Q3 2020 Gilead Sciences Inc Earnings Call

Joanne: Despite a crowded and competitive marketplace, the teams are well prepared to differentiate. We look forward to updating you on our progress in the Merdad will provide a little bit more color on the ongoing regulatory considerations and our thinking. And so with that, I'd like to turn the call over to Mohit.

Mohit: Thanks, Johanna, and good afternoon, everyone. I'm pleased to share some thoughts on several critical pipeline-related updates and progress, starting with Vecluri. We're very pleased with the recent full approval of the inquiry by the FDA. The inquiry is now approved in the U.S. for the treatment of hospitalized patients with COVID-19-based disease on a strong and consistent body of evidence from three rigorous, randomized, controlled clinical trials over the past six months to inform us about the profile of the drug. It's the first antiviral treatment proven to help patients hospitalized with COVID-19 recover and leave The results include the double-blind, placebo-controlled NIAID Phase III, Act I trial, published recently in the New England Journal of Medicine.

At this time, all participants on a listen only mode. After the speaker presentations, there will be a question and answer session.

Ask a question during the session you would need to press star one on your telephone.

Please be advised that.

Recorded [laughter].

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I'd now like to hand, the conference over to your speaker today to Douglas Mophie Senior director of Investor Relations. Thank you. Please go ahead Sir.

Thank you Dylan and good afternoon, everyone. Just after market close today, we issued a press release your earnings results for the third quarter of 2020.

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

Mohit: The study met its primary endpoint of time-to-clinical recovery through day 29, demonstrating that Glory Plus standard of care reduced the time-to-recovery through day 29 compared with placebo Plus standard of care from 15 to 10 days with a p-value of less than 0.001. The key secondary endpoint of clinical status at day 15 was also met. Patients receiving Vecluri were 50% more likely to have their condition improved by day 15 compared with those receiving placebo, and the effect was maintained through day 29. However, the secondary mortality endpoint in the overall population only showed a trend towards reduced mortality, with a p-value of 0.07. Recall that when we started these trials with NIAID, we knew very little about the disease itself and didn't know which patients might be most likely to benefit from VetClery.

The speakers on today's call will be done yellow date, chairman and Chief Executive Officer.

So one of the most T. a chief commercial officer, My Dad policy, Chief Medical Officer, and Andrew Dickinson, Chief Financial Officer.

Also on the call and available for question then on so we'll be Christy shore, Chief Executive officer of Kite, and Diana brain, not SVP and head about biology therapeutic area.

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 <unk> business financial condition and results of operations.

Plans and expectations with regard 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 beyond our control and could cause actual results to differ materially from those statements.

Mohit: Given the range of disease severity in the overall study population and the emerging understanding that clinical outcomes are highly dependent on a patient's requirement for oxygen at baseline, an exploratory post hoc analysis was conducted to determine whether there were differences in mortality based on patients' baseline clinical status with respect to the requirement for oxygen support. In this post-hoc analysis, and patients requiring low-flow oxygen at baseline. The largest subgroup of patients in the trial, over 40% of patients, those who received Bicklery had a 72% reduction in mortality at day 15 and a 70% reduction in mortality at day 29, with confidence intervals that do not cross one. These results are what we would have expected and hoped for with an antiviral therapy that should have the most impact when given earlier in the course of the disease before the inflammatory cascade leads to critical illness.

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 to gilliatt and Gilliatt assumes no obligation to update any such forward looking statements.

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 got website.

I will now turn the call over to Dan.

Thank you, Doug and good afternoon, everyone.

This is really been a pivotal quarter for gilliatt with last week's closing of the Immunomedics acquisition, we've effectively transformed our near and long term growth story.

Fidelity and approved medicine for third line metastatic triple negative breast cancer has tremendous potential for patients today and significant pan tumor potential for the future.

We are all excited to deliver on that potential along with the teams from immunomedics, who became a part of the Gilly on family last week.

Mohit: These data add to the breadth of evidence from two additional randomized controlled clinical trials establishing the use of vecculary as a standard of care for the treatment of COVID-19 in hospitalized patients. All three of these Phase III trials have been published in peer-reviewed journals, and the raw data was shared with the FDA as part of the NDA review process for them to perform their own independent analyses, as is their standard approach. We continue to pursue other ways to expand the utility of remdesivir as a backbone of treatment, including exploring how combinations could be more effective and new means of administering the drug that don't require intravenous administration. Now last week, interim results from the World Health Organization Solidarity Trial were released through a preprint server. These results don't alter the demonstration of efficacy observed with remdesivir in the studies I just described. That trial was intentionally designed to be pragmatic and enable participation across a wide range of healthcare settings. There are components of the study design and data that should provide pause. These may be clarified or placed into appropriate context during the peer review process.

I wanted to take this opportunity to thank everyone at immunomedics for the extraordinary work you've done on for Dolby to date, it's an honor to work.

With all of you now to build on those efforts for the benefit of patients with cancer around the world.

The acquisition is undoubtedly an inflection points in terms of our growth and adds to the growing pipeline of transformational medicines are b bench strengthening over the course of the year.

All of this is building on the strong foundation of our core business, we seem to strengthen durability of our HIV business. Once again in the past quarter and we're confident in our long term leadership.

I'd like to briefly talk about the changing nature of our growth prospects driven primarily by the acquisition of units.

Also touch on our core business I'll say, a few words about the clarity around out there. What's just gained FDA approval and then Joanne I'm or dad will pick up with more details.

I'll start with immunomedics and try to elevate the acquisition of Immunomedics has the largest transaction gilats history undoubtedly marks a turning point for the company.

As you know traditionally is already approved in the U.S. for third line metastatic triple negative breast cancer.

The recent data at ESMO underscored is transformative potential for this particularly challenging form of cancer.

As well as the potential for treating bladder cancer.

We will look for expansion into earlier lines of therapy in the short term and overall, we see towards Lvs a pipeline in a product the prevalence of train two in multiple cancer types means for Dolby has and tumor potential.

Secondly, in addition to its extensive potential as a monotherapy traditionally stands out because of the way it lends itself to combinations. The early data are promising and we look forward to exploring combinations with various types of agents going forward.

Mohit: Given that we haven't received the data, nor have these data been peer-reviewed, it's difficult for us to discuss the studies. Some of the issues we and others have identified in the WHO study include the lack of PCR confirmation of COVID-19 at the time of enrollment, the lack of distinction between patients requiring low-flow or high-flow oxygen in the results, no data monitoring, no data verification, and 20% of the data being reported is missing from the preliminary analysis. We can only speculate at this point that these factors may have contributed to the negative outcomes reported in this study. It is, however, important to note that the totality of data generated thus far for Vicklery suggests that antivirals are most effective earlier in the disease. As you get sicker, inflammation such as ARDS or fibrosis, and potentially things like vascular blood clots and bacterial pneumonia could kick in.

The acquisition gives us an immediate presence in the field of solid tumors and bring it brings us a significant expertise of the teams from immunomedics work.

Complementing our existing strengths in hematologic cancers through our combined tight and gilliatt pipeline and building on the important progress we've already made this year in building our oncology pipeline.

Including Immunomedics, we've completed a total of 10 transactions in oncology so far this year [noise].

I'll just mention two of the significant opportunities that other results from those transactions.

My goal Knob is now in phase three for NDS and offers some potential first in class auction utilizing the CD 47 pathway to activate innate immune system.

Our partnership with arc is progressing well, we're particularly excited by the potential of the TIGIT compounds as well as other work that's coming out of that collaboration.

And cell therapy, we are now the only company went to an FDA approved therapies, yes, Skarda intercard is quite early.

Earlier. This month, we received a positive opinion for COVID-19 from the European Medicines Agency the committee for medicinal products for human use.

Mohit: The NIAID data suggest that patients on low-flow oxygen are those that show the greatest benefit in time to discharge and mortality. An antiviral doesn't clear inflammation or blood clots once they're formed, so this makes sense. Sicker patients on high-flow oxygen and mechanical ventilation may need an antiviral, but it will be insufficient to treat the inflammation.

I'm also pleased to announce that the FDA has accepted the Skarda EPS.

For relapsed or refractory Follicular lymphoma marginal zone lymphoma, after two or more lines of systemic therapy.

The agency also granted priority review priority review for this application.

Zuma seven the industry's first ever randomized trial in cell therapy, and the only cell therapy in second line with overall survival as an endpoint will be delayed slightly due to the slowdown in the rate some of that however, we expect the data in the first half of 2021 and based upon that data.

Mohit: In those patients, treatment in addition to antivirals, such as dexamethasone, may be beneficial and has been demonstrated to be that way using WHO data. We look forward to learning more about the Solidarity trial results and sharing this information with regulators once we have the data in hand. Most importantly, at this moment, the world is combating a pandemic that isn't going away. As we see infections once again on the rise across the U.S. and Europe, it's critical that physicians have every tool possible at their disposal and that patients are encouraged to seek care for what we know can be a rapidly progressing and deadly virus. We're proud of the role that Glory has played in this pandemic, and I'm proud of and profoundly grateful to the team that's worked so hard to advance this medicine for patients, including those collaborators at the NIAID, the investigators, and patients who have been integral to the conduct of these studies. We regularly receive letters of gratitude from people who've been treated with VicLurie.

We're ready to submit quickly after.

In summary, we made great progress in building out and advancing our pipeline to drive growth this year and for Dolby represents the true growth inflection point, changing our outlook significantly and positioning gilliatt as an important contributor in the field of oncology.

The foundation for all this additional growth is our durable core business and HIV, we saw a solid rebound in the third quarter with 14% quarterly sequential growth in the global franchise.

While COVID-19 continues to impact our business there were clear signs of recovery in the third quarter.

Moreover, the underlying demand is strong as pik tardy continues to be the treatment of choice for patients and providers.

On the prevention side, we exceeded the goal we set at the beginning of the year of switching 40% to 45%.

Mohit: We're grateful for the opportunity to provide this important treatment during this time. Now, I'd like to turn to oncology. As Dan mentioned, we're very excited now to have the Tridelby program in-house with the closing of the immunomatics transaction. We're excited to welcome the impressive immunomatics team to Gilead. As Dan and Johanna both mentioned, Fidelity represents a growth inflection point for the company, and I'd like to highlight recent progress that has us excited about the full potential of this medicine. You may have seen the ESMO data that Immunomatics presented from the confirmatory phase 3 assent study. In this study, despite having received a median of four prior anti-cancer treatments, patients treated with Tredelvi showed a statistically significant and clinically meaningful improvement in overall survival, with a median of 12.1 months versus 6.7 months for chemotherapy and a hazard ratio of 0.48. P value of less than 0.0001.

Clinically appropriate at risk individuals.

To discovery.

As of October 1st we were at 46%.

Joanna will share more perspective on our third quarter sales in a few moments.

Finally, I'd like to briefly comment on run does severe which we now report referred to by its brand name that clarity.

