Analyst Conference Summary

biotechnology

conference date: November 7, 2024 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2024 (third quarter, Q3 2024)

Forward-looking statements

Overview: Strong results, great news on new HIV products. But GAAP earnings hit by IRPD charge.

Basic data (GAAP):

Revenue was $7.55 billion, up 9% sequentially from $6.95 billion and up 7% from $7.05 billion in the year-earlier quarter.

Net income was $1.25 billion, down 22% sequentially from $1.61 billion and down 43% from $2.18 billion year-earlier.

Earnings per share (EPS, diluted) were $1.00, down 22% sequentially from $1.29, and down 42% from $1.73 in the year-earlier quarter.

Guidance:

Increased full-year 2024 guidance to product sales of $27.8 to $28.1 billion, diluted GAAP EPS of $0.05 to $0.24, and non-GAAP diluted EPS of $4.25 to $4.45.

Conference Highlights:

Daniel O'Day, CEO, said "Gilead's third quarter results are the strongest of the year to date, with 7% year-over-year revenue growth, including 13% year-over-year growth for Biktarvy. Based on this very strong topline growth and disciplined operating expense management, we are increasing our full year revenue, operating income, and earnings per share guidance. We are excited to further increase our impact for patients and communities in the months ahead. This includes building on the momentum from the U.S. launch of Livdelzi for primary biliary cholangitis and preparing for the potential launch of the first twice-yearly option for HIV prevention option, lenacapavir."

The dividend of $0.77 per share, to be paid on December 30, 2024 to shareholders of record as of December 13, 2024.

IPRD impairment of $1.73 billion related to Trodelvy and aquisition related amortization of $458 million were both the main differences between GAAP and non-GAAP results and the main reason for y/y declines in net income and EPS.

In Q3 2024 Lenacapavir for HIV reported positive Phase 3 results for twice-yearly prevention. For oral once-weekly dose combined with Merck's islatravir Phase 2 data also reported. Six royalty-free licensing agreements were signed with manufacturers for sale in resource-limited nations. On track to file with FDA for lenacapavir before the end of 2024.

In Q3 2024 Livdelzi +UDCA received FDA accelerated approval for primary biliary cholangitis.

Seladelpar for primary Biliary cholangitis was approved by the FDA in August 2024. Expects 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. Data at ASH next month.

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

Non-GAAP numbers: Net income was $2.53 billion, up sequentially from $2.52 billion and down 12% from $2.88 billion year-earlier. Non-GAAP EPS was $2.02, up slightly sequentially from $2.01 and down 12% from $2.29 year-earlier.

Product sales were $7.52 billion, up 9% sequentially from $6.91 billion and up 8% from $6.99 billion in the year-earlier quarter.

Royalty, contract and other revenue was $30 million, down sequentially from $41 million, and down from $56 million year-earlier.

Cash and equivalents ended at $5.0 billion, up sequentially from $2.8 billion. $4.3 billion cash flow from operations. Capital expense $140 million. $4.17 billion free cash flow. $300 million was used to repurchase shares. $983 million paid in dividends. Long term liabilities were $8.4 billion.

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

Expenses were $6.66 billion, consisting of $1.57 billion for cost of goods sold; $1.40 billion for R&D; $505 million acquired in-process R&D; $1.75 billion IPRD impairment; $1.43 billion SG&A. Leaving income from operations of $888 million. Interest expense $238 million. Other Income $306 million. Income tax benefit $297 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:

CAR T space, Yescarta, Breyanzi, strategy? FL and MCL new indications are in class, and we are seeing bispecifics out of class. We expect physicians to try out new therapies. We are confident in our plans to continue to expand our sales.

Lenacapavir launch for prep dynamics? We are seeing more consumers using prep, more prescribers, more nations. Expanding beyond typical white male users. Twice yearly profile is attractive. It will have impact on Descovy and generic oral drugs. We are planning for efficient commercial introduction. We believe we can grow our share of the market.

Anito-cel delayed neurotoxicity? We are not seeing that, despite have over 100 patients to date. We have applied what we learned from Yescarta and Tecarus to Anito-cel, including in manufacturing.

Seladelpar pricing, payer coverage? We are pleased with our initial launch. We have a history in liver disease which helps. We enabled direct purchasing with a specialty distributor. Payer coverage is in line with expectations, no major bariers. Main ramp will be in 2025.

Some HIV patients want to take pills, some want the sub-q, for both treatment and prevention. Will talk more about this at our HIV day.

600,000 on prep by 2030? At least that many. Currently 350,000 to 400,000. Our broad clinical trial program will help include a broader variety of patients. Driven by lenacapavir.

Triple negative breast cancer opportunity? Has segments. If we can move up to earlier lines of therapy.

Medicaid cutbacks, if done? We need to see how this plays out. HIV patients always have a fallback position, currently about 20% of our HIV business. 340D setting is growing. There are a variety of access methods for these patients.

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