Q2 2020 Gilead Sciences Inc Earnings Call

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Operator: Ladies and gentlemen, today's conference is scheduled to begin shortly. Please continue to stand by. Thank you for your patience.

Operator: BF-WATCH TV 2021

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the second quarter 2020 Gilead Sciences earnings conference call. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone keypad. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then zero to reach an operator. I'd now like to hand the conference over to your host today, Mr. Douglas Maffay, Senior Director of Investor Relations. Please go ahead. Thank you.

At this time all participant lines are in listen only mode. After the speakers presentation. There will be a question answer session.

I asked the question during the session you'll need to press Star then one on your telephone keypad.

Please be advised today's conference maybe recorded.

If you acquire any further assistance. Please press star then zero to reach operator.

I feel like a hand the conference over to your hosts today Mr. Douglas Buffet Senior director of Investor Relations. Please go ahead.

Thank you ladies and good afternoon, everyone.

Douglas Maffei: Thank you Liz and good afternoon everyone. Just after market close today, we issued a press release with earnings results for the first half and second quarter of 2020. The press release and detailed slides are available in the investor section of the Gilead website. The speakers on today's call will be Daniel O'Day, Chairman and Chief Executive Officer, Johanna Mercier, Chief Commercial Officer, Merdad Parsey, Chief Medical Officer, and Andrew Dickinson, Chief Financial Officer. Also on the call and available for Q&A will be Christy Shaw, Chief Executive Officer of KITE, and Diana Brainard, SVP and Head of our Virology Therapeutic Area.

Just off the market close today, we issued a press release with earnings results for the first call second quarter throughout 2020.

The press release and detailed slides are available on the Investor section of the Gilliat website.

The speakers on today's call will be Danilo day, Chairman and Chief Executive Officer.

So one of my theory, Chief Commercial Officer, My Dad policy, Chief Medical officer, and onto Dickinson Chief Financial Officer.

Also on the cold and available for Q, and I will be Christy short Chief Executive officer of quite.

And Diana brain out Sep and had to fall biology therapeutic area.

Before we begin with all prepared remarks, let me remind you that we will be making forward looking statements, including risks and uncertainties related to the impacted the cobot 19 pandemic on Gilliat business.

Douglas Maffei: Before we begin with our prepared remarks, let me remind you that we will be making forward-looking statements, including risks and uncertainties related to the impact of the COVID-19 pandemic on Gilead's business, financial condition, and results of operations. Plans and expectations with respect to products, product candidates, corporate strategy, 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. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statement. Non-GAAP financial measures will be used to help you understand the company's underlying business performance. The GAAP to non-GAAP reconciliations are provided in the earnings press release as well as on the Gilead website. I will now turn the call over to Dan.

Financial condition on the results of operation.

Plans and execute expectations with respect to products product candidate corporate strategy financial projections on the use of capital.

On 2020 financial guidance, all of which involve certain assumptions risks and uncertainties that beyond our control.

Could cause actual results could differ materially from these statements.

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

All forward looking statements are based on information currently available Gilliat Gilliat assumes no obligation to update any such forward looking statement.

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

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

Thank you, Doug and good afternoon, everyone.

Daniel O'Day: Thank you, Doug, and good afternoon, everyone. I'd like to start by thanking our Gilead employees worldwide who, along with our partners, continue to go above and beyond to meet our many responsibilities at this time. Those responsibilities include advancing remdesivir, supporting work across our other medicines that are helping patients today, and building our pipeline of future therapy. We'll cover each of those during today's call. I'm pleased to have the team with me here to provide an overview, and we all look forward to answering your questions. I'll start things off with some of my thoughts.

I'd like to start by thanking our Julianna employees worldwide, who along with our partners continue to go above and beyond to meet our many responsibility to this time.

It was responsibilities include advancing run does severe supporting work across our other medicines that are helping patients today and building our pipeline of future therapies.

Well cover each of those during today's call.

I'm pleased to have the team with me here to provide an overview and we all look forward to answering your question.

I'll start things off for some of my perspective.

The first thing I want to comment on it the continued strength and durability of our core HIV business.

Daniel O'Day: The first thing I want to comment on is the continued strength and durability of our core HIV business. We've grown market share, even as we navigated the expected impact of the COVID-19 pandemic, and we're already seeing early signs of recovery from that impact in some markets.

We've grown market share even as we navigated the expected impacts of the cobot 19 pandemic and we're already seeing early signs of recovery from that impact in some markets.

We are confident in our long term leadership in HIV.

Daniel O'Day: We are confident in our long-term leadership in HIV. People living with HIV depend on innovative therapies that meet their needs, and Gilead is and has always been focused on meeting those needs. Vic Tarvey has become the gold standard in HIV treatment, and we're on track with our conversion to DSCOVI for PrEP treatment. The principles that have driven our HRV growth to date still apply, and will continue to drive our growth in the future.

People living with HIV depend on innovative therapies that meet their needs and Gilliat is and has always been focused on meeting those needs.

Thanks, Harvey has become the gold standard in HIV treatment.

We're on track with our conversion to discover <unk> proprietary but.

The principles that have driven or age R&D growth to date still apply and we'll continue to drive or growth in the future.

The secondary I want to comment on as our role in fighting the pandemic threats.

Daniel O'Day: The second area I want to comment on is our role in fighting the pandemic with remdesivir. There is a growing body of clinical and real-world data that continues to shape our understanding of the medicine. The data tell a consistent story of clinical benefit for patients suffering from COVID-19, across our simple studies, the NIAID data, the Compassionate Use data, and more recently, the comparative analysis that uses real-world data. I'd also like to highlight some details on our efforts to ensure broad access to Remdesivir in the second half of the year and beyond. As we discussed last time, we feel the full weight of our responsibilities with Remdesivir, and that applies to the price we set following the donation period. We price Remdesivir well below the value it provides to enable access at this critical time and ensure that we continue to meet our responsibilities in the future with further investment in Remdesivir and in research that will help us to prepare for any future pandemic. The extensive clinical development work continues on remdesivir so that we can potentially extend the treatment to many more patient groups. We've begun clinical work on an inhaled solution that could be used outside the hospital. And we'll also conduct clinical trials using the intravenous formulation in an outpatient setting, such as nursing.

There's a growing body of clinical and real world data the continues to shape, our understanding of the medicine.

The data tell a consistent story of clinical benefit for patients suffering suffering from carbon 19 across our simple studies the NIAD data.

The compassionate use data and more recently, the comparative analysis that use real world data.

I'd also like to highlight some detailed in our efforts to ensure a broad access to run does appear in the second half year and beyond.

As we discussed last time, we feel the full weight of our responsibilities with her industry beer and that applies to the price. We said following the donation period.

We price trend disappear well below the value. It provides to enable access at this critical time and ensure that we continue to meet our responsibilities in the future with further investment in run deficit here and in research that will help us to prepare for any future pandemics.

The extensive clinical development work continues.

I'm run does severe said, if we could potentially extend the treatment to many more patient groups.

We have begun clinical work I mean inhaled solution that could be used outside the hospital.

Also conduct clinical trials, using the intravenous formulation and the outpatient settings, such as nursing homes.

My Dad, we'll talk more about the development program later.

Daniel O'Day: Merdad will talk more about the development program later. As you know, we've agreed to the U.S. government's request, following discussions about the significant rise of COVID-19 infections in the United States, that U.S. patients will receive 500 million treatment courses of our supply until the end of September, when we expect to have enough remdesivir to meet real-time global demand. As announced yesterday, we're pleased to have reached an agreement with the European Commission, where they will centrally purchase remdesivir for patients in the European Union and the UK. The European Commission will be responsible for all decisions regarding allocation among member states.

As you know we've agreed to U.S. government requests following discussions about the significant rise of cobot 19 infections in the United States. The U.S. patients will receive 500 million treatment courses the worst supply until the end of September when we expect to have enough from does severe to meet real time global demand.

As announced yesterday, we're pleased to have reached an agreement with the European Commission.

Where they will centrally purchased from disappear from patients in the European Union in the UK Europe.

The European Commission will be responsible for all decisions regarding allocation among member states.

The remaining supply run does severe will be allocated to other countries, but significant rates of cobot 19 infection.

Daniel O'Day: The remaining supply of remdesivir will be allocated to other countries with significant rates of COVID-19 infection. We will see a significant increase in supplies in October, as expected. The third theme I want to touch on is the progress we're making in shaping Gilead's growth story. You may recall that we previously shared a framework outlining the three pillars that will shape Gilead's next chapter, and you'll see these in the slides on our website today as well. I've already touched on the first pillar, which is our durable core business, and Johanna will describe our achievements on this front in more detail in a moment. Pillar 2 is our pipeline, and we made important progress across several potentially transformational assets in a relatively short period of time, with a balance of both internal innovation and acquired investigative competence. Pillar three is our strategy to drive future growth by accessing the highest quality external innovation in order to serve more patients. The pace of our corporate development activities has not slowed down a bit during this pandemic season.

We will take me see a significant increase in supplies in October as expected.

The third theme I wanted to touch on the progress, we're making and shaping gilly ads growth story.

You may recall that we previously shared or framework outlining the three pillars that will shape glance next chapter and you'll see these in the slides on our website today as well.

I've already touched on the first pillar what she started durable core business and Joanne will describe our achievements on this front in more detail in a moment.

Pillar choose our pipeline and we made important progress across several potentially transformational assets in a relatively short period of time, where the balance of both internal innovation and acquired investigational compounds.

Pillar three is our strategy to drive future gross bye.

Accessing the highest quality external innovation in order to serve more patients.

The pace of our corporate development activities has not slowed down a bit during this a pandemic time.

I'd like to highlight the progress we made this year on executing on our immuno oncology strategy.

Daniel O'Day: I'd like to highlight the progress we made this year in executing on our immuno-oncology strategy. Our goal is to grow our immuno-oncology pipeline and our expertise, both through external opportunities and by advancing our internal efforts. The range of immuno-oncology deals we've announced this year represent significant progress towards this goal. These deals bring complementary scientific approaches and provide access to clinical and preclinical assets with a view to both mid and long-term growth. Before I hand over to the team for the detailed comments and our progress, I want to briefly mention something that we see as another key area of responsibility for the company. The Work Against Racial Injustice. We are passionately committed to using Gilead's platform for what we see as a global issue that calls on everyone to play a role.

Our goal is to grow our immuno oncology pipeline and her expertise both through external opportunities and by advancing our internal efforts.

The range of immuno oncology deals we've announced this year represents significant progress towards this goal.

These deals bring complementary scientific approaches and provide access to clinical and preclinical assets with a view to both mid and long term growth.

Before I hand over the team for the detailed comments in our progress I want to briefly mentioned something that we see is another key area of responsibility for the company. The worked against racial in jobs.

Our passionately committed to using Gilats platform for what we see as a global issues. It calls for everyone to play a role the leadership team and I have spent the past week listening carefully to black employees.

Daniel O'Day: The leadership team and I have spent the past weeks listening carefully to black employees as they've started to share with us how they, their families, and their communities experience racial injustice in various forms. Gilead is committed to both immediate and long-term actions that will have a lasting impact on our employees and the communities that we serve. Let me now hand the call off to Johanna, who will walk us through some of the key details related to our business performance.

It started to share with us how day their families and their communities experience racial and justice in various forms.

It is committed to both immediate and long term actions and we'll have a lasting impact for our employees and the communities that we sir.

Let me know hand, the call off to Joanna who will walk us through some of the key details related to our business performance over do you Joanna.

Thanks, Dan and good afternoon, everyone.

