Gilead Sciences Inc (GILD) — Q2 2025 Earnings Call Transcript

Thank you, Rebecca. Just after market closed today, we issued a press release with earnings results for the second quarter of 2025. The press release, slides and supplementary data are available on the Investors section of our website at gilead.com. The speakers on today's call will be our Chairman and Chief Executive Officer, Daniel P. O'Day; our Chief Commercial Officer, Johanna Mercier; our Chief Medical Officer, Dietmar Berger; and our Chief Financial Officer, Andrew Dickinson. After that, we'll open the call to Q&A, where the team will be joined by Cindy Perettie, the Executive Vice President of Kite. Let me remind you that we will be making forward-looking statements. Please refer to Slide 2 regarding the risks and uncertainties relating to forward-looking statements that could cause actual results to differ materially. With that, I'll turn the call over to Dan.

Thank you, Jacquie, and good afternoon, everyone. The team and I are pleased to be here with you today to share the results of a very successful second quarter. This quarter had special significance, of course, with the FDA approval of lenacapavir or Yeztugo for twice yearly HIV prevention. I want to take this opportunity to thank the many people who contributed to this remarkable achievement from the Gilead teams who discovered and developed lenacapavir to the participants in the PURPOSE studies as well as the KOLs, advocates, community partners and others who have been part of the lenacapavir journey. This is truly a milestone moment in the history of HIV with the launch of a groundbreaking innovation that could bend the arc of the epidemic. Moving to the quarterly results. We had another very strong quarter of clinical, commercial and operational execution. Excluding Veklury, base business sales of $6.9 billion grew 4% year-over-year, driven by robust growth across Biktarvy, Descovy, Livdelzi and Trodelvy. Product sales of $7.1 billion grew 2% year-over-year. The strong base business performance was partially offset by lower Veklury sales due to fewer COVID-19-related hospitalizations. HIV had a very strong second quarter with demand-driven growth of 7% year-over-year, more than offsetting the anticipated headwinds from the Medicare Part D redesign. Biktarvy grew 9% year-over-year to $3.5 billion, and Descovy grew 35% year-over-year to $653 million. This was Descovy's strongest quarter ever, highlighting the growth of the HIV prevention market into which we are now launching Yeztugo. It is now 7 weeks since FDA approval of Yeztugo, and we are very pleased with what we're seeing so far. Johanna and Andy will take you through our results in more detail. But overall, the strong commercial execution and operating expense discipline year-to-date support higher expectations for the second half of 2025. As a result, we are increasing our revenue and EPS guidance for the full year. From a clinical perspective, the second quarter was one of the strongest in Gilead's history. In addition to the FDA approval of Yeztugo, we received a positive CHMP opinion from the European Medicines Agency. With more than 1 million new HIV infections globally each year and over 600,000 HIV-related deaths, we believe lenacapavir is one of the most important scientific breakthroughs of our time, which brings a sense of urgency and responsibility to reach the communities most in need as quickly as possible. At the same time, we continue to fully evaluate lenacapavir's potential in the clinic. For example, we have just initiated PURPOSE-365, a Phase III trial evaluating once yearly lenacapavir for PrEP. Additionally, we continue to develop seven combination regimens that utilize lenacapavir-based molecules for HIV treatment. In the second half of this year, we plan to share updates from ARTISTRY-1 and ARTISTRY-2. These Phase III trials are evaluating a potential new single-tablet regimen combining bictegravir plus lenacapavir that could further extend the reach of Gilead's current HIV treatment business. Moving to oncology. We announced back-to-back positive Phase III results for Trodelvy with the top line data from ASCENT-03 and the detailed data from ASCENT-04. We now have data that show highly statistically significant and clinically meaningful benefit for Trodelvy across first-line metastatic triple-negative breast cancer. Trodelvy is already the leading therapy for second-line metastatic TNBC. And with these data, we look forward to potentially advancing Trodelvy to the first-line setting where it could benefit twice as many patients. In cell therapy, we expect to provide a pivotal update from the Phase II iMMagine-1 trial evaluating anito-cel for multiple myeloma later this year. Given the compelling efficacy and safety data seen to date, combined with Kite's industry-leading manufacturing capabilities, we believe anito-cel is well positioned as a potential best-in-class therapy for multiple myeloma. In summary, this is a very special time for Gilead that's underscored with our second quarter results. This highlights the strength of our R&D engine and the level of excellence in our commercial and operational execution. Having built this positive momentum, we're excited by what's to come with continued innovation that will benefit patients and drive growth across our therapeutic areas. With that, I'll hand over to Johanna.

