Gilead Sciences, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strong Quarterly Results: Third quarter earnings underscore growing momentum driven by strong portfolio and team execution.
• HIV Outperformance: Commercial outperformance in HIV therapies with Biktarvy up 6% Y/Y, Descovy up 20% Y/Y, and Livdelzi up 35% sequentially.
• Operating Expenses: Disciplined operating expense management led to 22% Y/Y growth in non-GAAP EPS.
• Yeztugo Launch: Yeztugo achieved 75% payer coverage nearly 3 months ahead of target, with $39 million in Q3 sales.
• Trodelvy Progress: Presented positive Phase III data in first-line metastatic triple-negative breast cancer, submitted sBLAs with FDA.
• Cell Therapy: Continues efforts to increase adoption of cell therapies, with Kite progressing next-generation pipeline and anito-cel showing potential.

Segment Performance

• HIV: Sales of $5.3 billion, representing 4% growth year-over-year and 4% quarter-over-quarter. Biktarvy sales were $3.7 billion, up 6% year-over-year and 4% sequentially. Descovy had third quarter sales of $701 million, a record high, increasing 20% year-over-year. Yeztugo had third quarter sales of $39 million, with $54 million including early launch in June. Livdelzi sales were $819 million, up 12% year-over-year and 35% sequentially, exceeding $100 million quarterly for the first time.
• Oncology: Trodelvy sales were $357 million, up 7% year-over-year.
• Cell Therapy: Third quarter sales were $432 million, down 11% year-over-year and sequentially, facing competitive headwinds.

Guidance

• HIV Revenue: Increased full-year HIV revenue growth expectation to approximately 5%.
• Product Sales: Total product sales expected to be in the range of $28.4 billion to $28.7 billion, with a $100 million increase at the low end of the range from previous guidance.
• Non-GAAP EPS: Expected to be in the range of $8.05 to $8.25, raising the low end by $0.10.
• Cell Therapy: Forecasts approximately a 10% decline for full-year 2025 versus 2024.

Risks

• Cell Therapy Headwinds: Continued competitive headwinds for cell therapy in the near future.
• Medicare Part D Impact: $900 million headwind for HIV business in 2025 associated with Medicare Part D redesign.
• Regulatory and Market Risks: Potential challenges in regulatory approvals and market competition for new products.

Question and Answer

Q: Congrats on the quarter. On Yeztugo, I know it's early. I wanted to see if you had any color on patients switching from Descovy versus those who are brand new to PrEP.

A: Johanna Mercier mentioned Yeztugo sourcing is across switches and naive patients, with a balance of business from long-acting injectables, oral branded, and generics.

Q: Quick question. I noticed a $39 million sales number in 3Q. And I'm trying to make sense of it. By my rough math, it sounds like about 3,000 patients initiated in 3Q. Is that consistent with how you see it?

A: Johanna Mercier provided context on Yeztugo sales, mentioning year-to-date sales of $54 million, focus on access and payer coverage, and expectation of full-year sales around $150 million.

Q: Congrats on all the progress. Switching a little bit to HIV treatment. Now that you are guiding for 5% year-over-year growth, combine that with the $900 million of Part D redesign impact you're taking, does seem like HIV is growing at, what, 9% to 10%. I mean can you talk a little bit about that?

A: Johanna Mercier explained HIV growth is driven by market demand, Biktarvy growing 6% Y/Y, Descovy growing 20% Y/Y, and prevention market momentum.

Q: Could you just comment on the inventory impact for Yeztugo in the third quarter and also how the CVS pricing discussions are progressing?

A: Johanna Mercier stated no inventory buy-in in Q3, with discussions with payers ongoing for CVS access, confident in reaching 90% coverage goal by first year of launch.

Q: Another one on Yeztugo. I mean you've said several times that in the 75% covered lives, you've been pleased by the level of restriction. I wonder if you could give us a little more detail to how much of the lives have prior auths or co-pay or any other restrictions like to certain types of practices, for instance?

A: Johanna Mercier mentioned most plans have added Yeztugo to formulary with zero co-pays, few step edits and prior auths, similar to Descovy's access profile.

Q: Maybe just another one on Yeztugo. Johanna, can you maybe talk bigger picture about what the patient journey is like here for getting an appointment with the physician obtaining and getting Yeztugo administered? Maybe how that's comparing to your expectations, how that could evolve?

A: Johanna Mercier discussed the patient journey, noting evolving processes, reduced approval times, and benefits of buy-and-bill, with conversion rates improving monthly.

Q: I hope you'll indulge me on a relatively short-term minded question here on Yeztugo. But we've seen pretty volatile scripts over here the past couple of weeks. And I guess my question is, are the TRx that we're seeing reflective of what you're seeing? Is that impacted by third-party PrEP campaigns or more standard demand growth or early impacts from the J-code?

A: Johanna Mercier noted week-to-week variability in IQVIA reports, directional alignment with overall trends, and expectation of stabilization over a couple of quarters.

Q: Congrats on the quarter. Johanna, just wondering if you can comment at all high level about how we should think about overall PrEP market growth. Obviously, it's been very strong the last couple of quarters, 14% this quarter, 15% last quarter. Is that kind of the level we should think about at a franchise for you guys as we head into 2026?

A: Johanna Mercier expected PrEP market growth to continue at around 14% to 15%.

Q: Congratulations on the good quarterly results. So for anito-cel, could the filing happen any day or in the very near future? What is left that's required for the filing? And we're excited for the data at ASH, so should the expectation be similar efficacy to Carvykti with improved safety? Or do you believe there's still room to improve on efficacy?

A: Cindy Perettie stated no communication on filing dates, looking forward to sharing data cut at ASH, seeing similar efficacy and improved safety.

Q: Sorry, back to Johanna after that very short break. Back on Yeztugo, I just wonder if you could give us some of your feedback on the patient and physician experience and reaction to Yeztugo. Obviously, your competitor has been suggesting a preference for their product over yours, but I'd be intrigued to hear what you're actually experiencing on the ground.

A: Johanna Mercier mentioned 98% satisfaction rate with HCP training, over 7,000 HCPs trained, and smooth patient and physician experience.

Q: I want to, I guess, zoom out a little bit to the White House deals and drug pricing, but particularly in the context of your HIV portfolio and higher Medicaid exposure. Obviously, this year, you've dealt with the Part D redesign and have grown through that. As you're looking at potential flexibility in any sort of deal with this administration on drug pricing, can you give any context to kind of the scale that you're preparing for or your actions or flexibility that you're looking to garner in a deal that might ensure that, that impact is less than what you're experiencing with the Part D redesign this year?

A: Daniel O'Day discussed constructive engagements with administration, partnership with U.S. State Department on PEPFAR, and strong U.S. footprint.

Q: Question on Hepcludex for HDV. You put a lot of effort into getting that resubmitted since the CRL. So I guess, one, what gives you confidence that you'll get approval from FDA this time around? And two, what do you think the market opportunity for the drug is in HDV, just keeping in mind that there are two competitors in Phase III development?

A: Dietmar Berger mentioned additional data from Europe and real-world setting, Johanna Mercier discussed small market opportunity in HDV for Hepcludex