, in some cases that's more risk, in some cases that's less risk, depending on the nature of what we're looking at, So we have a solid pipeline, but we have a sense of urgency, of course, around building this, and I think we've been clear about the areas we intend to build in. But rest assured, our sense of urgency around this is high, but so is our expertise, I would say, as well. Andy, do you want to add anything to that?

Great. Thanks for taking my question.

If you could.

Talk a little bit about the market opportunities.

So it didnt, maybe tell us that heavily TTP equation.

Think about this as an incremental opportunity you think the portion of it could be from existing get started thank you.

Got it captured in it.

Okay.

So I think you know I can touch on that from a commercial standpoint, and then maybe packet efforts Diana cigarette attach a little bit more on its clinical profile and its offering.

But from a commercial standpoint, we're thinking about the captain in two ways one intervention on the other one in treatment obviously.

We think there's probably an opportunity we'll see.

To see if theres monotherapy in prevention and potentially obviously, we're looking for combination in the treatment and Diana can touch on that a little bit more.

In prevention I do think with discovery right now in prevention and the launch of what's going on we do think that probably going to be something that could be very interesting for patients. If you think about that marketplace I think it potentially up to six months.

And that's really what patients are looking forward to have something every six months. This could be something very interesting and exciting for patients and that would be with the timing that we're thinking about four for this compound it assuming all plays out Dan it could be actually more of a switch intervention market from discovery to the capsid inhibitor.

Having said that in treatment that we could look very different and I do think that potentially a market expansion.

Andrew D. Dickinson: I mean, the only thing I would add is that I agree that there is a sense of urgency; we'll be disciplined. I'd say, to some extent, Corey, the best proxy is just looking at the past couple of years.

As it would really be if we can find a combination that would really work in the treatment setting I do think that would offer a long acting that patients actually really want.

Andrew D. Dickinson: I mean, we've outperformed commercially for the last two years, and we've given very clear guidance for 2020. Obviously, we will work incredibly hard to outperform again. We see opportunities, you know, things that we can potentially do better. We would like to find external assets to supplement our pipeline, but we also feel that the durability of our existing business and our existing pipeline are both underappreciated. So to answer your second question, can we compete without doing large business development deals? Absolutely. I mean, and we think that we can, you know, continue to build a sustainable business. Would we like to supplement it with outside assets, especially to build our late stage pipeline? Yes, and we are actively working on that. But to reiterate what Dan said, we're going to be thoughtful and disciplined in how we do this. Alright, that's helpful. Thanks guys.

And that's the biggest piece of the tied to what we're trying to do with making sure that we matched up what the patients are telling us with our clinical development.

Plan and what I mean by that is as we've done so much market research with our patient pool, what they're telling US is yes weekly oral would be interesting and potentially something that they might be interested over a daily compound, but it's not for everyone.

Then when you go from weekly URL to potentially what else would they want with a rather an injectable to subcu subcu wins out if they'd rather three months in six months six months win wins out and so that's really where we have focused our clinical development team to make sure that we're addressing the needs of patients and maybe with that I'll turn it over to Diana Yes, we we've.

Looking at the bar is very high because big Harvey, It's really set the standard.

We also know that within the U.S. for example on the 85% of people with HIV or in treatment and if we want to and they epidemic we have to do better and the capsid inhibitors going to be one of those tools and we really see it as to how that was saying as a market expand or because one of the reasons that those people aren't in treatment is that the treatments right now we're not a minimal.

To their lifestyles, and so a long acting as a way to make the umbrella a little bit larger it's a complement to pick tavi and what we have already.

Okay.

Operator: Thanks, Craig.

Our next question comes multimedia young with Cantor Fitzgerald. Your line is now open.

Operator: Our next question comes from Mohit Bansal with Citi. Your line is now open. Great, thanks for taking my question, and if you could talk a little bit about the market opportunity for CABSID inhibitors, especially in heavily pre-TK patients, should we think about this as an incremental opportunity?

Hey, guys. Thanks for taking my question.

I just wanted to ask maybe perhaps Dan.

And or to about the or that sorry about the.

Nash and happy space I mean, I know, it's one that's been pretty tough in the clinical side, but obviously, there's a lot leverage figure business. Since you have the sales force in place I guess I'm just trying to figure out where you guys kind of think about that going forward over the next 12 months. Thanks.

Johanna Mercier: from existing Gilead products. Thank you.