Johanna Mercier: Thanks, Dan, and good afternoon, everyone. Let me start by saying that despite the anticipated impact of the pandemic, our business is solid and remains resilient. While COVID-19 has had an impact on parts of our business this past quarter, we're built to withstand this kind of challenge, and we remain confident in the strength of our core business. No one can actually predict the progression of this pandemic, but we do see signs of recovery and partial return to normal in Europe as well as some parts of Asia. And we're confident that this will also play out in the U.S. once the incident stabilizes.

Let me start by saying that despite the anticipated impact to the pandemic our business is solid and remains resilient.

Koby 19 has had an impact on parts of our business. This past quarter were built to withstand this kind of challenge and we remain confident in the strength of our core business.

No one can actually predicts the progression of <unk>, but we do see signs of recovery and personal returned to normal in Europe as well as some parts of Asia and we're confident that this will also play out anyway once the incident stabilizes.

Johanna Mercier: Turning now to the specifics of Q2 in the first half for business performance, starting with HIV. Our HIV franchise is strong and durable. In both treatment and prevention, we have a patient-focused history of innovation and believe both will continue to be important drivers for the company over the next decade. In June, we hit our stated year-end goal of conversion to calf-based regimens on the treatment side and are now at 90% of our total portfolio. The HIV uptake continues to remain strong across geographies and is the number one HIV treatment regimen across the U.S., EU5, and other key global markets for both Naive and Switch. For PrEP, we achieved our goal of 40 to 45% Dyscove conversion with 43% at the end of June. We continue to believe that physicians and patients are benefiting from choice and are increasingly seeing the CARB-E for treatment and the SCOBY for PrEP as the preferred option for their patients. However, the quarter overall was down year-on-year 1% and quarter-over-quarter by 3%.

Turning now to the specifics acute during the first half for business performance starting with HIV.

Our HIV franchise, it's John and durable in both treatment and prevention, we habitation focused history of innovation.

I believe bodes well continue to be important drivers for the company over the next Jackie.

In June we hit our stated yearend gold is conversion to Taf based regimens on the treatment sites and are now at 90% of our total portfolio.

It's Harvey uptake continues to remain strong across geographies and as the number one HIV treatment regimen across the last you side and other key global markets in does naive insights.

For Pratt we achieved our goal of 40% to 45% is gonna be conversion with 43% at the end again.

We continue to believe that physicians and patients are benefiting from choice.

Increasingly seeing big Harvey for treatment and discovery program as the preferred option for their patients.

A quarter overall was down year on year, 1% and quarter over quarter by 3%.

The impact on our HIV revenue, including Big Harvey was primarily driven by inventory dynamic.

Johanna Mercier: The impact on our HIV revenue, including the CARB-E, was primarily driven by inventory dynamics. In Q2, we saw a reversal of the pandemic-related stocking that happened in March during the onset of COVID across the U.S. and Europe. Also, on the treatment side, as expected, we're seeing reduced switches due to the decline in patient visits and physicians not wanting to initiate new therapies during a pandemic. We're also seeing an unfavorable shift in payer mix from commercial to government segments.

Q2, we saw reversal of the pandemic related stocking that happened in March during the onset of Cozy enterprise U.S. and Europe.

Also on the treatment side as expected, we're seeing reduced switches due to the decline in patient visits and conditions not wanting to initiate new therapies during a pandemic.

We're also seeing an unfavorable shift in payer mix some commercial to government segment.

Despite that our overall demand remain robust with both the overall deal yet portfolio and big Harvey gaining share quarter over quarter and year on year.

Johanna Mercier: Despite this, our overall demand remained robust, with both the overall Gilead portfolio and BigCarvey gaining share quarter over quarter and year on year. However, the pandemic impacted PrEP demand as expected, and we saw reduced initiations and therapy discontinuations due to fewer people seeing their health care providers and social dynamics. We're starting to see gradual recovery across our markets, including in the U.S., where we saw improving PrEP trends in June. Strong Vic Tarvey uptake and Discovi for PrEP conversion during the quarter underscore the confidence we have in our core HIV business as we expect to recover from the pandemic over the remainder of the year and into 2021. If we look at our HIV business, comparing the first half of revenues this year versus 2019, we see a robust underlying business with 6% growth. The Half Year View normalizes the inventory dynamics associated with the pandemic.

The pandemic impacted demand as expected and we thought reduced initiation and therapy discontinuations due to fewer people seeing their health care providers and social dynamics.

We're starting to see gradual recovery across our markets, including in the U.S., where we saw improving production in June.

Strong big Harvey uptake and just go deeper Pratt conversion during the quarter underscores the confidence we have in our core HIV business as we expect to recover from the pandemic over the remainder of the year and going into 2021.

If we look at our HIV business comparing the first half of revenues this year versus 2019, we see the robust underlying business with 6% growth.

Uh-huh your views normalizes, the inventory dynamics associated with at hand.

So now we turned to HCT.

Johanna Mercier: So now we turn to HCV. Our HCD business, which is more like an acute business, was down 47% from Q2 2019 and down 39% from Q1 this year. As we discussed during the Q1 call, reduced or delayed physician visits naturally decrease both diagnosis and patient starts.

Our E C D business, which is more like an acute business was down 47% from 2019 and down 39% from Q1 this year.

As we discussed during the Q1 call reduce certainly position visits naturally decrease diagnosis and patient starts.

U.S. HCV starts again, 42% quarter over quarter.

Johanna Mercier: U.S. HCV starts were down 42 percent quarter over quarter. However, overall USHCV share has held strong at about 60% across segments, which is up 11 points from Q2 2019. Similarly, we are seeing strong and consistent share in Europe as well. As other markets start to reopen, similar to what we saw in June and July across Europe, it's likely we will see many patients return throughout the rest of the year and into 2021. As an example of this, in Italy, which was heavily impacted by COVID earlier this year, we saw recovery in June as more patients, especially higher-risk patients, started to return to their physicians and begin treatment.

However, overall USA CDCR has held strong and about 60% of cross segment, which is that 11 points from Q2 2019.

Currently we are seeing strong and consistent share in Europe as well.

As other markets start to reopen similar to what we signed June and July across Europe, It's likely we will see many patients returns throughout the rest of year and its 2021.

As an example of death nasally, which was heavily impacted by Kogut earlier. This year, we saw recovery in June as more patients, especially the high risk patients started to return to their condition and begin treatment.

Before I close just let me highlight for you range of commercial opportunities on the horizon that make it all I saw so excited to be part of the Gilliat team.

Johanna Mercier: Before I close, just let me highlight for you a range of commercial opportunities on the horizon that make us all so excited to be part of the Gilead team. In the near term, we're pleased with the significant volume growth we're seeing in China, despite the impacts of COVID as we receive foreign RDL approvals at the end of 2019. This also serves as a basis for expanding HBV business, which we expect to hit $1 billion globally by the end of 2022. We're preparing to launch Vogotnib in RA in the coming months and are excited about the recent CHMP positive opinion. As we look to the mid- to long-term, we're accelerating our efforts to build our portfolio and expertise in immuno-oncology. We see strong potential for megalomab, and we recently highlighted T-Date at ASCO.

In the near term, we're pleased with the significant volume growth, we're seeing in China.

The impact of Kobe death, we received for NRT I'll take both at the end of 2019.

It's also serves as a basis for expanding HCV business, which we expect to hit 1 billion globally by the end of 2022.

We are preparing to launch forgotten EBIT on rain coming months and are excited about the recent cgmp positive opinion.

As we look to the mid to long term, we're accelerating our efforts to build our portfolio an expertise in immuno oncology.

Strong potential from a growing that.

Where we recently highlighted TD eight at ASCO Mcgraw than I could be very important therapy for Mds patients.

Johanna Mercier: McGrill and I could be a very important therapy for MDF patients. And lastly, on HIV and Lenacapazir, we believe that long-acting antiretrovirals will play a role in the future HIV market and see the potential for this compound to best meet patient needs. Merdad will share more on the clinical progress on Lenacapavir and Imantapavir. So, let me end where I started.

And lastly on HIV Atlantic happier, we believe that long acting will play a role in the future HIV market and see the potential for the compound to best meet patients.

I will share more on the clinical progress on many happier in a moment.

So let me add where I started our core business historical the fundamental demand drivers for HIV treatment and prevention businesses remain real and we're optimistic heading into the second half of the year.

Johanna Mercier: Our core business is durable. The fundamental demand drivers of our HIV treatment and prevention businesses remain strong, and we're optimistic heading into the second half of the year. We have an incredible core portfolio driven by HIV, and we're building a compelling set of opportunities as we continue on our journey. And lastly, I just want to thank all 12,000 of our colleagues who have demonstrated that they can continue to deliver for patients who need our medicines, both in our base business and more recently with Remdesivir. It's the first time in my career I've seen a company go from an investigational compound to a launch product, serving hundreds of thousands of patients in a matter of months. But it just reinforces for me Gilead's history and commitment to patient-focused innovation. I'm very proud to be part of this team. Merdad, I turn it over to you.

We have an incredible core portfolio driven by HIV and we're building a compelling set of opportunities as we continue on our journey.

And lastly, I just want to thank all 12000 of our colleagues who have demonstrated that they can continue to deliver for patients meter medicine, both in our base business and more recently with Bendeka there.

First time in my career I've seen a company go from an investigational compound to launch products, serving hundreds of thousands of patients in a matter of month.

But it just reinforces for me deal yet history and commitment to patient focused innovation.

I'm very proud to be part of the team work and turn it over to you.

Merdad V. Parsey: Thanks, Johanna, and good afternoon, everyone. I'm excited to be here and share with you some of the perspectives on our pipeline, which continues to both progress and grow despite these challenging times. As you've seen, our pipeline expansion continued during this period, driven by the strategy that Dan referenced earlier. Of course, Remdesivir is an important part of this story, and while managing the added responsibility of working as diligently as possible on Remdesivir, we were also able to make great strides across the rest of the pipeline. Let me share some of those highlights with you.

Thanks, Shannon and good afternoon, everyone I'm excited to be here and share with you some of the perspectives on our pipeline continues to both progress and to grow. Despite these challenging times as you've seen our pipeline expansion continued during this period driven by the strategy that Dan referenced earlier.

Of course formed as severe as an important part of the story, while managing the added responsibility working diligently as possible and then does severe we're also able to make great strides across the rest of the pipeline, let me share some of those highlights with you.

Even a pipeline for three key things.

Merdad V. Parsey: We look at a pipeline for three key things. We'd like to see that the level of diversification across the different therapeutic areas is good, the balance across the phases of development, and the quality of the assets we have in development, along with their associated risks.

We'd like to see that the level of due principally different diversification across the different therapeutic areas is good the balance across the phases of development the quality of the assets, we haven't development along with associated risk.

That's where I'd like to turn now.

We continue to build in each of our therapeutic areas as reflected in other exciting set of clinical data read outs and presentations at scientific meetings during this quarter.

Merdad V. Parsey: We continue to build in each of our therapeutic areas as reflected in another exciting set of clinical data readouts and presentations at scientific meetings during this. This includes data that further validate our belief in some of our key assets, including Merolamab, Lenacaprivir, and, of course, remdesivir. Let me share a few specific highlights in each of our strategic areas. In HIV, we continue to make progress on the next chapter of our commitment to people living with HIV by working on a long act. Linda Kaprovir, our investigational captive inhibitor, continues to show promise as a potential agent, both for long-acting treatment and for prevention. The Phase 2, 3 study that has continued to enroll during the pandemic, and we look forward to data from this trial for highly treatment-experienced people with HIV who often have few, if any, other options. People living with HIV tell us that the most desirable long-acting reagents are either a weekly oral or every three to six months a cutaneous injection, preferably one that can be self-administered.