The quarter to receive full at the approval is treating hospitalized patients that COVID-19 see only after FDA approved therapy for COVID-19. In addition to being authorized are approved for use in more than 50 countries worldwide.

We are also now in a position to meet global demand because of the work we've done since January to ramp up our supply.

It's worth stepping back for just a moment to recognize how remarkable is that we are in this position today at the start of the year and most of the world and not even heard of covering the.

The scientific community knew very little about the virus or it's devastating potential today less than 10 months. Later, we have an FDA approved therapy that is helping patients around the world to recover faster and for certain groups of patients that glorious lowering the risk of death.

Mohit: Trudelby also demonstrated statistically significant improvement in ORR, 35% vs. 5%, and CBR, 45% vs. 9%, when compared with chemotherapy. These remarkable results should establish Tredelby as a new standard of care in patients with third-line metastatic TNBC. In urothelial cancer, another area of focus, as reported last month, Immunomatics released positive results from Cohort 1 of the Pivotal Phase II Trophy U01 study of Tordelvi in cisplatin-eligible patients with metastatic urethelial cancer. These results confirm the interim findings and prior Phase I-II study results showing Tredelvi has significant activity and is well-tolerated in patients with heavily pre Tredelphi has the potential to be an important new treatment for patients with metastatic urethelial cancer.

All this comes at a time when the rates of hospitalization sadly in many places are increasing.

We have repeatedly seen the clinical benefits of the clarity across multiple clinical trials trials in the past quarter. These benefits.

Unequivocally demonstrated by the gold standard of global clinical trials. The definitive results from the fully powered double blind placebo controlled and randomized NIAD Act. One trial showed an average reduction in recovery time up five days.

Sometimes I imagine how I would feel if a family member was hospitalized recovered 19 I'm sure. Many of you think of this as well I am extremely grateful that therapy exists that has been validated but all of the rigor required for an FDA approval and whose benefits have been demonstrated in peer reviewed data from a trial that is without question.

The pinnacle of clinical studies today.

My Dad, we'll talk about all the recent data on that clarity, including what we've seen from the WD chose study and the ongoing development programs shortly Joanne.

Joanne I will talk about the recent move to a commercial distribution model in the us which is going very well.

Just like to close on victory by expressing my gratitude once again, all the gilliatt employees have pets, our hearts and souls into this work since January along with our many partners on behalf of all of it I want to say how privileged we feel the play a role in helping endemic and be able to put our anti viral expertise to work for patients recover.

Mohit: Based on these exciting data, a supplemental BLA seeking expansion of TRDEL-B's label to include the assent results is expected to be submitted in Q4 to the FDA under the RTOR program. The SBLA submission to the FDA for an accelerated approval of Tredelvi in metastatic urethelial cancer is expected in Q4 as well. In addition, the MAA for Tridaldian Metastatic TMBC in Europe is planned for submission to the EMA in the first quarter of 2021. The potential for crudality in earlier lines of therapy and additional tumor types is something we're really excited to explore. Results from studies with combinations of PARP inhibitors and separately checkpoint inhibitors give us even more options to explore the potential of this new treatment for patients.

19.

I want to emphasize that we will continue to do all it takes to fulfill our responsibility with Macquarie.

To wrap up my prepared remarks, I want to emphasize that our portfolio and pipeline are much stronger going into the fourth quarter and 2021.

By executing on our strategy in a disciplined way throughout the past 12 months, we have significantly changed the nature of our growth process, especially following the acquisition of Immunomedics and we have maintained a long term deal durability of our core HIV franchise. We're.

We're not done of course, but we made significant progress and for that I want to thank all the teams are really adding tight and our many partners worldwide with this I'll hand, the call now over to Joanne.

Mohit: Beyond Fidelvi, I'd like to highlight other opportunities in our oncology pipeline that continue to excite us. For migrolimab, our anti-CD47 asset, we continue to pursue options for filing via an accelerated approval pathway for migrolimab in addition to azacitidine and MDS in 2021 based on the ongoing single-arm study. As with all single-arm studies, there are risks, and the FDA will make a decision based on the totality of the data and whether the data support a substantial benefit from the available standard of care. The recent breakthrough designation for Macrolimab provides recognition by the FDA of the potential for Macrolimab, and it enables us to have more frequent FDA interactions. We also have obtained prime designation from McGrill and Mab, another recognition of the potential for Magro, McGrill, and Mab.

Thanks, Dan and good afternoon everybody.

I want to begin by building on Dan's comments that are durable core business.

Results for Q3 amid the ongoing so the 19 pandemic have been strong and as anticipated we continue to see signs of recovery during the quarter in underlying demand trends across our core franchises in UK and Europe.

Looking at our HIV business.

We continue to make great progress in both treatment and prevention the.

It's Harvey in treatment and just go the prevention continued to gain share quarter over quarter.

In treatment the Tavi remains the number one regimen across key global markets.

In the U.S. wanting to new patient start on the Carty and roughly wanting to patient switching to the tavi do so from a non gilead single tablet regimen growing overall.

Yeah.

In fact, if I could the dynamics, we continue to make progress with difficulty with 46% conversion of clinically appropriate individuals at risk.

At the end of September exceeding our stated goal of 40% to 45%.

Our overall HIV revenue in Q3 was very strong at 14% sequential growth over Q2, and 8% year over year growth driven by the strong demand fundamentals and normalized inventory dynamic.

Mohit: We've initiated our enhanced randomized phase 3 study comparing migrolimab plus azacitidine versus azacitidine alone in higher-risk MDS patients to confirm the Phase I results for potential full approval. The emerging data from our partner, ARCIS, is very exciting, and we look forward to updating you in due course. Moving to antivirals, we continue to be excited about Lenacaprivir, the company's investigational, long-acting HIV-1 capsid inhibitor, an injectable administered every six months. The study evaluating Lenacaprivir in highly treatment-experienced HIV patients is progressing, and we're on track for a planned filing in 2021. We also recently announced the addition of a new study arm of Lenacap Revere to the existing planned women's HIV prevention study, evaluating dyscovian travada in women at risk of HIV.

The unique quarterly phasing of inventory dynamic this year and the recent you about a loss of exclusivity will impact our sequential quarterly revenue dynamics in the fourth quarter.

With 91% of Gilliatt, you ask patients having converted to Taf based regimen.

We'll continue to build on our strength in HIV, including long acting formulation for both treatment and prevention.

Now briefly on HCV.

Our HDD business showed 4% sequential growth over Q2, while down 31% from Q3 last year due to lower patient starts year on year.

As market started to reopen in the UK and Europe, we saw an increase in diagnosis and patient starts in Q3.

Our stock market share across core market puts us in a position of strength.

Patients return through the rest of the year and into 2021.

Mohit: In parallel, we will also initiate a study of Lenacap Revere for HIV prevention in men and transgender people who have sex with men. Turning to tilgotanib, we're excited about the launch of Jicellica for rheumatoid arthritis in Europe. During the quarter, we shared data from a Phase 2b3 selection trial in ulcerative colitis showing filgotinib 200 mg, induced remission at week 10, and achieved endoscopic, histologic, and 6-month corticosteroid-free remission at week 58, with a consistent safety profile.

I'd like to now highlight some specifics on the initial commercialization of victory, which began in the third quarter.

As our teams have begun reaching out to physician and hospital system has been incredibly inspiring to hear the story of how they have used this medication and what it meant to patients as well as their loved ones.

As a reminder, the commercial model in the third quarter with governed by an agreement.

With the U.S. government allocate 90% of our supply to patients in the last two years.

Partnership with the U.S. Department of health and human services.

Mohit: We plan to file Philgotinib for ulcerative colitis in Europe before the year end and in Japan early next year. As we previously shared, in August, the FDA issued a complete response letter for phlegotinib in rheumatoid arthritis, requesting data from the Manta and Manta ray studies and expressing concerns regarding the benefit-risk profile of the 200 milligram dose. We met with the FDA for a Type C meeting to discuss MANTA, and we'll meet again for a Type A meeting in Q4 to further discuss the CRL. In the meantime, we're pausing screening and enrollment for ongoing trials in psoriatic arthritis, ankylosing spondylitis, and uveitis, as we believe the FDA meeting will inform the broader phlegotinib development program We continue to believe in the Benefit-Risk Profile at Filgotten. I'd also like to highlight that we remain committed to inflammation and to our long-term collaboration with Galapagos. Finally...

During the quarter, we recorded declare retail at 873 million.

A portion of inventory that will be consumed in Q4 was recognized as revenue in the third quarter.

As Dan mentioned, we have now pivoted beginning October for two or more traditional commercial model working directly with amerisourcebergen to provide liquidity directly to hospitals.

Amerisourcebergen will the main or sole distributor that clearly through the end of the year to ensure consistency and continuously.

In Europe.

We signed a joint procurement agreement with the European Commission on October eight that enables participating country any new European economic area and UK to purchase secretary to meet both real time demand and stockpiling need coordinated by the European Commission.

[noise] disagreement temporarily or the removes the need for country by country reimbursement policy that typically follow marketing authorization recognizing the urgency of the current health crisis.

Mohit: I wanted to highlight that we are focused on ongoing strategic portfolio review and disciplined prioritization of our overall portfolio. We've shared a summary of important upcoming milestones across the pipeline and the materials we've provided. I'll turn over the call to Andy now.

Encompasses purchases a victory over the next six months and can be extended if needed.

[noise] predicting the underlying demand for declaration continues to be challenging given so many variables including incidence rate.

Andy: Thanks, Merdad, and good afternoon, everyone. Our third quarter performance was strong, and it reflects the solid underlying fundamentals in our core HIV franchise and the start of the post-donation phase for VEC-LURI. It also reflects the ongoing and dynamic impact of the COVID-19 pandemic. You will find our detailed Q3 results in the press release and materials we have posted.

In addition rate as well as future vaccine and emergency.

Now turning to Dolby.

You know the immunomedics deal closed less than two weeks out and we're already working closely with a joint team to ensure the continued to get to Dolby strong loss in third line metastatic triple negative breast cancer and accelerate its future potential.

Andy: In my following remarks, I will review elements of our Q3 performance and provide you with an update on our full year guidance. Turning now to the Financial Highlights. Total revenues for the third quarter of 2020 were $6.6 billion, with non-GAAP diluted earnings per share of $2.11. This compares to total revenue of $5.6 billion and non-GAAP diluted earnings per share of $1.64 for the same period last year. Non-GAAP diluted earnings per share for the third quarter of 2020 increased 29% year-over-year, primarily due to higher operating income driven by growth in HIV product sales and our initial VECLRI sales, as well as lower non-GAAP tax rates. As noted in the earnings press release, on a GAAP basis, the third quarter diluted earnings per share was 29 cents, primarily due to $1.2 billion in charges related to our collaborations and equity investments in building out our oncology pipeline, as well as a $900 million loss from unfavorable changes in the fair value of our equity investment in Galapagos.

It is a true catalyst for growth in a joint team energized as we continue to accelerate the work on these transformational therapy together as one team.

While not part of our third quarter results I'd like to highlight immunomedics Q3 results, which they'll be anyway.