Thanks, Dan, and good afternoon, everyone. We had another very strong quarter of commercial execution, culminating with the launch of Yeztugo following FDA approval in late June. Second quarter product sales, excluding Veklury of $6.9 billion, were up 4% year-over-year, primarily driven by 9% growth in Biktarvy and 35% growth in Descovy. We also delivered encouraging contributions from Livdelzi in its third full quarter of commercial launch and in Trodelvy, partially offset by lower HCV sales following a very strong second quarter in 2024. Sequentially, sales in our base business were up 10%, driven by growth in HIV, oncology and liver disease. Including Veklury, total product sales of $7.1 billion were up 2% year-over-year. While Veklury's share of U.S. hospitalized patients treated for COVID-19 remains well over 60%, the number of patients impacted by the pandemic continues to decline. This is reflected in second quarter sales of $121 million for Veklury and also in our updated full year guidance. Moving to Slide 8. HIV sales of $5.1 billion represented very strong 7% year-over-year growth, primarily driven by increased demand in addition to higher average realized price. Sequentially, sales were up 11%, reflecting inventory build and higher average realized price, both typical second quarter seasonal dynamics as well as higher demand. On Slide 9, Biktarvy sales of $3.5 billion were up 9% year-over-year, with commercial execution supporting a strong increase in demand. Sequentially, sales were up 12%, reflecting seasonal inventory build and higher average realized price as well as higher demand. Biktarvy once again expanded its U.S. market share and increased 2 percentage points year-over-year to over 51%. Biktarvy continues to lead in share in major markets around the world. Further strengthening Biktarvy's differentiation, the FDA recently granted a label expansion to include the treatment of HIV in people with antiretroviral history who are not virologically suppressed with no known or suspected resistance. This new indication addresses an important unmet need for people with HIV, specifically those who come off therapy and then restart treatment. This label expansion reinforces confidence in Biktarvy to get such individuals to sustained viral suppression. Moving to Descovy, second quarter sales of $653 million increased 35% year-over-year with growing awareness of PrEP and unrestricted access driving both higher average realized price and higher demand. Sequentially, sales were up 11%, reflecting seasonal inventory dynamics and higher demand. Partly driven by strong execution from our commercial team and continued growth ahead of the Yeztugo launch, the U.S. PrEP market has now expanded to more than 0.5 million active users. This market continues to grow in the mid-teens year-over-year, highlighting progress on our goal of expanding the HIV prevention market. Additionally, Descovy for PrEP share grew once again this quarter, representing more than 40% of the U.S. market. Moving to Slide 10, we received FDA approval of Yeztugo as the first twice yearly injection for HIV prevention in mid-June, and the team has been executing what I consider to be the best planned commercial launch I have seen to date. Revenue in the first days of launch right at the end of the second quarter reflected planned inventory build as we expected. While it's still early days, we're extremely pleased with the feedback from both clinicians and consumers as well as the progress of our early discussions with payers and the effectiveness of our launch preparations and execution to date. Notably, the first Yeztugo prescription was written within hours of approval with the first product shipped within 24 hours and the first dose administered within days, well ahead of our expectations. Prior to launch or any commercial engagement, Yeztugo's unaided awareness among healthcare providers was at 72%, more than twice the typical prelaunch awareness with aided awareness at 95%. I look forward to sharing more about Yeztugo's early performance in the coming quarters. We are well on our way to achieving our target of 75% access for Yeztugo within 6 months of launch and 90% within 12 months. Outside the U.S., we have just received a positive CHMP opinion and expect a European Commission decision on lenacapavir in the next 2 months. Our launch preparations in our initial target European territories are underway. Gilead is committed to facilitating access to lenacapavir for those who could benefit from HIV prevention regardless of where they live. With that in mind, we recently announced a partnership with the global fund to bring lenacapavir to approximately 2 million people in primarily low and lower middle-income countries over the next 3 years. We were also pleased that the World Health Organization and the International AIDS Society both recently announced new HIV prevention guidelines recommending the use of lenacapavir. As we look at the rest of 2025 on Slide 11, it's clear that we are seeing very strong performance in both HIV treatment and prevention. With that in mind, we're increasing our full year sales guidance and now expect HIV sales to grow approximately 3% in 2025, up from our prior assumption of flat revenue year-over-year. This updated HIV guidance is driven by strong Biktarvy and Descovy