Gilead Sciences Inc (GILD) — Q3 2025 Earnings Call Transcript

Thank you, Rebecca. Just after the market closed today, we issued a press release with earnings results for the third 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 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. We appreciate you joining today as we take you through another very strong set of quarterly results. Our third quarter earnings underscore the growing momentum you're seeing from Gilead today, which is driven by our strong portfolio and the impressive execution of our teams. As you'll hear during the call, our progress is visible in both our quarterly results and in our strong clinical pipeline. Highlights of our third quarter include commercial outperformance across our HIV therapies and Livdelzi. This resulted in a 6% year-over-year growth for Biktarvy, 20% year-over-year growth for Descovy and 35% sequential growth for Livdelzi. Disciplined operating expense management contributed to 22% year-over-year growth in non-GAAP EPS. Even excluding a $0.25 benefit from a nonrecurring accounting item, non-GAAP EPS grew 10% compared to 4% base business growth year-over-year, highlighting the leverage in our business model. As a reflection of our strong performance year-to-date, we are increasing our full year HIV revenue growth expectations to approximately 5%. This is despite the $900 million headwind for our HIV business in 2025 associated with the Medicare Part D redesign. Our newest addition to the HIV portfolio, Yeztugo for HIV prevention, delivered third quarter sales of $39 million or $54 million, including the first few weeks of launch in June. Of course, our initial priority has been securing payer coverage, and I'm very pleased to share that we've already achieved our 75% coverage goal, nearly 3 months ahead of our target. This sets a strong foundation for continued growth in 2026. Our confidence in our HIV business comes from both our existing on-market product leadership and our innovative pipeline. We look forward to sharing progress on one of our next-generation HIV treatments before the end of the year with an update on the ARTISTRY-1 and ARTISTRY-2 studies. These Phase III programs are evaluating an investigational single-tablet regimen of bictegravir and lenacapavir, and we continue to target a product launch in early 2027. As I mentioned, Livdelzi was a standout of the quarter, contributing to 12% year-over-year growth in our liver portfolio. Livdelzi exceeded $100 million in quarterly sales for the first time and is already the #1 treatment for second-line PBC in the U.S. We're also pleased to share that we have filed for FDA approval of bulevirtide for the treatment of chronic hepatitis delta virus. This therapy has been available in Europe since 2020 under the brand name of Hepcludex, and we expect to bring it to patients in the U.S. in 2026. Turning to oncology. We continue to make significant clinical progress, most recently with the presentation of our ASCENT-03 detailed data at ESMO and simultaneous publication in the New England Journal of Medicine. Given the particularly aggressive nature of this disease, we are moving as quickly as we can to bring Trodelvy to first-line metastatic triple-negative breast cancer patients. We have submitted supplemental biologic license applications with the FDA and are targeting a potential commercial launch in 2026 that could extend Trodelvy's leadership in breast cancer. We also continue to target a commercial launch for anito-cel for multiple myeloma in 2026 and look forward to sharing an update from the pivotal iMMagine-1 study before the end of this year. In summary, we are very pleased with our performance in the third quarter, building on a very strong 2025 overall. And just as importantly, we have significant potential ahead. The quality, breadth, and diversity we built into the portfolio over the past years is now presenting us with multiple opportunities to drive benefits for patients. With several just launched or soon-to-be launched products across HIV, oncology, and liver disease and clinical readouts on the horizon with further commercial potential, this continues to be an exciting phase of growth. The fact that we now have no major LOEs until 2036 reinforces our strong position. My thanks as always to the Gilead team for their incredible work this quarter and their continued dedication to doing more for the communities we serve. With that, I'll hand it over to Johanna.

