Analyst Conference Summary

biotechnology

conference date: August 8, 2024 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2024 (second quarter, Q2 2024)

Forward-looking statements

Overview: Continues to gain traction.

Basic data (GAAP):

Revenue was $6.95 billion, up 4% sequentially from $6.69 billion and up 5% from $6.60 billion in the year-earlier quarter.

Net income was $1.61 billion, up sequentially from negative $4.17 billion and up 53% from $1.05 billion year-earlier.

Earnings per share (EPS, diluted) were $1.29, down sequentially from negative $3.34, and up 55% from $0.83 in the year-earlier quarter.

Guidance:

Lowered 2024 GAAP EPS to $0.00 to $0.30, but raised non-GAAP EPS to $3.60 to $3.90.

Conference Highlights:

Daniel O'Day, CEO, said "Gilead has had another strong quarter with 6% year-over-year growth in our base business. This was driven by sales of our therapies for HIV, Oncology and Liver Disease, including 8% growth for Biktarvy. One of the key highlights of the quarter was interim data from the Phase 3 Purpose 1 trial showing 100% efficacy for lenacapavir in HIV prevention for cisgender women. We look forward to additional clinical readouts in the coming months, and to potentially launching seladelpar for primary biliary cholangitis in the United States." Believes positioned for both near and long-term growth.

The dividend of $0.77 per share, to be paid on September 27, 2024 to shareholders of record as of September 14, 2024.

Lenacapavir for HIV now is in 7 trials, plus 3 INDs, with a variety of combination therapies. In Q2 2024 got positive results in Phase 3 combo trial subcutaneous twice-yearly infusion for HIV prevention (PrEP) in cisgender women. 100% efficacy. Commercial launch as early as late 2025.

Seladelpar for primary Biliary cholangitis has a PDUFA of August 14, 2024. Expects a positive decision, modest 2024 revenue contribution. Acquired with CymaBay.

Anito-cel tech transfer completed. Ready to launch the Phase 3 iMMagine-3 trial in late 2024 for second to fourth line multiple myeloma patients.

Biktarvy for HIV continues to gain market share. Descovy has over 40% of the PrEP market share.

The oncology pipeline includes 8 Phase 3 programs in breast, lung, and gastrointerstinal cancers. The total number of programs is 29. Trodelvy is in a Phase 3 trial to move it up to first line PD-L1-mTNBC (breast cancer), with data expected in 2024. But in Q2 2024 did not meet the primary endpoint in Phase 3 confirmatory advanced or metastatic urothelial cancer.

Yescarta is in several trials to expand its use.

Gilead now has 61 clinical stage programs. Expects cancer program to generate one-third of revenue by 2030.

Non-GAAP numbers: Net income was $2.52 billion, up sequentially from negative $1.64 billion and up 49% from $1.69 billion year-earlier. Non-GAAP EPS was $2.01, up 52% sequentially from negative $1.32 and up 50% from $1.34 year-earlier.

Product sales were $6.91 billion, up 4% sequentially from $6.65 billion and up 5% from $6.56 billion in the year-earlier quarter.

Royalty, contract and other revenue was $41 million, up sequentially from $39 million, and up from $35 million year-earlier.

Cash and equivalents ended at $2.8 billion, down sequentially from $4.7 billion. Reduction due to acquisition of CymaBay and repayment of senior notes. $1.3 billion cash flow from operations. Capital expense $130 million. $1.20 billion free cash flow. $100 million was used to repurchase shares. $972 million paid in dividends. Long term liabilities were $24.6 billion.

Numerous other studies are underway or planned; see Gilead pipeline.

Expenses were $4.31 billion, consisting of $1.54 billion for cost of goods sold; $1.35 billion for R&D; $38 million acquired in-process R&D; $0 IPRD impairment; $1.38 billion SG&A. Leaving income from operations of $2.64 billion. Interest and other expense $592 million. Income tax $438 million.

Capital allocation priorities are to grow the dividend and pay down debt. No near term plans for a major acquisition.

Q&A selective summary:

TIGIT landscape? Our approach is differentiated, starting with an FC silent molecule. That seems to lower adverse events. Focus is on cancer with best chance of activity: NSCLC and gastric. Cautiously optimistic.

PrEP market, payer roadblocks? Market for PrEP growing about 12% a year. Discovy is covered by about 90% of plans. Lenacapavir redefines the market with twice a year dosing. Market growth can come from reaching more types of users and prescribers, and countries. Market share, Discovy is the leader, believe Lenacapavir will become the leader. Believe it will also have better adherence. We are looking at ways to support reimbursement so everyone who wants it can get it.

Anito-cel trial timing? We are excited about its potential. Fully enrolled first trial. Data at ASH. The Phase 3 R/R MM trial will be product from our own facility. We have the option to do bridging therapy if needed.

Could Lenacpavir combo replace Biktarvy? Phase 2 and 3 studies indicate we could get a broad label. Should reach switch segment of market. Believe Biktarvy will remain the standard of care for oral dosing.

The U.S. CAR T market is competitive, there are some headwinds, but we added a new sales team and are generally making progress.

PrEP market is of individuals who are not sick. So it is hard to get people to use a pill every day. We think the twice yearly dosing will be more attractive to the population. It could really make a dent in the HIV epidemic.

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