Q1 2022 Gilead Sciences Inc Earnings Call

Thank you for standing by, and welcome to the Gilead Sciences First Quarter 2022 Earnings Conference Call.

Thank you for standing by and welcome to the Gilead Sciences first quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone please be advised that today's call is being recorded.

At this time, all participants are in a listen-only mode.

So thanks, Evan, for that.

After the speaker's presentation, there will be a question-and-answer session.

To ask a question during this session, you'll need to press Star 1 on your telephone.

Please be advised that today's call is being recorded.

If you require any further assistance, please press Star 0.

If you require any further assistance. Please press star zero I will now like to hand, the call over to your host for today's program Jackie Ross Vice President Investor Relations. Please go ahead.

I would now like to hand the call over to your host for today's program, Jacquie Ross, Vice President, Investor Relations.

Let's have the next question, please.

Please go ahead.

Our next question comes in the line of Tyler Van Buren from Cowen.

Thank you, Jonathan, and good afternoon, everyone.

Your question, please.

Thank you Jonathan and good afternoon, everyone.

Just after market closed today, we issued a press release with earnings results for the first quarter of 2022. The press release, slides, and supplementary data are available on the Investor section of our website at gilead.com.

Hey there.

Is that the market closed today, we issued a press release with earnings results for the first quarter of 2020 to.

Good afternoon, and thanks for taking the question.

The press release slides and supplemental data are available on the investors section of our website at Gilead Dot com.

The speakers on today's call will be our Chairman and Chief Executive Officer, Daniel O'Day, our Chief Commercial Officer, Joanna Mercier, our Chief Medical Officer, Merdad Farsi, and our Chief Financial Officer, Andrew Dickinson.

Can you please give us your latest thoughts regarding a successful outcome for the DOM Mark 7 trial when we get the phase 2 PFS data later in the year?

The speakers on today's call will be our chairman and Chief Executive Officer, Daniel O'day, Our Chief Commercial Officer, Johanna Mercier, Our Chief Medical Officer, Mary Murphy, and our Chief Financial Officer, Andrew Dickinson.

After that, we'll open up the call to Q&A, where the team will be joined by Christy Shaw, the Chief Executive Officer of KITE.

After that we'll open up the call to Q&A for the team will be joined by Christi Shaw Chief Executive Officer of Kate.

Before we get started, let me remind you that we will be making forward-looking statements, including those related to the impact of the COVID-19 pandemic on Gilead's business, financial condition, and results of operations, plans and expectations with respect to products, product candidates, corporate strategy, business and operations, financial projections, and the use of capital, and 2022 financial guidance, all of which involve certain assumptions, risks, and uncertainties that are beyond our control and could cause actual results to differ materially from these statements.

And related to the readout for the upcoming Roche results, what are you most interested in seeing other than the primary endpoint?

Before we get started let me remind you that we will be making forward looking statements, including those related to the impact of the COVID-19 pandemic on Gilead business financial condition and results of operations plans and expectations with respect to products product candidates corporate strategy business and operation financial projections.

Thanks a lot, Tyler.

So Tidgett, over to Merdad, please.

Sure.

The use of capital and 2022 financial guidance, all of which involve certain assumptions risks and uncertainties that are beyond our control and could cause actual results to differ materially from these statements.

A description of these risks can be found in the earnings press release and our latest SEC disclosure document.

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

All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statement.

Excuse me.

All forward looking statements are based on information currently available to Gilead and Gilead 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.

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, and our supplemental data sheet as well as on the Gilead website.

The GAAP to non-GAAP reconciliations are provided in the earnings press release, in our supplementary data sheet, as well as on the Gilead website.

Now I'll turn the call over to Dan.

Hi, Tyler.

Now I'll turn the call over to Dan.

Thank you, Jackie, and good afternoon, everybody.

Yeah.

Thank you Jackie and good afternoon, everybody. We appreciate you taking the time with Gilead today and I also want to thank those of you who joined overall gene oncology deep dives over the last few months.

We appreciate you taking the time with Gilead today, and I also want to thank those of you who joined our virology and oncology deep dives over the last few months. These two events provided a more in-depth view of our portfolio, our strategy, and the teams behind them.

You know, I think our thinking has been that DOM Manilamab, as a Tidgett agent will add to the ORR, but to your point, it's not only that that we would be looking for.

And what we would be hoping for, in addition to the overall response rate, is going to be the depth of the responses and the durability of responses, right?

So those are the factors that we'll be looking for.

These two events provides a more in depth view of our portfolio our strategy and the teams behind them, we shared a much broader view of our growing clinical pipeline than we had in the past highlighting its potential to deliver a number of new therapies to address unmet needs for patients across a diverse range of conditions.

We shared a much broader view of our growing clinical pipeline than we had in the past, highlighting its potential to deliver a number of new therapies to address unmet needs for patients across a diverse range of conditions.

For those of you who joined, I hope you got a deeper sense of why we're confident of sustaining our leadership in virology and growing our oncology revenues so that it becomes more than one-third of our total revenue in 2030.

For those of you who joined I Hope you got a deeper sense of why we're confident in sustaining our leadership embryology and growing oncology revenue so that it becomes more than one third of our total revenue in 2030.

Yes.

I'll turn now to our performance this quarter, and I'm pleased to share that the year is off to a strong start in line with guidance as shown on slide four. Total product revenue is up 3% from last year to $6.5 billion U.S. dollars, with cell therapy, PICLURI, TRIDEL-V, and HIV driving growth.

We will also be looking to see what the Roche data looks like when it comes out at ASCO to see what they've seen as sort of a benchmark, if you will.

I'll turn now to our performance this quarter I am pleased to share that the year is off to a strong start in line with guidance as shown on slide four.

But those are the various factors we'll be looking for.

Obviously, tolerability is going to be in there as well in the overall profile.

Total product revenue was up 3% from last year to $6 5 billion U S dollars with cell therapy <unk> in HIV driving growth.

Thanks, Merdad.

HIV grew 2% year-over-year, primarily driven by BicTarV, which grew 18%, and reported more, than 4% market share growth compared to the first quarter of 2021.

HIV grew 2% year over year, primarily driven by <unk>, which grew 18% and reported more than 4% market share growth compared to the first quarter of 2021.

This is notable given the impact of our Truvada LOE.

This is notable given the impact of our Truvada LOE.

Sequentially, HIV was down 18% primarily as a result of first-quarter seasonality.

Sequentially HIV was down 18%, 18%, primarily as a result of first quarter seasonality.

Our growing oncology portfolio performed well, with Tredelby revenue doubling compared to the first quarter of 2021, and cell therapy, delivering another strong quarter of growth.

Our growing oncology portfolio performed well with <unk> revenue doubling compared to the first quarter of 2021 and cell therapy, delivering another strong quarter of growth.

We recently extended our portfolio of marketed cancer therapies. Following the FDA approval of <unk> for second line relapsed refractory.

We recently expanded our portfolio of marketed cancer therapies following the FDA approval of Yaskarta for second-line relapsed and, refractory LBCL.

<unk> I'm also pleased to highlight the FDA approval of our new cell therapy facility in Maryland, which is part of the expected 50% increase in our manufacturing capacity by the end of 2022.

I'm also pleased to highlight the FDA approval of our new cell therapy facility in Maryland, which is part of the expected 50% increase in our, manufacturing capacity by the end of 2022. The new facility will support our cell therapy growth expectations over the next several years.

The new facility will support our cell therapy growth expectations over the next several years.

Moving to the pipeline, we shared the phase III top line readout from <unk> two in March showing that the study met its primary endpoint with a statistically significant improvement in progression free survival versus physicians choice of chemotherapy.

Moving to the pipeline, we shared the Phase III top-line readout from Tropics II in March, showing that the study met its primary endpoint, of statistically significant improvement in progression-free survival versus physicians' choice of chemotherapy. Additionally, the first interim analysis of the key secondary endpoint of overall survival demonstrated a trend in improvement.

Additionally, the first interim analysis of the key secondary endpoint overall survival demonstrated a trend in improvement.

As you know, we are exploring potential pathways for approval with regulatory authorities to bring Tredelby to these later-stage patients.

As you know we are exploring potential pathways for approval with regulatory authorities to bring Dolby to these later stage patients.

The details of the study results will be shared at ASCO in June.

The details of the study results will be shared at <unk> in June .

At the Oncology Deep Dive earlier this month, we highlighted the broad potential for Tredelby across multiple tumor types and lines of therapy, with plans to initiate 13 more Tredelby trials through 2023, including four more in 2022.

At the oncology deep dive earlier this month, we highlighted the broad potential for <unk> across multiple tumor types and lines of therapy with plans to initiate 13 more toward Lv trials through 2023, including four more in 2022.

Turning to slide five as you know the timing for tropics too and the NDA decision for Capella are subject to change.

Turning to Slide 5, as you know, the timing for Tropics II and the NDA decision for Capella are subject to change.

In the case of Capella, this is due to the biocompatibility issue that we're working to resolve, and we're fully confident in Lenacapivir itself.

Hey, some capella this is due to the buyout compatibility issue, but we're working to resolve and we're fully confident.

Let a catheter itself.

Other than that, we are on track with the remaining targeted milestones we shared with you in January.

Other than that we are on track with the remaining targeted milestones we've shared with you in January .

We've added some of the newly disclosed trials from our oncology deep dive as well on this slide.

We've added some of the newly-disclosed trials from our Oncology Deep Dive as well in this slide.

Additionally, we're pleased to note that the partial clinical holds for the pivotal Magrolimib trials, including Enhance 3 for first-line unfit AML shown in this slide, have been lifted.

Additionally, we are pleased to note that the partial clinical holds for the pivotal <unk> trials, including enhanced III for first line unfit AML shown on this slide have been lifted.

I'm also pleased to share that despite the hold, there's no change to the timing of the first interim readout for Enhance for first-line high-risk MDS, which we expect in the first half of 2023.

I'm also pleased to share that despite the hold there is no change to the timing of the first interim readout for enhanced for first line high risk Mds, what should we expect in the first half of 2023.

Mirdad will share more pipeline details later in the call.

Mehrdad will share more pipeline details later in the call.

Before I pass over to Joanna I, just wanted to take a moment to thank the gilead and kite teams for putting the full weight of the expertise passion and commitment behind all of this work that you are seeing it's thanks to our 14000 employees across the world that we're delivering for patients with diverse conditions and diseases today and advancing our pipeline of <unk>.

Before I pass it over to Joanna, I just want to take a moment to thank the Gilead and CHI teams who are putting the full weight of their expertise, passion, and commitment behind all of this work that you're seeing.

Thanks, Tyler.

It's thanks to our 14,000 employees across the world that we're delivering for patients with diverse conditions and diseases today and advancing a pipeline of innovative new therapies for the future.

Let's have the next question, please, John.

Innovative new therapies for the future.

We have some bold ambitions for the coming years, and we're confident of achieving them, given the level of innovation and capabilities that we have in place today.

Our next question comes in line of Mohit Bansal from Wells Fargo.

We have some bold ambitions for the coming years, and we're confident of achieving them given the level of innovation and capabilities that we have in place today.

Now I'll invite Johanna to share an update on our first quarter commercial performance.

Now I'll invite Joanna to share an update on our first quarter commercial performance over the years Joanna Thanks, Dan and good afternoon, everyone.

Over to you, Johanna.

Thanks, Dan.

And good afternoon, everyone.

Your question, please.

So turning to slide seven, we had a solid start to the year with total product sales, excluding Vicklory of $5 billion U.S. for the quarter, up 2% year over year, driven by cell therapy, Trudelvy, and HIV, and offset in part by HCV pricing dynamics. Quarter over quarter, total product sales excluding Vicklory were down 14% as a result, of the seasonality we typically see in the first quarter of the year, primarily in our, HIV business.

Great.

So turning to slide seven we had a solid start to the here with total product sales excluding secondary five Gallagher.