Johanna Mercier: So I think, you know, I can touch on it from a commercial standpoint and then maybe pass it over to Daina.

Johanna Mercier: to touch a little bit more on its clinical profile and its offerings.

Sure murder do you want to.

Yes, sure happy to yes. Thanks, Thanks to leave yes, yes for.

Johanna Mercier: From a commercial standpoint, we're thinking about the capsid in two ways. One is in prevention, and the other one in treatment. Obviously, we think there's probably an opportunity, we'll see, to see if there's monotherapy in prevention and, potentially, obviously, we're looking for combination therapy in treatment and Daina can touch on that a little bit more. In prevention, I do think with DSCOVI right now in prevention and the launch of what's going on, we do think that's probably going to be something that could be very interesting for patients. If you think about that marketplace, I'm thinking potentially up to six months, and that's really what patients are looking for, to have something every six months. This could be very interesting and exciting for patients, and with the timing that we're thinking about for this compound, assuming it all plays out, then it could actually be more of a switch in the prevention market from DSCOVI to the capsid inhibitor.

For Nash I think.

We definitely.

Our working hard on the results from the Atlas trial and will be.

We'll be talking with the regulators and looking to see what the path forward is as you as you said it data will be published to.

Easily seasonal right exactly so in in April will show the data to everyone in April easel and we're we have plans for a certain midyear discussion with the agency to to sort of see if theres a path forward and what that might look like and make a decision based on based on those discussions.

Just a reminder, that we've we've been studying more evthree and that for patients to more severe patients than our than most of the other competition has where they're looking at the mile their patient populations at ones to Evthree have twos Nfthree sorry, primarily.

Johanna Mercier: Having said that, in treatment, that could look very different, and I do think that's potentially a market expansion because it would really be, if we can find a combination that would really work in the treatment setting, I do think that would offer a long-term effect that patients actually really want, and that's the biggest piece of the puzzle. What we're trying to do is make sure that we match up what the patients are telling us with our clinical development plan, and what I mean by that is, as we've done so much market research with our patient pool, what they're telling us is, yes, a weekly oral would be interesting and potentially something that they might be interested in over a daily compound, but it's not for everyone. And then, when you go from weekly oral to potentially, what else would they want? Would they rather an injectable to a sub-Q? Sub-Q wins out. If they'd rather have three months than six months, six months wins out.

So it does pose some unique challenges.

So we will continue to work there and I think that you I would say that same thing for HPV right. I think it's a HPV is a bit different in that it is a core part of our business we have.

We have therapies, we have a sales force tier.

To your point on that we're continuing to be committed to that space and working there. Our focus is on a cure we have.

Ongoing work with it with a number of programs to to try to header.

Moved from where we are today in treatment to moving towards a cure.

Thats going to be a challenging road, but we're committed to it and continue to work work there.

I think I couldn't agree more with Merck that view.

Got it maybe add to that ALLETE is just to say.

Particularly in Hep B, we understand the ended today. This is going to take partnerships. We have to decide what do we do internally what are we do with partners.

Johanna Mercier: And so that's really where we have focused our clinical development team to make sure that we're addressing the needs of patients, and maybe with that, I'll turn it over to Diana. Yeah, we recognize the bar is very high because the CAR-V has really set the standard, but we also know that within the U.S., for example, only 85% of people with HIV are in treatment, and if we want to end the epidemic, we have to do better, and the capsid inhibitor is going to be one of those tools. And we really see it, as Johanna was saying, as a market expander because one of the It's a complement to VicTAR-V and what we have already.

Cure is significantly more difficult than treatment in this area.

And so I think that get back into some of the comments that both for that and I had around.

How much should we invest in ourselves how much to do with partnerships what percentage of our total investment goes into these very very important.

Unmet medical needs.

And making sure that we also invest appropriately in.

Other areas that we know have even greater realization potential that also have begun my medical needs. So that balance will continue to play out. The reality is we have very good expertise in both these diseases and I think we'll be able to make good decisions.

Great. Thank you.

Thank you.

Our next question comes from Selim Siad with Mizuho Your line is helping.

Daina Graybosch: [inaudible] Our next question comes from Alethea Young with Cantor Fitzgerald. Your line is now open.

Hey, Thanks, so much guys for taking my question and I appreciate the color on the guidance Andy.