We achieved 53 million in net sales in Q3, the first full quarter of commercial availability.

Total net sales were 73 million in for in the first five months of commercial lives in the midst of a pandemic.

Over a thousand accounts order to Delvina first five months of commercial launch and of those that 488 were new and unique in Q3.

We've seen robust adoption continue in Q3 in both community and academic centers.

We look forward to expanding commercialization to Europe and other markets around the world as quickly as possible starting with an easy submission in Q1 of next year.

And to close a few words on Dec Nellika, which is the brand name for Fogo.

Okay has now launched in Germany, and launch planning is well underway across Europe as well as Japan we.

We anticipate sales in both regions during the fourth quarter.

Andy: Product sales for the third quarter of 2020 were $6.5 billion, up 28% sequentially and up 18% year-over-year, primarily due to Vecluri sales and our core HIV products driven by stronger demand, as well as higher volume as channel inventory continues to normalize in the United States. HIV revenues grew sequentially 14%, driven by a continued patient uptake of Bictarvy and Dyscovy for PrEP and increased channel inventory purchases HIV revenues increased 8% year-over-year, primarily due to higher demand driven by BicTarVie and, as I said earlier, the normalization of inventory purchases in the U.S., partially offset by lower sales of Truvada. HCV revenues grew 4% sequentially, primarily due to higher patient starts in the United States and Europe, but revenues were down 31% year-over-year, primarily due to the COVID-19 Cell therapy revenues were down 6% sequentially due to COVID-19 and up 25% year over year driven by continued patient uptake and expansion of Yescarta in Europe. Now, we turn to our expenses. Non-GAAP R&D expense was $1.2 billion for the quarter, down 3% sequentially and up 12% year-over-year.

Despite a crowded and competitive marketplace. The teams are well prepared to differentiate decked out with that.

We look forward to updating you on our progress in the future.

We'll provide a little bit more color on the ongoing regulatory considerations and our thinking there and.

And so with that I'd like to turn the call over to Mike.

Thanks, Joanna and good afternoon, everyone I'm pleased to share some perspectives on several critical pipeline related updates and progress.

Starting with the Cleary.

We're very pleased with the recent full approval of victory by the FDA cleared.

Macquarie is now approved in the you asked for the treatment of hospitalized patients with COVID-19 based disease on a strong and consistent body of evidence from three rigorous randomized controlled clinical trials.

Over the past six months to inform us about the profile of the clarity.

It's the first antiviral treatment proven to help patients hospitalized with COVID-19 recover and leave the hospital more quickly the significant benefit for patients their families and society.

The results include the double blind placebo controlled and I D. Phase Three act one trial published recently in the New England Journal of Medicine.

The study met its primary endpoint of time to clinical recovery through day 29, demonstrating the glory plus standard of care reduce the time to recovery through day 29, compared with placebo plus standard of care from 15 to 10 days with a P value of less than <unk> 0.001.

Andy: The sequential decrease was primarily driven by lower investments in Remdesivir in the third quarter. The year-over-year increase was primarily driven by higher investments in remdesivir, partially offset by pauses or deferrals of certain clinical trials due to the COVID-19 pandemic. Non-GAAP SG&A expense was $1.1 billion, down 6% sequentially and up 5% year-over-year.

The key secondary endpoint of clinical status at day 15 was also met patients receiving back Larry were 50% more likely a habit improved by day 15, compared with those receiving placebo and the effect was maintained three day 29.

The secondary mortality endpoint in the overall population only showed a trend towards reduced mortality with the P value <unk> 0.07.

Andy: The sequential decrease in expenses was primarily driven by the second quarter accrual of $97 million related to a Department of Justice matter, which subsequently settled in the third quarter. The year-over-year increase was primarily driven by headcount growth, partially offset by lower marketing spend due to COVID-19. Now moving to the balance sheet and cash flow. We finished the quarter with $26 billion in cash and marketable debt securities. During the quarter, we generated $2.3 billion in cash flow from operations.

Recall that when we started these trials with Tonight with an I.D., we knew very little about the disease itself and didn't know which patients might be most likely to benefit from that cleary.

Given the range of disease severity in the overall study population and the emerging understanding the clinical outcomes are highly dependent on a patient's requirement for oxygen at baseline.

Exploratory post hoc analysis was conducted to determine whether there were differences mortality based on patients baseline clinical status with respect to the requirement for oxygen support.

Andy: We paid dividends of $861 million, and we repaid $2 billion of maturing debt. And we repurchased $201 million of stock. In addition, we issued $7.25 billion of senior notes and arranged a $1 billion term loan, which we drew down in Q4 to partially fund the acquisition of Immunomatic. After closing the ImmunoMedx acquisition, our balance sheet remained strong, and our capital allocation priorities remained unchanged. We have, however, curtailed our share repurchase program in the near term as we focus on paying down debt incurred in the acquisition.

In this post hoc analysis and patients requiring low flow oxygen at baseline the.

The largest subgroup of patients in the trial over 40% of patients.

Those who receive begleris had a 72% reduction in mortality data team and a 70% reduction in mortality at day 29 with confidence intervals that do not cross one.

These results are what we would have expected and hoped for with an antiviral therapy.

You should have the most impact when given earlier in the course of the disease before the inflammatory cascade leads to critical illness.

These data add to the breadth of evidenced from two additional randomized controlled clinical trials, establishing the use of declared as a standard of care for the treatment of COVID-19 in hospitalized patients.

All three this piece of these phase three trials have been published in peer reviewed journals and the raw data was shared with the FDA as part of the Endear review process for them to perform their own independent analyses as is their standard approach.

Andy: As Dan indicated, the acquisition will immediately accelerate our revenue growth and is expected to be neutral to accretive to our non-GAAP EPS by 2023 and significantly accretive thereafter. Turning now to COVID and its continued impact on our business and the broader business environment. As we do every quarter, we've updated our base case utilizing external projections and views. As you know, the pandemic continues to progress in unpredictable ways. The recent uptick in infection and hospitalization rates in the U.S. and Europe is obviously of concern to all and will potentially impact the business environment during the fourth quarter and into 2021. Globally, external views suggest widespread vaccination will not become a reality until late 2021.

We continue to pursue other ways to expand the utility of Indesit, there's a back burner treatment, including exploring how combinations could be more effective and new means of administering the drug that don't require intravenous administration.

Now last week interim results from the World Health organization Solidarity trial were released through pre print server.

These results don't alter the demonstration of efficacy observed Ruth with for investigator in the studies I just described.

That trial was intentionally designed to be pragmatic and enable participation across a wide range of health care settings.

The components of the study design and data that should provide pause.

These may be clarified, replacing two appropriate context during the peer review process.

Given that we haven't received the data nor have there been peer reviewed.

Nor have these data have been peer reviewed it's.

It's difficult for us to discuss the study.

Andy: As a result, we expect the pandemic to continue to impact our business and broader market dynamics, including, in particular, HCV, HIV PrEP, and Vecluri demand into 2021 and potentially beyond. We also expect that our HIV treatment business will continue to remain largely unaffected and that the remainder of our core business will continue to recover in the fourth quarter and into the first half of 2021. With that as context, let me turn to our updated full year 2020 guidance. It's important to reiterate that we are operating in a highly complex and dynamic environment and that projections are subject to greater uncertainty than has historically been the case. We have reaffirmed and narrowed our revenue guidance range to $23-$23.5 billion, reflecting the latest estimates for VecLurie.

Some of the issue is we and others have identified and Whx study include the lack of a PCR confirmation of COVID-19 at the time of enrollment but.

The lack of distinction between patients requiring low flow were high flow oxygen in the results.

No data monitoring no data verification and 20% of the of the data being reported is missing from the preliminary analysis.

We can only speculate at this point that these factors may have contributed to the negative outcomes reported in this study.

It is however important to note that the totality of data generated thus far.

Four bit Clarice suggests that entered borrows.

Our most effective earlier in the disease course as.

As you get sicker inflammation, such as they are do you answer fibrosis.

Potentially things like vascular blood clots, and bacterial noted pneumonias could kick in.

Andy: The guidance range provided during our second quarter earnings reflected underlying uncertainty in the demand dynamic for Vecluri, given the nature of this pandemic, and, as Jomana mentioned earlier, factors such as the rate of infections by region, severity, hospitalizations, and stockpile demand, all of which have been difficult to forecast. On the expense side, we're raising our SG&A expense guidance to low double-digit percentage growth, reflecting the immuno Our full year operating income guidance range is reaffirmed and narrowed and is now $10.7 to $11.2 billion U.S. dollars. Our full year non-GAAP EPS range is also reaffirmed and narrowed and is now $6.25 to $6.60 per share.

The NIAD data suggests that patients on low flow oxygen or those that should greatest benefit in time to discharge and mortality.

An antiviral doesn't clear inflammation or blood clots once their form. So this makes sense sicker patients on high flow oxygen and mechanical ventilation may need an antiviral, but will be insufficient to treat the inflammation.

And those patients treatment. In addition to enter Biros, such as Texas, Dexamethasone, maybe beneficial and had been demonstrated to be that way.

Using whr data.

We look forward to learning more about the solidarity trial results and sharing this information with regulators once we have the data in hand.

Most importantly at this moment the world is combating pandemic that isn't going away.

As we see infections once again on the rise across the U.S. in Europe. It's critical that physicians have every tool possible at their disposal and that patients are encouraged to seek care for what we know can be a rapidly progressing and deadly virus.

Andy: As we think about our performance to date and our guidance, we are encouraged by the significant progress we've made in such a challenging environment this year. Before we hand the call off for Q&A, we would like to express our gratitude to our 12,000 Gilead and Kite employees worldwide. Their spirit, dedication, and resilience make it possible for us to have a meaningful impact on patients with some of the world's hardest-to-treat diseases. We'd now like to open the call to questions. Thank you. As a reminder, if you have a question at this time, please press star 1 on your telephone. To withdraw your question, please press the pound key.

We're proud of the role that Glorious played in this pandemic and I'm proud of and profoundly grateful to the team. That's worked so hard to advance this medicine for patients, including those collaborators that the and I had to eat the investigators and patients who have been integral to the conduct of these studies.

We regularly receive letters of gratitude from people, who have been treated with Macquarie. We're grateful for the opportunity to provide this important treatment during this time.

So now I'd like to turn to oncology.

As Dan mentioned, we're very excited now to have the trail the program in house with the closing of the Immunomedics transaction. We're excited to welcome the impressive immunomedics team to gilliatt.

Operator: I show our first question comes from the line of Matthew Harrison from Morgan Stanley. Please go ahead. Great. Good afternoon.

As Dan Angina, both mentioned fidelity represents a growth inflection point for the company and I'd like to highlight recent progress that has us excited about the full potential of this medicine.

Matthew Harrison: Thanks for taking the question. I guess I've forgotten. Can you guys maybe just describe what you're thinking in terms of the potential outcomes here once you have that type A? Is this something where you could decide not to launch the drug in the U.S. at all? Or is this more of a nuanced approach where maybe you won't move forward with RA but move forward with the IBD indication? Thanks very much. Excuse me. Hi Matthew, it's Merdad.