This includes data that further further about validate our belief in some of our key assets, including roadmap when a contravir inquiries from disappear.

Let me share a few specific highlights in each of our strategic areas.

In HIV, we continue to make progress on the next chapter of our commitment to people living with HIV by working on a long acting option.

Blended cap Revere, our investigational capsid inhibitor continues to show promise of the potential agent.

Both for long acting treatment and prevention.

Phase two three study that has continued to wall during the pandemic.

And we look forward to data from this trial, probably treat experienced people, which I'd be who often have few if any other options.

People would live living with HIV tell us at the most desirable long acting registrations are either a weekly oral or in every three to six months subcutaneous injection preferably that can be self administered.

Merdad V. Parsey: The profile of Lena Kaprovir gives us the potential to achieve both of these and therefore the potential to be a key therapeutic component for both treatment and prevention. Now turning to remdesivir, a lot of data has been generated over the past six months that all inform us about the profile of remdesivir. As Dan pointed out, the thing that stands out is the consistency across these data.

The profile of mine a copper beard gives it the potential teaching both of these options and therefore, the potential to the key therapeutic continent, both treatment and prevention.

Now turning to run that severe a lot of data have been generate over the past six months that all inform us about the profile is indesit here as Dan pointed out the thing that stands out as a consistency across these data and I like to take a step back and highlight a few key pieces of the story.

Merdad V. Parsey: And I'd like to take a step back and highlight a few key pieces of the data. One piece is that we see that recovery time for patients in the hospital is short. Another is that the five-day course of treatment is appropriate for most patients.

One pieces that we see that recovery time for patients.

The hospital in short.

No there is it a five day cores and treatment as appropriate for those patients.

Got it generally well tolerated.

Merdad V. Parsey: And finally, it's a drug that generally will colloidate. We've now published data to demonstrate a benefit in mortality compared to the standard of care using a comparative analysis of real-world data. As you know, there was a trend toward benefit and mortality at day 14 in NIAID studies, and we now await the final day 28 data from that trial as well.

We've now published data demonstrated benefit in mortality compared with standard of care using the comparative analysis of real world data.

As you know there was a trend towards benefit in mortality. It day 14, and I D study.

We don't wait the final day 28 day to combat trial as well.

We also continue to pursue other ways to expand the utilities and got severe including new formulations and exploring how combinations could be more effective.

Merdad V. Parsey: We also continue to pursue other ways to expand the utility of Mdesivir, including new formulations and exploring how combinations could be more effective. For example, we've begun a Phase I study on an inhaled version of rhodendiazivir that uses commercially available nebulizers. Beyond that, we're working on the feasibility of a dry powder formulation for inhalation and a subcutaneous formulation. We're also supporting several clinical trials exploring potential combinations. In each of those studies, remdesivir is being used as a backbone standard of care agent. We're really proud of the role remdesivir has played in this pandemic, and I couldn't be prouder of the team that's worked so hard on this. As a reminder, Daina Brainerd, who leads our virology team, is here with us today, and she'll be happy to share additional insights during the Q&A. Moving on, to Phil Dotnibb.

We've begun to phase one study on an inhaled version agreed that severe uses commercially available nebulizers beyond that we're working on the feasibility of the dry powder formulation for inhalation and subcutaneous formulation.

We're also supporting several clinical trials exploring potential combinations.

In each of those studies were invested here is being used as a backbone standard of care agent.

We're really proud of the room rollover investors played in this pandemic and I couldn't be prouder. The team. That's worked so hard on this as a reminder, Diana Brainerd, who leads our garage team is here with us today and she'll be happy to share additional insights during Q1 day.

Moving on to fill gotten it.

We continue believed that this selective JAK inhibitor has the potential to provide new option for patients suffering from a variety of inflammatory diseases.

Merdad V. Parsey: We continue to believe that this selective JAK inhibitor has the potential to provide a new option for patients suffering from a variety of inflammatory diseases. I'd like to update you on recent discussions with regulators on Unitarian Friday. In Europe, we're pleased to receive the positive CHMP opinion for the treatment of adults with moderate to severe rheumatoid arthritis. The opinion includes both 100 and 200 mg doses and indicates that use is appropriate as monotherapy and in combination with methotrexate.

I'd like to update you on recent discussions with regulators on inventory and Fridays.

In Europe, we're pleased to receive the positive cgmp opinion for the treatment of adults with moderate to severe winter gets riders.

Your opinion includes both 102 hundred milligram doses and indicates news is appropriate as monotherapy and combination with methotrexate.

As a reminder.

Merdad V. Parsey: As a reminder, this subpoena is a scientific recommendation to the European Commission to grant marketing authorization in Europe. We continue to have ongoing dialogue with the FDA. We've been informed that there will not be an advisory committee meeting, and the PDUCA date remains unchanged.

Isn't recommendation to the European Commission to grant marketing authorization in Europe.

We continue to have ongoing dialogue with the FDA. We've been informed that there will not be an advisory committee meeting and the PDUFA date remains unchanged.

Moving on to oncology, we made strides during the quarter and throughout the first half a year and advancing our pipeline and accelerating our efforts to build our portfolio and expertise and immuno oncology several key transactions.

Merdad V. Parsey: Moving on to oncology, we've made strides during the quarter and throughout the first half of the year in advancing our pipeline and accelerating our efforts to build our portfolio and expertise in immuno-oncology through several key transactions. First, we completed the acquisition of 47 that we announced during the first quarter. Let's bring early mapping into our pipeline and investment compound, currently being developed for eggs and anal, as well as much of the impressive 2017 who now complement our internal. We're also very excited about the art partnership, which reflects our ability to have tailored interactions that work both for us and our partners. This partnership brings us a potentially differentiated fidget compound as well as an investigational IPV1 monoclonal antibody.

First we completed the acquisition of 47.

We announced during the first quarter, let's bring growing up into or pipe.

Definitely compound.

Currently being developed for [laughter] and channel as well as much of the principally 17, who know complement earned.

We're also very excited about the our partnership with <unk>, which reflects our ability to top tier contractions that were both for us.

Partners. This partnership brings us a potentially differentiated digit compound.

Investigational anti PD, one monoclonal antibody.

We're also excited word of the excellent experienced clinical team that arc because for the development of these programs.

This partnership discussion everything in their pipeline and allows the ARCUS team to continue to pursue groundbreaking science.

Merdad V. Parsey: We're also excited to work with the excellent, experienced clinical team at ARCIS for the development of these. This partnership gives Saskatchewan everything in their pipeline and allows the ARCIS team to continue to pursue groundbreaking. Kizona and Pioneer are deals that give us options targeting other immuno-oncology approaches. And in each of these transactions, we have the option to acquire the entire company based on clinical data. These new programs build on our existing partnerships and our internal pipeline. In cell therapy, we all congratulate Christy Schott and our colleagues at KITE for the recent approval of Cardiff's Relastifact pre-MCA. Cut and Gilead are now the first company to have multiple approved cell therapy products that will bring benefit to even more patients with difficult-to-treat diseases. The CHI team also reached a major milestone with the successful approval and launch in June of the M-SPAN manufacturing site with end-to-end production that expands the ability to treat more patients. Christie's with us here today and happy to share more thoughts during the Q&A.

Two zone, and pioneer or deals or give us options targeting other immuno oncology approaches and in each of these transactions we have the option to acquire the entire company based on clinical data.

He's been programs builds on our existing partnerships and our intent internal pipeline.

And so therapy, we all congratulate Christy showing our colleagues at kite recent approval its cars, it's for relapsed refractory mcl.

Cutting gilliat are now the first companies have multiple approved cell therapy products that will bring benefit to even more patients with difficult to treat cancers.

The team also reach a major milestones and successful approval and launch in June the unspent manufacturing site and production that expands the ability to treat more patients.

Chris He's with US here today and happy to share more sites during the Q.

[noise] materials, we provided we've shared a summary of important no coming milestones across the pipeline.

In closing our senior R&D team continues to build with the addition of leaders in data science clinical Biomarkers pharmacology clinical operations portfolio management inflammation oncology.

All of these leaders bring added expertise from an already world class team. We're excited to have been join us.

Let me turn the call now over to Andy.

Thanks, My dad and good afternoon, everyone.

I'd like to cover three topics to round out our commentary before turning to QNX.

First I'll provide a summary of our financial highlights for the quarter in the first half of 2020.

Second I will provide some additional color on the potential implications of co bid on the second half of 2020 based on updated assumptions drawn from external experts outside thinking.

Merdad V. Parsey: Materials we've provided. We shared a summary of important upcoming milestones across the pipeline. In closing, our senior R&D team continues to build with the addition of leaders in data science, clinical biomarkers, pharmacology, clinical operations, portfolio management, inflammation, and oncology. All of these leaders bring added expertise to an already world-class team, and we're excited to have them join us. Let me turn the call now over to Andy.

Finally, I'd like to pull all this together and review our revised 2020 financial guidance.

As a reminder, the earnings materials posted on our website contain additional information.

Leading the details of our 2020 revised financial guidance.

Turning now to our financial highlights total revenues for the second quarter were 5.1 billion with non-GAAP diluted earnings per share of $1.11 cents as noted in the earnings press release on a GAAP basis, we recorded a diluted loss per share of $2.66, primarily due to a $4.5 billion.

Andrew D. Dickinson: Thanks, Merdad, and good afternoon, everyone. I'd like to cover three topics to round out our commentary before turning to Q&A. First, I'll provide a summary of our financial highlights for the quarter and the first half of 2020. Second, I will provide some additional color on the potential implications of COVID for the second half of 2020 based on updated assumptions drawn from external experts and outside thinking. Finally, I'd like to pull all this together and review our revised 2020 financial guidance. As a reminder, the earnings materials posted on our website contain additional information, including the details of our 2020 revised financial guidance. Turning now to our financial highlights. Total revenues for the second quarter were $5.1 billion, with non-GAAP diluted earnings per share of $1.11.

Process research and development charge related to our acquisition of 47.

This compares to revenue of 5.7 billion with non-GAAP diluted earnings per share of $1.72 cents for the same period last year.

Product sales for the second quarter were 5.1 billion down, 7% sequentially and down 10% year over year.

As anticipated the second quarter product revenues were unfavorably impacted by Cobot 19.

The year over year quarterly decline was also impacted by approximately 160 million favorable adjustments recorded in the second quarter 2019 for statutory rebates, primarily to HCV and HIV prior year sales in Europe.

This decline was partially offset by HIV growth driven by the carvey in the United States.

As John mentioned the quarter over quarter decreases in HIV revenues was primarily driven by the reversal of the Q1 increase buying patterns student academic as well as lower U.S. prep demand an unfavorable U.S. payer mix sequentially. The decrease was partially offset by treatment growth and seasonable higher net pricing to.

Andrew D. Dickinson: As noted in the earnings press release, on a GAAP basis, we recorded a diluted loss per share of $2.66 primarily due to a $4.5 billion in-process research and development charge related to our acquisition of 47. This compares to revenue of $5.7 billion with non-GAAP diluted earnings per share of $1.72 for the same period last year. Product sales for the second quarter were $5.1 billion, down 7% sequentially and down 10% year-over-year.

Yes, and inventory patterns.

The decrease in HCV revenues sequentially and year over year, primarily reflects lower volume due to lower diagnoses and patient starts do the pandemic.

Let's talk a revenues grew sequentially and year over year, primarily driven by the continued vision uptake in Europe.

Overall product sales for the first half of your were 10.5 billion compared to our 10.8 billion for 2019.

Excluding recent Ela, we products for Nexsan with terrorists are Britain, our business grew year over year, despite the impact of a pandemic.