Salaries for the quarter up 2% year over year, driven by cell therapy for Derby anti HIV and offset in part by HDD pricing dynamics.

Quarter over quarter total product sales, excluding the creative are down 14% as a result of the seasonality.

<unk> in the first quarter and for the year, primarily in our HIV business.

On slide eight, you can see that HIV sales were down 18% quarter over quarter to $3.7, billion, consistent with our guidance, given the seasonality we customarily experience in the first quarter of every year. First, the channels build their inventories over the fourth quarter and then draw them, down during Q1. On a dollar basis, the majority of the sequential decline was associated with inventory drawdown.

On slide eight you can see that HIV sales were down 18% quarter over quarter to $3 7 million consistent with our guidance given the seasonality we customarily experienced in the first quarter of every year.

Thanks for taking my question.

First the channel and to build their inventories over the fourth quarter, and then draw them down during Q1.

And maybe a question for Andy regarding APEX.

On a dollar basis, the majority of the sequential decline was associated with inventory drawdown.

Second, we realized lower net prices in part due to increased copay support, Part D discounts, and other efforts to maintain access and affordability of our HIV medicines as patient's insurance plans reset.

Second we realized lower net prices in part due to increased co pay support part D discounts and other efforts to maintain access and affordability of our HIV medicines patients insurance plans reset.

This is a customary Q1 dynamic that we expect to normalize throughout the rest of this year. Year over year, HIV sales were up 2%, driven by market growth for both treatment and PrEP, offset in part by the impact of the loss of exclusivity for Truvada in 2020.

So, Andy, you mentioned that in 1Q there was a $100 million impact.

And then since you provided, the guidance, I mean, U.S. dollar has been strong, about 7% U.S. dollar to European euro decline.

This is a customary Q1 dynamic that we expect to normalize throughout the rest of this year.

So just what I'm trying to understand is how much of the APEX impact you are absorbing in this guidance which you are maintaining right now?

Year over year.

From my math, it could be $300 million plus.

But if that means that this business is really stronger than you anticipated, if you could help us understand where this trend is coming from.

<unk> sales were up 2% driven by market growth for both treatment and prep offset in part by the impact of the loss of exclusivity for to that to that end 2020.

The year over year impact of this is expected to be minimal starting in this quarter second quarter of this year.

The year over year impact of this LOE is expected to be minimal starting in this quarter, second, quarter of this year, and excluding the LOE impact, HIV sales increased 5%.

Excluding the gallery impact HIV sales increased 5%.

Overall, we're encouraged by the signs of recovery seen in the HIV treatment market.

Thank you.

Overall.

Encouraged by the signs of recovery seen in the HIV treatment market.

Despite screening and diagnosis rates still below pre-pandemic levels and the continuing, impact on market growth due to the Omicron surge in Q1.

Sure.

Site screening and diagnosis rates still below pre pandemic levels and the continued impact on market growth due to the omicron search in Q1.

That's a great question, Mohit.

As a result, both the US and European HIV treatment markets were down slightly on a, sequential basis. On a year over year basis, the European market was roughly flat and the US market grew a, little over 3%.

As a result.

And European HIV treatment market for down slightly on a sequential basis.

On a year over year basis, the European market was roughly flat in the U S market grew a little over 3%.

The PrEP market grew 33% year over year and 3% sequentially.

The prep market grew 33% year over year and 3% sequentially.

Notably, DSCOVI continues to hold approximately 45% market share and will continue to engage, with payers to ensure those who benefit from PrEP have access to their preferred regimen.

Notably this is gonna be continues to hold approximately 45% market share and we'll continue to engage with payers to ensure those who benefit from perhaps have access to their preferred regimen.

We believe Gilead remains well-positioned in PrEP and, as highlighted during our virology, deep dive in February, we expect the market to double by 2030, catalyzed by the launch of long-acting regimens such as Lenacapavir.

We believe gilead remains well positioned in path and as highlighted during our virology deep dive in February we expect the market to double by 2030 catalyzed by the launch of long acting regimens such as <unk>.

DSCOVI sales in the first quarter were $374 million, up 4% year over year, driven by continued, PrEP market growth and partially offset by generic competition and switches to newer treatment medicines such as BicTarvi.

<unk> sales in the first quarter were $374 million up 4% year over year, driven by continued market growth and partially offset by generic competition and switches to newer treatment medicine, such as the target.

Turning to slide nine the party sales of $2 2 billion in the first quarter were up 18% year over year, driven by U S market growth and notably continued share gains in both the U S and in Europe .

Turning to slide 9, BicTarvi sales of $2.2 billion in the first quarter were up 18% year, over year, driven by US market growth and, notably, continued share gains in both the, US and in Europe.

I'm happy to take it.

Look, it's relatively simple in that you're absolutely right.

And even in April, we've seen a continued deterioration of exchange rates or strengthening of the dollar which impacts the revenues coming from our European business.

<unk> remains the leading regimen for new starts and switches in the U S and you start in Europe in fact, the TARP shares at four 5% year over year.

BicTarvi remains the leading regimen for new starts and switches in the US and new starts, in Europe. In fact, BicTarvi's share is up 4.5% year over year to 43% share in the US, almost eight, times larger than the next leading promoted medicine and representing the highest share of any complete regimen for the treatment.

So to be clear, the $100 million impact was a year-over-year comparison Q1 to Q1.

Joanna and I are watching the budget impact of the exchange rates very carefully.

And part of the confidence in maintaining the guidance is that, yes, there are FX headwinds.

There are also, for instance, related to your question, there's also this change in the accounting treatment of in-process R&D which will lead to additional expenses from upfront payments that weren't previously part of how we reported non-GAAP earnings.

On the flip side, there are parts of our business that are outperforming.

43% share in the U S.

Eight times larger than the next leader, leading promoted medicine and representing the highest share any complete regimen for the treatment of HIV.

Moving to slide 10, in HCV, we maintained steady market share, and the 22% decline year, over year was primarily driven by unfavorable pricing dynamics.

Moving to slide 10 and HBV.

We maintained steady market share and a 22% decline year over year was primarily driven by unfavorable pricing dynamics.

Sequentially, HCV was up 2% while the overall market and new patient starts continued to, be impacted by the pandemic.

Sequentially HDD was up 2%, while the overall market and new patient starts continue to be impacted by the pandemic.

HBV and HDV on slide 11 were up 7% year over year due to higher demand for Vemliti, namely, in Asia.

HBV and H D D. On slide 11, we're up 7% year over year due to higher demand for <unk>, mainly in Asia.

Sequentially, HBV and HDV declined 11% driven by the same HBV seasonal inventory and pricing, dynamics impacting HIV.

Sequentially HBV in HDD declined, 11% driven by the sustained HBV seasonal inventory and pricing dynamics impacting HIV.

Hipcludex sales were $11 million for the quarter, primarily reflecting sales in Germany and, France, where full reimbursement has been established.

<unk> sales were $11 million for the quarter, primarily reflecting sales in Germany, and France, where full reimbursement has been established.

Our discussions with regulatory bodies and other countries across Europe are ongoing, and of course, we look forward to potential approval in the U.S. in the second half of this year.

Our discussions with regulatory bodies in other countries across Europe are ongoing and of course, we look forward to potential approval in the U S. In the second half of this year.

VicLurie revenues in the first quarter were $1.5 billion, as shown on slide 12.

Again, you think of the strength of Veclurie that we've seen so far.

So clearing revenues in the first quarter were $1 5 billion as shown on slide 12.

So Joanna and I and the rest of the management team will look at the puts and takes of this in the middle of the year and we'll provide a more thoughtful update.

VicLurie utilization tracks hospitalization rates, and therefore, due to the timing of, Omicron surges, was lower in the U.S. after January, but higher in Europe and Asia later in the quarter.

But I think the key for you is recognizing a couple of things that have changed that could impact negatively our EPS, our GAAP and non-GAAP EPS.

Declarer utilization tracks hospitalization rates and therefore due to the timing of omicron surgeon with Lorena you asked after January at higher in Europe , and Asia later in the quarter.

We're optimistic that there will not be another surge this year in the U.S., and overall, we will maintain our readiness to support hospitalized and not hospitalized patients.

There are also things that will have additional strength we expect over the course of the year that will offset that to some extent.

We're optimistic that there will not be another surge this year in the U S and overall, we will maintain our readiness to support hotline and not hospitalized patients.

There's no change to our commitment to COVID-19 patients globally, and in that regard, we, were very pleased to receive the World Health Organization's revised COVID-19 guidelines.

No change to our commitment to COVID-19 patients globally and in that regard we were very pleased to receive the world Health organization has revised COVID-19 guidelines.

These guidelines now conditionally recommend VicLurie for the treatment of patients with, non-severe COVID-19 at highest risk of hospitalization.

These guidelines now condition, we recommend FRE for the treatment of patients with non severe COVID-19 at highest risk of hospitalization.

And earlier this week, VicLurie received FDA approval for the treatment of certain pediatric, patients who are at least 28 days old, highlighting our ongoing commitment to extend the reach of VicLurie where we can.

And earlier this week <unk> received FDA approval for the treatment of certain pediatric patients for at least 28 days old highlighting our ongoing commitment to extend the reach of Macquarie, where we can.

Now, turning to oncology, Tredelby's sales were up 103% year-over-year and 24% sequentially, as shown on slide 13.

Now turning to oncology.

<unk> sales were up 103% year over year, and 24% sequentially as shown on slide 13.

We're encouraged by adoption not just in the U.S., but notably in Germany and France, and continue to work with health authorities and reimbursement bodies to extend Tredelby's reach to patients globally.

We're encouraged by adoption not just in the U S, but notably in Germany, and France and continue to work with health authorities and reimbursement bodies to extend <unk> reach to patients globally.

We've completed the expansion of our field force to support the U.S. and Europe, and, believe we are now at right scale to support physicians and make Tredelby available across all approved indications to patients who could benefit from it.

We completed the expansion of our field force to support the U S and Europe and believe we are now right scale to support physicians and make sure they will be available across all approved indications to patients who could benefit from it.

We're extremely excited by the feedback from physicians about Tredelby's impact on patients, both those who are prescribing Tredelby today and those who expect to have access to it soon.

We're extremely excited by the feedback from physicians about <unk> impact on patients.

Those who are prescribing to tell me today, and those who expect to have access to it soon.

With strong physician uptake and our expanded field footprint starting in April, we believe, Tredelby will benefit more than the one-in-four second-line metastatic TNBC patients we're reaching in the U.S. today.

With strong physician uptake.

Our expanded field footprint starting in April we believe to Adobe will benefit more than the one for second line metastatic CNBC patients for reaching in the USA.

We look forward to sharing more updates as we progress throughout the year.

We look forward to sharing more updates as we progress throughout the year.

Turning to slide 14, and on behalf of Christiana <unk> cell therapy sales for the first quarter of 2022 or $274 million up 43% year over year and 16% sequentially.

Turning to slide 14, and on behalf of Christy and the CHI team, cell therapy sales for the, first quarter of 2022 were $274 million, up 43% year-over-year and 15% sequentially. For the quarter, the Ascardia sales of $211 million were up 32% year-over-year and 16% sequentially, driven by continued global demand in relapsed or refractory large B-cell lymphoma, as well as in follicular lymphoma.

For the quarter sales of $211 million were up 32% year over year, and 16% sequentially driven by continued global demand and relapsed or refractory large b cell lymphoma, as well as in Follicular lymphoma.

This highlights the growing recognition of the durable, long-term survival benefits showcased, at last December's American Society of Hematologists.

This highlights the growing recognition of the durable long term survival benefit showcased at last December's American Society of Hematology meeting.

For Ticardis, sales of $63 million were up 103% year-over-year due to strong demand in, relapsed or refractory mantle cell lymphoma.

For <unk> sales of $63 million or 103% year over year due to strong demand in relapsed or refractory mantle cell lymphoma.