You may have seen the ESMO data that immunomedics presented from the confirmatory phase three assent study.

In this study despite having received the medium a median of four prior anti cancer treatments patients were treated with TRID Lv showed a statistically significant and clinically meaningful improvement in overall survival with a medium of 12.1 month.

Merdad V. Parsey: Yeah, I think it's hard to predict what the outcomes are. I do think that both the options you suggested are possible, and I would sort of tend towards your latter approach, which is that if things aren't able to move forward with RA, we'd like to keep the door open for us to continue to move forward in IBD and continue those discussions, obviously dependent on the MANTA and the MANTA RA data outcome. Thank you. I'm sure our next question comes from the line of Evan Seigerman from Credit Suisse. Please go ahead. Hi guys, thank you so much for taking the question. I know it's a busy day. So, with the recent reveal of Galapagos' Toledo program, Merdad, what do you really need to see from the proof-of-concept trials to opt in and be comfortable potentially incorporating this into your portfolio, given your focus on portfolio optimization? Yeah, thanks. Great question!

Versus 6.7 months for chemotherapy and a hazard ratio of 0.48.

And a P value of less than <unk> 0.0001.

They will be also demonstrated statistically significant significant improvement in our our 35% versus 5%.

CVR, 45% versus 9% when compared with chemotherapy.

These remarkable results should establish turned out to be as a new standard of care in patients with third line.

Static TNBC.

In Urothelial cancer, another area of focus as reported as my last month Immunomedics release, the positive results from cohort one of the pivotal phase two trophy you owe one study of trail the Ansys platen eligible patients with.

With metastatic Urothelial cancer.

These results confirm the interim findings and prior phase one two study results showing traditionally has significant activity and is well tolerated in patients with heavily pretreated.

Evan David Seigerman: You know, they're doing a really great job of exploring the potential of that program in multiple indications, and they have a great approach to trying to get there quickly, looking for early signals of activity. On our end, obviously, we would like to see the programs de-risked to the appropriate level at the time that we opt in. That will vary based on the signals we see and the magnitude of the improvement that we see. So obviously, if you saw, hypothetically, a huge response in one indication that was really unexpected and blew it out of the water, we might opt in more early, whereas if it's more nuanced in a small trial, we might want to flesh that out a little bit more before we opt in. Our contract allows us to continue to work with them as the programs are de-risked, and our desire is to opt in and Excellent. Thank you so much.

Metastatic urothelial cancer, who progressed, despite platinum based chemotherapy and checkpoint inhibitors.

Sure they'll be has the potential to be an important new treatment for patients with metastatic urothelial cancer.

Based on these exciting data.

In the in terms of the path forward for Debbie the BLE supplemental BLE seeking expansion of Fidelity's label to include the ascent result is expected to be submitted in Q4 to the FDA under the RTR program.

Yes, Bill a submission to the FDA for an accelerated approval of trade LD in metastatic Urothelial cancer is expected in Q4 as well.

In addition, the M&A front your Delta in metastatic TNBC in Europe is plan for submission to the EMA in the first quarter of 2021.

The potential for today will be in earlier lines of therapy in additional tumor tumor types is something we're really excited to explore.

Results from stays with combinations of PARP inhibitors, and separately checkpoint inhibitors give us even more options to explore the potential of this new treatment for patients.

The entre Dolby I'd like to highlight other opportunities in oncology pipeline that continue to excite us.

Merdad V. Parsey: I appreciate it. Thank you. Our next question comes from the line of Corey Casimov from J.P. Morgan. Please go ahead.

The growing mab, our anti CD 47 asset we continue to pursue options for filing via an accelerated approval pathway from a growing Mab. In addition is exciting and Mds in 2021 based on the ongoing single arm study.

Corey Casimov: Hey, good afternoon, guys. Thanks for taking the question. I wanted to ask about Remdesivir and the change to GuidanceNow. I guess I'm just trying to better understand... What has changed since your guidance?

As with all single arm studies, there are risks and the FDA will make a decision based on the totality of the data and whether the data support the substantial benefit from available standard of care.

The recent breakthrough designation from the growing map.

Hi, its recognition by the FDA the potential from a growing that enables us to have more frequent FDA interactions.

Andy: Given the pace of infections that we're seeing across the country, can you just kind of go into a little bit more detail on why the decline and kind of how this market's evolving? Sorry, it's Andy. I'll start, and Johanna can jump in as well. I think it's relatively straightforward. I mean, it's a dynamic situation. It's very difficult to forecast, as we've discussed, and as I think most people understand. The rate of hospitalizations is the biggest factor that has moved around a lot over the last six months, and it continues to move today. So what you're seeing is the latest estimate based on the information that we have. We're pleased with the uptake in the third quarter, obviously, with the formal U.S. approval and the joint procurement agreement in place. Johanna and her team, I think, have a better sense of where we see the year, but it's still very dynamic, and it's unusual compared to what you have to typically forecast. Johanna, do you want to add anything to that?

We also have attained prime designation from a drilling have another recognition of the potential for magro growing Matt.

We've initiated or enhance randomized phase three study comparing the growing at plus stays inside the dean versus a decitabine alone in higher risk Mds Mds patients to confirm the phase one results for potential full approval.

The emerging data from our partner Argus is very exciting and we look forward to updating you in due course.

Moving to antiviral, we continue to be excited about Atlanta cap repair the company's investigational long acting HIV, one capsid inhibitor and injectable administered every six months.

The study evaluating lending cap for beer and highly treatment experience HIV patients is progressing and we're on track for a planned filing in 2021.

We also recently announced the addition of a new study arm a blended cap rate here to the women to the existing plan women's HIV profit prevention study.

Evaluating disco the antibody and women at risk of HIV.

In parallel we will also initiate a study of lending copper gear for HIV prevention in men and transgender people, who had sex with men.

Johanna Mercier: Yeah, maybe just to add to that, Andy, I think what we're also seeing is the severity of the disease. So I think as you saw through the summer months, even though there were surges going through the U.S. mostly, some of those were younger patient populations, and therefore, the hospitalization rates really dropped over the summer months. We were seeing closer to 12 to 15 percent late in Q2, and as you go into Q3, they're closer to 5 percent. So we're really tracking those very closely. It's not just the incidence. It's, really, to Andy's point, the hospitalization rates. And obviously, the assumption is, in light of the surge this fall, both in Europe as well as in the U.S., that those numbers will pop back up a little bit. So that would be one piece of the puzzle.

Turning to feel gotten it we're excited about the launch of Jay Celica for rheumatoid arthritis in Europe.

During the quarter, we share data from the phase to be three selection trial in ulcerative colitis, showing forgotten them 200 milligram induce remission at week 10, and achieved endoscopic histologic and six month corticosteroid free remission at week 58, with a consistent consistent safety profile.

We plan to file forgot forgotten it for ulcerative colitis in Europe before the year end and Japan early next year.

Johanna Mercier: The other piece, I would say, is that we looked at some of our assumptions around stockpiling, and although we've seen some stockpiling, not at the level that we had originally projected. And so we're adapting to that as well. Okay, very helpful.

As we previously previously chip shared in August the FDA issued a complete response letter for forgotten it in rheumatoid arthritis requesting data from the Manta and Manta rays studies and expressing concerns regarding the benefit risk profile of the 200 milligram dose.

Michael J. Yee: Thank you. Thank you. Our next question comes from the line of Michael Yee from Jeffries. Please go ahead.

Merdad V. Parsey: Hey, thanks for the question. I wanted to follow up a little more on Phil Godnab. Obviously, it's an important driver, and you said you'll have a Type A meeting and you'll make some decisions. Can you just clarify what you would actually learn from a Type A meeting?

We met with the FDA for type C meeting to discuss Manta and we'll meet again for a type B meeting in Q4 to further discuss the CRL.

In the meantime, we're pausing screening and enrollment for ongoing trials in Psoriatic arthritis, ankylosing spondylitis and uveitis as we believe the FDA meeting will inform the broader forgotten a development program.

Merdad V. Parsey: And if you were to, as you said, maybe keep IBD, isn't 200 milligrams really important? And so that would tie together with RA being approved at 200. So maybe just explain a little bit where these scenarios would evolve from, and could you just make tough decisions and not go forward at all? Thank you. Sure, Michael.

We continue to believe in the benefit risk profile it still gotten it.

I'd also like to highlight that we remain committed to inflammation into our long term collaboration with Galapagos.

Finally.

Merdad V. Parsey: Look, I think the conversation we'll have at the Type A meeting will center around really what level of evidence the FDA would be looking for on both of those issues, right, in terms of trying to get to a better benefit-risk understanding. And so... That will depend on both, so we need to find that out from the 200 milligram standpoint, and we need to find it out from the manta and manta ray standpoint. So those two things, we will get guidance from the FDA at the type A meeting. And then, based on that outcome, we will make some decisions about how to go forward, whether it's, you know, whether there's a clear path. Whether we have to only go forward in IBD or whether 200 mg is not viable until MANTRA reads out, MANTRA-RAY readout.

I wanted to highlight.

That we are focused on ongoing strategic portfolio review and disciplined prioritization of our overall portfolio.

We've shared his summary of important upcoming milestones across the pipeline and the materials we provided.

I will turn over the call to Andy now.

Thanks, Brad and good afternoon, everyone.

Our third quarter performance was strong and it reflects the solid underlying fundamentals in our core HIV franchise and the start of the post donation phase for BEC Laurie. It also reflects the ongoing and dynamic impacted the COVID-19 endemics.

You will find our detailed Q3 results in the press release the materials, we have posted.

In my following remarks, I will review elements of our Q3 performance and provide you with an update on our full year guidance.

Turning now to the financial highlights.

Total revenues for the third quarter of 2020 were 6.6 billion with non-GAAP diluted earnings per share of $2, an 11 cents.

Geoffrey Christopher Meacham: All those are possibilities, so it's hard to speculate what the outcome of that will be. We'll be transparent, obviously, as we have that discussion about how we'll proceed. Okay, thank you. Thank you. Our next question comes from the line of Geoffrey Porteous from SVB Lyrinc. Please go ahead.

This compares to total revenue of 5.6 billion non-GAAP diluted earnings per share of $1.64 cents for the same period last year.

Johanna Mercier: Oh, thank you very much. Question, one question. A multi-part question on Viclory and then a quick one on Tredelby.

Non-GAAP diluted earnings per share for the third quarter of 2020 increased 29% year over year, primarily due to higher operating income driven by growth in HIV product sales and our initial that glory sales as well as lower non-GAAP tax rate.

Merdad V. Parsey: So on Viclory, could you give us a sense of how many patients have been treated so far, or at least in the quarter? Disclose for us what the inventory stock was. A little bit of color about what proportion of hospitalized patients are getting remdesivir because we get the sense that standard... Merdad, could you just talk a little bit about the profile of Tredelvian? It does have... tolerability limitations. So which of the combinations do you think it makes the most? So let me start, Geoff, with the Vic Lurie question around usage.