Operator: Hey guys, thanks for taking my question. I just wanted to ask, perhaps Dan and Merdad, about the NASH and HEP B space. I mean, I know it's one that's been pretty tough on the clinical side, but obviously there's a lot of leverage for your business since you have the sales force in place. So I guess I'm just trying to figure out where you guys kind of think about that going forward over the next 12 months. Thanks.

Just one for me on.

On sort of the long term picture here I'm not asking for long term guidance, maybe that's for Dan or Randy.

Obviously, you guys provided a lot of color I'm, joining you mentioned, but Harvey a majority of patients through 2033, you guys seem.

Relatively excited about what you haven't currently in the pipeline with forgotten them et cetera.

But what consensus has you modeled that 22 billion sort of flattish for the next few years do you need emanate too.

Operator: Sure. Merdad, do you want to go?

Merdad V. Parsey: Yeah, sure. Happy to. Yeah, thanks. Thanks, Olivia.

Grow your topline or do you think you can grow your topline without any additional M&A. Thanks, so much.

Merdad V. Parsey: Yeah, for NASH, I think we definitely, you know, are working hard on the results from the ATLAS trial, and we'll be talking with the regulators and looking to see what the path forward is. As you said, the data will be published at EASL. Right, exactly. So in April, we'll show the data to everyone in April at EASL, and we have plans for a sort of midyear discussion with the agency to sort of see if there's a path forward and what that might look like, and we make a decision based on those discussions. You know, just a reminder that we've been studying more F3 and F4 patients, the more severe patients, than most of the other competition has, where they're looking at the milder patient populations of F1s to F3s, F2s and F3s, sorry, primarily. So it does pose some unique challenges.

Yes.

Thanks, Phil even certainly have others comment here as well, but but look I think as weve as we try to build the story as I've come to investigate the story and some of the other colleagues around the table.

I think the first answer to your question is.

You know how durable is our base business, because I think that has a very different.

Depending on how durable.

You feel it is that has a very different.

Perspective and.

Our confidence around the mid to long term growth. So I think in you know we've talked quite a bit about this.

We feel very confident with the durability of our base business and this is different by the way compared to a lot of companies in the industry, Yes, we have.

As you know from our guidance for issuing today, we've got we've got some patent expiry to deal with this year and some patent expiry to deal with next year in terms of Truvada, but then as you look out in terms of time.

Merdad V. Parsey: So, you know, we will continue to work there. And I think that I would say the same thing for HPV, right? But I think HPV is a bit different in that it is a core part of our business. We have treatments. We have a sales force, to your point about that.

We feel well prepared for the discovery patent expiry in 20 526 in a basically then have a very durable franchise out until 2033. So so that's the first part of the answer into the story then.

Merdad V. Parsey: We're continuing to be committed to that space and working there. Our focus is on a cure. We have ongoing work with a number of programs to try to head our, you know, move from where we are today in treatment to moving towards a cure. That's going to be a challenging road, but we're committed to it and will continue to work there.

We do feel that we have growth engines internally and that's exactly why we've tried to highlight them a bit more give your exposure to them be transparent about it but also be very clear about where are those inflection points are things that we have in our hands today and of course some of the obvious ones. We have on the plate with things like ulcerative colitis potentially reading out this year.

Daniel O'Day: Yeah, I think I couldn't agree more with Merdad's view, and the only thing I'd maybe add to that, Alethea, is just to say that, particularly in Hep B, we understand that, at the end of the day, this is going to take partnerships. We have to decide, you know, what do we do internally? What do we do with partners? Cure is significantly more difficult than treatment in this area, and so I think that gets back into some of the comments that both Merdad and I had made around the question of how much we invest in ourselves. How much do we do with partnerships? What percentage of our total investment goes into these very, very important unmet medical needs? And making sure that we also invest appropriately in other areas that we know have even greater realization potential and that also have big unmet medical needs. The reality is that we have very good expertise in both these diseases, and I think we'll be able to make good decisions.

Second line Dl Bcl.

Capsid inhibitor coming next year.

Well, we didnt talk about a variety of things that are coming to the Galapagos pipeline, but also have optionality for us if you like in that you know osteoarthritis. The phase two will will come true this year.

And then we'll have an IPO interim next year. So there are variety of things in our hands, including other collaborations I'm not speaking out here today that are in phase ones are label, enabling phase twos that are going to read out and we've given you all the exposure to the pipeline portfolio. So can we grow based upon what we have in house, yes, I'm confident we can and I also.