Thanks, Dan, and good afternoon, everyone. I'm pleased to share our third quarter results, representing another strong quarter of commercial execution with exciting momentum in our most recently launched products, Yeztugo and Livdelzi, in addition to continued robust Biktarvy and Descovy growth. Starting on Slide 7. Third quarter product sales, excluding Veklury, were $7.1 billion, up 4% year-over-year and up 2% sequentially, driven by strength across our HIV portfolio, offset in part by lower oncology revenue. Including Veklury sales of $277 million, third quarter total product sales were $7.3 billion, up 4% sequentially and down 2% year-over-year, primarily reflecting lower Veklury sales associated with fewer COVID-19-related hospitalizations. Moving to Slide 8. HIV sales of $5.3 billion represented 4% growth versus prior year and prior quarter, primarily driven by higher demand and favorable inventory dynamics, partially offset by lower average realized price. Year-to-date, our HIV business has grown more than 5%, which is particularly impressive as we managed through a $900 million headwind for the full year related to the Medicare Part D redesign. Consistent with our performance year-to-date, we are increasing our guidance for full year HIV revenue growth to approximately 5%, up from 3% last quarter. On Slide 9, Biktarvy sales of $3.7 billion were up 6% year-over-year and 4% sequentially due to higher demand, reflecting continued market growth of 2% to 3% and strong commercial execution. Biktarvy's year-over-year market share in the U.S. has grown every quarter since launch and achieved a record high of approximately 52% in the third quarter. Given Biktarvy's clear differentiation and market leadership, we're pleased that the expected loss of exclusivity in the U.S. for Biktarvy has been extended into 2036. Moving to Descovy, third quarter sales were a record $701 million, increasing 20% year-over-year, primarily due to higher demand for Descovy for PrEP. Sequentially, sales were up 7%, driven by higher demand and average realized price due to channel mix, partially offset by inventory dynamics. As a reminder, roughly three-quarters of Descovy sales are for HIV prevention. This highlights the incredible momentum in the prevention market driven by the growing awareness and increasing unrestricted access as well as excellent commercial execution. Descovy for PrEP achieved a new record market share of more than 45% in the U.S. in the third quarter. This reflects the strength of our PrEP team and the impact they're having in ensuring HIV PrEP reaches more of the people who could benefit from it. Overall, the PrEP market grew approximately 14% year-over-year. Moving to Slide 10 and one quarter in, we are really excited with the initial positive reception to our Yeztugo launch across consumers, clinicians, and payers. Yeztugo is increasingly recognized in clinical guidelines, including most recently the U.S. CDC. This strong endorsement of Yeztugo offers healthcare providers, public health leaders, and communities clear guidance on an innovation that could help shift the trajectory of the HIV epidemic. As we've discussed previously, expanding payer coverage is a critical indicator in our initial launch, and we're working with every payer to accelerate access. I am thrilled that we have already achieved 75% access in the U.S., almost three months ahead of our target. This includes coverage by UnitedHealthcare and Express Scripts as well as 20 of the top 25 state Medicaid plans. In most cases, payers do not require prior authorizations or co-pays. Keep in mind that much of our progress to the 75% access goal has been made in the last several weeks. We continue to work on an account-by-account basis to help clinicians navigate the new logistics and reimbursement process and the benefits of this access will pull through in 2026. Looking forward, we're moving quickly to expand access beyond 75% and continue to target 90% by the end of the first half of 2026. Altogether, Yeztugo is off to a strong start, delivering $39 million in sales in the third quarter. From launch in the middle of June to the end of the third quarter, Yeztugo revenue was $54 million, including $15 million of new launch-related stocking at the end of the second quarter. As we expected, most early prescribers are existing HIV PrEP clinicians who are leveraging white bagging to simplify the logistics and reimbursement arrangements. In August, the European Commission approved lenacapavir for PrEP under the name Yeytuo. We look forward to further regulatory decisions across other geographies. Additionally, as part of our broader commitment to access, Gilead has agreed with the global fund and the U.S. State Department through PEPFAR to supply enough doses of lenacapavir for PrEP to reach up to 2 million people over three years in certain low and lower-middle-income countries. Moving to liver disease on Slide 11, sales of $819 million were up 12% year-over-year and 3% sequentially, driven almost entirely by Livdelzi for primary biliary cholangitis. Livdelzi grew 35% sequentially, driven by strong commercial execution, including