As noted in the earnings press release on a GAAP basis, the third quarter diluted earnings per share was 29 cents, primarily due to $1.2 billion in charges related to our collaborations and equity investments in building out our oncology pipeline as well as 900 $900 million loss from unfavorable changes in the fair.

Value of our equity investment in Galapagos.

Product sales for the third quarter of 2020 were $6.5 billion up.

28% sequentially and up 18% year over year, primarily due to very jewelry sales and our core HIV products driven by stronger demand as well as higher volume as channel inventory continues to normalize in the United States.

Johanna Mercier: So what we've seen is obviously in Q3, a little bit of an interesting dynamic in light of most of the supply being committed through the HHS to the U.S. patient population. So there was a bit of an inventory build through Q3 that you're going to see play out in Q4 in the U.S., specifically, to be in a situation where our current supply is now at a level where it is exceeding global demand. So we feel very confident in making sure we can meet global demand around the world, namely in Europe right now, in light of not only the direct procurement agreement but the recent surge that you're seeing across countries in Europe. I think to your point about the percentage of patients, it really varies across countries but also regions.

HIV revenues grew sequentially, 14% driven by continued patient uptake of victory into Scobey for prep and increased channel inventory purchases in the United States.

HIV revenues increased 8% year over year, primarily due to higher demand driven by big RV and as I said earlier, the normalization of inventory purchases in the U.S., partially offset by lower sales of Truvada.

HCV revenues grew 4% sequentially, primarily due to higher patient starts in the United States and Europe.

But the revenues were down 31% year over year, primarily due to the COVID-19 pandemic and its impact on patient starts.

Johanna Mercier: And I do think that that percentage is increasing as we speak, as the FDA approval came out last week. We're already seeing a lot more noise around that, but also in light of the fact that we have a field team, so medical and commercial, that are now going out to make sure that physicians are aware and educated on where to best use VicLurie. And I think that's one of the pieces that's the most important. So that's playing out as we speak. But we have seen probably out of hospitalization rates in many countries, anywhere between 40 to 50% in the U.S. usage of remdesivir. And of course, that number will only grow as people better understand the data now that it's been published, as well as approved through the FDA, and maybe Merdad on Fidelvi. Yeah, and I'll take the Tridelby question, Geoffrey.

Cell therapy revenues were down 6% sequentially due to COVID-19, and up 25% year over year, driven by continued patient uptake and expansion, yes, Garda in Europe.

Now turning to our expenses.

Non-GAAP R&D expense was $1.2 billion for the quarter down, 3% sequentially and up 12% year over year.

The sequential decrease was primarily driven by lower investments in ramdev severe in the third quarter.

The year over year increase was primarily driven by higher investments in room does severe partially offset by pauses or deferrals of certain clinical trials due to the COVID-19 pandemic.

Non-GAAP EPS GNS expense was $1.1 billion down, 6% sequentially and up 5% year over year. The sequential decrease in expenses was primarily driven by the second quarter accrual of $97 million related to a department of Justice matter, which subsequently settled in the third quarter.

Merdad V. Parsey: Yeah, look, I think what we know so far with the Tridelby profile and combo is a couple of things. One is just looking at the combos where it's been tested. You know, there's data with the PARPs, and there's data with checkpoint inhibitors. And so far, those data seem to support the ability to go forward with combos. And that obviously opens a number of doors there for us to investigate. When we look at the adverse event profile and we talk to the investigators about what they're seeing and how they're managing it, the toxins, largely neutropenia and diarrhea, often the investigators are saying that that toxicity seems to be manageable, something they're comfortable managing, and we're getting a lot of encouragement to move earlier in lines of therapy based on The individual combinations will be dictated by the indication that we're in, right? Whether it's breast, urothelial, or lung, those combinations will depend.

The year over year increase was primarily driven by head count growth, partially offset by lower marketing spend due to COVID-19.

Now moving to the balance sheet and cash flow, we finished the quarter with $26 billion in cash and marketable debt securities.

During the quarter, we generated $2.3 billion in cash flow from operations, we paid dividends of $861 million, we repaid 2 billion of the maturing debt and we repurchased 201 million of stock.

In addition, we issued $7.25 billion of senior notes and arranged a 1 billion dollar term loan, which we drew down in Q4 to partially fund the acquisition of Immunomedics.

After closing the immunomedics acquisition, our balance sheet remains strong and our capital allocation priorities remain unchanged we.

Merdad V. Parsey: But I think a big one will probably be the checkpoint inhibitors, where I think we're optimistic and have reasonably good data about being able to combine them there. Great. Thank you. Can we have the next question? Our next question comes from the line of Alethea Young from Cantha Fitzgerald. Please go ahead.

We have however, curtailed our share repurchase program in the near term as we focused on paying down debt incurred in the acquisition.

As Dan indicated the acquisition will immediately accelerate our revenue growth and is expected to be neutral to accretive to our non-GAAP EPS in 2023.

2023, and significantly accretive thereafter.

Christine Vico: Hey guys, thanks for taking my question. I just wanted to talk a little bit about, you know, kind of big picture immunology. So, you know, maybe depending on what you decide, you might forget about next year based on some of the conversations, like, you know, how are you thinking about the space? Are you still committed? Would you consider doing M&A?

Turning now to co bid and its continued impact on our business and the broader business environment.

As we do every quarter, we have updated our base case utilizing external projections in views as.

As you know the pandemic continues to progress in unpredictable ways.

The recent uptick of infection hospitalization rates in the US in Europe is obviously of concern to all and will potentially impact the business environment during the fourth quarter and into 2021.

Dan: Or do you have an internal pipeline that can continue to drive potential revenues there? Yeah, thanks, Alicia. I'll start, and then maybe Merdad can add as well.

Globally external view suggest widespread vaccination will not become a reality until late in 2021.

Dan: But first of all, I mean, nothing's changed about our dedication to our three disease areas. As you know, our strategy that we announced at the beginning of the year was based upon two really strong scientific disciplines that we have from a discovery perspective at Gilead and with our partners, and that is antivirals and immunomodulation. And we've been firmly focused on that strategy in terms of how it plays out in both antivirals, inflammation, and fibrosis, and then also oncology. So, you know, we think there are a lot of synergies associated with that science. Obviously, immunology, as you know, goes across so many disease states. Immunology plays into antivirals, for instance, particularly when we look at some of our HPV cure programs.

As a result, we expect the pandemic to continue to impact our business and broader market dynamics, including in particular, HCV HIV prep and very blurry demand into 2021 and potentially beyond.

We also expect that our HIV treatment business will continue to remain largely unaffected and that the remainder of our core business will continue to recover in the fourth quarter and into the first half of 2021.

With that as context, let me turn to our updated full year 2020 guidance.

It's important to reiterate that we are operating in a highly complex and dynamic environment than the projections are subject to greater uncertainty than has historically been the case.

We have reaffirmed the narrowed our revenue guidance range to 23% to $23.5 billion, reflecting the latest estimates for begleris.

Dan: But clearly, in the field of inflammation, you know, we've already spoken about where we stand with phlegotinib. We have a variety of follow-on agents within our Gilead research, with our partners at Galapagos, and we'll maintain an external view on opportunities to continue to advance our inflammation portfolio in-house. And you can see, of course, what we've done in the oncology field, predominantly immuno-oncology over the past year, really building up our oncology base based upon, largely based upon, immuno-oncology. Tredelby allows us to have a really strong footprint now into solid tumors in a pan-tumor way, which we think will be very complementary to our first-in-class, best-in

The guidance range provided during our second quarter earnings reflected underlying uncertainty in demand in the demand dynamics for Vick Laurie.

Given the nature of this pandemic and as John mentioned earlier factors such as the rate of infections by region severity Hospitalizations, then stock piling demand all of which have been difficult to forecast.

On the expense side, we're raising our EPS to get a expense guidance to low double digit percentage growth, reflecting the immunomedics acquisition.

Our full year operating income guidance ranges reaffirmed a narrowed and is now 10.7 to 11.2 billion us dollars.

Merdad V. Parsey: Merdad, maybe you want to add your view on that question as well? I think you hit all the key points, Dan. You know, I think we the only thing I'd add is I think we really have a great team here.

Our full year non-GAAP EPS range is also reaffirmed and narrowed and is now at 6.25 to 6.6 $6.25 to $6.60 per share.

Merdad V. Parsey: And, you know, I think that that team is going to be really great at charting our future in immunology, but as Dan said, we remain committed to that, and we'll continue to look at both near and long-term opportunities there that make sense for us in the portfolio. Maybe, Merdad, it's just important to emphasize the unmet medical need in that area. It's still very significant.

As we think about our performance to date and our guidance. We are encouraged by the significant progress we've made in such a challenging environment. This year.

Before we end the call off for Q and a we would like to express our gratitude to our 12000 gilliatt and kite employees globally.

Theres spirit dedication and resilience make it possible for us to have.

A meaningful impact on patients with some of the world's hardest to treat diseases.

Dan: Yeah, and we look at, maybe the only other thing I'd add is that we look at it through a fairly broad lens of what immunology means. There are a lot of indications with a lot of unmet need that persist in that space, and, you know, we'll be looking for that transformative profile. Thanks, Alicia.

We'd now like to open the call for questions.

Thank you as a reminder, if you have a question at this time. Please press star one on your telephone so which are your question. Please press the pound key.

Carter Gould: Thank you. Our next question comes from the line of Carter Gould from Barclays. Please go ahead. Hi, thanks for taking the question. Maybe just to follow up on that same sort of question on portfolio construction, you know, historically, old Gilead was routinely criticized for not being as disciplined with many of its mid-stage assets.

I show our first question comes from the line of Matthew Harrison from Morgan Stanley. Please go ahead.

Great. Good afternoon, Thanks for taking the question I guess.

Phil gotten up can can you guys, maybe just describe what you're thinking in terms of the potential outcomes here. Once you have that type a meeting.

Is this something where you could decide not to launch the drug in the us at all.

Dan: Clearly, the pipeline is much broader. You guys highlighted, you know, sort of a return to discipline, yet it doesn't seem to be apparent, I guess, when we look through the pipeline slides. When you think about the size and breadth of the pipeline today, are you comfortable with that? And, I guess, will we start to see some of those prioritization decisions start to manifest soon? Or if there's things you can point to today, that would be helpful. Thank you. Yeah, Carter, again, I think the entire team here is dedicated to putting together a portfolio management process that's state of the art. I think your question is very well taken. It's a work in progress, right?

Or is this more nuanced approach, where maybe you won't move forward with already but.

The IBT indication thanks very much.

Excuse me Hi, Matthew it's Murdo had.

Yes, I think.

The the outcomes, it's hard to predict what the outcomes are I do think that.

Both the options you suggested are are possible.

And I would sort of tend towards your ladder.

Approach, which is that we would.