Andrew D. Dickinson: As anticipated, the second quarter product revenues were unfavorably impacted by COVID-19. The year-over-year quarterly decline was also impacted by approximately $160 million of favorable adjustments recorded in the second quarter of 2019 for statutory rebates primarily for HCV and HIV prior year sales in Europe. This decline was partially offset by HIV growth driven by Bectarvi in the United States.

If we compare the first half of 2020 versus the same time period in 2019, the HIV inventory dynamics associated with cobot, 19, or normalize and our first half results demonstrate strong underlying HIV demand growth with the business up 6% over 2019.

This reflects a strong and encouraging start to the year in our core HIV franchise. Despite the impact of company 90.

You can find more information, including the geographic breakdown of revenues in the materials, we have posted.

Now turning to expenses non-GAAP R&D expense was 1.2 billion for the quarter up 19% compared to the same period last year and up 18% sequentially, primarily due to our investment in bessinger, including clinical trials and manufacturing scale up costs.

Andrew D. Dickinson: As Johanna mentioned, the quarter-over-quarter decreases in HIV revenues were primarily driven by the reversal of the Q1 increased buying patterns due to the pandemic, as well as lower U.S. PrEP demand and unfavorable U.S. payer conditions. However, sequentially, the decrease was partially offset by treatment growth and seasonable higher net price in the U.S. and inventory patterns. The decrease in HCV revenues sequentially and year over year primarily reflects lower volume due to lower diagnoses and patient starts due to the pandemic. Yes, target revenues grew sequentially and year over year, primarily driven by continued patient uptake in Europe. Overall product sales for the first half of the year were $10.5 billion, compared to our $10.8 billion for 2019. Excluding recent LOE products for Nexon Latteris, our business grew year over year despite the impact of the pandemic.

Non-GAAP EPS DNA expense was 1.2 billion up 6% compared the same period last year in up 8% sequentially, primarily due to a 97 million dollar accrual related to a previously disclose department of Justice investigation.

From a liquidity standpoint, we continue to be very well positions during the quarter. We generated 2.6 billion in cash from operations and we ended the quarter with 21.2 billion in cash and marketable securities.

We completed our acquisition of 47 this quarter for 4.7 billion net of cash required we paid cash dividends of 856 million and we repurchased 700000 shares of stock for $54 million.

Our strong balance sheet investment portfolio are built to withstand macroeconomic events like hill, the 19, and our capital allocation priorities remain unchanged.

We will continue to focus on investment to augment internal and external innovation in support of continued pipeline expansion.

In addition, we intend to support and grow our dividend over time provided that any dividend increases of course subject to approval from our board.

Andrew D. Dickinson: If we compare the first half of 2020 versus the same time period in 2019, the HIV inventory dynamics associated with COVID-19 are normalized, and our first half results demonstrate strong underlying HIV demand growth, with the business up 6% over 2019. This reflects a strong and encouraging start to the year in our core HIV franchise, despite the impact of COVID-19. You can find more information, including the geographic breakdown of revenues, in the materials we have provided.

Finally, as it relates to repurchase of shares in 2020 were on track relative to the directional guidance, we provided in our fourth quarter 2019, and yearend earnings call in separate.

Turning now to the Coburn 1919 impact on our revised guidance.

Accordingly, as you heard earlier in the called the fundamentals and durability of our long term outlook remains very strong.

We expected our core business will gradually recover starting in Q3 following peak pandemic impact on underlying treatment initiation and switch dynamics that we observed in the second quarter.

Andrew D. Dickinson: Now turning to expense. Non-GAAP R&D expense was $1.2 billion for the quarter, up 19% compared to the same period last year and up 18% sequentially, primarily due to our investment in Remdesivir, including clinical trials and manufacturing scalable. Non-GAAP SG&A expense was $1.2 billion, up 6% compared to the same period last year and up 8% sequentially, primarily due to a $97 million accrual related to a previously disclosed Department of Justice investigation.

We continue to expect minimal impact on our HIV treatment business over time with maintenance of high market share.

In HCV, we expect patient starts to regained momentum in the third quarter and beyond.

In addition, since our first quarter earnings call, we've established global pricing for run deciliter, and we refined our expectation to run disappear for the year.

As you would expect there are still many uncertainties, considering the shape and duration of the recovery in the second half of the year as well the availability in uptake.

Sure.

With that as context, let me summarize the details of our revised full year guidance.

Our revised topline revenue range, including expected sales of Rem density during 2020 is 23 billion to $25 million.

Andrew D. Dickinson: From a liquidity standpoint, we continue to be very well-positioned. During the quarter, we generated $2.6 billion in cash from operations, and we ended the quarter with $21.2 billion in cash and marketable debt securities. We completed our acquisition of 47 this quarter for $4.7 billion net of cash acquired, we paid cash dividends of $856 million, and we repurchased 700,000 shares of stock for $54 billion. Our strong balance sheet investment portfolio is built to withstand macroeconomic events like COVID-19, and our capital allocation priorities remain unchanged. We will continue to focus on investment to augment internal and external innovation in support of continued pipeline expansion. In addition, we intend to support and grow our dividend over time, provided that any dividend increase is, of course, subject to approval from our board. Finally, as it relates to the repurchase of shares in 2020, we're on track relative to the directional guidance we provided in our fourth quarter 2019 and year-end earnings call in February. Now, the COVID-19 impact on our revised guidance. Importantly, as you heard earlier in the call, the fundamentals and durability of our long-term outlook remain very strong.

We're increasing our 2020, R&D and SGN expense expectations.

Our guidance unexpected product gross margin and effective tax rate for 2020 remained unchanged.

Our updated operating income range is 10.7 billion to 13 billion and finally, our updated non-GAAP EPS range $6 in 25 cents to $7.65.

I'd like to highlight a few additional points that will give you more color on the assumptions that drove this updated guidance.

On the expense side or in DNS unit guidance increase to reflect expected extensions for run deciliter 47, and the litigation accrual that I mentioned earlier.

On Ramdev severe as we previously stated we expect to manufacture 2 million or more treatment courses cumulatively and 2020.

Our revenue guidance reflects that we expect to sell one to 1.5 million treatment courses of run disappeared. This year.

We expect the rent that's of your demand will be skewed towards the us in the third quarter and that the proportion of ex us sales will increase in the fourth quarter and beyond.

That said the progression independent of the global economic backdrop, our supply expectations, the potential uptake of rendez severe and related matters continued to be dynamic and uncertain.

We expect to learn more over the coming months and we'll update you on our latest thinking on our Q3 earnings call.

Before I hand, the call opportunity I'd like to express my gratitude as well to our 12000 guillette employees globally without their spirit dedication and resilience nothing we strive to achieve for patients would be possible.

Andrew D. Dickinson: We expect that our core business will gradually recover starting in Q3 following the peak pandemic impact on underlying treatment initiations and switch dynamics that we observed in the second half. We continue to expect minimal impact on our HIV treatment business over time with maintenance of high market share. In HCV, we expect patients to start to regain momentum in the third quarter, and, In addition, since our first quarter earnings call, we have established global pricing for Remdesivir, and we have refined our expectations for Remdesivir for the year. However, as you would expect, there are still many uncertainties concerning the shape and duration of the recovery in the second half of the year, as well as the availability and uptake of Remdesivir.

I'd like to open the call for questions Liz.

Ladies and gentlemen, if you'd like to ask a question at this time. Please press the star spend the number one key on your Touchtone telephone to withdraw your question press the pound key.

Our first question comes from Tyler Van Buren with Piper Sandler Your line is now open.

Hey, guys. Thanks for taking the question I guess with respect to.

CB and HIV share increases that you saw during the pandemic you've talked about coming out of the pandemic stronger. So could you just provide a little bit more color on that.

Sure Tyler Oak turn right around the Joanna.

Okay. Thanks, Tyler and yes. So for example in HIV when you think about the Caribbean discovery, which are truly brands both for treatment and prevention picked Harvey shares has been growing share year on year, but even quarter over quarter. So we grew share to 33% in Q2.

Andrew D. Dickinson: With that as context, let me summarize the details of our revised full-year guide. Our revised top-line revenue range, including expected sales of Remdesivir in 2020, is $23 billion to $25 billion. We're increasing our 2020 R&D and SG&A expense expectations. However, our guidance on expected product gross margin and effective tax rate for 2020 has remained unchanged. Our updated operating income range is $10.7 billion to $13 billion. And finally, our updated non-GAAP EPS range is $6.25 to $7.65. I'd like to highlight a few additional points that will give you more color on the assumptions that drove this updated guide.

To be Carvey, and then when you think about on a very large basis. You can appreciate so that that out just about 1% share increase and then when you think about just go. The we were we closed the quarter Q1 at about 37% share in scrap market and we ended up at the end of June at 43%, So I guess.

I think that.

And despite some of the dynamic because that's kind of at 19 and and some of the and decrease in patient screening I still do you think that the brands are solid because of their portfolio because of what they offer for patients and one other things both of those brands are asking brands that.

Andrew D. Dickinson: On the expense side, R&D and SG&A guidance increased to reflect expected expenses for Remdesivir 47 and the litigation approval that I mentioned earlier. For Remdesivir, as we've previously stated, we expect to manufacture 2 million or more treatment courses cumulatively in 2020. Our revenue guidance reflects that we expect to sell 1 to 1.5 million treatment courses of Remdesivir this year. We expect that Remdesivir demand will be skewed towards the U.S. in the third quarter and that the proportion of ex-U.S. sales will increase in the fourth quarter. That said, the progression of the pandemic, the global economic backdrop, our supply expectations, the potential uptake of remdesivir, and related matters continue to be dynamic and uncertain. We expect to learn more over the coming months, and we'll update you on our latest thinking in our Q3 earnings. Before I hand the call off for Q&A, I'd like to express my gratitude as well to our 12,000 Gilead employees worldwide. Without their spirit, dedication, and resilience, nothing we strive to achieve for patients would be possible. Now I'd like to open the call for questions. Liz?

19 environment are actually and probably the best choice for patient because you think about big Harvey and you think about no monitoring no.

Thing et cetera, those are really the rapid start with the Harvey is critical for patients and and I think that that's also helping to support the carvey throughout this transition with dependent.

And just as a quick follow up with respect to the big Harvey share gains or are those share gains are switches.

The different during the pandemic as they were prior to the pandemic are they coming from the regimen for taking share.

Though.

Yeah, the sourcing a business is asking about the same the only difference I would say is our this suites.

In treatment is obviously, a little bit slower than what we've seen in the past just because physicians don't want to switch there is actually guideline that suggests no switching during the pandemic on contract to John So so it's more the naive patient population net beating be carty right now versus the switch population and older compounds.

Our keeping share so since gilliat has about 75% we thing we can HIV basically what you're seeing it some of our older brand are keeping higher share versus then switching over to more compounds like the Tommy.

Operator: Ladies and gentlemen, if you'd like to ask a question at this time, please press the star, then the number one key on your touch-tone telephone. To withdraw your question, press the pound key. Our first question comes from Tyler Van Buren with Piper Sandler. Your line is now open.

Great. Thanks for taking the questions.

Thanks Tyler.

Our next question.

That comes from US Jeffrey Parker with SBB Leerink. Your line is now open.

Tyler Van Buren: Hey guys, thanks for taking the question. I guess with respect to the HCV and HIV share increases that you saw during the pandemic, you talked about coming out of the pandemic stronger. So could you just provide a little bit more color on that?

Thank you very much.

Maybe a couple of questions on rim Descovy, Andy you indicated I think you're going to so one to 1.5 million courses.

But it sounds like you're supplying half a million courses just in Q3.