We're pleased with the strong early uptake for adult acute lymphoblastic leukemia in the, U.S. following approval last October, which contributed to the 11% sequential growth in, Ticardis.

We're pleased with the strong early uptake for adult acute lymphoblastic leukemia in the U S. Following approval last October which contributed to the 11% sequential growth in Jakarta.

The strong momentum we've seen across our cell therapy portfolio continued with the, approval of Yaskarta in second-line relapsed or refractory LBCL earlier this month, as well as FDA's approval for our new Maryland manufacturing facility announced just last week. Through capacity improvements across our existing in-house CAR-T manufacturing site, in addition, to the new Maryland site, we expect our manufacturing capacity to increase by up to 50% and support our aspiration to serve a cumulative 25,000-plus patients by the end of 2025. Second-line orders started coming in the day after the FDA approval and have been steady, ever since.

The strong momentum we've seen across our cell therapy portfolio continue with the approval just got it in second line relapsed or refractory <unk> earlier this month as well as FDA approval for our new Maryland manufacturing facility announced just last week.

Two capacity improvements across our existing in house car T manufacturing site. In addition to the new Maryland site, we expect our manufacturing capacity to increase by up to 50% and support our aspiration to serve a cumulative 25000 plus patients by the end of 2025.

Second line orders started coming in the day after the FDA approval and had been steady ever since.

It is truly heartening to see the immediate help we can provide for patients.

It's truly heartening because of immediate help we can provide for patients.

Given Yaskarta's second-line inclusion in the NCCN guidelines and robust clinical data, we expect Yaskarta to shift the paradigm and the standard of care for LBCL patients.

Given you have got a second line inclusion in the Mtc and guidelines and robust clinical data, we expect to start to shift the paradigm in the standard of care for <unk> patients.

Chris Hughes here with the team and is available to take any questions on cell therapy during, our Q&A.

Christopher here with the team and is available to take any questions on cell therapy during our Q&A.

And so with that, I will hand over the call to Murdad for an update on our clinical pipeline.

And so we'll give you additional color later in the year, but we're very comfortable maintaining our guidance where we are today.

And so with that I will hand over the call to <unk> for an update on our clinical pipeline.

Thank you, Joanna, and hi, everyone.

Hopefully that helps.

Thank you Joanna and hi, everyone.

2022 is full of clinical activity here at Gilead.

Thank you very much, Andy.

2022 is full of clinical activity here at Gilead and I hope the virology in oncology deep dives were helpful in highlighting the breadth and depth of our portfolio.

And I hope the virology and oncology deep dives were helpful in highlighting the breadth, and depth of our portfolio.

Let's have the next question, please.

By the end of 2022, we expect to have more than 90 clinical trials underway across oncology, virology, and inflammation.

Our next question comes in the line of Colin Bristow from UBS.

By the end of 2022, we expect to have more than 90 clinical trials underway across oncology for all Jane inflammation.

Your question, please.

With such a broad portfolio, our focus is firmly on innovation and execution to ensure, that we fully leverage its potential.

Hey, good afternoon, and thanks for squeezing me in.

Just a quick one, just following on the Tidget and Xenocene asset.

As such a broad portfolio, our focus is firmly on innovation and execution to ensure that we fully leverage its potential.

I just wanted to really understand where your, you know, what is it you're most enthused about, and how you're just thinking about this strategically?

Is it the Tidget and PG-1 doublet that, you know, you really see the value, but there's some concern about market timing, or are you, you know, absolutely excited about the triplet data?

Moving to HIV on slide 16, we shared exciting one-year data from the CAPELLA trials at CROI, in February, reporting 83% virologic suppression in heavily treatment-experienced people living with multidrug-resistant HIV.

If you could just help me through that, thanks.

Moving to HIV on slide 16, we shared exciting one year data from the Capella trials across in February reporting, 83% virological suppression in heavily treatment experienced people living with multi drug resistant HIV.

Thanks, Colin.

Given the significant unmet need of this patient population, the Lenacapivir NDA was designated, priority review by the FDA, and we're planning to resubmit the NDA as soon as we've resolved the clinical hold and complete response letter. As you know, the basis of these FDA actions was the compatibility of Lenacapivir with, the vials in use at that time, not Lenacapivir itself.

Merdad, go ahead.

Given the significant unmet need of this patient population.

Of your NDA was designated a priority review by the FDA and we're planning to resubmit the NDA as soon as we resolve the clinical hold and complete response letter.

Sure.

Look, I think we obviously are going to be looking at across all the data, across all the assets.

Maybe the way I would say it is that we're seeing the Tidget-PD-1 combination, as likely to be sort of the benchmark or the basis for treatment, at least in lung cancer and potentially more broadly.

And as such, our hope is to have, you know, a great combination there to make sure, that we then have something to which we can add other potential agents that could bring us to even better responsiveness.

As you know the basis of these FDA actions was the compatibility of blended <unk> vials in use at that time not lending catheter itself.

So whether that's Adenosine or Tredelvi or, you know, something else in our pipeline, I think those are all options for us to consider.

But we're seeing, I would say the floor is being raised, is our belief, and that Tidget-PD-1 combination becomes sort of the baseline that we need to aim for.

Thanks.

We're in ongoing dialogue with the agency to consider an alternative vial and look forward, to updating you of our progress in due course.

Very nice, conceptual there.

So out of respect for everybody's time, we'll take one last question.

Ongoing dialogue with the agency to consider an alternative vials and look forward to updating you of our progress in due course.

Jonathan, can we have the last question, please?

Certainly.

Separately, we're on track for the HTE MAA approval in Europe in the second half of the year.

Our final question for today comes from the line of Salveon Richter from Goldman Sachs.

Separately, we are on track for the Hte MAA approval in Europe in the second half of the year.

At a virology deep dive in February, we shared details of the eight internal candidates that, could partner with Lenacapivir for treatment and highlighted the additional early development or discovery assets shown on slide 17.

Your question, please.

At a variety of deep dive in February we shared details of the eight internal candidates that could partner with lending cap of your for treatment and highlighted the additional early development or discovery assets shown on slide 17.

Hey, thanks.

This is Mal for Salveon.

In addition to our PrEP programs, these assets give us a high degree of confidence that Gilead, will sustain its leadership in HIV through the 2020s and beyond.

Thanks for squeezing us in.

In addition to our prep programs. These assets give us a high degree of confidence that Gilead will sustain us leadership in HIV through the 2000 Twenty's and beyond.

In the immediate term, we continue to generate very strong data for BicTarvi.

In the immediate term we continue to generate very strong data for big target at Croix, we showed biologic suppression at or above 98% in EMEA analysis, and zero cases of treatment failure due to resistance to any components of the single tablet regimen into five year phase III trials.

At CROI, we showed biologic suppression at or above 98% in the ME analysis and zero cases, of treatment failure due to resistance to any components of the single-tablet regimen in two five-year Phase III trials.

Of note, this five-year duration is unprecedented for an HIV regimen.

Of note. This five year duration is unprecedented for an HIV regimen.

Moving to slide 18, but clearly is playing an important role in the fight against COVID-19, as the only antiviral approved for use in both hospitalized and non hospitalized patients.

Moving to slide 18, the CLURI is playing an important role in the fight against COVID-19, and is the only antiviral approved for use in both hospitalized and non-hospitalized patients.

Just in the past few days, the FDA approved an SNDA for Vecluri for the treatment of pediatric, patients who are at least 28 days old and either hospitalized with COVID-19 or with mild to moderate COVID-19 and considered high risk for progression to severe COVID-19.

Just in the past few days.

FDA approved and S. NDA for victory for the treatment of pediatric patients who are at least 28 days old and either hospitalized with COVID-19, or with mild to moderate COVID-19, and considered high risk for progression to severe COVID-19.

In addition to Vecluri, we have an ongoing phase one trial of GS5245, our investigational, oral COVID-19 nucleoside that once metabolized works in the same way as remdesivir. Results from this study could lead to a registrational trial.

In addition to that clearly we have an ongoing phase one trial of <unk> 245, our investigational oral COVID-19, nucleoside that once metabolized worst in the same ways from that severe.

Results from this study could lead to a registrational trial, so even while we hope the worst of this pandemic is behind US. We will continue to work to ensure that COVID-19 therapies are available to as many patients as possible.

So even while we hope the worst of this pandemic is behind us, we will continue to work to, ensure that COVID-19 therapies are available to as many patients as possible.

Moving to oncology and specifically to Adobe on Slide 19, we will share more detailed data from the tropics <unk> study at <unk> in June as a reminder, we announced that the steady minutes primary endpoint with statistically significant PFS versus physicians choice of chemotherapy in late line patients.

Moving to oncology and specifically Tredelby on slide 19, we'll share more detailed data, from the TROFICS02 study at ASCO in June.

Just to go back to Tidget real quick, you and ARCUS have previously noted that you'd want to see an ORR, greater than 50%, but what would you like to see on PFS and, most importantly, OS?

It seems like 30-plus months might be sufficient on OS given Katrina Mono data, and maybe a year-plus for PFS.

As a reminder, we announced that the study met its primary endpoint with statistically, significant PFS versus physician's choice of chemotherapy in late-lying patients.

Just would be great to hear your thoughts on this.

That results are consistent with the Tredelby arm in the Immunomedics 132-01 Phase 1-2 trial.

And that results are consistent with the Trudeau will be arm in the immunomedics <unk> phase one two trial.

OS showed a trend in improvement at the first interim analysis, and we're now targeting, a final OS analysis in 2024, depending on the timing of events. In the meantime, we're engaging with regulatory authorities to explore potential pathways, given the high unmet need.

OS showed a trend in improvement at the first interim analysis and we're now targeting a final OS analysis in 2024, depending on the timing of events.

Yes.

In the meantime.

We are engaging with regulatory authorities to explore potential pathways given the high unmet need as a reminder, topics. So two targeted more advanced patient population.

As a reminder, TROFICS02 targeted a more advanced patient population than Destiny Breast, 04. The encouraging clinical data we've seen in this more challenging patient group has, strengthened our excitement in exploring earlier-stage patients.

Destiny Bristow for incur.

The encouraging clinical data we've seen in this more challenging patient group has strengthened our excitement and exploring earlier stage patients.

As we shared two weeks ago, we're planning a pivotal study for frontline HR-positive, HER2-negative patients, and we'll share more information in due course.

As we shared two weeks ago, we're planning a pivotal study for frontline HR positive <unk> negative patients and will share more information in due course of course.

In addition to traffic so two we're targeting first patient in our EF Pi for a number of neutral <unk> trials this year.

In addition to TROFICS02, we're targeting First Patient In, or FPI, for a number of, new Tredelby trials this year.

In the first half of 2022, this includes frontline studies for non-small-cell lung cancer and, PD-L1-positive and PD-L1-negative metastatic TNBC.

In the first half of 2022. This includes frontline studies for non small cell lung cancer, and PD lone positive and PD lone negative metastatic <unk>.

In the second half of the year, we're targeting FPI for the Evoque 3 Phase 3 trial for first-line, non-small-cell lung cancer.

In the second half of the year, we're targeting F pie for <unk> three phase III trial for first line non small cell lung cancer.

TROFICS04 for metastatic urothelial carcinoma is ongoing, and we anticipate a readout in, the 2023-2024 timeframe.

Tropic, so far for metastatic <unk> carcinoma is ongoing and we anticipate a readout in the 2023 2024 time frame.

As you can see on this slide, shared for the first time in our Oncology Deep Dive earlier, this month, we are in the earliest stages of evaluating how Tredelby, either alone or in combination, could bring new options to people with cancer.

As you can see on this slide shared for the first time in our oncology deep dive earlier this month we.

We are in the earliest stages of evaluating how <unk> either alone or in combination could bring new options to people with cancer.

In total, we're studying more than 25 combinations, including seven Phase 3 combination studies.

In total we are studying more than 25 combinations, including seven phase III combination studies.