performance so far this year and our expectations for the second half. Some additional considerations. First, we've made no change to our assumption regarding the impact of Medicare Part D redesign, which at the start of the year, we expected to impact our HIV business by approximately $900 million in 2025. Excluding this headwind, HIV growth this year would be more than 7%. Second, given the recency of launch, we have made no changes to launch assumptions surrounding Yeztugo. And finally, given a broad range of possible policy outcomes, our updated HIV guidance assumes no changes to the current landscape. Moving to liver disease on Slide 12. Sales of $795 million were down 4% year-over-year, following a particularly strong second quarter of 2024. This reflects lower average realized price and lower patient starts in HCV, partially offset by the very strong launch of Livdelzi as well as demand for HDV and HBV products. For HCV, U.S. pricing has been impacted year-over-year by Medicare Part D redesign, while volume was driven by the timing of purchases in both the U.S. and internationally. In primary biliary cholangitis, we continue to be pleased with Livdelzi's performance in the U.S. as well as the early launches in Europe following approval last quarter. Overall, revenue almost doubled from $40 million in the first quarter to $78 million in the second, driven by growing second-line PBC market share with our focus on both market expansion and persistence of therapy. Looking ahead, we are particularly encouraged by the demand we're seeing for Livdelzi in new patient starts. That said, and after a tremendously strong second quarter, we do expect sequential growth to be more moderate in the third quarter, reflecting continued growth in new patients but a slower uptake among switch patients where cadence of physician visits remains a gating factor. Moving to Slide 13, Trodelvy sales of $364 million were up 14% year-over-year and 24% sequentially, reflecting Trodelvy's continued strength in metastatic breast cancer and more than offsetting on a year-over-year basis the expected decline associated with the withdrawal of the bladder cancer indication in the U.S. Internationally, we have seen strong demand growth, both year-over-year and sequentially where launch momentum and share gains continue across major markets. Building on our market leadership in second-line metastatic triple-negative breast cancer, we're working towards filing for approval in the first-line setting based on the potentially practice-changing results from the ASCENT-03 and ASCENT-04 trials. As a reminder, there are almost twice as many patients in the first-line metastatic setting compared to second line as well as longer duration of therapy, and we look forward to expanding the options available for patients in this earlier line setting. For cell therapy on Slide 14 and on behalf of Cindy and the Kite team, second quarter sales of $485 million were down 7% year-over-year, primarily driven by lower demand, partially offset by higher average realized price. As expected, our Kite cell therapies continue to face competitive headwinds, although sales were up 5% sequentially, helped by favorable FX impact in addition to higher demand for Yescarta in the U.S. and Tecartus globally. It's taking time to reduce the barriers to broaden adoption of cell therapy, but we're making progress. For example, the FDA recently removed the CAR T class requirement for a REMS program, which we believe will reduce the burden of CAR T administration for healthcare providers, patients and caregivers, and we're pleased to see these changes starting to be rolled out across authorized treatment centers. The FDA also made additional changes to the CAR T product labels that will have meaningful impact on patient and caregiver quality of life. This included a 50% reduction in the time patients need to remain near their treating center and a 75% reduction in driving restrictions. We continue to believe that outpatient delivery remains key to broader cell therapy adoption. With that in mind, new real-world data shared at ASCO highlighted the viability of outpatient administration for Yescarta. This is also reflected in increasing outpatient adoption over time, suggesting growing physician comfort with the use of Yescarta in this setting. Our efforts to educate physicians and patients on the potential benefits of a one-time CAR T treatment are also ongoing. Most recently, we highlighted new 5-year overall survival analysis from Tecartus in B-cell acute lymphoblastic leukemia at EHA, the longest follow-up of any CAR T therapy in this indication. Together, these new data support our goals of bringing cell therapy closer to patients and increasing adoption. Wrapping up our second quarter, I want to thank the commercial team for delivering yet another strong quarter of impact for patients and financial results for Gilead. Any commercial organization is energized by new product launches, and we are so fortunate to have several new, exciting and impactful products in our portfolio. The Yeztugo launch marks a unique moment for Gilead, and I know the commercial teams share a sense of both excitement and responsibility given the potential to truly transform the HIV landscape in the coming years. And so with that, I'll hand the call over to Dietmar.