So could you give us a sense of what youre upside.

Johanna Mercier: Sure, Tyler. I'll turn right over to Johanna.

Capacity is given the.

Johanna Mercier: Okay. Thanks, Tyler.

Lastly, the initiatives that you have in place for the year.

Johanna Mercier: Yeah, so, for example, in HIV, when you think about...

Secondly.

How you see the demand beyond those 500000 courses in Q3.

Johanna Mercier: No monitoring, no HLA testing, etc. The rapid start with Victarvi is critical for patients, and I think that's also helping to support Victarvi throughout this transitional period with the pandemic.

Our unallocated basis already in Q4 or.

Is there some uncertainty about the demand and they could you just give us a sense of how you've incorporated that into a god. They must be there's a huge range in your operating income.

Johanna Mercier: And just as a quick follow-up, with respect to the Big Tarby share gains, are those share gains or switches, are they different during the pandemic as they were prior to the pandemic? Are they coming from, are they regimens that they're taking share gains at all?

That's being driven by rent.

Give us more color on that.

Maybe I'll start maybe one final point and asked Jim on Oh, God down I'm, sorry, perfect No. That's great grandchildren, and thank you maybe I'll ask joining to comment on the the upside to the supply and demand in Q3 in Q4 the.

Johanna Mercier: Yeah, the sourcing of business is actually about the same. The only difference I would say is that our switch in treatment is obviously a little bit slower than what we've seen in the past, just because physicians don't want to switch. There are actually guidelines that suggest no switching during the pandemic from drug to drug. So, it's more the naive patient population that's feeding the curvy right now versus the switching population, and older compounds are keeping their share. So, since Gilead has about 75% within the HIV market, basically, what you're seeing is some of our older brands are keeping higher shares versus then switching over to newer compounds like Big Tarvy.

There is a wide range and it is driven by our indefinitely or expectation. So John had mentioned we're learning more we play we just started commercializing recently so we.

We do expect that we'll be able to narrow or if you could give you an update on acute third quarter, Jeff as you would expect John if you want to touch base on the supply and demand there.

Yeah sure.

So why maybe just what Andy the saying for Q4, specifically I think the uncertainties are our multiple and and it's not just.

Tyler Van Buren: Great, thanks for taking the question.

Our supply actually less uncertainty because I think we have a pretty good idea and ramp up had Dan.

Operator: Our next question, please. That comes from Geoffrey Porcus with SBB Larynx. Your line is now open.

Geoffrey Christopher Meacham: Thank you very much. So maybe I have a couple of questions on Remdesivir. Andy, you indicated, I think, that you're going to sell 1 to 1.5 million courses, but it sounds as though you're supplying half a million courses just in Q3. So could you give us a sense of what your upside capacity is, given the capacity initiatives that you have in place for the year? And secondly, how do you see the demand beyond those 500,000 courses in Q3? Are you on an allocated basis already in Q4, or is there some uncertainty about the demand? I mean, could you just give us a sense of how you've incorporated that into your guidance? There's a huge range in your operating income, so I presume that's being driven by Remdesivir.

In process. The team has done an incredible job ramping up and you really see that ramp up come through in Q4, we feel that and I think Dan mentioned that we feel that by early October we should be in a place assuming somewhat I don't know stable is the right word, but some ability within the pandemic globally and across at Casa numbers.

We should be in a situation, where global supplied meat global demand and not the great place to be in where we can't wait because it's been challenging that far the on in Q4, the uncertainties are more around the pandemic itself and and not really understanding.

Got it doesn't stabilize does it come to an all time low like we've seen in Europe on we really don't now and so that's why it's a little bit tougher to manage on that front.

Andrew D. Dickinson: and Maybe I'll start with the final point and ask Johanna.

Andrew D. Dickinson: Final point and ask Johanna. Oh, go ahead, Dan. I'm sorry. Perfect. No, that's great.

Mentioned before from a supply standpoint by the end.

On December of this year, we should be in addition to have cumulatively.

Johanna Mercier: Johanna

Johanna Mercier: Thank you.

Over 2 million treatment courses and and some of those obviously were used during the donation and in some are being used in Q3. So the balance of that will be in play for Q4, and we're just working with all the different governments not just the U.S., but governments around the world to better understand what they think they're real kind need is and that's really our focus right now it's a real time need.

Johanna Mercier: Maybe I'll ask Johanna to comment on the upside of supply and demand in Q3 and Q4. There is a wide range, and it is driven by our Remdesivir expectations. So Johanna mentioned we're learning more week by week. We just started commercializing recently. So we do expect that we'll be able to narrow our thinking and give you an update in the third quarter, Jeff, as you would expect. Johanna, do you want to touch base on the supply and demand question? Sure.

Okay. Thanks very much.

Jeff and we'll update you and everybody else in quarter. Three obviously so this is our best estimate at this stage.

Good.

Thank you.

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

Hey, Thanks, good afternoon.

Johanna Mercier: Yeah, sure. So I'll maybe just add to what Andy was saying for Q4 specifically. I think the uncertainties are multiple, and it's not just our supply that is less of an uncertainty because I think we have a pretty good idea and the ramp-up has been impressive. The team has done an incredible job ramping up, and you really see that ramp-up come through in Q4. We feel that, and I think Dan mentioned this, we feel that by early October we should be in a place assuming some, I don't know if stable is the right word, but some stability within this pandemic globally across the numbers, we should be in a situation where global supply meets global demand, and that's a great place to be, and we can't wait because it's been challenging thus far.

Following up on run Deveer two questions. One is maybe you could make a comment about thinking about the actual demand and sales that you've actually done versus actually utilization, how we've done some math around actual utilization and it sounds like a lot of this could actually be a far stockpiling. So maybe you could just comment on that type.

Dynamic.

I would help us think about future years, and then the second as I'm just looking forward, even a little bit you've made some comments about injectable on inhaled is this just say PK question. What do you have to look for in phase one data and what are the challenges and would you had this data and noticed by by say fourth quarter. Thanks.

Sure I'll start and then try to you.

And then we'll go to my dad them in an injectable.

So first of all.

Johanna Mercier: In Q4, the uncertainties are more around the pandemic itself and not really understanding whether it will stabilize, or come to an all-time low like we've seen in Europe. We really don't know, and so that's why it's a little bit tougher to manage on that front. As mentioned before, from a supply standpoint, by the end of December of this year, we should be in a position to have cumulatively over 2 million treatment courses, and some of those obviously were used during the donation, and some are being used in Q3. So the balance of that will be in play for Q4, and we're just working with all the different governments, not just the U.S., but governments around the world, to better understand what they think their real-time need is, and that's really our focus right now.

Michael I think I think really.

The vast majority of the rent that's bigger than.

We have today is being used.

You know the allocation process with the U.S. government.

Has gotten better over time and they really are allocating basically on at least twice a month, sometimes more frequently to where the hubspot occur in the United States and that's the vast majority the supply should we think there's probably very little.

Demand that is not being utilized at this stage of course completely efficient than there are some pockets where you might have.

Some hospitals that have more run veterinary or than patients, but right now given the tremendous.

Human need in the United States in particular and.

Right in other countries, we're working with we're really just working on the real time demand right now so that's being utilized Joanna do you have anything else you want to add to that.

Geoffrey Christopher Meacham: Thank you.

Geoffrey Christopher Meacham: Thank you very much.

Andrew D. Dickinson: Geoff, and we'll update you and everybody else in quarter three, obviously, so this is our best estimate at this stage.

Yes.

And Michael I'd, just add the fact that it's also based on incidence and happy etiology everything we're doing working with the U.S. government working with.

Geoffrey Christopher Meacham: Thank you.

Michael J. Yee: Our next question comes from Michael Yee with Jefferies. Your line is now open.

Michael J. Yee: Hey, thanks. Good afternoon.

And ex US government says Wow governments around the world, It's really based on the incident and what we've seen so far is that because of the way we're managing it with the HHS and a lot. Some hospitals that actually said no. Thank you give it to somebody who needs that we don't need it right now.

Daniel O'Day: Following up on Remdesivir, two questions. One is, maybe you could make a comment about thinking about the actual demand and sales that you've actually done versus actual utilization. We've done some math around actual utilization, and it sounds like a lot of this could actually be a form of stockpileing. So maybe you could just comment on that type of dynamic. That would help us think about future use. And then the second is, just looking ahead even a little bit. You've made some comments about injectable and inhaled. Is this just a PK question? What do you have to look for in phase one data, and what are the challenges? And would you have this data and know this by, say, the fourth quarter? Thanks.

So I do think that.

People are coming together to work through their understanding that there is a shortage of supply and understanding that it really needs to go to patients in need and the worst thing that could ever happened is products sitting idle somewhere so we're being very very careful to make sure that doesn't happen anywhere in the world.

Good day earlier since October Michael that we've been started to see.

Actual demand and utilization, perhaps be be different than perhaps the opportune for stockpiling, but not before October burned out over to your loan.

Johanna Mercier: Sure, I'll start and then Johanna will add, and then we'll go to Merdad on the injectable. So first of all, Michael, I think I think really the vast majority of the Remdesivir that we have today is being used. You know, the allocation process with the U.S. government has gotten better over time, and they really are allocating basically at least twice a month, sometimes more frequently, to where the hotspots are in the United States, and that's the vast majority of the supply. So we think there's probably very little demand that is not being utilized at this stage. Of course, it's not completely efficient, and there are some pockets where you might have some hospitals that have more remdesivir than patients, but right now, given the tremendous,

Michael's question Yeah.

Yes, so what I'd say is.

I mentioned, we're working on both being held them said Q the inhaled ahead.

And as I mentioned in phase one right now in the dose escalation phase.

Our the hypothesis here is that you know the wire is in many patients, especially early is primarily one and so the question is it fair enough patients can we can we treated now patient awareness and held.

Or or.

Actually even impatient, but then they held version yet right, where it needs to be on apparently in Milan, and whether that would have a benefit for those patients. So that's that's.

We're going to be running with inhaled version.

Johanna Mercier: I just want to add the fact that it's also based on incidents in epidemiology. Everything we are doing, working with the U.S. government, working with ex-U.S. governments as well, governments around the world, it's really based on incidents. And what we've seen so far is that, because of the way we're managing it with the HHS, we don't need it right now.

[music].

As far as subcutaneous will continue to work on that currently is not in the clinic and as I mentioned.

We're looking at feasibility and other parameters and bring that online.

Thank you like Michael good thanks.

Our next question comes from Terence Flynn with Goldman Sachs. Your line is now open.

Hi, Thanks for taking the question and thank you for all the work on the covert front.

Daniel O'Day: I think the earliest is October, Michael, that we would start to see actual demand and utilization perhaps be different and perhaps the opportunity for stockpileing, but not before October. Merdad, over to you on Michael's question.

Was wondering first just on the financials, if you could try to quantify the impact from co bid on a dollar basis that you saw in the quarter.

And then was wondering if you think about capsid, obviously important long term opportunity for you guys. Just conceptually are you focused on finding a partner for that internally to continue did you know dominate the market in terms of share or are you open to looking for an external partner and and as a result splitting the economics on the future.

Merdad V. Parsey: Yeah. Yeah. So what I'd say is, you know, as I mentioned, we're working on both the inhaled and the sub-Q. The inhaled is ahead and is, as I mentioned, in phase one right now, in the dose escalation phase. Our, our hypothesis here is that, you know, the virus in many patients, especially early, is primarily in the lung. And so the question is, for an outpatient, can we treat an outpatient with an inhaled or potentially even an inpatient?

Your market. Thank you.

Great. So why don't to Andy you take the financials and we'll have Diana take the capsid question.