On behalf of my CHI colleagues and on slide 20, I'm pleased to highlight the FDA approval, of Yaskarta for the second-line treatment of relapsed or refractory large B-cell lymphoma earlier this month. The approval is based on the ZUMA 7 trial data that showed that two-and-a-half times, more patients receiving Yaskarta were alive at two years, without disease progression or need for additional cancer treatment, versus the standard of care.

On behalf of Mike Hi, colleagues and on Slide 20, I am pleased to highlight the FDA approval of <unk> for the second line treatment of relapsed or refractory large b cell lymphoma earlier this month.

The approval was based on zoom is on the Zuma seven trial data that showed that two five times more patients receiving scarred. It were alive at two years without disease progression or need for additional cancer treatment versus the standard of care.

This was the first cell therapy approved by FDA for initial treatment of refractory or relapsed <unk>.

This was the first cell therapy approved by FDA for initial treatment of refractory or, relapsed LBCL, and within 12 months of initial treatment. Yaskarta was also added to the NCCN's B-cell lymphoma treatment guidelines for these patients.

And within 12 months of initial treatment.

<unk> was also added to the <unk> B cell lymphoma treatment guidelines for these patients.

Moving to Megrolomab on slide 21, we're very pleased that the FDA lifted the partial clinical, holds for our MDS and AML trials, and we've resumed enrollment in our three pivotal studies.

Moving to <unk> on Slide 21, we're very pleased that the FDA lifted the partial clinical holds for our Mds and AML trials.

We resumed enrollment in our three pivotal studies.

I'll note that the remaining partial clinical holds on DLBCL and multiple myeloma are being, reviewed by a different division of the FDA, and we're actively working to resolve them as quickly as possible. In the meantime, the impact of these remaining partial holds is limited since the DLBCL trial, was already fully enrolled at the time of the partial clinical hold, and the multiple myeloma trial had just initiated.

I will note that the remaining partial clinical holds on <unk> in multiple myeloma are being reviewed by different division of the FDA and we're actively working to resolve them as quickly as possible.

In the meantime, the impact of these remaining partial hold is limited since the <unk> trial was already fully.

Enrolled at the time of the partial clinical hold and the multiple myeloma trial had just initiated.

Overall, we're excited by Megrolomab's potential to be the first new treatment for first-line, high-risk MDS patients in 15 years, and have completed patient enrollment for the first interim analysis that we expect to share in early 2023.

Overall, we're excited.

We're excited by them a grille amounts potential to be the first new treatment for first line high risk Mds patients in 15 years and have completed patient enrollment for the first interim analysis that we expect to share in early 2023.

In the meantime, we look forward to sharing data from our Phase 1b trial for high-risk, MDS and first-line TP53 AML with more patients and longer follow-up at ASCO in June.

In the meantime, we look forward to sharing data from our phase one b trial for high risk Mds and first line <unk> 53, AML with more patients and longer follow up at <unk> in June .

Finally, on slide 22, and noting that the timing for the potential submission of TropixO2, and the NDA decision for Capella are subject to change, there are no updates to the targeted milestones shared with you in January.

Finally on slide 22, and noting that the timing for the potential submission of <unk> and the eight NDA decision for Capella are subject to change there are no updates to the targeted milestone shared with you in January .

With our partner ARCUS, we're targeting a number of data readouts in the second half of the year and have added some new trials, including Star 121, evaluating <unk> and Domino and that in combination with chemotherapy for frontline non small cell lung cancer and our 'twenty one to evaluate the same combination upper Gi malignancies.

With our partner, Arcus, we're targeting a number of data readouts in the second half, of the year, and have added some new trials, including STAR-121, evaluating Zimbarelumab and Dominilumab in combination with chemotherapy for front-line non-small-cell lung cancer, and ARC-21 to evaluate the same combination in upper GI malignancies.

With that, I'll hand the call over to Andy.

With that I'll hand, the call over to Andy.

Thank you Mark and good afternoon, everyone.

Thank you, Murdad, and good afternoon, everyone.

Thank you.

Before I get into the Q1 P&L review and the guidance update, I wanted to touch on the, $2.7 billion partial in-process R&D impairment related to assets acquired from Immunomedics in 2020. This had a $1.63 per share impact on our Q1 gap results and on our full-year gap EPS guidance.

Well, what I would say is those milestones, I would agree with the milestones that you've got there, and it's important to remember that those milestones will take time to play out, and we are going to make our bets without being able to look at OS for 30 months, right?

Before I get into the Q1 P&L review in the guidance update I wanted to touch on the $2 $7 billion partial in process R&D impairment related to assets acquired from Immunomedics in 2020.

We're going to have a less mature data set from which to make that decision.

So you're absolutely right that we will be looking at all of those things.

The driver will be to see that, again, tolerability and a benefit as far as the overall response rate is concerned, and look for benefits in the depth and duration of response that we can garner from the data set at the maturity that we will have when we look at it.

And there I would just say, you know, we'll be.., in a sense, watch our actions because you'll be seeing the studies will be getting underway and that should give you a sense of our confidence in those aspects.

This had a $1 63 per share impact on our Q1 GAAP results and on our full year GAAP EPS guidance.

With that, I just want to thank everybody.

There is no impact to our non-gap EPS in Q1 or to our non-gap EPS guidance for the full, year.

There is no impact to our non-GAAP EPS in Q1 or two our non-GAAP EPS guidance for the full year.

With the TropixO2 data readout in March, we have reassessed the value of the assets acquired. While no final decisions have been made pending discussions with regulatory authorities, as, a result of the data, we have taken a $2.7 billion impairment to reflect the likelihood of a delayed launch of Tredelvi for third-line plus HR-positive HER2-negative breast cancer in the United States as well as Europe, and the possibility of a reduced market share in late-line patients given the emerging competitive landscape.

With the tropics <unk> data readout in March we reassess the value of the assets acquired while no final decisions have been made pending discussions with regulatory authorities. As a result of the data we have taken a $2 $7 billion impairments to reflect the likelihood of a delayed launch of <unk> for third line plus HR positive <unk> negative breast cancer immune.

Added states as well as Europe , and the possibility of a reduced market share in late line patients given the emerging competitive landscape.

Prior to today's update, Gilead was carrying $14.7 billion for the IP R&D indefinite lived, intangible assets acquired with immunomedics.

Prior to today's update Gilead was carrying $14 7 billion for the IP R&D indefinite lived intangible assets acquired with Immunomedics. This now values these assets at $12 billion.

This now values these assets at $12 billion.

Recall that the carrying value of <unk> reflected four potential indications in progress at the time of the acquisition triple negative breast cancer in hormone receptor positive her two negative breast cancer bladder cancer and non small cell lung cancer.

Recall that the carrying value of Tredelvi reflected four potential indications in progress, at the time of the acquisition, triple-negative breast cancer and hormone receptor-positive, HER2-negative breast cancer, bladder cancer, and non-small cell lung cancer. At that time, we knew that Tredelvi's potential extended beyond these indications, but for, accounting purposes, did not assign value for the incremental opportunities that we are exploring in prostate, endometrial, and other solid tumors, as well as potential combinations such as with megrolamab, vanillamab, and PD-1s like pembrolizumab.

At that time, we knew that should all these potential extended beyond these indications.

For accounting purposes did not assign value for the incremental opportunities that were exploring in prostate endometrial and other solid tumors as well as potential combinations such as with Makola Mab.

No amount and PD ones like <unk> Mab.

As you saw at our Oncology Deep Dive earlier this month, there are 13 Tredelvi programs, targeted for initiation through 2023, including a number of incremental opportunities.

As you saw at our oncology deep dive earlier this month.

<unk> for the Ob programs targeted for initiation through 2023, including a number of incremental opportunities.

As a result, we remain confident Tredelvi will deliver an attractive return to our shareholders, over time.

As a result, we remain confident <unk> will deliver an attractive return to our shareholders over time.

Moving to slide 24, the first quarter was a strong start to the year, despite the expected, seasonality observed in our HIV business, and was stronger than expected Veclurie sales. Total product sales were $6.5 billion, up 3% year over year, with growth in cell therapy, Veclurie, Tredelvi, and HIV offset in part by lower HCV revenue. Of note, FX negatively impacted first quarter revenue by almost $100 million, net of hedges, representing approximately 160 basis points of growth.

I really appreciate the attention today for the, couple of deep dives we've had.

We look forward to chatting with you at ASCO and beyond to keep you updated on our progress for the year.

Moving to slide 24 the.

In the first quarter was a strong start to the year. Despite the expected seasonality observed in our HIV business and was stronger than expected <unk> sales.

Total product sales were $6 5 billion up 3% year over year with growth in cell therapy, the glory Trudeau and HIV offset in part by lower HCV revenue.

Of note FX negatively impacted first quarter revenue by almost $100 million net of hedges, representing approximately 160 basis points of growth.

Total product sales, excluding Veclurie, were up 2% from the first quarter of 2021 to $5, billion.

Total product sales, excluding <unk> were up 2% from the first quarter of $2021 5 billion.

In HIV, on a sequential basis, we were impacted, as expected, by the normal seasonality associated, with Q1 inventory burn following a build in Q4.

And with that, I'll turn it over to Jackie for some final comments.

In HIV on a sequential basis, we were impacted as expected by the normal seasonality associated with Q1 inventory burn following a build in Q4. In addition to the typical first quarter pricing headwinds that improve throughout the rest of the year.

In addition to the typical first quarter pricing headwinds that improved throughout, the rest of the year.

With Q1 now behind us, we expect sequential growth in HIV throughout the rest of the year. Non-GAAP product gross margin was 87.4% for Q1, up 90 basis points year over year, primarily, due to lower inventory reserve adjustment.

With Q1 now behind US, we expect sequential growth in HIV throughout the rest of the year.

non-GAAP product gross margin was 87, 4% for Q1 up 90 basis points year over year, primarily due to lower inventory reserve adjustment.

First quarter non-GAAP operating expenses were largely consistent with our expectations, as we support the expansion of our oncology business. Non-GAAP R&D was $1.2 billion, up 10% year over year, and non-GAAP SG&A was $1.1 billion, up 5% year over year, both primarily due to higher costs associated with Tredelvi.

First quarter non-GAAP operating expenses were largely consistent with our expectations as we support the expansion of our oncology business non-GAAP R&D was $1 2 billion up 10% year over year and non-GAAP SG&A was $1 1 billion up 5% year over year, both primarily due to higher costs associated with <unk>.

Moving to tax our non-GAAP effective tax rate in the first quarter was 18, 4%.

Moving to tax, our non-GAAP effective tax rate in the first quarter was 18.4%.

Overall, our non-GAAP diluted earnings per share were $2.12 in the first quarter of 2022, compared to $2.04 for the same period last year, reflecting the higher revenue and higher gross margin offset in part by higher operating expenses.

Overall, our non-GAAP diluted earnings per share were $2 12 in the first quarter of 2022 compared to $2 <unk> for the same period last year, reflecting the higher revenue and higher gross margin offset in part by higher operating expenses.

On a GAAP basis, our effective tax rate and earnings per share were impacted by the $2.7, billion impairment.

On a GAAP basis, our effective tax rate and earnings per share were impacted by the $2 7 billion impairment.

Yeah.

We are excited about the strong start to the year, and as you can see on slide 25, the, only revision to our outlook is to our GAAP EPS, primarily to reflect the $1.63 share impact of the impairment discussed earlier. We now expect GAAP EPS in the range of $3 to $3.50 per share, from $4.70 to $5.20.

We are excited about the strong start to year and as you can see on slide 25, the only revision to our outlook as to our GAAP EPS primarily to reflect the $1 63 share impact of the impairment discussed earlier.

We now expect GAAP EPS in the range of $3 to $3 50 per share from $4 70 to $5 20.

On VEC-LURI, we note the strong revenue start to the year, but also, fortunately, the significant, drop-off in U.S. hospitalizations during the first quarter and into the second quarter so far.