some new launches outside the U.S. and withdrawal of a competitor's product in the U.S. We are particularly pleased to see strong levels of persistence among users and believe Livdelzi shows clear differentiation and value to those with PBC. Livdelzi is now the market leader in second-line PBC in the U.S. and quarterly revenue topped $100 million for the first time. Moving to Slide 12, Trodelvy sales of $357 million were up 7% year-over-year, primarily due to higher demand and down 2% sequentially with higher demand offset by unfavorable inventory dynamics and lower ex-U.S. average realized price. Trodelvy's continued strength in the U.S. and international markets across metastatic breast cancer more than offset on a year-over-year basis the expected impact from the bladder cancer withdrawal in the U.S. With Trodelvy's potential launch in first-line metastatic TNBC following the potentially practice-changing ASCENT-03 and ASCENT-04 readouts this year, we look forward to expanding the options available for patients in this earlier line setting. There are almost twice as many patients in the first-line metastatic setting compared to second line, and patients typically have a longer duration of therapy. For cell therapy on Slide 13 and on behalf of Cindy and the Kite team, third quarter sales of $432 million were down 11%, both year-over-year and sequentially with continued competitive headwinds from in and out of class therapies. We anticipate these headwinds to continue in the near future. We remain committed to increasing the adoption and utilization of cell therapies given their curative potential for many patients. Year-to-date, we've added more than 40 authorized treatment centers and now have more than 570 globally. As shared in prior quarters, our efforts to lower the hurdles to community adoption are progressing, but it's clear that we have more to do before all eligible patients have the opportunity to benefit from these cell therapies. In addition to the team's work to expand the reach of cell therapies, Kite is also progressing its next-generation pipeline to offer similar efficacy with better safety, which would result in enhanced outpatient usage potential. Additionally, we're very excited by the development of anito-cel, which continues to show potential best-in-class safety and efficacy as a BCMA CAR-T therapy for late-line relapsed, refractory multiple myeloma. We look forward to providing an update from the iMMagine-1 study later this year. Wrapping up our third quarter, I'd like to thank the commercial teams who are executing relentlessly across both our in-line portfolio as well as our newer opportunities like Yeztugo and Livdelzi. Looking to 2026, we're preparing for a number of additional potential launches across our therapeutic areas of focus and are excited by the opportunity to extend our reach and impact on the patients and communities we serve. And with that, I'll hand the call over to Dietmar.

Thank you, Johanna, and good afternoon, everyone. In the third quarter, the team progressed 56 clinical programs across our three therapeutic focus areas with four additions since last quarter as we advance our research with the most meaningful potential scientific and patient impact into the clinic. Building on Johanna's comments on our Yeztugo launch, we continue to lead HIV innovation with 10 clinical programs across treatment and prevention. Lenacapavir and its prodrugs are foundational in our treatment and prevention programs. And in July, we initiated the registrational Phase III PURPOSE-365 trial evaluating lenacapavir as HIV prevention with once yearly injections. This is a single-arm PK and safety study, which, along with the unprecedented efficacy seen in the Phase III PURPOSE 1 and 2 studies is expected to support a regulatory filing with potential for approval in 2028. Moving to treatment. We have seven ongoing clinical programs evaluating daily, weekly, monthly, quarterly and twice-yearly regimens based on lenacapavir or one of its prodrugs. Beginning with our next-generation daily oral regimen, BIC/LEN, we continue to expect an update from our Phase III ARTISTRY studies later this year. ARTISTRY-1 and ARTISTRY-2 are evaluating the potential of Gilead's investigational complete regimen that combines bictegravir, the key integrase inhibitor in Biktarvy, and lenacapavir, our breakthrough capsid inhibitor. The regimen is a potential option for virologically suppressed people with HIV, including many people currently on complex regimens. Further, we have a suite of long-acting oral and injectable agents in development for a range of dosing frequencies from once weekly oral to twice-yearly injectables. Our strategy has been to set up our pipeline for multiple shots on goal and then choose the best option for each dosing frequency. Notably, for our development of a twice-yearly treatment regimen combining a novel integrase inhibitor with lenacapavir, we took two INSTI agents to Phase I, GS-1219 and GS-3242. Aligned with the guidance we shared at our HIV Analyst event last year, we have now chosen to prioritize the development of GS-3242 over GS-1219, and we expect to