Thank you, Johanna, and good afternoon, everyone. I'd like to start on Slide 16 by recognizing the years of tireless effort across many research and development teams at Gilead, Kite and our partners that contributed to a spectacular quarter of clinical results. In April and May, we announced positive top-line results from ASCENT-04 and ASCENT-03 that showed Trodelvy regimens demonstrated highly statistically significant and clinically meaningful efficacy with the potential to be practice-changing in first-line metastatic triple-negative breast cancer. In May and June, we shared promising early results from our next-generation bicistronic CAR-Ts in lymphoma and glioblastoma. In June, we shared updated data from our pivotal iMMagine-1 trial in fourth-line and later relapsed and/or refractory multiple myeloma that further reinforce our belief in anito-cel's best-in-class potential. And also in June, we achieved FDA approval of Yeztugo, our breakthrough twice yearly injectable for HIV prevention, which we truly believe has transformative potential. We believe lenacapavir will help bring us closer to our goal of ending the HIV epidemic in the years ahead. You have heard Johanna's excitement about the commercial launch in the U.S. And in July, we were pleased CHMP adopted positive opinions for our EU marketing authorization application and for EU medicines for all, which enables a streamlined assessment for WHO prequalification and additional global regulatory reviews. These are critical advances in our plans to help make lenacapavir available to people who need to be protected from HIV globally. This is a moment of pride for this Gilead team and has given me personal pause as I recognize and appreciate the brilliance of the team of scientists that we have here and the determination to keep out innovating ourselves to achieve the best possible experience and outcomes for those we serve. With that in mind, our work in HIV continues. As you can see on Slide 17, with the approval of Yeztugo, we continue to target up to eight additional HIV product launches before the end of 2033, including five that would come to market by the end of 2030. In HIV prevention, we have initiated our Phase III trial evaluating once yearly intramuscular injections of lenacapavir for HIV prevention, now called PURPOSE-365. If successful, this could launch as early as 2028. In HIV treatment, we continue to expect an update on our new daily oral combination of bictegravir and lenacapavir in the second half of the year from ARTISTRY-1 in people with HIV on complex regimens. In addition to ARTISTRY-1, we now expect to provide an update for ARTISTRY-2, the second Phase III trial for BIC/LEN for virally suppressed people with HIV or people looking to switch regimens. Looking at our weekly HIV treatment programs, we expect the Phase III update on the lenacapavir plus islatravir combination in 2026 with a view to potential launch in 2027. As we announced, our wholly owned weekly WONDERS program evaluating the combination of GS-4182, one of our lenacapavir prodrugs and GS-1720, one of our long-acting integrase inhibitors is on clinical hold pending further analysis. We are making progress on our other oral long-acting candidates and continue to expect our wholly owned once-weekly program to be moving forward with a delay of 3 to 6 quarters. Among the rest of our leading HIV programs, three are in Phase I, namely our monthly oral and our quarterly and twice yearly injectables. We look forward to sharing updates on these in due course. Finally, we continue to plan for our Phase III study evaluating lenacapavir plus broadly neutralizing antibodies or bNAbs as a potential twice yearly injectable treatment. We continue to target commercial launch in 2030. Moving to oncology on Slide 18. Trodelvy's impact in metastatic triple-negative breast cancer was reinforced with highly statistically significant and clinically meaningful results in the Phase III ASCENT-03 and ASCENT-04 studies in the first-line setting. At ASCO, we presented potentially practice-changing detailed data from ASCENT-04, showing treatment with Trodelvy plus pembrolizumab resulted in an 11.2 months median progression-free survival, a 35% improvement versus chemo plus pembro for first-line PD-L1 positive metastatic triple-negative breast cancer. We saw an early trend for improvement in overall survival with Trodelvy plus pembro, though we would note these data are immature. Still, these results are remarkable given the high share of patients who crossed over to Trodelvy following disease progression in the control arm, which would be expected to mask a potential overall survival benefit. We will be filing for full approval based on the primary median PFS endpoint for both ASCENT-03 and ASCENT-04 with a potential FDA regulatory decision expected in 2026. We plan to share detailed Phase III ASCENT-03 data at an upcoming medical meeting, which will allow it to be considered for future guideline updates. These results are encouraging as we continue to evaluate Trodelvy in earlier lines of breast cancer. In addition to ASCENT-03 and ASCENT-04, our other Phase III breast cancer programs include ASCENT-07 in chemo-naive hormone receptor positive HER2-negative metastatic breast cancer, evaluating Trodelvy following endocrine and CDK4/6 inhibitor therapies. This is an event-driven trial, and we will update you in due course. And ASCENT-05 in high-risk early triple-negative breast cancer, evaluating adjuvant Trodelvy plus pembro. As would be expected with earlier line trials in a potentially curative setting, it will be several years before we are able to provide an update. We also remain focused on clinical execution of our five other ongoing Phase III programs for Trodelvy and domvanalimab across lung, endometrial, and upper GI cancers. Moving to Slide 19. On behalf of Cindy and the Kite team, we were pleased to present new data from across our cell therapy pipeline at the ASCO and EHA Congresses. In partnership with Arcellx, data from the iMMagine-1 trial at EHA demonstrated the consistent and compelling efficacy and safety profile of anito-cel. We continue to believe anito-cel has the potential to offer a best-in-class profile, and we look forward to presenting pivotal data from this trial towards the end of the year. As a reminder, we continue to target 2026 for a commercial launch. From our next-generation construct at ASCO, we presented initial data from the bicistronic CD19, CD20, Kite-363 CAR T, which we believe has shown a promising profile in B-cell malignancies, and we have selected Kite-363 to be evaluated in Phase I trials of autoimmune and neuroinflammatory conditions. In the second half of this year, we will decide which program to advance in hematology, choosing between our three next-generation CAR T constructs. Additionally, in collaboration with the University of Pennsylvania, Perelman School of Medicine, ASCO data on the bicistronic EGFR-IL13Ra2 CAR T strengthens proof-of-concept for expanding CAR Ts to treat solid tumors. Overall, we remain excited about the potential of our next-generation therapies to offer improved efficacy and safety profiles and to reach patients faster as we work towards our goal of bringing potentially curative therapies to patients. Finally, moving to our pipeline milestones on Slide 20. We have had an extremely productive and successful quarter overall. Looking to the rest of the year, we expect the pivotal update from our iMMagine-1 trial evaluating anito-cel in fourth line or later relapsed or refractory multiple myeloma, the European Commission decision on lenacapavir for PrEP following the recent positive CHMP opinion, and the Phase III update for ARTISTRY-1, evaluating BIC/LEN in people with HIV on complex regimens. We have also added a new milestone, a Phase III update for ARTISTRY-2, evaluating BIC/LEN in virologically suppressed people with HIV. Together, ARTISTRY-1 and ARTISTRY-2 have the potential to support global regulatory filings that could expand the reach of Gilead's HIV treatment business. With that, I'll turn the call over to Andy.