On deck Laurie we note the strong revenue start to the year, but also fortunately the significant drop off in U S. Hospitalizations during the first quarter and into the second quarter. So far.

With that in mind, we will monitor demand through the second quarter and evaluate our, full-year guidance in the middle of the year.

With that in mind, we will monitor demand through the second quarter and evaluate our full year guidance in the middle of the year.

One housekeeping item before we wrap up, following recent guidance from the SEC, beginning in, the first quarter and similar to many of our peers, Gilead will no longer exclude acquired in-process R&D expenses from non-GAAP financial measures. Prior period results have been updated to reflect this new methodology and are shared, in our supplementary data posted on the Investor Relations website.

One housekeeping item before we wrap up.

Following recent guidance from the SEC beginning in the first quarter and similar to many of our peers Gilead will no longer exclude acquired in process R&D expenses from non-GAAP financial measures prior.

Prior period results have been updated to reflect this new methodology and our shared in our supplementary data posted on the Investor Relations website.

As a reminder, our full-year guidance does not include the impact of any future upfront, payments related to the normal course of business partnerships or licensing deals. Going forward, we plan to update our guidance on a quarterly basis to reflect the impact, of any new corporate development transactions closed in the prior quarter.

As a reminder, our full year guidance does not include the impact of any future upfront payments related to the normal course of business partnerships or licensing deals going forward, we plan to update our guidance on a quarterly basis to reflect the impact of any new corporate development transactions closed in the prior quarter.

Moving to slide 26, you can see there is no change for our capital allocation priorities. In the first quarter, we repaid $500 million in debt. Additionally, we returned $1.3 billion to shareholders through our dividend and repurchase of shares.

Moving to slide 26, you can see there is no change to our capital allocation priorities.

In the first quarter, we repaid $500 million in debt.

Additionally, we returned $1 3 billion to shareholders through our dividend and repurchase of shares.

Finally, on M&A, there is no change to our philosophy here either.

Thank you all for joining us today.

Finally on M&A there is no change to our philosophy here, either we are very comfortable with the breadth and the quality of the pipeline that we have built acquired or partnered and the growth that it will enable in the coming years.

We are very comfortable with the breadth and the quality of the pipeline that we have built, acquired, or partnered, and the growth that it will enable in the coming years. With that in mind, you can expect us to continue to opportunistically access high-quality assets through partnerships or make smaller acquisitions in the normal course of business.

With that in mind, you can expect us to continue to Opportunistically access high quality assets through partnerships or make smaller acquisitions in the normal course of business.

With that I will invite the operator to open the Q&A.

With that, I'll invite the operator to open the Q&A.

We do appreciate your continued interest in Gilead and look forward to updating you throughout the year, as Dan said.

Certainly ladies and gentlemen, if you have any questions at this time. Please press Star then one.

We ask that you. Please limit yourself to one question. Each and then you may get back into queue. As time allows our first question comes from the line of Michael Yee from Jefferies. Your question. Please.

Certainly.

Have a great rest of your day.

Thank you, ladies and gentlemen, for your participation in today's conference.

Hey, guys. Thank you good afternoon.

This does conclude the program.

Maybe I could ask about the planned or potential <unk> filing you would note that it is subject to change maybe you could just describe what you think the conversation is with FDA is it a combination of a modest PFS and OS trend and is there a magnitude of always trend that you think will be attractive.

And allow a green light to our filing maybe just talk a little bit about that and what would drive us all filings. Thank you.

You may now disconnect.

Thanks, Michael I'll turn it over to where that in just a second but I'll just remind folks that we will leave.

Discussing the data more at <unk> coming up there in early June we look forward to engaging with regulatory authorities in the coming months to further discuss the data and the path forward.

I'll see if that has anything to add on that at this stage, but yes, Michael I think in <unk>.

Normal course of business, we will always discuss the data the totality of the data with the agency prior to our filing and have that conversation with them.

He said the primary endpoint was.

Statistically significant.

So we will have that conversation with them looking at all of the all of the data and come to a conclusion based on the feedback we get.

And we continue to look at earlier lines of therapy and plan those trials to move up in lines of therapy. Given the results. We saw in <unk>, two as well and hormone receptor positive.

Thanks, a lot Michael for them, we have the next question.

Ladies and gentlemen, if you have any questions at this time, please press star, then 1.

Good day.

Certainly our next question comes from the line of Matthew Harrison from Morgan Stanley . Your question. Please.

We ask that you please limit yourself to one question each, and then you may get back in the queue as time allows.

You may now disconnect.

Hi, This is Charlie on for Matthew.

I guess my question is that.

<unk> currently being used in China, and then actually benefit from the Covid outbreak.

And maybe.

If that's the case can you talk about what's the economics look like over there. Thank you.

Our first question comes from the line of Michael Yee from Jefferies.

Good day.

Thanks for the question was the right to Joanna Hi, Charlie. Thanks for your question. So <unk> has been used now with over 11 million patients worldwide.

Your question, please.

[music]

I think it is really impressive and it's still one out of two hospitalized patients in the U S. But we are seeing though is trends.

Of less severe disease, and therefore less have placed hospitalizations, but also less treatments specific to your question to China. We don't have approval in China at this point in time, and we're continuing those discussions with health authorities in light of the fact that what's going on in China with the pandemic obviously.

Hey, guys.

Thank you.

Good afternoon.

Maybe I could ask about the planned or potential fidelity filing.

You note that it's a subject to change.

Maybe you could just describe what you think the conversation is with FDA.

I do think the WHI guidelines guidelines being updated just most recently is also going to help those discussions.

As well so more to come on that but not currently in play at this point in time in China.

Thank you.

Is it a combination of a modest PFS and OS trend, and is there a magnitude of OS trend that you think will be attractive and allow a green light to a filing?

And the next question please.

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

Maybe just talk a little bit about that and what would drive a filing.

Thank you.

Thanks, Michael.

Thanks, So much for taking my question sticking with the theme.

Net new that Youre seeing that increases your level of confidence in <unk> potential for success and are there any ways to potentially expedite at future development of that asset.

Thanks, Brian over to you Murdo.

I'll turn it over to Mehrdad in just a second, but I just remind folks that we will be discussing the data more at ASCO coming up there in early June.

Yes, nothing new to report Brian its a great question, we continue to move along really well in our.

We look forward to engaging with regulatory authorities in the coming months to further discuss the data and the path forward.

Phase one study Thats moving moving forward expeditiously and we are.

Working with the agency to design the phase two.

<unk> program and really moving as fast as possible. We've got a great partnership with the agency and others are really ready to pound. So right now so far so good.

Thanks, Brian next question please.

I'll see if Mehrdad has anything to add on that at this stage.

Next question comes from the line of Simon Baker from Redburn. Your question. Please.

Yeah, Michael.

Thank you for taking my question.

Hey, Johnny you alluded to.

<unk>.

Market dynamics. So I'm just wondering if you could give us a little bit more color and update us on how diagnosis rates I'll now compared to the beginning of the year and also if you are seeing any initial impact from FX as launch of companies. Thanks, So much.

Sure. So both marketing happened either thanks, Tony for your question.

I think as normal course of business, we'll always discuss the data, the totality of the data with the agency prior to a filing and have that conversation with them.

As we've said, the primary endpoint was statistically significant, and so we will have that conversation with them looking at all the data and come to a conclusion based on the feedback we get.

Right.

And we continue to look at earlier lines of therapy and plan those trials to move up in lines of therapy, given the results we saw in Tropix-2 as well in hormone receptor positive.

So thanks a lot, Michael, for that.

So let me start with the market. So if you look at the screening and diagnosis levels. They are still somewhat below pre pandemic, but theyre definitely catching up.

I think what we saw in the first half of 'twenty, one with a really depressed market and started picking back up in Q3 and Q4 of last year.

What we saw in Q1 of this year, despite the underground surge.

That obviously impacts.

What we saw quarter over quarter pretty much flat in the U S and overall Europe as well year on year change, though we have the three 6% growth.

And I think that's a really that's a signal that we need to watch for and continue to focus on and since Gilead had close to 75% market share of the total HIV market I think it's really it's part of our responsibility to ensure that we get screening and diagnosis stop and make sure we emphasize to pay down that so more to come on that but there's a lot of activities. The team is taking on to ensure that.

We get people back in and screen. So that we don't have full such cases veins, which unfortunately, we've seen in the recent in the recent past and you've seen that anecdotally.

On the prevention market is a little bit different prevention market bounces back a lot faster posted panned out of that and we've seen that timing kind of gone. After every single search.

So what we've seen quarter over quarter was about a 3% growth in the U S for prevention, so slightly modest growth, which declined a little bit, but that's because of the omicron secured in January year over year the growth of 33%.

And so I think that that's really telling in a sense of how it bounces back much faster post these surges and thats been kind of consistent year on year as we've seen the different.

The different I guess variance.

On your question around carbon user.

Specific to <unk> treatment, Sharon cabinet that is 6%. So no we haven't seen an impact what we see as new entrants coming into the market, you'll always see a little bit of switching going on which is normal.

I do think that there is an ask from a patient standpoint. This is the first long acting so thats exciting, but we're also seeing is a higher than usual drop off rate with cabinet as well.

And a lot of that share is going to take time back. So I do think it's interesting to watch.

And I think the more agents on the market for the better.

Definitely one that at this point in time very limited impact to the HIV market share for Gilead.

Can we have the next question?

Thanks for your question.

Certainly.

Thank you Craig next.

Our next question comes in the line of Matthew Harrison from Morgan Stanley.

Our next question comes from Geoff Meacham from Bank of America. Your question. Please.

Your question, please.

Hey, guys afternoon, and thanks for the question Adam.

Hi, this is Charlie Young from Matthew.

Had an HIV question for him or data or maybe even Dan.

So I guess my question is, you know, is VicLurie currently being used in China and actually benefit from the COVID outbreak there?

You've got an increasingly broad pipeline around the catheter.

No getting long acting right is strategically very important to gilead. So the question what's been the main bottleneck. So far is it a matter of matching up the PK PD for Brilinta and would you wait to go into a larger scale trial. If there was a candidate that may make an optimal doublet captured there. Thank you.

And maybe if that's the case, can you talk about what the economics look like over there?

Thank you.

Thanks for the question.

Yes, Thanks, Jeff I appreciate it I'm going to turn it over to write down the second here, but just remind for those of you that didn't have the chance to look at the <unk> deep dive, Dave we really did spend a lot of time on the entirety of the portfolio and the many shots on goal we have along with Atlantic cap of Atlantic cover is a truly unique molecule.

We'll go right to Joanna.

Hi, Charlie.

Thanks for your question.

So VicLurie has been used now with over 11 million patients worldwide, which I think is really impressive.

And it's still one out of two hospitalized patients in the U.S. What we are seeing, though, is trends of less severe disease and therefore less hospitalizations but also less treatments.

Specific to your question to China, we don't have approval in China at this point in time, and we're continuing those discussions with health authorities in light of the fact that what's going on in China with the pandemic, obviously.

And presents opportunities.

Challenge is to find exactly the right partner, but we certainly have many that will be progressing to the clinic, but maybe you want to give a little more meat to the.

Sure Yes.

I do think the WHO guidelines being updated just most recently is also going to help those discussions as well.

I mean, maybe I'll start by saying on the prep side.

So more to come on that, but not currently in play at this point in time in China.

Thanks.

We obviously don't need to wait for a partner molecule and.

Really at this point, it's about resolving the issues with that.

Yes.

Clinical hold.

Once that gets resolved, we'll be back in business with the trials and.

We'll move as fast as possible to get the prep.

Studies completed and get our filing done in treatment.

Right and again I think youre right we built.

The portfolio.

To provide us numerous options to then combine with <unk> four treatment NOI acting.

Mode, and that's a mix of oral approaches where we could have an oral long acting molecule or.

A parenteral long acting agent and for parental were.

Trying to go for.