If things aren't able to move forward with our re we'd like to keep the door open for us to continue forward in IB D.

Dan: So we're, first of all, we've hired a lot of new people into the organization with terrific expertise in different therapeutic areas. We're putting processes into place across research and development and into our commercial organization to help us make decisions accordingly. And I think you'll see some of those play out in the near term as well. But the philosophy that Merdad and Johanna and the rest of the team and I are firmly committed to is, you know, drawing the line at a level that makes sure that the programs that cross that line are really first and best in class.

And continue those discussions obviously dependent on the manta and the Manta Ray data outcome.

Thank you.

Sure. Our next question comes from the line of even segment from Credit Suisse. Please go ahead.

Hi, guys. Thank you so much for taking the question I know, it's a busy day. So with the recent reveal of Galapagos is Toledo program, what do you really need to see from the proof of concept trials to opt in and be comfortable potentially incorporating this into your portfolio given your focus on portfolio optimization. Thank you.

Dan: And I'm really pleased with how the organization has progressed, both from an operational perspective and, then also from a scientific perspective, over the course of the past year. But, as you know, this is a continual process, and we need to make sure that we're constantly looking at the outside environment, looking at the unmet medical need, going back to where that line is drawn in our organization, and making consequential decisions about the portfolio. And we intend to do just that. We intend to make tough decisions and fund those most attractive opportunities. I would also say the other thing we're looking very hard at is the balance in our portfolio. I think in the past, you know, Gilead has also been, You know, Seam is the company that went after a lot of high risk, high reward projects. In some cases, they were not successful in the late stages.

Yes. Thanks.

Great question.

They're doing a really great job of.

Exploring the potential.

Of that program in multiple indications and they have a great approach of try.

Trying to get there quickly looking for early signals of activity.

On our end.

Obviously, we would like to see the programs de risked to the appropriate level.

At the time that we opt in that will vary based on the signals, we see and the magnitude of improvement that we see so obvious.

Actually if you saw hypothetically a huge response in one indication that was really unexpected and blew it out of the water we might opt in more early.

Dan: I think we're firmly committed to having a balanced portfolio, where we're always holding the bar high for innovation but making sure we de-risk as much as possible earlier in the stages of development such that when you get into the late stage investments in phase three, things have been de-risked, and therefore your ability to succeed rises as well. So these are all very conscious things we're working on together. Merdad, again, I apologize. You've trained me well.

Whereas if the if it's more nuanced in a small trial, we might want to flesh that out a little bit more before we often are contract allows us to.

Continue to work with them as the Perkins are we de risked and our desire is to opt in and move as quickly as possible. Once we once we have an appropriate level of risk.

Merdad V. Parsey: You may very well have some things to add to that as one of the leaders in organizing this portfolio. You know, the only thing I'd add, Carter, is that it's a really insightful question and it's something that we're, as Dan said, really committed to doing. What I would say is that you will see us exercising that discipline. That will be something that will be apparent sooner than later.

Excellent. Thank you so much I appreciate it.

Thank you. Our next question comes from the line of Cory Kasimov from JP Morgan. Please go ahead.

Hey, good afternoon, guys. Thanks for taking the question.

Just ask about Rem does severe and the change to guidance now I guess I'm just trying to better understand kind of what has changed since your guidance into Q that leads to the lowering of the fiscal year guidance by 1.5 billion and I mean, just given the pace of infections that were seen across the country.

Merdad V. Parsey: And recognize that there are a lot of things that are in the slight that it'll make sense to de-prioritize because they're already ongoing, so you know we'll let those things read out, so it'll probably take a little bit longer for everything to get taken care of in the wash as you if you will, but you will definitely see that playing out with us as data gets read out and as new things enter into the portfolio. We Thank you. Our next question comes from the line of Brian Abrahams from RBC Capital Markets. Please go ahead.

Can you just kind of go into a little bit more detail on why this why the lowering and kind of how this market is evolving in your eyes.

All right.

Sorry, it's Andy I'll start and John can jump in as well I think its relative its relatively straightforward I mean, its a dynamic situation, it's very difficult to forecast is as we've discussed.

It is I I think most people understand.

The rate of hospitalizations is the biggest factor that has moved around a lot over the last six months and it continues to move today. So.

Brian Abrahams: Hey guys, thanks for taking my question. A question on HIV and inventory and stockpiling. I'm wondering if you could quantify if what you observed in the third quarter was a benefit or just normalization. And as you look to the fourth quarter and beyond, what should we expect with respect to potential stockpiling just given the newest COVID spike versus inventory drawdowns? Thanks. So maybe I'll take that one, Brian.

What you're seeing is are the latest estimate based on the information that we have.

We're pleased with the uptake in the third quarter, obviously with the formal US approval the joint procurement agreement in place joining our team.

I think I have a better sense of where we see the year, but it's still very dynamic it it's unusual compared to what were you know what what you have to typically forecast John do you want to add anything to that yes.

Johanna Mercier: I think that as we're seeing Q3, this whole year, and I'm sure everybody's kind of seeing this, this whole year has been really interesting when it comes to inventory, because we've seen a pattern that's very different from prior years, obviously due to COVID-19. The expectation that we have this year is, as you normally see in Q4, you actually do have a lift in product supply at the end of December that plays into our total inventory for 2020. Having said that, that's a little bit also impacted by the fact that Chevada's LOE, and there's now a generic on the market with Keva as of early October, and so we believe that number is a little lower than the norm that we've seen in the past. We haven't assumed additional stockpiling to your point about COVID-19 because it's already, usually Q4 is already on the rise versus other quarters. So we've assumed that.

Yeah, maybe just to add to that Andy.

I think what I think what we're also seeing is the severity of the disease. So I think as you saw through the summer months, even though they were surge is going through the U.S. mostly.

On some of those were younger patient population and therefore, the hospitalization rates really dropped over the summer months, we were seeing closer to 12% to 15%.

Late Q2, and as you go into Q3, they're closer to 5%. So we're really tracking those very closely not just the incident, it's really too cute Andy point, the hospitalization rate and obviously the assumption is in light of the.

The surge this fall both in Europe, as well as the media.

Those numbers will pop back up a little bit on to that would be one piece of the puzzle the other piece I'd say.

We we look at some of our assumptions around stockpiling and although we've seen some some stockpiling not at the level that we had originally.

Projected and so we're adapting to that as well.

Okay very helpful. Thank you.

Johanna Mercier: What we've seen in Q3 to the first part of your question, I think it's just normalization of the last couple of quarters. And you kind of, you know, if you recall, Q1 usually draws down on Q4 supply. What we saw was a pickup in March because of COVID-19 that then kind of bled out in Q2, and then we saw a pickup again in Q3, which I think is really the normalization of those three quarters. So assuming, you know, Q4 is like other quarters in the past, that's what's currently in our current situation. Hopefully, that addresses the thinking there for each. That's really helpful.

Thank you.

Our next question comes from the line of Michael Yee from Jefferies. Please go ahead.

Hey, Thanks for the question I wanted to follow up a little more on Filgotinib. Obviously, it's an important driver and you said you have a type a meeting and we'll make some decisions can you just clarify what you would actually loan from a type a and if you were to as you said, maybe keep IBT and 200 milligrams really important and so that would.

Hi, together with our A. being approved the 200, so maybe just explain a little bit.

What are the scenarios would would evolve from and could you just make that decision to not go forward at all thank you sure.

Johanna Mercier: Thanks. Thank you. Our next question comes from the line of Tyler Van Buren from Piper Sandler. Hey, good afternoon, and thanks for taking the questions. I was just hoping to get a little bit more...

Sure Michael Yes, I couldn't agree more.

Look I think the conversation will have.

In the Taipei meeting will center around really what level of evidence.

The FDA would be looking for on on both of those issues right in terms of trying to.

Tyler Van Buren: I guess if you take the midpoint of the updated guidance relative to the guidance at the beginning of the year and the Q3 sales, it could suggest that sales could be down significantly in Q4 quarter over quarter, but then obviously, the core business has been impacted a bit by the pandemic, which could offset and make it more flat. So I wanted to understand what your modeling is. For more information, please visit www.fema.gov for the outpatient and the inhaled studies.

Get to a better benefit risk understanding.

And so.

That will depend both so we need to find that out from the 200 milligrams standpoint, and we need to find out from the Manta and Manta Ray standpoint.

So those two things we will.

Get guidance from the FDA in at the Taipei meeting and then based on that outcome we.

We will make some decisions about how to go forward whether its.

Andy: Can you give any more granularity on when we should expect that data and how much you think demand could increase if those studies are successful? Right, thanks. So Andy, why don't you handle the guidance and maybe go to Daina for the updates on Victoria's Next Generation? Sure. Hi Tyler.

Whether there is a clear path.

Whether we have to only go forward in IB deal or whether 200 milligrams is not viable.

Until mantra reads out Manta Ray read out all of those are possibilities. So it's hard to speculate with the outcome of that will be we'll be transparent obviously as we as we have that discussion with with how how we'll proceed.

Diana: Thanks for the question. I appreciate it. But we're not providing specific product guidance, as you know, and we typically don't. But as you suggest, and as we mentioned earlier, the revision and guidance are tied, you know, not entirely, but almost entirely, to expectations around Zach Lurie. Johanna also mentioned that there was some excess inventory in the channel as a result of the terrific work that our manufacturing team did. And you'll see in our materials that we're on track to meet the expectation that we had set in terms of 2 million treatment courses by the end of the year. So as inventory was moving into the channel in the third quarter, at the same time that hospitalization rates and the severity of the outbreak in the US, at least at that time, were coming down, there was less demand in the third quarter than expected. And then you see that play out in the fourth quarter.

Okay. Thank you.

Thank you.

Our next question comes from the line of Geoffrey Porges from SVB Leerink. Please go ahead.

Thank you very much question one question multi.

Multipart question, but clearly and then a quick ones with Elbit. So inventory could you give us a sense of how many patients are being treated so far well at least in the quarter.

This pause for us what the inventory stocking was.

A little bit of color about what proportion of hospitalized patients and getting them decimated because we get the sense that standard of care.

And then.

Could you just talk a little bit about the profile to belvieu in combination.

Andy: So we didn't recognize revenue for all of the Vecluri that was shipped in the third quarter. To be clear, some of that was constrained. And then you see that playing through in the fourth quarter in the full year guidance. So we can't be more specific than that. Happy to provide any additional color that we can, but we're not going to provide specific product-level guidance. Maybe over to Diana. Hi Tyler.

It does have some significant safety and tolerability liabilities, so which of the combinations you think it makes the most sense.

Thanks.

So let me start.

Yes, we see that Cleary question around you said so what we've seen is obviously in Q3 EPS.

Diana: So our outpatient study is ongoing. We're recruiting actively, and in terms of our predictions, we think that that study will wrap up early next year, and we should have results in the first quarter. It is harder than usual to predict the dynamics of trial enrollment for COVID-19 because so much depends on the number of cases and the competition with other clinical trials.