Yes, Thanks, Dan Hi turns thanks for the question you know we don't provide specific.

We didnt provided specific.

Merdad V. Parsey: .......

Merdad V. Parsey: ..

Michael J. Yee: As far as subcutaneous, we'll continue to work on that. That currently is not in the clinic, and as I mentioned, we're looking at feasibility and other parameters of bringing that online. Thank you.

Guidance in terms of the the cobot impact I would say at a high level it impacted our business exactly the way that we expected filleted predominantly as you heard from Jonah and the HCV treatment and the HIV prep business.

Terence Flynn: Michael, good. Thanks.

Terence Flynn: Our next question comes from Terence Flynn with Goldman Sachs. Your line is now open.

The impact was substantially less than half a billion dollars.

On the topline revenue in the first half so rather than thinking about it on a quarterly basis, there and I.

Andrew D. Dickinson: Hi, thanks for taking the question and thank you for all the work on the COVID front. I was wondering, first, just on the financials, if you could try to quantify the impact from COVID on a dollar basis that you saw in the quarter. And then I was wondering, as you think about CAPSID, obviously an important long-term opportunity for you guys, just conceptually, are you focused on finding a partner for that internally to continue to dominate the market in terms of share, or are you open to looking for an external partner and, as a result, splitting the economics of the future market? Thank you.

I think it's easier to think about it on the first half basis as you've heard from other companies as well given the the pull forward of inventory at the end of the first quarter.

Okay. That's helpful.

Great and I can speak to our capsid inhibited, our and our vision of our long acting HIV franchise, and there, but I would say as we're looking at our past success and and it's really been driven by focusing on trying to meet the needs of patients and doing that agnostic to where we.

Come up with the compound to the regimen. So in the past that's been through acquisitions, it's been through partnerships and its of course been through internal discovery and we really do have unparalleled excellence in terms of our internal discovery and <unk> and we're doing a lot of work there to try to find a a partner for capsid.

Terence Flynn: Great, so why don't Andy take the financials and we'll have Diana take the CAPSID question?

Andrew D. Dickinson: Yeah, thanks Dan, and hi Terence. Thanks for the question.

Andrew D. Dickinson: As you know, we don't provide specific guidance in terms of the COVID impact. But I would say, at a high level, it impacted our business exactly in the ways that we expected. So it hit predominantly, as you heard from Johanna, in the HCV treatment and HIV prep business. The impact was substantially less than half a billion dollars on our top line revenue in the first half. So rather than think about it on a quarterly basis, Terence, I think it's easier to think about it on a first half basis, as you've heard from other companies as well, given the pull-forward of inventory at the end of the first quarter. Hopefully, that's helpful.

But we're also open and always looking externally as well with the idea that we will be successful if we create the best regimen for patients.

Thanks parents for the question. Okay can we go to the next one please.

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

Hi, there thanks very much for taking my question question on forgotten it with the PDUFA upcoming and the current stated the pandemic I'm curious your latest thoughts on launch approach and potential for differentiation to the label or otherwise how that shapes. Your commercial strategy and then I'm also wondering if there's any reason why the CHF <unk> recommendation.

Daina Graybosch: Great. And I can speak to our capsid inhibitor and our vision for our long-acting HIV franchise. And there, what I would say is we're looking at our past success, and it's really been driven by focusing on trying to meet the needs of patients and doing that agnostic to where we come up with the compounds or the regimens. And so, in the past, that's been through acquisitions, it's been through partnerships, and it's, of course, been through internal discovery. And we really do have unparalleled excellence in terms of our internal discovery, and we're doing a lot of work there to try to find a partner for capsid. But we're also open and always looking externally as well, with the idea that we will be successful if we create the best regimens for patients.

Ones on dosing and indication wouldn't necessarily be illustrative of global positioning for the product or do you think FDIC. He may are still looking up the Jack benefit risk profiles differently. Thanks.

Thanks, maybe I concur with Brent Yeah go ahead. Your I know why don't you start and compared to add on said anything as well, but go ahead. Please.

Okay. Thanks, Brian for the question.

So yes, so obviously pleased with recent positive cgmp opinion, and and we are working we've been working diligently with the teams around the world to prepare for launch with still got match. We are looking at the coded situation and in assessing the situation to be honest with you maybe a couple of months back we were thinking virtual not virtual that I think in line.

Terence Flynn: Thanks, Terence, for the question. Okay, can we go to the next one, please?

Brian Abrahams: Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is now open.

Yes kind of what was where we're seeing that dynamic for the market I think virtual is the leeco.

Brian Abrahams: Hi there. Thanks very much for taking the time to answer my question. A question on Filgotinib. With the PDUFA upcoming and the current state of the pandemic, I'm curious about your latest thoughts on the launch approach and potential for differentiation through the label or otherwise, and how that shapes your commercial strategy. And then I'm also wondering if there's any reason why the CHMP recommendations on dosing and indication wouldn't necessarily be illustrative of global positioning for the product. Do you think FDA and EMA are still looking at the Jack Benefit Risk Profile differently?

And so we're looking at how we do that and get back vast approach so more to come on that front.

Out of work going on.

Make sure that we do that at competitively as possible the.

From a differentiation standpoint, it's in line with what we talked about before we we believe in the profile Filgotinib and the differentiation that it offers and so therefore that that's really an opportunity medically to make sure that your medical team that conversation that education happens with position.

Murdoch.

Do you want to comment on the regulatory.

Yes.

I think my dad is having a bit of an audio issue. So all she didn't here Brian. So you know I think I think it's kinda premature to anticipate exactly what's going to happen a different regulatory authorities around the world.

Johanna Mercier: Thanks. Thanks. We'll be right back.

Johanna Mercier: Yeah, go ahead, Johanna, why don't you start? And if our dad wants to add anything as well, go ahead, please.

Johanna Mercier: Okay, thanks, Brian, for the question. So yeah, obviously, pleased with the recent positive CHMP opinion. And we are working, we've been working diligently with the teams around the world to prepare for launch. We've still gotten in.

We continue to have discussions with all regulatory authority is obviously Europe was the first went out of the gates, we're pleased with that and as soon as we have some additional information, we'll let you know but.

Difficult to speculate thanks.

Thank you.

Johanna Mercier: We are looking at the COVID situation, and in assessing the situation, to be honest with you, maybe a couple months ago, we were thinking virtual, not virtual. But I think in light of kind of where we are, and where we're seeing the dynamics of the market, I think virtual is the way to go. And so we're looking at how we do this and the best possible approach. So more to come on that front. There is a lot of work going on to make sure that we do this as competitively as possible. From a differentiation standpoint, it's in line with what we've talked about before; we believe in the profile of PhilGOTNIB and the differentiation that it offers. And so, therefore, that's, that's really an opportunity medically to make sure that, through our medical teams, that conversation, that education happens with physicians. Merdad, If you want to comment on the regulatory...

Our next question comes from a media young with Cantor Fitzgerald. Your line is now open.

Hey, guys. Thanks for taking my question and congrats on everything that you guys had been doing here. It's incredible I guess I just wanted to kind of maybe talk big picture about like of course, you know there from doesn't bear which could have some earlier you know kind of utility beyond you know and then in the treatment cycle, but just where we are with that things as well and kind of how you think about but listen they got from death.

There may be perhaps over the next couple of years, even though I know I'm asking you look at Crystal ball. Thank you.

Yeah, great cheerleader for us. Thank you very much relief, so oh yeah.

Obviously, I think our general position on this is.

But you will always need effective therapeutics and effective vaccine the control any type of a viral outbreaks of anytime and certainly one in a pandemic. So I think we're firmly committed to.

Merdad V. Parsey: I think Merdad is having a bit of an audio issue, so I'll feed in here, Brian. So, you know, I think it's kind of premature to anticipate exactly what's going to happen with different regulatory authorities around the world. We continue to have discussions with all regulatory authorities. Obviously, Europe was the first one out of the gates. We're pleased with that, and as soon as we have some additional information, we'll let you know. But, you know, it's difficult to speculate. Thanks.

Working to expand Brenda threers impact be really.

We're really pleased that every piece of data in our hands or in other People's hands has been consistent consistent about the effect in terms of reduction hospital stays.

Consistent around the ability to use it earlier in hospitals to isn't good I get a you know even bigger impact.

I think that will continue regardless of of vaccination. Our hope obviously is like a heavier than normal influenza.

Brian Abrahams: Thank you.

Olivia Brayer: Our next question comes from Olivia Young with Cantor Fitzgerald. Your line is now open.

Daniel O'Day: Thanks for taking my question, and congrats on everything that you guys have been doing here. It's incredible.

With an effective vaccine appropriately administered drugs many patients as we'll take a vaccine around the globe.

That you could reduce the number of patients that ever have to enter the hospital, but you know as we know vaccines are never 100% effective they're never 100% utilized.

Olivia Brayer: I guess I just wanted you to kind of talk big picture about, like, of course, you know, they're from Desivir, which could have some earlier, you know, kind of utility beyond, you know, in the treatment cycle. But just where we are with vaccines as well, and kind of how you think about positioning it from Desivir, maybe perhaps over the next couple of years.

So there will always be patients could be in therapeutics and what we're excited about in terms of the potency of run descovy or is the ability to use it earlier on patients to get them out of a little faster.

Daniel O'Day: Thank you for joining us.

Olivia Brayer: You're a great cheerleader for us. Thank you very much, Olivia.

And also to make sure that the types of work we're doing now the using rough discover outside the hospital could prevent patients remember having to go in and of course, that's all to be determined. So I think it'll be hand in glove with vaccines and the and obviously, we're looking forward also too.

Daniel O'Day: So, yeah, obviously, you know, I think our general position on this is that you will always need effective therapeutics and effective vaccines to control any type of viral outbreak of any type, and certainly one caused by a pandemic. So, I think we're firmly committed to working to expand Remdesivir's impact. We're really pleased that every piece of data in our hands or in other people's hands has been consistent, consistent about the effect in terms of reduction in hospital stays, consistent around the ability to use it earlier in hospital stays and get, you know, even bigger impacts. But, you know, as we know, vaccines are never 100% effective. They're never 100% utilized.

The work that's going on in terms of looking at anti viral a potent antiviral that's been proven like from does severe in patients to be used perhaps in combination with other therapeutics to get an even stronger treatment effect, but that continues to be I think our view and.

We're hoping that I'm really proud to be working in this industry at this stage because my colleagues around the industry I know are doing everything possible, including the collaboration but they have without some run does severe too.

Daniel O'Day: So, there will always be patients that need therapeutics. And what we're excited about in terms of the potency of Remdesivir is the ability to use it earlier on patients to get them out of the hospital faster and also to make sure that the types of work we're doing now, using Remdesivir outside the hospital, could prevent patients from ever having to go in. Of course, that's all to be determined. So, I think it'll be hand in glove with vaccines. And obviously, we're looking forward also to the work that's going on in terms of looking at an antiviral, a potent antiviral that's been proven effective, such as Remdesivir, in patients, to be used, perhaps in combination with other therapeutics, to get an even stronger treatment effect.

To bring new therapeutics in vaccines to patients and so we're excited about that so.

Thank you very much for the question.

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

Hey, guys. Thanks for taking my question. This as Macchiato Corey So just to go back to that Harvey are you able to quantify how much of that to Q weakness due to inventory.

So first of other factors that you mentioned and should we expect these other factors such as a shift pair mix slowdown in page switches to persist for the remainder of Tony Tony.

Thanks over huge running thanks.

Daniel O'Day: But that continues to be, I think, our view, and we're hoping, and I'm really proud to be working in this industry at this stage, because my colleagues around the industry, I know, are doing everything possible, including the collaboration that they have with us in Remdesivir, to bring new therapeutics and vaccines to patients, and so we're excited about that. So, thank you very much for the question.