Longer than two months and for oral we are looking at hopefully getting to weekly or thereabout. So we have a number of candidates that are that are progressing.

Show US essentially you said it right, which is do they have the right properties from PK PD standpoint.

For an oral agent and do they have the right properties parenterally, including things like injection site reactions and Tolerability.

So it's less about the ability to inhibit HIV replication, it's more about the molecule and the formulation characteristics that allow us to get to long acting therapy.

I will just say again that <unk> is a very unique and special molecule that enables us to do that.

Finding another molecule that has those sorts of characteristics is the challenge that we are undertaking.

Thanks.

We have the next question, please.

The next question please.

Our next question comes from the line of Brian Abrahams from RBC Capital Markets.

Certainly our next question comes in line of do Kim from Piper Sandler Your question. Please.

Your question, please.

Hey, there.

Hi, Thanks for taking my question I wanted to ask about yes Carter.

And the launch in second line <unk>.

Thanks so much for taking my question.

I was hoping you could provide some first impressions of the launch and whether your sense of the demand out there is matching with your expectations.

Sticking with the COVID theme, anything new that you're seeing that increases your level, of confidence in 5245's potential for success, and are there any ways to potentially expedite a future development of that asset?

Thanks, Brian.

Yeah. Thanks, Dow are delighted to have kristie here with us So we'll hear it from the source certainly interesting. Thanks.

Let's hand over to you, Merdad.

Yeah, nothing new to report, Brian.

It's a great question.

We're very encouraged.

First before the approval the NCC guidelines that changed.

Now put yes, Scott for <unk> second line as a category, one which as you may know physicians and providers use to.

Identify standard of care, so that happened a month before approval, which is unusual in these times.

And then with the approval.

We continue to move along really well in our Phase 1 study that's moving forward expeditiously, and we are working with the agency to design the Phase 2, 3 program, and really moving as fast as possible.

Right. After the approval of our manufacturing site was approved in Maryland, So we really feel like we're in.

We've got a great partnership with the agency and others, and are really ready to pounce.

Hitting on all cylinders in terms of really bringing this important therapy to patients and so the second line launch was approved on a Friday at about three PM and on Saturday orders starting to come in so we're already manufacturing commercial product in our site in the Maryland facility. So the definitely.

So right now, so far, so good.

Thanks, Brian.

Early days, obviously, but.

The demand was.

Building up I think when the data came out at Ash in December and we're starting to see the orders come in as soon as we got approval.

Can we have the next question, please?

Thanks, Kristen for the color Greg can we have the next question. Please.

Our next question comes from the line of Simon Baker from Redburn.

Our next question comes from the line of Cory <unk> from Jpmorgan. Your question. Please.

Your question, please.

Yeah.

As Gavin on for Cory Thanks for taking our questions.

Just on <unk> label expansion opportunities.

Thank you for taking my question.

In lung cancer in particular with the evoke to study it looks like Theres multiple cohorts in the study and we're just curious if one is there evidence of synergy with PD, one inhibitors and you plan on sharing any of that this year and then two are you going to utilize a trop two biomarker in any of these.

Thank you.

On HIV, Johnny, you alluded to the market dynamics.

Hey, Thanks for the question, Doug why don't you cover the yes, there'll be alone sure yet on the biomarker side, we continue to evaluate the role of trop two expression and responses.

I just wondered if you could give us a little bit more color and update us on how diagnosis, rates are now compared to the beginning of the year, and also if you are seeing any initial impact from Glaxo's launch of Cabinuva.

Thanks so much.

Sure.

And as we discussed actually for the breast cancer study and our and our experience so far.

Not seeing a big impact of trop two expression on responsiveness. So.

But we will keep looking because lung cancer may behave differently than what we're seeing and we do expect.

Expression patterns to be different so maybe there'll be a different cutoff and a different tumor types. So that remains to be seen.

In terms of synergy.

We are I think thats, the nature of where we're going with with the studies and that.

In order to to see additive benefit we need to conduct the larger clinical trials, we do think that coming at it at the tumors with the two different approaches.

Will.

<unk>.

I'm always careful about using the term synergy I think that implies a different.

A different mechanistic approach so I do think we expect.

Activity.

Of the two components.

And yes, we do feel that we will have.

Additivity that <unk> should bring additional benefit to patients.

Over and above what the EMEA.

EMEA immuno oncology agents PD, one PDL, one inhibitor is bringing to the treatment of those patients.

Great. Thanks, a lot or that so let's have the next question. Please.

So both market and Cabinuva.

Thanks, Simon, for your question.

So let me start with the market.

So if you look at the screening and diagnosis levels, they're still somewhat below pre-pandemic, but they're definitely catching up. I think what we saw in the first half of 21 was a really depressed market and started, picking back up in Q3 and Q4 of last year.

Year-on-year change, though, we have 3.6% growth.

Our next question comes from the line of Robyn <unk> from Securities. Your question. Please.

What we saw in Q1 of this year, despite the Omicron surge, that obviously impacts what, we saw quarter over quarter pretty much flat in the U.S. and overall Europe as well.

And I think that's the signal that we need to watch for and continue to focus on.

And since Gilead has close to 75% market share of the total HIV market, I think it's really, part of our responsibility to ensure that we get screening and diagnosis up and make sure we end this epidemic.

So more to come on that, but there's a lot of activities the team is taking on to ensure, that we get people back in and screened so that we don't have full-fledged cases of AIDS, which unfortunately we've seen in the recent past, and you've seen that anecdotally.

On the prevention market, it's a little bit different.

And so I think that's really telling in the sense of how it bounces back much faster post, these surges. And that's been kind of consistent year on year as we've seen the different, I guess, variants.

The prevention market bounces back a lot faster post this pandemic, and we've seen that time, and time again after every single surge.

On your question around CABINUVA, specific to CABINUVA, treatment share in CABINUVA is, 0.6%.

So what we've seen quarter over quarter was about a 3% growth in the U.S. for prevention, so slightly modest growth, which declined a little bit, but that's because of the Omicron surge in January.

Hi, guys. Thanks for taking my question.

Year over year, the growth was 33%.

And congrats on the heart of data by the way. So I just wanted to maybe play Devil's advocate a little bit on on your comments around M&A I think some investors believe that you have all these drink program, but we're not going to see them read out and I think you did a good job highlighting that in the oncology day, so for near term growth.

So no, we haven't seen an impact.

What we see is new entrants coming into the market.

Are you thinking about would you be open to acquiring something that would provide some near term growth to gap you before a lot of your <unk> trials and your.

Novelis Ralph like start reading out how are you thinking about that as a company.

You always see a little bit of switching going on, which is normal.

Thanks, Rob and I'll start and then maybe Andy can add but I would.

I do think that there's an ask from a patient standpoint.

This is the first long acting, so it is exciting.

Create you're bringing that up I think it's been a really purposeful strategic approach we have taken over the last three years to build our oncology portfolio beyond cell therapy, which is obviously now has a history with us for almost five years and I'll just remind the folks on the phone that in addition to whatever is acquired at the time of the acquisition.

Terms of trials and potential and capability of that size organization now.

Naturally when a large organization requires particularly these pan tumor potential molecules you begin really the process of extending the potential for that medicine alone in late lines earlier lines and in combinations and thoughtful combination. So I think actually Kate is a terrific example of that going back now five years.

Post the acquisition.

I appreciate that you started out with congratulations on used cars, but to see the potential for.

Technology like cell therapy, and the leadership type took by bringing this up into earlier lines of therapy and the number of patients of course, then that you can impact on what.

With a potentially curative therapy is exactly kind of the playbook.

We will be.

Pursuing right now with.

<unk> with <unk>.

And obviously with the combination of.

Of ARCUS assets, which.

Albeit a bit a bit earlier in the process. So I think we always have to remember the timeframe in which one evaluates the success of M&A. The other thing I would just say is that of course.

Constantly are looking to complement that I mean, the bar is much higher now for gilead than it was several years ago because of the number of possibilities and opportunities we have.

And then the bandwidth at any one company can do but you see on the bandwidth side. We're also doing a lot of collaborations with other companies, including folks like Merck who are operationalized in fact, a study of <unk> with <unk>. So theres different ways I think to work on the bandwidth, but we will constantly be looking at different types of opportunities out there the complement.

Our virology, our oncology and our early inflammation program to add those to the growth story that we're creating here at gilead.

I know Andy spends a lot of time thinking about this would love any additional thoughts on this as well. Thanks, Dan. Thank you Robyn for the question look I would just go back to start with.

What we're also seeing is a higher than usual drop-off rate with CABINUVA as well.

And a lot of that share is going to Big Tarby back.

So I do think it's interesting to watch.

Fundamentally.

We have a lot of confidence in where we are in a growth profile today and I think it's.

And I think the more agents on the market, the better, but definitely one that at this, point in time, very limited impact to the HIV market share for Gilead.

It's fair to say that the market may be underappreciated the growth even robin if you look at our first quarter results, especially when you adjust for the impact of the low <unk>.

Thanks for your questions.

And FX Theres really reasonably strong growth in our business and this is just the beginning from our perspective. So there are always things that we can do to work on a growth profile, but when you look at the strength of the HIV business, what we're seeing in our oncology business hopefully that gives you a sense of why we as a management team have so much confidence about not only where we are today, but where we're going.

Thank you.

Our next question comes from the line of Geoff Meacham from Bank of America.

We recognize to your question that the growth profile should get meaningfully better in the next couple of years as the portfolio matures and the way that Dan was describing so while we will look at things, including commercial assets. As you know those are far and few between.

Many of them are expensive and that's not really where our focus is we really genuinely believe we have everything we need today to be a leading growth company in the sector and it's just going to take a little more time, but we're definitely seeing all the right signs that we are looking for as a management team. So you should not expect that we're going to go out chasing commercial assets or.

Large deals the guidance is very clear, it's ordinary course partnerships, maybe smaller commercial acquisitions again, we'll be opportunistic, but that's not where our focus is today.

Thanks, Ed and then the last thing I'd say in addition to the molecules into medicines.

The expertise that we're bringing into gilead is second to none and I hope hopefully you saw some of that and it's just really the some representation of that at both overall gene oncology deep dives days, because that's really critical in any company that we as a leadership team worked in there is really getting the right teams together at the right.

Time to make sure we're making the right choices and decisions on the portfolios as we move forward. So that's.

A really big focus for us and we're really pleased with the progress we're making there.

Your question, please.

So with that let's have the next question. Please Jonathan.

Certainly it comes from the line of Omar <unk> from Evercore. Your question. Please.

Hey, guys.

Afternoon, and thanks for the question.

Hi, guys. Thanks for taking my question I just wanted to expand on a prior question on all of them that severe and it.

Dan maybe that it feels like the pace at which this program is moving forward and sort of the timeline for the pivotal trial start in the amount of time it will take.

Materially slower than <unk> and model the pay removed. So I guess my question is.

What are the expedited pathway as you guys are thinking about when talking to FDA, because presumably <unk> path is not unreasonable given the public health emergency and or maybe even an active compared to trial versus perhaps a little bit established non inferiority relatively fast given the pace at which infections are happening right. Now. So there is a pathway all wrap up there.

Summer is that two accelerated in your view.

I had an HIV question for Merdad or maybe even Dan.

Yes, Omar I'll start and then I'll hand, it over to Mark. So first of all I mean, just to reinforce this message for everybody on the phone I mean, we are absolutely moving with with.

So you've got an increasingly broad pipeline around the catheter barrier, and I know getting long-acting right is strategically very important to Gilead.

So the question, you know, what's been the main bottleneck so far?

With tremendous focus and speed and of course, we have great lessons within organizations are under severe was arguably the fastest.

Is it a matter of matching up the PK, PD for LENA, and would you wait to go into a larger-scale trial if there was a candidate that may make an optimal doublet with LENA catheter barrier?

Thank you.

<unk> of an anti viral.

Ever occurred from.

Yeah, thanks, Geoff.