Thank you, Dietmar, and good afternoon, everyone. Starting on Slide 22, our second quarter results show continued strength in execution across the company. Our base business was up 4% year-over-year to $6.9 billion, driven by growth in Biktarvy, Descovy, Livdelzi and Trodelvy. Reflecting fewer COVID-related hospitalizations, Veklury sales were down 44% year-over-year, resulting in total product sales of $7.1 billion, up 2% year-over-year. Moving to our non-GAAP results on Slide 23. Second quarter product gross margin was up 1% from the same quarter last year to 87%, driven by a more favorable product mix. R&D expenses were up 9% compared to a relatively low second quarter of 2024, reflecting investments in clinical manufacturing and study activities. I'll highlight that we continue to expect full-year R&D expenses to be roughly flat on a dollar basis from 2024 and year-to-date R&D expenses are tracking in line with our internal expectations. Acquired IPR&D expenses were $61 million in the second quarter, primarily driven by the Kymera collaboration we announced in June. SG&A expenses were flat year-over-year with higher sales and marketing expenses, primarily related to our HIV franchise, offset by lower G&A expenses. Second quarter operating margin was 46% or 47%, excluding acquired IPR&D. The non-GAAP effective tax rate was 19% this quarter, in line with our expectations. And finally, non-GAAP diluted EPS was $2.01 for the quarter. Moving to our full-year guidance on Slide 24. We had an extremely strong first half of 2025 driven by our HIV portfolio and bolstered by the encouraging momentum in both Livdelzi and Trodelvy. With that in mind, we are updating our full-year 2025 guidance as follows: we now expect product sales, excluding Veklury, of approximately $27.3 billion to $27.7 billion, representing an increase of $0.5 billion in our base business expectations for 2025. This update reflects HIV growth of approximately 3% year-over-year driven by the outperformance of Biktarvy and Descovy year-to-date, FX tailwinds, and softer cell therapy expectations where we now expect a modest decline for full-year 2025 versus full-year 2024. I'll note that our assumptions have not changed in the following areas: firstly, our assumptions for the impact of Medicare Part D redesign remain unchanged from the beginning of the year, and we expect approximately $1.1 billion of impact to our business. Secondly, while we're very encouraged by the launch dynamics of Yeztugo to date, we are not updating our assumptions for Yeztugo revenue in the second half of 2025 at this time. And finally, we have not updated our expectations for the impact of potential tariffs or other changes to the broader policy environment. We continue to expect the impact of known tariffs to be manageable in 2025. Moving to Slide 25, we are reducing our full-year 2025 expectations for Veklury by $400 million to approximately $1 billion, reflecting the current path of the COVID-19 pandemic, including lower hospitalization rates in the first half and the trends we've seen in the first month of the third quarter. As a result, total product sales are expected to be in the range of $28.3 billion to $28.7 billion, with $0.5 billion increase in base business expectations, partially offset by lower COVID-19 related sales. For other items in the P&L, on a non-GAAP basis, we now expect product gross margin to be approximately 86%, reflecting strong performance year-to-date and a more favorable product mix. We expect R&D expenses to be roughly flat on a dollar basis from 2024, which is consistent with our expectations at the start of the year. And we expect acquired IPR&D to be approximately $400 million, reflecting $315 million of expenses so far this year, in addition to known commitments and expected milestone payments. SG&A expenses are now expected to decline by a mid- to high single-digit percentage compared to 2024, updated to reflect higher HIV sales and marketing expenses and other corporate expenses associated with higher 2025 base business expectations. Rounding out the P&L, we expect operating income to be between $13 billion and $13.4 billion. Our effective tax rate to be approximately 19%, consistent with our prior guidance. And we expect our full-year diluted EPS to be between $7.95 and $8.25, an increase of $0.20 at the midpoint compared to our prior guidance. Looking ahead, we will continue to monitor the macro landscape carefully, and we expect that our disciplined approach to operating expense management positions us well to adapt as needed in the months ahead. On Slide 26, our capital priorities remain unchanged, and we returned $1.5 billion to shareholders in the second quarter. This included $527 million of share repurchases, currently being executed under our 2020 plan. We expect to complete the 2020 program over the next several quarters, and our Board recently approved a new $6 billion program to support continued share repurchases. These repurchases are intended to offset equity dilution at a minimum but can also be used opportunistically as you've seen in the first half of 2025. Overall, Gilead delivered another very strong quarter of clinical and commercial execution, supported by our disciplined operating model. As we look to the second half of the year, we believe that Gilead is well positioned for near-term and long-term growth, and we remain focused on delivering on our strategic commitments. With that, I'll invite Rebecca to begin the Q&A.