I believe.

That we're going to supplement that and de risks that overtime or we're going to continue to do it in the way that you've seen us do that.

With proper partnerships and proper M&A transactions to get to a portfolio strength, it's even more obvious to everybody and even more reliable and that's going to take some time to build that into growth, but we're firmly committed to do that we have the resources to be able to do it I mean, that's what I would say Andy region over I think thats perfect in an amazing okay.

Operator: Great, thank you.

Operator: Thank you.

Operator: Our next question comes from Salim Syed with Mizuho. Your line is now open.

Operator: Hey, thanks so much, guys, for taking my question, and I appreciate all the color on the guidance, Andy. Just one from me on sort of the long-term picture here. And I'm not asking for long-term guidance. Maybe this is for Dan or Andy.

Because that helps me yeah, that's super helpful. Thanks, So much guys.

Thank you.

Our last question comes from a line of Phil Nadeau with Cowen and company. Your line is now open.

Daniel O'Day: Obviously, you guys provided a lot of color. Johanna, you mentioned Big Tar V, majority of patients through 2033. You guys seem, you know, relatively excited about what you have currently in the pipeline. But what consensus have you modeled at $22 billion, sort of flat-ish for the next two years? Do you need M&A to grow your top line, or do you think you can grow your top line without any additional M&A?

Good afternoon. Thanks for fitting in one question for Randy on the 2020 got its just kind of maybe three moving parts that more mentioned on slide 25, and I was just curious to get your thoughts on on whether these.

Well materially impact revenue in 2020, so positive side first is filgotinib any expectations for forgotten it revenue cuts, but in your guidance there may be as potential headwinds.

Daniel O'Day: Thanks so much.

Daniel O'Day: Yeah, thanks, Salveen, and I'll certainly have others comment here as well, but look, I think as we've tried to build the story and as I've come to investigate the story and some of the other colleagues around the table, I think the first answer to your question is, you know, how durable is our base business? Because I think that has a very different, depending on how durable, you know, you feel it is, that has a very different, you know, perspective on our confidence around mid- to long-term growth.

In HIV the nucleotide sparing regimens are launching.

Any expectation for those to gain share through the course of the year and on HCV price has been deteriorating over last couple of years any expectations for further declines in price again contemplating got it. Thank you.

Yes, hi level.

Joanna may want to comment on the HIV headwinds in fill go there's limited contribution in in 2020 as you'd expect given the projected launch date so.

They are potential upside there.

Daniel O'Day: So I think, and, you know, we've talked quite a bit about this, we feel very confident with the durability of our base business, and this is different, by the way, compared to a lot of companies in the industry. Yes, we have, you know, as you know from our guidance we're issuing today, we've got some patent expiry to deal with this year and some patent expiry to deal with next year in terms of Truvada, but then as you look out in terms of time, we feel well-prepared for the Discovi patent expiry in 2025-26, and it basically then has a very durable franchise out until 2033. So that's the first part of the answer to the story.

If that develops.

We think and spend a lot of time in the HIV market.

So as you might expect.

Our expectations for the competitive dynamic and HIV market are built into our guidance.

And then the HCV space, we do expect there to be continued price pressure in the HCV space. If you see the third quarter to the fourth quarter. If you look at our slides.

The number of patients that were treated actually went up.

Nonetheless revenues are down given kind of the dynamic in that in that space. So obviously, it's a smaller speaking HCV at the smaller piece of our business.

But we are guidance assumes continued.

Daniel O'Day: Then we do feel that we have growth engines internally, and that's exactly why we've tried to highlight them a bit more, give you exposure to them, be transparent about it, but also be very clear about where those inflection points are, things that we have in our hands today. And, of course, some of the obvious ones, you know, we have on the plate with things like ulcerative colitis potentially reading out this year, second-line DLBCL, capsid inhibitor coming next year, but we did talk about a variety of things that are coming to the Galapagos pipeline that also have optionality for us, if you like, and that's, you know, osteoarthritis, a Phase II will come true this year, and then we'll have an IPF interim next year.

Decrease in that business overtime, but it's still important business for us it generates a lot of cash flow.

On a percentage basis.

Although the increases the same on a dollar basis.