Thanks, Matthew for their questions if I understood. It sorry, you broke up a little back if I understood. It correctly. It was specific to the Caribbean a shift in what's driving it and it's really the inventory fluctuations back what's driving.

On the shift from Q1 to Q2 and you can appreciate Q4 always a little bit higher it plays out in Q1 at least that in Q1, but then we saw the uptake because of covet 19 in late March and we saw that lead out in Q2. So it's really what's driving the big heavy teeth, we have seen a payer mix shift.

Corey Kazimoff: Our next question comes from Corey Kazimoff with J.P. Morgan. Your line is now open.

Matthew: Hey guys, thanks for taking my question. This is Matthew. I'm for Corey. So just to go back to Dick Tarvey, are you able to quantify how much of the QQ weakness is due to inventory pull-through versus other factors that you mentioned, and should we expect these other factors, such as a shift in payer mix and slowdown in patient switches, to persist for the remainder of 2020?

In the last two quarters, where do you do.

Employment, we're seeing a shift from commercial payers to and government channels, and specifically phs and Medicaid, but I, just playing time, that's really not impacting or modestly impacting our business overall, so it's really inventory driven.

Great. Thank you hopefully I answered your question.

Yeah Okay.

Okay.

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

Johanna Mercier: Thanks. Over to you, Johanna. Thanks, Matthew.

Johanna Mercier: We have seen a payer mix shift in the last two quarters, where due to unemployment, we're seeing a shift from commercial payers to government channels, specifically PHS and Medicaid, but at this point in time, that's really not impacting or modestly impacting our business overall. So it's really inventory-driven.

Hey, guys actually the question.

The strategic one for Dan or even Andy.

And when you took over the narrative for Julian was a return to growth.

She was stabilizing and of course I get the headwinds from Kogut, but.

Sustainable growth has still been today's there. So the question is do you run.

The product that such anchors your long term growth, where do you feel like you need other assets.

Matthew: Great. Thank you. Hopefully, I have answered your question.

Geoff Meacham: Hopefully, I have answered your question.

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

Obviously I recognize that feel go and tight or are also in growth, but do you need other assets to help drive sustainable more long term growth. Thank you very much.

Geoff Meacham: Hey guys, thanks for the question.

Geoff Meacham: at a strategic level.

Yes.

[music].

Geoff Meacham: I think one for Dan or even Andy. Dan, when you took over the narrative for Gilead, it was a return to growth.

Oh, sorry about that Jeff I was chipping away there.

Let me, let me say it certainly the latter to your question, Jeff and and that is that.

Geoff Meacham: https://www.kenhub.com

As you know as happy as we are that we can have an impact when patients and recovered crisis with right that's severe.

Geoff Meacham: [inaudible]

Geoff Meacham: So the question is, do you reinvestigate a new product that anchors your long-term growth?

Geoff Meacham: or do you feel like you need other assets? You know, obviously, I recognize that Phil Goh and Kite are also in growth mode, but do you need other assets?

We completely understand that.

Hopefully by the way for the World that we'll get to a stage where.

The pandemic is much more predictable and read this year is playing a role.

Geoff Meacham: We need other assets to help drive sustainable, more long-term growth. Thank you very much.

But not what we're relying upon for our mid to long term growth than the company. So we believe that rather.

Daniel O'Day: You're on mute.

Daniel O'Day: Oh, sorry about that, Geoff. I was chatting away over there.

Daniel O'Day: Let me say it's certainly the latter to your question, Geoff, and that is that, you know, as happy as we are that we can have an impact on patients in the COVID crisis with thrandesivir, we completely understand that, hopefully, by the way, for the world, we'll get to a stage where the pandemic is much more predictable, and thrandesivir is playing a role, but not what So we believe that, rather, the continued emphasis on our core business to make sure that we not only continue to lead with HIV today but also tomorrow with the next generation of medicine, combined with what we have in our internal pipeline, and then growing our overall immuno-oncology business, both within Kite and outside of Kite.

The.

Continued emphasis on our core business to make sure that not only continue to lead with HIV today, but also tomorrow with the next generation of a better films.

Combined with what we have in our internal pipeline.

And then growing our overall immuno oncology business spoke tight and an outside of cuts and I think that's what you see as we think about now outside of raw G moving into inflammation moving more deeply into oncology, particularly outside of kite.

You are going to continue to see I think more of what you've seen in the first half of this year, which is an ability to both optimize our current portfolio in house and continue to do smart targeted deals could allow us to bring transformational medicine innovation into our house a different stage.

Daniel O'Day: And I think that's what you see as we think about, now outside of virology, moving into inflammation, moving more deeply into oncology, particularly outside of kites. You're going to continue to see, I think, more of what you saw in the first half of this year, which is an ability to both optimize our current portfolio in-house and continue to do smart, targeted deals that allow us to bring transformational medicine innovation into our house at different stages of development. And obviously, that goes along with different risk profiles, right? So, and that's, I think, where the BD team under Andy's leadership has done a really good job of making sure we're doing fit-for-purpose transactions where when we're going after first or best in class and there's risk associated with it, we're trying to be prudent about how much capital we deploy up front, particularly in the earlier stage assets, and kind of pay for success over that period of time.

As of development, and obviously that goes along with different risk profiles right. So and that's I think where the b. The BD team under Andy's leadership has done a really good job, but making sure we're doing fit for purpose transactions, where when we're going after first our best in class and there's risk associated with.

We're trying to be prudent about how much capital we deploy upfront.

Particularly on the earlier stage assets.

If you don't pay for success over that period of time and there are others, where we've seen a late stage they stage data like 47, where.

Where we feel quite confident and and bullish about bringing that in and using the breadth and depth of gilliat to.

Daniel O'Day: And there are others where we've seen late-stage data, like 47, where we feel quite confident and bullish about bringing that in and using the breadth and depth of Gilead to look at expansive life cycle management of a medicine like Megrolamab that has a leading position in a competitive environment to allow us to think about multiple different indications in hematologic malignancies and possibly also looking at solid tumors. So that type of strategy is absolutely fundamental to grounding us and continuing to build on our mid to long-term growth story. Andy, anything that you'd like to add from your side?

Look at expansive lifecycle management on a medicine like might grow about.

But has a leading position in a competitive environment to allow us to think about multiple different indications in hematologic malignancies, and possibly also looking at solid tumors. So that type of this strategy is absolutely fundamental to rowdiness and continuing to build on our mid to long term growth.

Sure and anything that you'd like to and from your side.

Andrew D. Dickinson: I think you said it well in the captions. Thanks.

I think you said it well that competes thanks.

Daniel O'Day: Thanks, Dan. Thanks, Jeff.

Thanks, Dan.

Thanks.

Our next question comes from Evan Seigerman with Credit Suisse. Your line is now open.

Evan David Seigerman: Our next question comes from Evan Seigerman with Credit Suisse. Your line is now open.

Evan David Seigerman: Thank you so much for taking the question. I actually have one for Christy. I know you haven't spoken much on the call.

Thank you so much for taking the question actually one for Christy I know you haven't spoken much on the call I'm. Congrats on your very recent approval of to Cartus, you help us better understand kind of how you view the commercial potential for this asset and have you seen lever reversal on trends around car to use this month versus say June or me, how should we think about to try.

Christine Vico: Congratulations on your very recent approval of Tecardus. Can you help us better understand how you view the commercial potential for this asset? And have you seen any reversal in trends around CAR-T use this month versus, say, June or May? And how should we think about their trajectory over the course of the year?

Victory over the course of the year.

Yeah.

Thanks for the question, making sure I'm, a a wide awake and listening.

[laughter]. So oh, we're so pleased about being the first company to be able to deliver for mantle cell lymphoma patients. This.

Christine Vico: Thank you.

Evan David Seigerman: Thanks for the question, making sure I'm wide awake and listening. We're so pleased about being the first company to be able to deliver for mantle cell lymphoma patients, and they are all authorized for the new product within 30 days. So we're very hopeful that all of these patients that have nothing else to keep them alive actually have something that can help them with such great efficacy. When we look at what happened in Q2, I'd say we were maybe pleasantly surprised that more patients were treated than we thought would be based on COVID. I will say that with what's happening now with the states in the U.S., we continue to see a slowdown versus what we saw in Q1 in terms of registrations. So I do think we're not going to see a huge uplift in Q3, and we could be flat, and I don't know if we'll maybe lose some growth. But right now, it's too early to tell, but I'm not as optimistic about Q3, and hopefully, when we come out of this situation, it'll get better.

The Cartus it has a curative intent and so although it's not a huge opportunity relative to deal bcl or some of our other other studies there will be coming up like second line. It really is a differentiator for us in the marketplace that continue to demonstrate our leadership just like with the escargot, our manufacturing footprint, we're gearing up we have.

ER ready to go in seven days authorized sites will all be.

I Oh authorized for the new product within 30 days. So we're very hopeful that all of these patients that have nothing else to keep them alive actually have something that that can help them why such great efficacy. When we look at what happened in Q2, I'd say, we were maybe pleasantly surprised that more patients were treated than we thought would.

Based on covert I will say that with what's happening now with the states and the U.S.. We continue to say you know a slow down versus what we saw in the Q1 in terms of registrations. So I do think we're not going to see huge uplift in Q3, and we could be a flat and I don't know <unk>, maybe loose some growth but right.

Early to tell but I'm not I'm as optimistic about Q3, and hopefully when they come out of the situation will get better and I'm really proud of the tight team because as you can imagine with all of the flights being canceled early on and without having to figure out, which 80 seized to bring T cells back to where you didn't originate being able to hold T cells are we haven't before the team.

Christine Vico: And I'm really proud of the KITE team because, as you can imagine, with all of the flights being canceled early on and with having to figure out which ATCs to bring T-cells back to where they didn't originate, being able to hold T-cells where we haven't before, the team hasn't missed a beat and hasn't missed a delivery. So as I look at the whole of KITE and we look at the whole of the opportunity, it's really multiple indications in a very short period of time with mantle cell lymphoma, non-Hodgkin's, and indolent non-Hodgkin's lymphoma by the end of this year being submitted. We have ALL been submitted and, with priority review next year being approved. And we also have the big indication of the second line DL-BCL to be submitted next year. So as you look at that combination, I do think it gives us the best opportunity for growth and to potentially cure more patients of their cancer.

As it missed a beat and hasn't missed the delivery so as I look at the whole of tight and we look at the whole of the opportunity. It's really multiple indications in a very short period of time with mantle cell lymphoma, non hodgkins indolent non hodgkin's lymphoma by the end of this year being submitted we have AOL being submitted in the priority.

Your next year being approved and we also have the big indication of second line deal Bcl to be submitted next year. So you look at that combination combination I do think it gives us the best opportunity for growth and to potentially care more patients have there cancer.

Evan David Seigerman: Thanks, Evan, and we're looking forward to hearing more from Christy as that kite business develops. We'll get more airtime here.

Thank you so much.

Thanks, Evan we're looking forward to hear in more from Christiana type business develop [laughter]. Thanks Evan.

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

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

Great. Good evening. Thanks for taking my question I, just want to ask a little bit more about forgotten Evan and Mantech. So it sounds like you've you finished enrollment and I think the I think it's either about three months when you take the primary endpoint. There. So I'm just wondering how the timing of getting the data from Manto, which it sounds like could come towards the end of this year versus the.

Matthew Harrison: Great. Good evening.