A little bit of a interesting dynamic in light of the most of the supply wave and committed to the HHS to U.S. patient population.

There was a bit of an inventory build to this the Q3 that you're going to see play out in Q4 in the U.S. Specifically, we're also in a situation where the incredible work that's been done by our manufacturing team.

Diana: So we're going to have to kind of take it month by month and see how the dynamics go. As you know, we are approved with VECLRI for hospitalized patients or patients in an equivalent inpatient setting. So in terms of then what that does for us, once we have the trial results, if it was successful, we would then look to get an expanded label for that population. But that would be further down the line. But our first step is to get the study enrolled and see how VECLRI performs in the outpatient setting, where we're trying to prevent hospitalization rather than hasten recovery in the hospital. Thanks so much. This question comes from the line of Umer Raffat. Hi guys, thanks for taking my question. Just two very quick ones.

To be in a situation where.

Our current supply now is at a level, where it is exceeding global demand. So we feel very confident in making sure. We can go back in and around the world, namely in Europe right now in light of not only to John's acumen agreement, but in light of the recent surge.

That you're seeing across countries in Europe.

I think to your point about for essentially a patient really Barry.

Across countries, but also region and I do think that that percentage.

Umer Raffat: First, on BigTarVie perhaps, the IMS Trends... don't appear particularly encouraging for the last six months or so. I know it's growing, but not the way it was in the past. I would love to get your take on that.

Increasing as we speak as the FDA approval came out last week, we're already seeing a lot more noise around that but also in light of the fact that we have a fuel team so medical and commercial that are now going out to make sure that physicians are aware and educated on where best to use that clearly and I think that's one of the pieces.

Johanna Mercier: And secondly, on the capsid inhibitor, Merdad, how are you thinking about possible candidates for a combo? I know there are other companies with HIV candidates as well, and this has been an ongoing question. I don't know where you guys are headed. Sure, Johanna can start and then I'll take it from there. I think that if you look at the share growth, it's basically eight points of share growth year on year when you think about Q3'19 to Q3'20. And when you look at Q2 to Q3, it's a point of view on share.

That's important so that's playing out as we speak that we have seen probably added supply. These rate many countries anywhere between 40% to 50% in the U.S. usage of projected here and of course that number will only grow at people better understand the data now that have been published as well as the troops through yesterday.

Great. Thank you.

Frank maybe didn't hurt add on to Dolby.

Yes, I'll take the introductory question.

Merdad V. Parsey: So we do think that growth continues. Where we've seen a little bit more of an impact is from a market standpoint. Because if you think about the impact of COVID-19, it's had a larger impact on our HIV treatment business, really, when it comes to switching. And so it'll impact disproportionately newer agents in the market because physicians aren't switching to newer agents. But obviously, a big target is part of that pool.

Free.

Yes look I think what we know so far.

The trend there will be great combo is a couple of things. One is just looking at the combos, where it's been tested.

You know the there's data with the Parps and there's data with the.

With checkpoint inhibitors and so for those those data seem to support the ability to go forward with combo and that obviously opens.

Number of doors, there for us to investigate.

Johanna Mercier: The overall share of Gilead still remains really strong because of that, because we, you know, more than 75% of patients are actually on a Gilead compound. And so, therefore, they're just remaining; there are fewer switches. We've seen that rebound a little bit in Q3. We expect that to continue through Q4. But I think overall, if you think about it in the US, which is our largest business, you know, right now, one out of two, actually more than one out of two patients start on BicTarvy. We have about a 56% share or so in naive patients. And when you think about the switches, although the market for switches is a little bit lower, we're still roughly about one in two patients going to BicTarvy.

When we look at the adverse event profile, we look at what and we talked to the investigators about.

They are seeing and how they are managing it.

The taxes.

Additionally, the neutropenia in this and the.

And the diarrhea, and often that the investigators are saying that base that that toxicity seems to be manageable something they're comfortable managing and.

We're getting a lot of encouragement to move earlier in lines of therapy based on that adverse event profile.

The the individual combinations will be dictated by the indication that we're in right whether its breadth urothelial along those combinations will depend but I think a big one will probably be the checkpoint inhibitors, where where I think we're we're optimistic and have.

Merdad V. Parsey: And they're going to BicTarvy from a non-Gilead single treatment regimen, which I also think is a great place to be. So we continue to feel extremely confident in BicTarvy's continued growth because you're seeing it basically happen across all of the markets around the world to really consolidate around BicTarvy. In addition to the fact that COVID-19 is actually for naive patients, a real advantage with BicTarvy because of the rapid start, and that's something that even guidelines are recognizing in light of the fact that you don't need to, there's no genotype testing, there's no HLA testing, etc. So that's also helping to continue to grow our share in the naive patient population. So with that, Merdad or Daina on the caption.

Reasonably good data about being able to combine there.

Great. Thank you.

[music].

Yes.

[music].

We have the next question.

Thank you. Our next question comes from the line of lithium from Cantor Fitzgerald. Please go ahead.

Hey, guys. Thanks for taking my question I.

I just wanted to talk a little bit about you.

You know kind of big picture immunology.

So you know maybe depending on what you decide with forgotten.

Ill gotten of next year based on some of the conversations like how are you thinking about the phase are you still committed would you consider doing M&A or do you have an internal pipeline continue to drive.

Merdad V. Parsey: Yeah, I'm happy to take that, Umer. Then, as you mentioned, look, we have both internal candidates for combining with Lena Kaprovir, and we remain open. As you said, there are other agents out there that could potentially be combination partners, and we remain definitely open to figuring out what's in the best interest of patients, and we'll continue to be diligent on that front. So I think both possibilities remain there.

Dr. defense revenues there thanks.

Yes, Thanks, really I'll start and then maybe my dad can add as well, but first of all I mean, nothing changed about our dedication to.

Our threed disease areas as you know I mean, our strategy that we announced the beginning of the year was based upon two really strong scientific disciplines that we have.

Merdad V. Parsey: Thank you, guys. Thanks, everyone. Thank you. I'll show our last question. Meacham from Bank of America, please go ahead. Hey guys, thanks so much for the questions. I just had a couple on remdesivir.

From a discovery perspective.

Gilly out and with our partners and that is anti viral immunomodulation.

And weve been firmly focused on that strategy in terms of how it plays out in both.

Anti viral.

Geoff Meacham: Dan, you've talked about likely not making a major long-term contribution, so I just wanted to ask, are the investments in nebulized or next-gen programs still a priority in the near term? And the second one related to that, how do you manage inventories for when the infection step-down happens, which is hopefully sometime next year? Thank you. Thanks, Geoff, for the question. That's really helpful, I mean, to

Inflammation and fibrosis.

And then also oncology so.

We think theres a lot of synergies associated with that science, obviously immunology.

Yes goes across so many disease states.

Immunology plays into anti viral threats and particularly when we look at some of our HBV cure programs, but clearly in the field of inflammation.

We've already spoken about where we stand with forgotten that we have a variety of.

Dan: [inaudible] www.kenhub.com, But we'll continue to need investment. We're fully committed to the investment in line extensions here and in seeing where else we might be able to play in that continuum from the pre-hospital setting to hospitalized patients. Obviously, we're not going to play in the area of vaccines, but in the area of therapeutics. We think there's a very good return on that investment. I think the challenge we have, as we used to have with Tamiflu when I was at Roche, is that it is difficult to predict.

A follow on agents that are generally had research with our partner Galapagos and we'll maintain an external view.

Opportunity to continue to advance our inflammation portfolio in house and you can see of course, what we've done in the oncology field predominately immuno oncology over the past year really building up our oncology base based upon largely based upon immuno oncology trials.

Middleby allowances to have a really strong footprint now into solid tumors in a pan tumor way, which we think will be are very complementary to our first in class best in class immuno oncology portfolio.

Dan: And you've seen it already, you know, in our half-year, we gave quite broad guidance to give us the opportunity to understand where the pandemic was going and exactly how this sphere would play a role in it, and now what we've done is we've reaffirmed that guidance, but we've narrowed it. And I think as we go into next year and the year after, we're just gonna need to stay adapt But we do feel very strongly that Vecluri will contribute to our overall sales, be an important source of cash for our business, and allow us to pay down debt and make sure that we continue to invest in the routine part of our business in antivirals and beyond.

Right that maybe you want to add as well your view on the.

On that question as well.

I think you hit all the key point Stan.

I think we.

The only thing I'd add is I think we really have a great team here.

And I think that that team is.

Can be really great about charting our future in immunology, but as Dan said, we remain committed to that and we'll continue to look at both near and long term opportunities there that makes sense for us in the portfolio.

I mean, maybe marry that it's important to emphasize the unmet medical need in that area is still very optimistic.

Yeah, we look at maybe the only thing I'd add is that we look at it through fairly broad Leds, what what immunology means are lot indications with a lot of unmet need that back persist in that space and.

Dan: I think the other statement I would make, Geoff, is as a result of both the internal and external portfolio developments over the past year, and in particular, the Immunomatics in Tridelby transaction, excluding Victoria. We're now very confident in our ability to grow in the short and midterms, so I think Picluri will come on top of that and may have year-to-year variability, but I think that's really the story of today's call and the evolution of the course of the past year, and thanks for giving me the opportunity to kind of put that into context.

We will be looking for that transformative profile.

Thanks Lucas.

Thank you.

Next question comes from the line of Carter Gould from Barclays. Please go ahead.

Hi, Thanks for taking the question, maybe just to follow up on that same sort of question on portfolio construction historically.

Ultimately add was routinely criticized for not.

Think of disciplined with many of its midstage assets.

Clearly the pipeline is much broader you.

You guys highlighted sort.

Sort of a return to discipline.

Got it doesn't seem to be apparent I guess, when we looked at the pipeline slide when you think about the size and breadth of the pipeline today are you comfortable with that and I guess will we start to see some of those prioritization decisions start to manifest soon or if there's things you can point to today that would be helpful. Thank you.

Yes, Carter again, I think the entire team here is dedicated to putting together a.

Dan: Thank you. Thank you. This concludes the Q&A session. At this time, I'd like to turn the call over to Douglas Smith-Bay for closing remarks. Thank you, Dulem, 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. Ladies and gentlemen, thank you. This concludes today's presentation. Thank you for participating. You may now disconnect. BF-WATCH TV 2021

At Folio management process that its state of the art I think your question is very well taken it's a work in progress right. So we're.

First of all we we.

Hired a lot of news.

People into the organization with terrific expertise in new and different therapeutic areas.

We're putting processes into place across research and development.

Into our commercial organization to help us make decisions accordingly.

And I think you'll see some of those play out.

In the near term as well, but the philosophy that my dad ran in the rest of the team and I are firmly committed to.

You know drawing the line at a level that make sure that the the.

The programs that hurdle that line.

Our really first and best in class.

And I'm really pleased with how the organizational progress both from an operational perspective.

But then also from a scientific perspective over the course of the past year, but as you know I mean this is a continual process and we need to make sure that we're constantly looking at the outside environment look into the unmet medical need going back to where that line is drawn and organization and making consequential decisions on the portfolio and we intend to do that we intend to.