It's less than last year over year on that at some point it may stabilize but that's how I would think about it still at a high level I don't know John if you want to mainline I'm totally line with buttons that I would just add from HCV standpoint, the only thing I would add to that it's just so much more predictable today than it wise and so and the declines are much much softer.

And so what you're going to see is still continued price erosion across U.S. anurup.

And the patient starts are a little bit less every single quarter, but having said that it's nothing like what we've seen in the past due I think much more predictable marketplace for us in HIV I think we have had some of those I guess headwinds as you say from a competitor standpoint, and mid mid last year, I guess or so and competition came into the marketplace.

Daniel O'Day: So there are a variety of things in our hands, including other collaborations, I'm not speaking out here today, that are in Phase I or label-enabling Phase II that are going to read out, and we've given you all exposure to the pipeline and portfolio. So can we grow based upon what we have in-house? Yes, I'm confident we can, and I also believe that we're going to supplement that and de-risk that over time. And we're going to continue to do it in the way that you've seen us do that, with proper partnerships and proper M&A transactions to get to a portfolio strength that's even more obvious to everybody and even more reliable, and that's going to take some time to build that and to grow it, but we' I mean, that's what I would say, Andy. Would you?

And and we have been able to manage that extremely well and Josh let with very limited impact two big Harvey and its growth trajectory and so we believe the same will continue throughout 2020.

That's helpful.

Thanks, Bill Thank you.

So.

Good I think that's the end of our call today.

[music].

Operator.

Ladies and gentlemen, thanks for participating in today's conference. This concludes the program and you may now disconnect everyone have a good day.

Andrew D. Dickinson: I don't know. I think that's perfect. I don't have anything else to add.

Operator: Does that help? Yeah, that's super helpful.

Operator: Thanks so much, guys.

Operator: Thank you.

Operator: Our last question comes from a line Phil Nadeau with Cowan & Company. Your line is now open. Good afternoon, thanks for fitting me in.

Yes.

[music].

Andrew D. Dickinson: One question for Andy on the 2020 guidance, there's kind of maybe three moving parts that weren't mentioned on slide 25, and I was just curious to get your thoughts on whether these will materially impact revenue in 2020. So, the positive side first is Philgotinib. Any expectations for Philgotinib revenue contemplated in your guidance? While there may be potential headwinds in HIV, the nucleotide-sparing regimens are launching. Any expectation for those to gain share through the course of the year? And on HCV, price has been deteriorating over the last couple years. Any expectations for further declines in price? Again, it is contemplated in guidance. Thank you.

Andrew D. Dickinson: Yeah, at a high level, and Johanna may want to comment on the HIV headwinds. In filgo, there's limited contribution in 2020, as you'd expect, given the projected launch date.

Andrew D. Dickinson: So there's potential upside there, if that develops. You know, we think about and spend a lot of time in the HIV market. So, as you might expect, our expectations for the competitive dynamic in the HIV market are built into our guidance. And then, in the HCV space, we do expect there to be continued price pressure in the HCV space. If you compare the third quarter to the fourth quarter, if you look at our slides, you know, the number of patients that were treated actually went up. Nonetheless, revenues are down, given the kind of dynamics in that space. So obviously, it's a smaller, speaking of HCV, a smaller piece of our business. But we, our guidance assumes a continued decrease in that business over time, but it's still an important business for us. It generates a lot of cash flow, and on a percentage basis, although the increase is the same on a dollar basis, it's less and less year over year. And at some point, it may stabilize. But that's how I would think about it, Phil, at a high level.

Johanna Mercier: I would just add, from an HCV standpoint, the only thing I would add to that is that it's just so much more predictable today than it was, and the declines are much, much softer. And so what you're going to see is still continued price erosion across the U.S. and Europe, and patient starts are a little bit less every single quarter, but having said that, it's nothing like what we've seen in the past, so I think it's a much more predictable marketplace for us. In HIV, I think we have had some of those headwinds, as you say, from a competitor's standpoint, mid-last year, I guess, or so, when competition came into the marketplace, and we have been able to manage that extremely well, and with very limited impact on BicTarV and its growth trajectory, and so we believe the same will continue throughout 2020.

Johanna Mercier: That's helpful; thank you. Thanks, Joe.

Operator: Good. I think that's the end of our call today.

Operator: Thank you. Thank you. Thank you.

Operator: Operator Ladies and gentlemen, thank you for participating in today's conference. This concludes the program, and you may now disconnect. Everyone have a great day. All done.

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