Great. Congratulations on the progress. I know you'll be shocked to hear this question, but can you please elaborate on the early uptake with Yeztugo and whether you expect the early prescriptions to trend linearly from here or if it's still very early in what is expected to be a more of an exponential launch curve?

Yes. Go ahead, Johanna, please. We are very surprised to get that question.

Thank you for the question, Tyler. It's Johanna. We're very pleased with the launch so far. It’s still early days, about six weeks in, but we're excited about the progress. A lot of our success can be attributed to the readiness of our cross-functional teams; the moment we received approval, everything was in place to start immediately. The teams have started strong, and I'm proud of how they’re collaborating across the U.S. We've executed over 25,000 customer calls in the field, significantly exceeding our target of around 15,000. Many of these customers have interacted with either a representative or a medical sales representative multiple times, which illustrates the uptake and excitement. At launch, awareness was very high, at around 72% unaided awareness, considerably above the industry average of the 30s. Our aided awareness was over 95%. We were well-prepared going into this, and it’s up to us to continue the momentum. As mentioned, we have been tracking critical early data points closely, such as first script occurrence within hours and injections being administered within a couple of days. An important aspect to consider is access; we anticipate around 75% access at the six-month mark and about 90% at twelve months. Our field reimbursement team is dedicated to providing comprehensive reimbursement support to ensure scripts are filled promptly. Access timelines vary by plans, and we are mindful of that. I would like to highlight a couple of early successes. One significant achievement is the upcoming J-code, which simplifies the billing and reimbursement process. We expect confirmation for this J-code on October 1, which is ahead of our typical timelines of two to three quarters. Additionally, we’ve secured some early commercial wins, including plans that went live as of August 1, and state Medicaid successes. Specifically, California and Florida, two of the largest states involved in prevention, are on formulary as of August 1. We're thrilled to see more lives gaining access and are actively navigating medical exceptions. We've reached out to over 200 accounts to ensure they have the necessary information to make formulary decisions. Although this process will take some time, we are on track to meet our goals. I’m very excited about the future and believe we have the right team and commitment to impact the epidemic with Yeztugo. More data will come in the next quarter, so stay tuned.

Thanks, Johanna. Thanks, Tyler, for the question. I just want to add, I'm really impressed with the team's early launch support here, and we look forward to updating you in quarters to come.

Great. Congrats on all the progress as well. Johanna, you mentioned Descovy had one of its best quarters ever. I think if you look at the growth trajectory there, it's obviously been very robust and looks to be tracking well above the 8% rate that I think is implied in your longer-term guidance for the PrEP market when you guys look out to 2030. So just wondering how durable this kind of a growth rate is given what you're seeing out there in the market and a lot of the work you've done ahead of the Yeztugo launch? And then just one clarification. Can you just comment on the accuracy of Yeztugo IQVIA data for us if you have any visibility there?

Sure. The PrEP market is experiencing strong growth at approximately 15% annually. This growth is a result of our efforts to raise awareness about prevention. We are thrilled to report around 500,000 active PrEP users, which puts us on track to reach over 1 million by the mid-2030s. We see further opportunities for market expansion, especially with Yeztugo. The data from the PURPOSE-1 and PURPOSE-2 studies is powerful and is positively influencing the field. Regarding Descovy, we have been pleased with its performance and a market share of 35%. This success is attributed to improved access over the past 6 to 9 months, with many co-pays reduced to $0. Our unrestricted access now covers about 88% of total lives, with 98% total covered lives. Although 10% still face some restrictions, we have made significant progress in increasing Descovy's market share among these plans. As Yeztugo gains momentum in the coming quarters, we may see a slight decline in Descovy's share, as Yeztugo aims to differentiate across the entire PrEP market. Regarding IQVIA data, it's still early to draw firm conclusions, but we believe the data is generally on the right track. Some accounts and channels are not included in IQVIA, which impacts the representation. It may take a few more quarters to stabilize the data following our launch. Nonetheless, we are pleased with the initial uptake and enthusiastic customer response. We are closely monitoring customer uptake, especially as it pertains to reimbursements and how many users receive the injection. Stay tuned for further updates, as normalizing the data will likely take additional time.

Congrats on all the progress with Yeztugo. I figured I'll go in a different direction on potentially a risk factor for the business. In a scenario where the industry does converge around an MFN proposal, which is focused on Medicaid, how do you see the impact to Gilead business from a revenue perspective? And obviously inclusive of the mandatory and CPI rebates you do pay to Medicaid already.