Merdad V. Parsey: Thanks for taking my question. I just want to ask a little bit more about Philgotinib and Manta. So it sounds like you've finished enrollment, and I think it's about three months when you take the primary endpoint there. So I'm just wondering how the timing of getting the data from Manta, which it sounds like could come towards the end of this year versus the approval timeline for Philgotinib, how those two work together, and your ability to get that data to the FDA or how that influences the application.

The the approval timeline for forgotten, how those to work and and your ability to get that data to the FDA or how that influences on the application. Thanks.

Matthew Harrison: Thanks. Hey, thanks, Matt. It was...

Thanks, Matt It will turn right over to murder.

Okay. That's my Dad, I hope I hope everybody can hear me sorry, I got disconnected earlier, so you're right.

Merdad V. Parsey: Matt, we will turn it right over to Merdad. I'm Matthew. It's Merdad.

Merdad V. Parsey: I hope everybody can hear me. Sorry, I got disconnected earlier. So, you're right in some respects, Matthew, that the patients are all enrolled. But, I don't, we don't anticipate that three months is going to be the duration necessarily that would be sufficient for the regulators in terms of looking at both onset and recovery. We saw that first three months as a critical period. We think that that's the blinded period. There's probably longer to be, if that's necessary. So we're looking at probably late this year, early next year for us to have the data, and then for us to submit it to the agency in the first half of next year. Those are the kind of timelines we're looking at.

In some regards Matthew that that the patients are all of role.

You know I don't.

Well, we don't anticipate the three months is going to be the duration necessarily that would be sufficient for for the regulators.

In terms of looking at both.

Onset and recovery so while that close two months is a critical period. We think that's the blinded period, there is probably longer to be.

Thats necessary. So we're looking at probably late in this year early next year for us to have the data.

And then for us to submit it to the agency in the first half of next year. That's those are the kind of the timelines we're looking looking at.

Okay. Thanks very much of your question. Thanks, Matthew Yeah, I know that's it thanks Dan.

Matthew Harrison: Okay, thanks very much.

Christopher Thomas Schott: Is that your question? Thanks.

Thanks, Andrew.

Daniel O'Day: Thanks, Matthew. Yeah, no, that's it. Thanks, Dan.

Our next question comes from Robyn Karnauskas with Suntrust. Your line is open.

Hi, guys. Thank you for taking my question put one Dan any thought on.

Christine Vico: Our next question comes from Robin Karnaskas with SunTrust. Your line is now open. Hi, guys. Thank you for taking my question. Quick one.

What you think about the executive orders being implemented how you might run the business. If they work to do so going forward, especially on business development and for Christie, what would you like to augment your car T portfolio have done a lot of deals in I O. What else do you think you might need to be competitive and the and space that the bi specifics another thing.

Christopher Thomas Schott: Dan, any thoughts on what you think about the executive orders being implemented and how you might run the business if they were to do so going forward, especially in business development? And for Christy, what would you like to augment your CAR-T portfolio? You've done a lot of deals in I.O. What else do you think you might need to be competitive in the space?

The moving forward. Thanks.

Yeah. Thanks, Robin I mean first of all let me just take a big step back from an executive orders I mean, I know that we all agree.

Daniel O'Day: Yeah, thanks, Robin. I mean, first of all, let me just take a big step back from the executive orders. I mean, I know that we all agree, you know, at Gilead, that the current system in the US needs to change. And we're leaning into that on a variety of different fronts, have been for a couple of years. What's really important is that when we look at changes in the US system, that they're done in a way that ensures that patients are the ones to benefit, and at the same time, we maintain the U.S. innovation model. So, you know, the types of things that we've been working with, the different packages within the Congress and the Senate have all reflected that.

Gilly under the current system in the U.S. needs to change.

And we're leaning into that in a variety of different trends have been now for a couple of years, what's really important is the.

When we look at changes in the rough system, that's done in a way that ensures that patients. So the one to benefit.

And in at the same time that we maintain the U.S. innovation model. So you know the types of things that we've been working with.

The different packages within the Congress in the Senate have all reflected that now as we.

Look at these executive orders will be looking forward to engaging with the white house and with others too to have the very principles that I just mentioned.

Daniel O'Day: And now as we look at these executive orders, we'll be looking forward to engaging with the White House and with others to have the very principles that I just mentioned, you know, articulated, and, you know, that's where we'll go. In terms of how that impacts how we think about the future business, I would say that, you know, we have so many healthcare systems around the world, right, that we're working with. Of course, the U.S. is disproportionately important to us, but our belief firmly is that if you hold the bar high enough on transformational medicine, in other words, if you really think hard about first in class and best in class and keep the bar high, regard, because remember our cycle time is so long, our capital, you know, investment is a decade, that we can't be pivoting to, you know, one or the other So that's my firm belief. Christy, over to you on Robin's question.

You know articulated.

That's where it will go in terms of how that impacts how we think about the future business I would say that we have somebody healthcare systems around the world, but right. They were working with of course, the U.S. disproportionately important to us.

But our belief firmly is that if you hold the bar high enough I'm transformational medicines. So in other words, if you really think hard about first in class best in class and keep the bar high regard because remember our cycle time, so law our capital.

Investment as a decade that we can't be pivoting to one of the other particular governmental action.

The bottom line as we keep that bar high enough under any system under any scenario.

I think we'll do first of all well for patients and we'll do well for shareholders. As a result, so that's my firm belief.

50 over to you when Robbins crush Atlas.

Thanks, Robin I'm, So I'd say in the short term, we're looking at how do we care of those patients that aren't getting the effects of car T cell that we'd like you know, yes, Carter the only car T. That's been able to show the longest duration of over three years with almost 50% of patient.

Christine Vico: Thanks, Robin. So I'd say in the short term, we're looking at how we cure those patients that aren't getting the effects of CAR-T cells that we'd like. You know, your scar is the only CAR-T that's been able to show the longest duration of over three years with almost 50% of patients being alive. And how do we help the other 50% of the patients? So as you look at some of the portfolio that Gilead's building, and being able to actually combine in the future other therapies, non-cell therapies, with cell therapies would be one of our strategies to build on the strengths of both of the companies together. And then as we look at the mid to longer term, we've got three studies that are in solid tumors, that have INDs in phase one, and that would be our biggest long-term bets in terms of being able to really penetrate the solid tumor area. And there are specific areas that are kind of the low-hanging fruit, where the science is a little bit easier, and others where it's very complex, and the bar is just too high compared to standard of care.

Being alive and how do we healthy other 50% of the patients. So as you look at some of the portfolio that gilliat to building and being able to actually combined in the future other therapies non cell therapies with cell therapies would be one of our strategies to build on the strength of both of the company's together and then as we look.

At the mid to longer term, we've got three studies that are in solid tumor.

I have I NDS phase, one and that would be our biggest long term bets in terms of being able to I really penetrate the solid tumor area and the specific areas that are kind of the low hanging fruit, where the science is a little bit easier and others, where it's very complex and the bar is just too high compared to standard of care. So.

It was two areas in terms of launching success today being able to get more ethic is the lead in Hematological malignancies, and then moving to solid tumor I will tell you. In addition, though that we're not I'm, keeping our eyes closed or how to understand as we look at possible disruptors with allogeneic I.P.S.C. technology.

NK cells and that's what you see a lot of the business development deals that we did some of them tight alone with cell therapy in some of them with Gilliat, where we can both partake in in the potential positive.

Christine Vico: So those two areas in terms of launching success today, being able to get more efficacy and lead in hematological malignancies, and then moving to solid tumors. I will tell you, in addition, though, that we're not keeping our eyes closed or our heads in the sand, as we look at possible disruptors with allogeneic IPSC technology, NK cells, and that's what you see in a lot Some of them are flying alone with cell therapy, and some of them with Gilead, where we can both partake in the potential positive outcomes that could come from that. So as we look at different ways off the shelf, we're the first movers in that arena, both internally, and as we look at some of our partners externally. Great. Thank you.

Outcomes that could come from that so as we look at different ways off the shelf that where the first movers in that arena, both internally and as we look at some of our partners externally.

Great. Thank you.

Sure. Thank you. So I know there were kind of a time if there's one more question, we could take that respect for Everybodys time.

Our last question comes from numerous out with Evercore ISI. Your line is open.

Hi, guys. Thanks for squeezing me in.

I have two if I may 1st your dad curious what the feedback and some of your team on the long exposure of room that severe with Ivy form and how many fold higher can you get would be inhaled form at the highest I'd be very curious and secondly, I know there's this phase two trials coming up with the in the multi drug resistant patients.

Christopher Thomas Schott: Thank you, Robin. So I know that we're kind of on time. If there is one more question, we could take that. Out of respect for everybody's time, Liz.

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

HIV for your capsid inhibitor.

My question is if that hits why shouldn't that form the basis for an accelerated filing given the unmet need in a multi drug resistant patients. Thank you very much.

Umer Raffat: Hi guys, thanks for squeezing me in. I have two, if I may. First, Merdad, I'd be very curious what the feedback is from your team on the lung exposure of remdesivir with the IV form and how many fold higher it can be with the inhaled form at the highest dose. And secondly, I know there's this phase 2 trial coming up in multi-drug resistant patients and HIV for your capsid inhibitor. My question is, if that hits, why?

We are terrific Mcdonald's decide if you decide if you are Diane I want to feed the numbers that's great. Thanks, sure well I'll I'll do the long exposure Danny you can talk about capsid. So we are we are targeting to get within held version as good as it hopefully greater exposure in the long.

And we deal with the Ivy, We think we get obviously, great exposure with the Ivy version and we think we can do at least that good if not better depending on how high would go and what the lined up in business. That's a very important thing we need and see how the trials go the got sorry, that's our goal.

Umer Raffat: Umer, terrific.

Merdad V. Parsey: Sure. Well, I'll do the lung exposure. Daina, you can talk about CAFSCRID. So we are targeting to get with the inhaled version as good as it and hopefully greater exposure in the lung than we'd get with the IV. We think we get obviously great exposure with the IV version and we think we can do at least that well, if not better, depending on how high you can go and what the lung deposition is. That's a very empiric thing. We need to see how the trials go, but that's our goal. Daina, do you want to talk about CAFSCRID?

I know what you want to talk about the capsid.

Yeah that would be great and so I'm or in terms of that.

Study in highly treatment experienced patients, it's actually a phase two slashed three because of the urgent unmet need in that patient population.

Agency granted us breakthrough designation and they agreed that we could move directly from sees one be to a registrational trial in that population and so this study that's ongoing right now I'm sure. The results Pan out a will form the basis for and an application for approval in a highly.

Daina Graybosch: Yeah, that would be great. So, Umer, in terms of that study in highly treatment-experienced patients, it's actually a Phase II-3. Because of the urgent unmet need in that patient population, the agency granted us breakthrough designation, and they agreed that we could move directly from Phase I-B to a registrational trial in that population. So, this study that's ongoing right now, should the results pan out, will form the basis for an application for approval in highly treatment-experienced patients with linacapavir dosed every six months.

Treatment experienced patients with Atlantic happened, the or dosed every six months.

Thank you so much.

That concludes today's question and answer session I'd like to turn the call back to Douglas My favorite closing remarks.

Thank you Liz and thank you will for joining US today. We appreciate your continued interest in Gilliat and the team here look forward to providing you with updates on our future program.

Umer Raffat: Thank you so much.

Douglas Maffei: That concludes today's question and answer session. I'd like to turn the call back to Douglas Maffei for closing remarks.

Ladies and gentlemen, thank you for participating in today's conference.

That's the program you may now disconnect everyone have a great [noise].

Douglas Maffei: Thank you, Liz, and thank you all for joining us today. We appreciate your continued interest in Gilead, and the team here looks forward to providing you with updates on our future progress.

[music].

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

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