Standing still essentially to an approval in the United States. So so and as you know we've got a lot of experience from that in terms of working both gross profit improved groups around accelerating trials.

Appreciate it.

With the FDA around pursuing unique regulatory path and those learnings and those lessons I just wanted to say are certainly being put to use now for four.

Having said that we are of course at a very different stage of the pandemic at this stage and therefore, both from a regulatory perspective, and also our ability to recruit clinical trials, particularly with somewhat waning pandemic and the.

The developed world.

It has implications on the path, we will take in with that maybe I'll turn it over to Matt.

I'm going to turn it over to Merdad in a second here, but, you know, just remind for those of you that didn't have the chance to look at the Virology Deep Dive Day, we did spend a lot of time on the entirety of the portfolio and the many shots on goal we have, along with Lenacapavir.

Lenacapavir is a truly unique molecule and, you know, presents opportunities and challenges to find exactly the right partner, but we certainly have many that will be progressing to the clinic.

Any other details you want to add.

But, Merdad, maybe you want to give a little more meat to the conversation.

Yes.

Not much to add other than I think that our phase one study is moving very quickly.

Sure, yeah.

I mean, maybe I'll start by saying, you know, on the PrEP side, we obviously don't need to wait for a partner molecule.

It's moving very nicely without any issues.

I know you've asked about the 500 <unk> approach in the past as you can imagine those are all the avenues. You mentioned are all avenues that we have thought about and explored.

And, really, at this point, it's about resolving the issues with the clinical hold.

And so we will move with the fastest pathway available to us.

Once that gets resolved, we'll be back in business with the trials, and we'll move as fast as possible to get the PrEP studies completed and get our filing done.

That's the nature of the discussions we're having with the agency.

When it comes to treatment, you're absolutely right.

Thanks for the encouragement Newmar, let's take the next question.

And, again, I think you're right.

We've built the portfolio to provide us numerous options to then combine, with Lenacapavir for treatment in a long-acting mode.

And that's a mix of oral approaches, where we could have an oral long-acting molecule or a parenteral long-acting agent.

Our next question comes from the line of Evan <unk> from BMO capital markets. Your question. Please.

Hi, guys. Thank you so much for taking the question there might be a combo one for Andy and more data. So could you walk me through some of the some of the math behind the $2 $7 billion write down maybe how some of the data you've seen informed the magnitude of the impairment I'm just trying to square your.

And for parenteral, we're trying to go for, you know, longer than two months.

Assumptions may have changed from August of 2020 to now based on data updates that we've had.

And for oral, we are looking at hopefully getting to weekly or thereabouts.

So we have a number of candidates that are progressing to show us, essentially, you said it right, which is, you know, do they have the right properties from a PKPD standpoint for an oral agent, and do they have the right properties parenterally, including things like injection site reactions and tolerability.

Hey, Ben it's Andy Thanks for the thanks for the question. That's a great question look it's relatively simple.

So it's less about the ability to inhibit HIV replication.

It's more about the molecule and the formulation characteristics, that allow us to get to long-acting therapy.

And I'll just say again that Lenacapavir is a very unique, and special molecule that enables us to do that.

Finding another molecule that has those sorts of characteristics, is the challenge that we're undertaking.

Thanks.

Remember this is an accounting construct that we're required to reassess the value even before we have the discussions with the regulatory authorities. So I just want to backup and reiterate what we said when the data came out. The study was positive. This was strong data there was a range of outcomes that we expected when we did the deal this was within the range of outcomes.

But it wasn't at the point that we had modeled specifically clear required to when we when we.

Put together.

The intangible indefinite lived.

Asset schedule after the acquisition so.

It's a very simple model the key by the way is our evaluation and we have discussions in the coming months with the FDA.

Change again of course, and we'll have to continue to look at the valuation of the assets that are still sitting on the balance sheet, which is the valuation attributed to hormone receptor positive <unk> negative breast cancer and non small cell lung cancer over the coming years as you would expect consistent with any business combination transaction.

But it's relatively simple it's your standard probability weighted discounted cash flow analysis, where you look at the probability of approval. We are assuming I think this is the key for you. We took a conservative approach and we are looking at this and assume that that there is not a path forward.

Based on the PFS data and that we need to wait for overall survival, even though we're not certain if thats. The case and we will know more in the coming months. So for purposes for the accounting treatment, we had to make a call and thats. The call that we made and that leads to the $2 seven the other thing that I would add is.

We had <unk> <unk> related to IP R&D of $14 7 billion at the end of 2021.

A little over half of that or $8 $8 billion of that related to hormone receptor positive her two negative breast cancer. The remainder was non small cell lung cancer and again, we're already in the other indications that are approved we're already amortizing that those are now finite lived assets.

So now we have $6 1 billion relating to the cash flow is expected from third line plus as well as the earlier line hormone receptor positive breast cancer indication. So hopefully that gives you a little bit of color and again I would reiterate what we said on the call which is when we did this originally when we did the acquisition we highlighted explicitly that we were going to explore.

Other tumor types and combinations that were not part of our deal model. There is no need to build them into the deal model from the bottoms up but when you step back more importantly outside of the accounting construct we continue to believe that there are many many paths forward to create a lot of value for patients and for our shareholders with it so I'm happy to take it offline. If it's helpful to give to give you more color.

Yes, Thanks, a lot Andy I mean, I think the bottom line is that again, we took a somewhat conservative approach and the absence of having regulatory discussions so far we thought it was the prudent thing to do.

And to Andy's point I mean, this is an evaluation of value at the time of the transaction, which of course several years later in terms of the indications. The combination has the potential for <unk>. It's never as you know reflective in the initial.

And the initial accounting treatment of it so hopefully theres plenty of information in there in our press release.

More than happy to take it up with you as well so thanks, Kevin for that let's have the next question. Please.

Creep, the next question, please.

Our next question comes from the line of Tyler Van Buren from Cowen Your question. Please.

Apparently our next question.., comes in line of Doe Kent from Piper Sandler.

Either good afternoon, and thanks for taking the question can you. Please give us your latest thoughts regarding a successful outcome for the <unk> seven trial, when we get the phase III PFS data later in the year and related to the readout for the upcoming Roche results. What are you most interested in seeing other than the primary endpoint.

Thanks, a lot Tyler so tickets over to Amrita.

Excuse me.

Hi, Tyler.

Yes.

I think our thinking has been that Domino Mab is a <unk>.

<unk> will add to.

But to your point it is.

Not only that that we would be looking for.

And what we would be hoping for.

In addition to the overall response rate is going to be the depth of the responses and the durability of responses right. So.

Those are the factors that we'll be looking for we will also be looking to see what the Roche data it looks like when they win when it comes out at <unk> to see to see what they've seen is sort of a benchmark if you will.

But those are the various.

Factors, we'll be looking for obviously tolerability is going to be in there as well and in the.

Overall profile.

Yeah.

Thanks, Thanks, Tyler let's have the next question please.

Your question, please.

Hi.

Next question comes from the line of Mohit Bansal from Wells Fargo. Your question. Please.

Thanks for taking my question.

Great. Thanks for taking my question and maybe a question for Andy regarding Opex. So Andy you mentioned that in <unk>, there was a $100 million impact.

I wanted to ask about, yes, CARTA and the launch in, second line LBCL.

And then since you provided the guidance.

U S dollar has been strong.

7% U S dollar to European Euro declined so just trying.

Trying to understand is how much of the FX impact you had at solving in the guidance that you are maintaining right now.

From my math, it could be $10 million flat.

But.

That means that this business is really stronger than you anticipated and if you could help us understand business strength is coming from thank you.

I was hoping you could provide some first impressions of the launch and whether your sense of the demand out there is matching with your expectations.

Sure. That's a great question Mohit I'm happy to happy to take it.

Yeah, thanks, Doe.

Look it's relative relatively simple and that youre, absolutely right and even in April we've seen continued deterioration of.

Exchange rates are strengthening of the dollar which impacts the revenues coming from our European business.

So to be clear the $100 million impact was a year over year comparison Q1 to Q1.

Joanne and I are watching the budget impact of the exchange rates very carefully and part of the confidence in maintaining the guidance is that yes, there are FX headwinds.

There are also for instance related to your question. There is also this change in the accounting treatment of in process, R&D, which will lead to additional expenses from upfront payments that were previously par.

Part of how we reported non-GAAP earnings on the flip side. There are parts of our business that are outperforming again think of the strength of <unk> that we've seen so far so joanna and I and the rest of the management team will look at the puts and takes of this in the middle of the year and will provide a more thoughtful update but I think the key for you is recognizing a couple of things that have changed that could impact negatively our EPS.

Yes.

GAAP and non-GAAP EPS. There are also things that we will have additional strength, we expect over the course of the year that will offset that to some extent and so we will give you additional color later in the year, but we're very comfortable maintaining our guidance, where we are today.

Hopefully that helps.

We're delighted to have Christy here with us, so we'll hear it from, the source here.

Thank you very much.

Let's have the next question please.

Yeah, thanks.

Our next question comes from the line of Colin Bristow from UBS. Your question. Please.

Thank you, Christy.

Hey, good afternoon, and thanks for squeezing me in.

Thanks, Doe.

Just a quick one just following on on that.

You know, we're very encouraged.

The.

First, before the approval, the NCCN guidelines, that changed and now put yes, CARTA for LBCL second line as a Category 1, which, as you may know, physicians and providers use to identify standard of care.

Wanted to really understand where your.

What is it you mentioned.

And how you're just thinking about this strategically is.

So that happened a month before approval, which is unusual in these times.

And then with the approval, after the approval, our manufacturing site was approved in Maryland. So we really feel like we're hitting on all cylinders in terms of really bringing this important therapy to patients.

Is it the ticket in PD one doublet.

And so the second line launch was approved on a Friday at about 3 p.m. And on Saturday, orders started to come in.

So we're already manufacturing commercial product in our site in the Maryland facility.

So definitely, it's really early days, obviously, but the demand was building up, I think, when the data came out at ASH in December, and we're excited to see the orders come in as soon as we got approval.

You really see the value, but there is some concern about market timing or.

Are you.

Talking about the triplet data can you just help me through that.

Thanks, Christy, for that color.

Greg, can we have the next question, please?

Thanks Colin.

Our next question comes to the line of Corey Casimo from J.P. Morgan.

Your question, please.

Sure look I think I think we obviously youre going to be looking at across all of the data.

Hi.

Across all of the assets.

This is Gavin on for Corey.

Maybe the way I would say it is that we're seeing.

The PD one.

Combination as likely to be.

Thanks for taking our questions.

Sort of the benchmark or the basis for treatment at least in lung cancer and potentially more broadly and as such.

Just on Trodeldi label, expansion opportunities and lung cancer in particular with the EVOKE-02 study, it looks like there's multiple cohorts in the study, and we're just curious if, one, is there evidence of synergy with PD-1 inhibitors, and do you plan on sharing any of that this year?

And then, two, are you going to utilize a TRP-2 biomarker in any of these cohorts?

Our hope is to have.

<unk>.

A great combination there.

To make sure that we then have something to which we can add other potential agents that could bring us to even better responsiveness, so whether that whether thats adenosine or treat lv or.

Something else in our pipeline I think those are all options for us to consider but we are seeing.

I would say the the the floor is being raised is our belief that <unk> PD, one combination becomes sort of the.

The baseline that we need to aim for.

Thanks.

This conceptual or so.

Thank you.

For everybody's time, we will take one last question Jonathan can we have the last question. Please.

Hey, thanks for the question.

Merdad, why don't you cover this?

Yeah.

Certainly our final question for today comes from the line of Salvino Victor from Goldman Sachs. Your question. Please.

Hey, Thanks. This is Matt on for solving thank for squeezing me in.

Sure, yeah.

On the biomarker side, we continue, to evaluate the role of TRP-2 expression in responses.

Just to go back to <unk> real quick.