Yes. Thanks, Umer. Maybe I'll start, and then I'll hand it over to Johanna to talk specifically about the Medicaid portion of it. I just want to be clear that, obviously, we are having discussions and working with the administration on the whole topic of MFN, I would say just as a backdrop to all this but given the general business uncertainty in the country and also some of the sector-specific uncertainty, it's even more important that we're at this stage in Gilead's history of driving forward with all these new launches controlling operating expenses. And I remind you, as you know, we have very limited patent exposure until the end of 2033 with a very strong clinical development plan to be able to support the patients with that medicine prior to 2033. So I just put that in the backdrop. Obviously, we very much support the concept of finding ways to have patients better afford their medicine in this country while also preserving the right ecosystem here. Now specifically related to your Medicaid question, I'll hand it over to Johanna to talk about how that could or could not impact us.

In our Medicaid business for HIV, which is a significant part of our operations, we focus on the mid- to lower 20s. This is critical for us. Keep in mind that the co-pays for patients on Medicaid are very low, often $0 or a few dollars per prescription, and there is substantial support available. We are also monitoring not only potential demonstration projects related to MFN but also the current Medicaid legislation concerning the Big Beautiful Bill, understanding that most of its implications will not materialize until late 2026 or into 2027, so there's no immediate impact at this time. However, HIV is distinct. It is crucial to treat it, as the consequences of untreated cases could extend beyond individual patients, potentially leading to localized epidemics of HIV in the U.S. That’s why there are various support programs for individuals diagnosed with HIV, whether they are state programs, ADAP programs, foundations, or even Gilead's patient access programs. All these elements are part of our strategy to ensure patients receive coverage and access to the medications they need.

Really congrats on the progress. Given the importance of the Yeztugo launch and the recent changes to the HHS preventative task force. If PrEP is removed as a preventative medicine broadly, how does this change your approach to commercialization?

I heard most of that. It's Johanna, Evan, I'll take that one. Yes. So let me start by saying that we fully support the USPSTF guidance. We believe in preventative services, especially in HIV prevention. The current guidelines are well enforced and support the $0 co-pay without access restrictions for HIV prevention, which we believe includes Yeztugo as we move forward in our discussions with the plan. As I mentioned earlier, Descovy is well covered, with 88% access and no restrictions. That being said, if there were to be a change in the future, which we don’t foresee, I want to remind you that these guidelines didn’t really come into effect until about a year ago, roughly 2 or 3 quarters back. Prior to that, the prevention market was still growing at strong rates similar to what we see today, and we had considerable success with Descovy, holding around a 40% share. We are now closer to about a 44% or 45% share, and the market continues to grow at around the same rate. Therefore, we believe that even if the USPSTF guidance were to change, we could still navigate through it and work closely with our payers to ensure that people maintain access to HIV prevention just as they do today.

Congrats on the progress. I just wanted to ask about the treatment pipeline and specifically just elaborate on your confidence on the 4182, 1720, the weekly treatment combo, the WONDERS program following the clinical hold announced earlier this year. I guess just kind of next updates we should be watching for on that combo? And just how does that stack up relative to some of the other treatment combos that you're working on?

Chris, we'll get Dietmar's voice here.

Thank you for the question, Chris. We have a strong belief in our treatment pipeline. We approach our work on a weekly, daily, monthly, quarterly, and semi-annual basis. Our pipeline is robust, containing a range of different molecules. For instance, 4182 is a lenacapavir pro-drug, while 1720 is an INSTI. We have several other molecules in those classes within our portfolio. Currently, we are focused on analyzing the data further, both preclinically and clinically, to clarify our observations and determine which molecules contributed to those findings. We aim to advance with other molecules in our portfolio in new combinations to provide weekly treatment options for patients. Additionally, our Phase III ISLEND program, which includes islatravir and lenacapavir, is ongoing. We anticipate the next update for this program in 2026, with a planned launch in 2027. Concerning our wholly owned WONDERS program and its progression, we will provide updates in due course.

It seems that the contribution from outside the U.S. for Yeztugo will likely be much larger compared to Descovy or Truvada in the PrEP market. Johanna, I'm not looking for guidance, but when evaluating the contributions for HIV treatment in the U.S. versus outside the U.S., could the trends align with what you expect to see at the peak for PrEP? I'm interested in understanding the unique circumstances of the outside U.S. market as it relates to your strategy.

Thanks, Geoff. I agree with you. There is indeed a significant opportunity for Yeztugo outside the U.S. This largely relates to Descovy, as we faced challenges in various markets due to competition from Truvada, which has become generic in many of those areas. With Yeztugo, I believe the innovative and transformative benefits we offer will be recognized in markets that are seeking alternatives for HIV prevention, particularly where HIV incidence rates are high. I truly see potential for us to expand our reach beyond just where we currently stand with Descovy. However, I think achieving stable or peak performance may take some time because securing reimbursement will be complex. For countries that have explicitly stated their intentions to improve outcomes or are falling short of their 2030 targets, this represents a real opportunity for us to collaborate with relevant stakeholders and ensure that Yeztugo is accessible in those regions.