Make tough decisions and fund those those most attractive opportunities I would also say the other thing we're looking.

Very hard at it.

The balance in our portfolio I think in the past.

Good day, and it's also been.

You know seeing as the company that went after a lot of high risk high reward projects.

Im cases, those were not successful in the late stages.

I think we are firmly committed to having a balanced portfolio of our always holding bar high for innovation.

But making sure we de risk as much as possible earlier in the stages of development such that when you get into the late stage investments in phase three.

Things have been de risked and therefore, your your ability to succeed.

Rises as well. So these are all very conscious things we're working on together.

Murdoch again, I apologize if you've trained me well.

You bet.

Yeah.

One of the leaders and organizing this portfolio.

The only thing I'd add card, it's a really insightful question and it's something that we as Dan said, we're really committed to doing it.

And.

What I would say is that you will see us exercising that discipline that will be something that will be a parents.

Sooner than later and recognize that there are a lot of things that are in flight.

That.

They don't make sense to too.

You prioritize because they're already ongoing.

So, we'll we'll let those things read out so it you it'll probably take a little bit longer for everything to get.

You know taking care of in the wash as you if you will.

But you will definitely see.

That playing out with us as data get read out in his new things enter into the portfolio.

That will be exercising that discipline to make sure we're making some tough decisions.

Thank you.

Okay.

Thank you.

Our next question comes from the line of Brian Abrahams from RBC capital markets. Please go ahead.

Hey, guys. Thanks for taking my question a question on HIV and inventory and stockpiling I'm wondering if you could quantify if what you observed in third quarter was a benefit or just normalization and as you look to fourth quarter and beyond what should we expect with respect to potential stockpiling just given the new at the newest cobot Spike.

Versus inventory drawdowns. Thanks.

So maybe I'll take that one Brian.

I think that as we are seeing in Q3, this whole year and Im sure everybody kind of taking this fiscal year has been really interesting when it comes to inventory because leasing a pattern that's very different than in prior years, obviously due to coal the 19th the expectation that we had this year is as you normally see in Q4.

Are you actually do have a lift.

In product supply at the end of December that plays into our total inventory for.

For 2020, having said that a little bit also impacted by the fact that should that it will be and there is now generic on the market with Teva as of early October and so we believe that number is a little lower than the norm that we've seen in the past we haven't just seeing a dish stockpiling.

To to your point about COVID-19, because it's already usually Q4 is already on the right.

Versus other quarters. So we've seen that what we've seen in Q3 G. The first part of your question I think it's just normalization.

The last couple of quarters and you kind of you know if you recall.

Q1, usually draw down on Q4 supply what we size that pick up in March because it could be 19 that then kind of bled out in Q2, and then we saw pick up again in Q3, which I think is really the normalization of those three quarters. So assuming.

You know Q4 is is like other quarters in the past that what's currently in our current projection hopefully that addresses the thinking there for HIV.

That's really helpful. Thanks.

Thank you.

Our next question comes from the line of Tyler Van Buren from Piper Sandler. Please go ahead.

Hey, good afternoon, and thanks for taking the questions I was just hoping to get a little bit more precision on that guidance.

Guidance I guess, if you take the midpoint of the updated guidance relative to the guidance in the beginning of the year and the Q3 sales that could suggest that sales could be down significantly in Q4 quarter over quarter. So, but then obviously the core business has been impacted a bit by the pandemic, which could.

Offset it and make it more flat so wanted to understand what you're modeling for BEC were in Q4, what would your guidance incorporates and then the second.

Part of the question is on the outpatient Indian Hills studies can you give any more granularity on when we should expect that data and how much you think demand could increase if those studies are successful.

Right. Thanks, So when Andy why don't you handle the guidance and maybe go to Diana for the.

Updates on Mccleary's next generation.

Sure Hi, Tyler Thanks for the question I appreciate it.

We're not providing specific product guidance as you know and and we typically don't but.

As you suggested it as we mentioned earlier the revision in guidance is tied.

Not entirely but almost entirely to expectations around SEC Laurie.

John also mentioned that there was some excess inventory in the channel as a result of the terrific work that our manufacturing team did and you will see in our materials that were on track to.

Meet the <unk>.

The expectation that we had said in terms of the.

2 million treatment courses by the end of the year.

So as inventory was moving into the channel in the third quarter at the same time that hospitalization.

Hospitalization rates and the severity of the outbreak in the U.S. at least at that time was coming down there.

There is less demand in the third quarter than expected and then you see that playing through.

In the fourth quarter. So we didnt recognize revenue for all of the victory that was shipped in the third quarter to be clear.

Some of that was constrained in that you see that playing through in the fourth quarter and the full year guidance. So we can't be more specific than that happy to.

Provide any additional color that we can but we're not going to provide specific product level guidance.

Maybe over to Diana.

Hi, Tyler so our outpatient study is ongoing we're recruiting actively and in terms of our predictions. We think that that study will wrap up early next year. We should have results in the first quarter. It is harder than is typical to predict that dynamics of trial enrollment for COVID-19, so much.

Depends on.

The number of cases, though competition with other clinical trial. So we're going to have to kind of take it month by month and see how the dynamics go as you know where were approved with Macquarie for hospitalized patients or patients and an equivalent to inpatient setting so in.

Terms of then what that does for US once we have the trial results. If it were successful. We would then look to getting an expanded label for that population. So that would be further down the line, but our first step is to get the study enrolled and see how that Larry platforms in an outpatient setting where we're trying to present.

They send rather than hasten recovery in the hospital.

Thanks, so much.

Thank you.

Our next question comes from the line of Kumar Refaat from Evercore. Please go ahead.

Hi, guys. Thanks for taking my question just two very quick ones.

First on big targets, perhaps.

I must trends.

Don't appear particularly encouraging for last six months or so I know, it's growing but not not the way. It was in the past I just I would love to get your take on that.

And secondly on the capsid inhibitor may Dan how are you thinking about possible candidates for a combo.

No there are other companies with HIV candidates as well and this has been an ongoing question.

Where you guys have had to do that.

Sure Joanna concerned Len.

Hey, good from there.

Anyone so thats good yes, thanks humor.

So listen we're really proud of actually the tavi growth and and I think that if you look at the share growth is basically eight points of share year on year. When you think about as Q3 90 into Q3 20, and when you look at Q2 Q3, it it than I am.

Appoint a share. So so we do think that the growth continue its where where we've seen a little bit more of an impact just from a market standpoint, because if you think about the impact of Carbonite unit had a larger impact in our HIV treatment business really when it comes to switch it and so it will impact disproportionately newer agents in the market.

Because physicians are switching to newer agents, but obviously the tavi part of that pool and the overall share of deal yet still remains really strong because of that.

We you know more than 75% of patients are actually on a deal yet compound and so therefore.

They are just renaming is left which is we've seen that rebound a little bit in Q3, we expect that to continue through Q4.

But I think overall, if you think about a new EPS, which is our largest business right now running at acute actually more than one out to keep patients on starts on big Harvey.

About a 56% share so naive patients and when you think about the switches although the markets are switching from a little bit lower we're still roughly about wanting to patients I am going to the party and they're going to be carby from a non deal yet single treatment regimen, which I also think it's a great place to be so we continue to feel.

Extremely confident in the targets continued growth because you're seeing it basically happened across all the markets around the world to really consolidate around the Tavi. In addition to the fact that Kevin Knight Chairman.

It's actually for naive patients.

A real advantage that the tavi, because the rapid start and and that's something that even guidelines are recognizing in light of the fact that you don't need to there's no geno type catching there's no HIV testing et cetera. So that's also helping to continue to grow our share in a patient population.

So with that readout or Diana on the capsid.

Yes, I had to pick a hammer on.

The as you mentioned look we have both internal candidates for combining with line and cap Revere.

And we remain open as you said there are other agents out there that that could potentially be combination partners and we we are remain definitely open to.

Figuring out what's in the best interest of patients.

And we will continue to be diligent on that front, so I think both.

Possibilities remain there.

Thank you guys.

Thanks, Mike.

Thank you.

And I show our last question comes from the line of Joe.

Chad May come from Bank of America. Please go ahead.

Hey, guys. Thanks, so much for the question.

Just had a couple on room desk severe Dan you've talked about it likely not making a major long term contributions I just wanted to ask are the investments and nebulizer next gen programs.

Still a priority in the near term and the second one unrelated is how do you manage inventories for when the the infection step down happens, which is hopefully sometime next year. Thank you.

Yes, Thanks, Jeff for the question.

Really helpful I mean to your.

Your contacts on that I mean, let me, let me say a couple of things first of all I mean.

We think Vic Larry run done three or we will make a significant contribution certainly to gilliatt I mean, it already has since you've seen sales.

To date, when we think through the end of this year and into 2021.

And potentially on a seasonal basis beyond I mean, one has to there's a lot. We still don't know about the pandemic of course, but I think what we do know is that.

In order to get US all back to normal this is going to take.

A variety of approaches of course is going to take vaccines, it's going to take therapeutic in the hospital its going to potentially take combination therapies in the hospitals.

And then it's going to need therapeutics pre hospital, so I think.

We're proud to be a front ended it with a very potent anti viral but should the bedrock I'd think of any approach to due to a pandemic.

But but well continue to need investment we're fully committed to the investment in line extensions here and seeing where else we might be able to play in that continuum from pre hospital setting the hospitalized patients obviously, we're not going to plan area and succeed, but but an area of therapeutics.

We think there is a very good return on that investment I think the challenge we have.

By the way we used to have a tamiflu whenever that Roche is it becomes difficult to predict.

And you've seen it already you know and are at.

At the half year of course, we get quite wide guidance to give us.

Opportunities to understand where the pandemic was going exactly how thats going to play a role in it and now what we've done as we reaffirmed that guidance, but we've narrowed it and.

And I think as you go into next year on year. After we're just going to need to stay adaptable and flexible and how much of a contributor but clarity, but we do feel very strongly that recovery will contributed to overall sales be an important source of cash.

Cash for our business.

And allow us to pay down debt make sure we continue to invest and the routine part of our business and then collaterals and be up.

The other thing that I would make though Jeff is that as a result of.

Both the internal and external.

Portfolio development over the past year and in particular, the immunomedics and shouldn't be transaction.

Excluding Macquarie.

We're now very confident in our ability to grow in the short and mid term. So I think for clarity will come on top of that may have year to year variability, but I think that's really the story of today's call me evolution over the course of the past year and.

Thanks for giving me the opportunity to kind of put that into context.

Thank you.

Thank you.

This concludes the Q and a session at this time I would like to turn the call over to Franklin Bank for closing remarks.

Thank you Dylan and thank you all for joining US today. We appreciate your continued interest in gilliatt and the team here look forward to providing you with updates on our future progress.

Okay.

Yes.

Ladies and gentlemen, thank you. This concludes todays presentation. Thank you for participating you may now disconnect.

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