And as we discussed, actually, for the breast cancer study in our experience so far, we are not seeing a big impact of TRP-2 expression on responsiveness.

But we'll keep looking because lung cancer may behave, differently than what we're seeing, and we do expect expression patterns to be different.

So maybe there'll be a different cutoff in a different tumor type.

You would have previously noted that you'd want to see an overall greater than 50%.

So that remains to, be seen.

In terms of synergy, I think that's the nature of where we're going with the studies in that, in order to see additive benefit, we need to conduct the larger clinical trials.

We do think that coming at it at the tumors with the two different approaches will add.

But what would you like to see on PFS and most importantly OS it.

I'm always careful about using the term synergy.

I think that implies a different mechanistic approach.

It seems like 30, plus months might be sufficient on OS given keytruda mono data and maybe a year plus for PFS just would be great to hear your thoughts on this.

So I do think we expect additivity, of the two components. And yeah, we do feel that we will have additivity, that TRDELV should bring additional benefit to patients over and above what the immuno-oncology agents, PD-1, PD-L1 inhibitors bring to the tumor.

Great.

Thanks a lot, Merdad.

So let's have the next question, please.

Our next question comes from the line of Robin Karnaskas from Truist Securities.

Your question, please.

Hi, guys.

So thanks for taking my question, and congrats on the ISCARTA data, by the way.

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So I just want to maybe play devil's advocate a little bit on your comments around M&A.

Well, what I would say is those those milestones.

I think some investors believe that you have all these great programs, but we're not going, to see them read out.

I would agree with the milestones that you've got there and it is important to remember that that those milestones will take time to play out.

And I think you did a good job highlighting that in the oncology report.

And I think that's a good thing.

We are we are going to make or.

Make our bets.

Without being able to look at.

POS for 30 months right, we're going to have.

Less mature dataset from which to make that decision. So youre absolutely right that we will be looking at all of those things.

So I just want to maybe play devil's advocate a little bit on your comments around M&A.

I think some investors believe that you have all these great programs, but we're not going, to see them read out.

The driver will be to see.

Again, tolerability and a benefit.

As far as the overall response rate.

As concern and look for benefits in the depth and duration of response.

That we can garner from the data say that the maturity that we will have when we look at it and there I would just say.

And I think you did a good job highlighting that in the oncology day.

So for near-term growth, are you thinking about, would you be open to acquiring something, that would provide some near-term growth to gap you before a lot of your trivality trials and your MAGRA trials start reading out?

We will be.

Since watch our actions because youll be seeing of the <unk>.

<unk> will be getting underway and that should give you a sense of our confidence in those in those assets.

How are you thinking about that as a company?

With that I just wanted to thank everybody really appreciate your attention today for a couple of deep dives. We've had we look forward to chatting with you at <unk> and beyond to keep you updated on our progress for the year and with that I'll turn it over to Jacky for some final comments. Thank you all for joining us today and we do appreciate your continued interest in Gilead and look forward to updating you throughout the year.

Thanks, Robyn.

I'll start, and then maybe Andy can add.

But I appreciate you bringing that up.

I think it's been a really purposeful, strategic approach that we've taken over the last three, years to build our oncology portfolio beyond cell therapy, which obviously now has a history with us for almost five years.

And I just remind the folks on the phone that in addition to whatever is acquired at the, time of the acquisition in terms of trials and potential and capability of that size organization, naturally when a large organization acquires, particularly these pan-tumor potential molecules, you begin really the process of extending the potential for that medicine alone in late lines, earlier lines, and in combinations, in thoughtful combinations.

I think actually KITE is a terrific example of that, going back now five years post the, acquisition.

And I appreciate, Robyn, that you started out with congratulations on your SCARTA.

But to see the potential for a technology like cell therapy, you know, and the leadership, that KITE took by bringing this up in the earlier lines of therapy and the number of patients, of course, then that you can impact on with a potentially curative therapy is exactly kind of the playbook that we will be, we are pursuing right now with Tordelvi, with Megrolomab, and obviously with the combination of Arcus acids, which albeit are a bit earlier in the process.

So I think we always have to remember the timeframe and which one evaluates the success, of M&A.

The other thing I would just say is that, of course, we constantly are looking to complement, that.

I'd love Andy's additional thoughts on this as well.

The bar is much higher now for Gilead than it was several years ago because the number, of possibilities and opportunities we have and the bandwidth that any one company can do.

Thanks, Dan.

But you see on the bandwidth side, we're also doing a lot of collaborations with other companies, including folks like Merck who are operationalizing, in fact, a study of ours with Tordelvi.

And thank you, Robin, for the question.

So there's different ways, I think, to work on the bandwidth.

Look, I would just go back to start with, you know, fundamentally, we have a lot of, confidence in where we are in our growth profile today. And I think it's fair to say that the market maybe underappreciates the growth.

But we will constantly be looking at different types of opportunities out there that complement, our virology, our oncology, and our early inflammation program to add those to the growth story that we are creating here at Gilead.

And again, Robin, if you look at our first quarter results, especially when you adjust, for the impact of the LOE and FX, there's really reasonably strong growth in our business.

I'll just, I know Andy spends a lot of time thinking about this.

And this is just the beginning from our perspective.

So there are always things that we can do to work on our growth profile.

But when you look at the strength of the HIV business, what we're seeing in our oncology, business, hopefully that gives you a sense of why we as a management team have so much confidence about not only where we are today, but where we're going.

Dan said and have a great rest of your day.

And we recognize, to your question, that the growth profile should get meaningfully better, in the next couple of years as the portfolio matures in the way that Dan was describing.

So while we will look at things, including commercial assets, as you know, those are, far and few between.

Many of them are expensive, and that's not really where our focus is.

We really genuinely believe we have everything that we need today to be a leading growth, company in the sector, and it's just going to take a little more time.

Thank you.

Thank you ladies and gentlemen for your participation today's conference. This does conclude the program you may now disconnect good day.

But we're definitely seeing all of the right signs that we are looking for as a management, team.

Thanks, Dan.

You should not expect that we're going to go out chasing commercial assets or large, deals.

And the last thing I'd say, in addition to the molecules and the medicines, the expertise, that we're bringing in to Gilead is second to none, and hopefully you saw some of that, and it's just really some representation of that at both the virology and oncology deep dive stage, because that's really critical in any company that we've all, as a leadership team, worked in, is really getting the right teams together at the right time to make sure we're making the right choices and decisions on the portfolios as we move forward.

The guidance is very clear.

So that's a really big focus for us, and we're really pleased with the progress we're making.

Look, it's relatively simple.

It's ordinary course partnerships, maybe smaller commercial acquisitions.

So with that, let's have the next question, please, Jonathan.

And just to back up, remember, this is an accounting construct that we are required, to reassess the value even before we have the discussions with the regulatory authorities.

Again, we'll be opportunistic, but that's not where our focus is today.

Certainly.

So, I just want to back up and reiterate what we said when the data came out.

It comes from the line of Umer Raffat from Evercore.

The study was positive. This is strong data.

Your question, please.

There was a range of outcomes that we expected when we did the deal. This was within the range of outcomes. But it wasn't at the point that we had modeled specifically because we were required to when, we put together the intangible indefinite-lived asset schedule after the acquisition.

Hi, guys.

So, you know, it's a very simple model.

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Thanks for taking my question.

The key, by the way, is our valuation, and we have discussions in the coming months with, the FDA, could change again, of course, and we'll have to continue to look at the valuation of the assets that are still sitting on the balance sheet, which is the valuation attributed to hormone receptor positive, HER2 negative, breast cancer, and non-small cell lung cancer over the coming years, as you'd expect, consistent with any business combination transaction.

I just wanted to expand on a prior question on oil remdesivir.

But it's relatively simple.

And Dan, Merdad, it feels like the pace at which this program is moving forward and sort, of the timeline to the pivotal trial start and the amount of time it will take, it feels materially slower than how PaxLubin and ModeloPiravir moved.

It's your standard probability-weighted discounted cash flow analysis where you look, at the probability of approval.

So I guess my question is, what are the expedited pathways you guys are thinking about when, talking to FDA?

Because presumably, a 505B2 path is not unreasonable given the public health emergency and or maybe, even an active comparator trial versus PaxLubin established non-inferiority relatively fast given the pace at which infections are happening right now.

But there's a path where this could all wrap up this summer.

Is that too accelerated in your view?

Yeah, Umer, I'll start and then I'll hand over to Merdad.

So first of all, I mean, just to reinforce this message for everybody on the phone, I, mean, we are absolutely moving with tremendous focus and speed.

And of course, we have great lessons within our organization.

Remdesivir was arguably the fastest development of an antiviral that's ever occurred from, standing still essentially to an approval in the United States.

So and as you know, we've got a lot of experience from that in terms of working both with cooperative, groups around accelerating trials with the FDA around pursuing unique regulatory paths.

And those learnings and those lessons, I just want to say, are certainly being put to use, now for 5245.

Having said that, we're, of course, at a very different stage of the pandemic at this stage.

And therefore, both from a regulatory perspective and also our ability to recruit clinical trials, particularly with a somewhat waning pandemic in the developed world, you know, has implications on the paths we'll take.

And with that, maybe I'll turn it over to Matt Mirdad on any other details he wants to add.

Yeah, I mean, not much to add other than I think that our phase one study is moving very, quickly.

It's moving very nicely without any issues.

I know, Umar, you've asked about the 505B2 approach in the past.

As you can imagine, those are all the avenues you've mentioned are all avenues that we've, thought about and explored.

And so, we will move with the fastest pathway available to us.

And that's the nature of the discussions we're having with the agency.

Thanks for the encouragement, Umar.

Let's take the next question.

Our next question comes from the line of Evan Ziegerman from BMO Capital Markets.

Your question, please.

Hi, guys.

Thank you so much for taking the question.

It might be a combo one for Andy and Mirdad.

So, can you walk me through some of the math behind a $2.7 billion write-down?

Maybe how some of the data you've seen inform the magnitude of the impairment.

I'm just trying to square how your assumptions may have changed from August of 2020 to now, based on data updates that we've had.

Hey, Evan.

It's Andy.

Thanks for the question.

It's a great question.

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We are assuming, Evan, I think this is the key for you.

We took a conservative approach when we were looking at this and assumed that there is, not a path forward based on the PFS data and that we need to wait for overall survival, even though we're not certain that that's the case and we will know more in the coming months.

So for purposes, for the accounting treatment, we had to make a call, and that's the call, that we made, and that leads to the 2.7.

The other things I would add is we had Tredelvi-related IPR&D of $14.7 billion at the end of 2021. A little over half of that, or $8.8 billion of it, related to hormone receptor positive, HER2 negative, breast cancer.

The remainder was non-small cell lung cancer, and again, we're already, in the other indications, that are approved, we're already amortizing that.

Those are now finite lived assets.

[music].

So now we have $6.1 billion relating to the cash flows expected from third line plus, as well as the earlier line, the hormone receptor positive breast cancer indication.

So hopefully that gives you a little bit of color, and again, I'd reiterate what we said, on the call, which is when we did this originally, when we did the acquisition, we highlighted explicitly that we were going to explore other tumor types and combinations that were not part of our deal model.

There was no need to build them into the deal model from bottoms up.

So when you step back, more importantly, outside of the accounting construct, we continue, to believe that there are many, many paths forward to create a lot of value for patients and for our shareholders with this.

So I'm happy to take it offline if it's helpful to give you more color.

Yeah.

Thanks a lot, Andy.

I mean, Evan, I think the bottom line is that, again, we took a somewhat conservative approach, in the absence of having regulatory discussions so far, we thought it was a prudent thing to do, and to Andy's point, I mean, this is an evaluation of value at the time of the transaction, which, of course, several years later, in terms of the indications, the combinations, the potential for TRED-LV, it's never, as you know, reflected in the initial accounting treatment of it.

So hopefully, there's plenty of information there in our press release, and I'm more than, happy to take it up with you, well.

[music].