Great. Thank you very much. And Johanna, you are very popular today so one more for you. So the question is regarding the logistics as well as the safety side of it. So just wanted to understand for Yeztugo, the logistics dynamic because this is a prescriber base that is used to orals and now they're going to use an injection, which is also at doctor's offices. So how are you navigating that? And would it take some time to help understand prescribers the entire dynamic? Would love to understand that.

Sure. In preparation for this launch, we utilized insights from previous launches, particularly those transitioning from oral to injectable formats, to ensure we were ready. A key focus was on education and providing options for prescribers. At launch, we were able to inform healthcare providers and clinics that they could prescribe the product and handle billing in their offices. Alternatively, they could prescribe it and send the prescription to a specialty pharmacy, which would manage all the necessary behind-the-scenes work before sending the product back for the patient's injection. If they preferred, prescribers could direct patients to an alternative care site, sending the script along for the injection, with the site managing the reimbursement. We've established a flexible system, and although it’s still early, the trends are aligning with our expectations. Initially, we anticipated a stronger preference for specialty pharmacies unless the clinics that previously handled buy and bill opted for this approach, with a lesser impact from alternative care sites. It's still early to determine the long-term patterns, but a significant differentiator is our cross-functional network and partnerships. Our teams across the U.S. are organized to collaborate effectively with nurse educators, field reimbursement specialists, medical representatives, and commercial sales representatives, working in coordinated groups. They are conducting joint meetings with clinics nationwide to address questions and streamline the process for Yeztugo. This approach has proven very successful; our customers have been grateful for the support, receiving timely answers that enable them to prescribe for their patients. We are managing the complexities of logistics while ensuring that customers perceive the process as straightforward, which remains our goal.

Probably another one for Johanna I think. You spoke a little bit about kind of you've been surprised positively so far in the Yeztugo launch around access and around kind of the connecting of the dots that the team has been able to achieve and the scripts and the actual injection rates. Why didn't you raise the launch expectations or the guidance as you thought about kind of the Yeztugo launch for the remainder of this year? What are the things that are still question marks in your mind that would give you confidence to kind of raise your own expectations in terms of this launch for the early parts and what we might see this year?

Courtney, great question. And I think I would answer it with two ways. One is, it's still very early, right? We're 6 weeks into the launch. So that's one. Two is access is critical here. And so we're managing one-offs on medical exceptions every time our field reimbursement team hears that there is a little bit of a block somewhere, and we're working through it with the plan. But I think more importantly, we really need to see the number of covered lives increase over the next quarter or two to really see that momentum and really pull through those intake calls into scripts and injections. And so that's kind of the piece that we're waiting to see. And so I think you can ask me that question again in a couple of quarters, and we'll go from there.

Congrats on the Yeztugo progress. Maybe to switch things up. I just wanted to ask on sort of your continued confidence on anito-cel approvability based on a single-arm study. I'm familiar with the feedback your partner received some time ago. But since then, there's been bispecific approvals, competitor CAR Ts have had confirmatory data, coupled with obviously no shortage of disruption across CBER and FDA. So just how do you get comfortable with the feedback from years past still applies? And if there's been ongoing feedback that bolsters that confidence.

Yes. I know we're not communicating our regulatory strategy other than to say that we are continuing to have conversations with the FDA and are looking forward to launching in 2026. We don't have any major shifts in the things that we've communicated before and are looking forward to filing anito-cel.

Great. This is Dan. I want to thank everyone for your questions today and for joining the call. I have a few closing comments. As we mentioned, this has been a very successful second quarter, with growth from all three of our therapeutic areas contributing to the 4% growth in our base business, which more than offset the anticipated challenges from the Medicare Part D redesign. We're incredibly proud to have delivered the world's first twice-yearly prevention for HIV with lenacapavir, which has made a strong start in the U.S. We'll continue to provide updates in future quarters. Additionally, we received a positive CHMP opinion on Yeztugo and had a great overall launch. We are excited about the potential of this product. Overall, it’s been one of our best clinical quarters ever. Although we didn’t discuss it much today, we achieved back-to-back positive Phase III results for Trodelvy. As we wrap up this call, our strong top-line performance is translating into significant results on the bottom line. This is an exciting time for Gilead with multiple product launches and imminent launches on the horizon, including Yeztugo, Livdelzi, and potentially Trodelvy as a first-line treatment, along with the anito-cel cell therapy. I want to take a moment to thank the Gilead team for their extraordinary efforts in driving this level of innovation. Thank you all for joining us today. Our Investor Relations team is available for any follow-up questions you may have. We wish you a wonderful rest of your day, and we appreciate your interest in Gilead.