share more details on GS-3242 at a Virology Conference in 2026. On Slide 16, I'm pleased to highlight that we have completed the BLA filing for bulevirtide in chronic hepatitis delta virus or HDV. We're excited by the potential to bring bulevirtide to HDV patients in the U.S. with a potential regulatory decision in 2026. As a reminder, HDV affects approximately 2% of patients with HBV or about 40,000 people in the U.S. Patients with chronic untreated HDV infection can experience accelerated development of cirrhosis or severe scarring of the liver and have a higher risk of liver cancer and potentially end-stage liver disease and failure. Moving to Trodelvy on Slide 17. Earlier this month at the ESMO meeting, we presented detailed potentially practice-changing Phase III ASCENT-03 data in first-line metastatic triple-negative breast cancer patients who are not candidates for PD-L1 inhibitors. Specifically, Trodelvy demonstrated a 9.7 months median progression-free survival compared to 6.9 months for standard of care chemotherapy. This reflects a statistically significant and clinically meaningful 38% reduction in disease progression or death versus standard of care chemotherapy. As we expected when we initiated the study, the median overall survival data are not yet mature. These results were simultaneously published in the New England Journal of Medicine. Additionally, the detailed results from ASCENT-04 were shared at the ASCO meeting in May. These data, combined with ASCENT-03, highlight the potential for Trodelvy to be a backbone treatment across first-line metastatic triple-negative breast cancer. Based on these positive Phase III updates from ASCENT-03 and 04, we have submitted two supplemental biologic license applications for Trodelvy in first-line metastatic TNBC and expect regulatory decisions in 2026. This is incredibly important for patients as metastatic TNBC is the most aggressive subtype of breast cancer with limited treatment options and poor prognosis. Historically, progress in first-line therapy has been minimal and nearly half of patients do not progress beyond first-line treatment, meaning they may never access Trodelvy if it remains a later-line option. Similarly, we are currently exploring Trodelvy for first-line post-endocrine hormone receptor-positive HER2-negative metastatic breast cancer patients in the Phase III ASCENT-07 trial. We now expect to provide an update from this trial before the end of the year. On Slide 18, we are highlighting overall survival results shared at ESMO earlier this month from Arm A1 of the Phase II EDGE-Gastric study, evaluating domvanalimab, our Fc-silent anti-TIGIT plus zimberelimab and chemotherapy in patients with locally advanced unresectable or metastatic upper gastrointestinal cancers. In the 41 patients who received a novel regimen in this analysis, the median overall survival was 26.7 months. These findings were simultaneously published in Nature Medicine. These data are in a small number of patients. Survival results for this patient population still need to be confirmed in our ongoing Phase III STAR-221 trial evaluating domvanalimab plus zimberelimab and chemotherapy in patients with metastatic upper gastrointestinal cancers. We continue to expect an update from the event-driven STAR-221 trial in 2026. We also continue to develop domvanalimab plus zimberelimab and chemotherapy in first-line metastatic non-small cell lung cancer in the Phase III STAR-121 trial. Moving to cell therapy on Slide 19. And on behalf of Cindy and the Kite team, you can see that we have strengthened our in vivo capabilities. The in vivo cell therapies are potentially off-the-shelf products that could shorten the time it takes to treat patients and are also expected to have more simplified and cost-effective manufacturing processes. Given these potential advantages over autologous CAR-T, we believe in vivo could unlock broad access to cell therapies. With that in mind, we have welcomed the Interiors team into the Kite family, adding a novel in vivo platform and a strong IP portfolio. We have also entered into a new research and licensing collaboration with Pregene Biopharma. It's early days for in vivo, but we're excited to accelerate our exploration of the opportunities these technologies could bring to patients. As we step up our investment in in vivo therapies, we remain committed to our current Yescarta and Tecartus portfolios. For example, the FDA recently granted priority review for Yescarta in primary CNS lymphoma with a PDUFA date in February 2026. Primary CNS lymphoma is a rare, yet aggressive subtype of non-Hodgkin's lymphoma that affects the central nervous system. Additionally, CD19 CAR-T products, including Yescarta, have recently received a Category 2A recommendation from the NCCN for Richter's transformation. We are pleased with these reviews and guideline decisions, which will provide HCPs with additional opportunities to prescribe Yescarta. For our next-generation CAR-Ts, we look forward to sharing Phase I data from KITE-753 and KITE-363 in lymphoma at an upcoming medical congress later this year, as well as pivotal Phase II initiation of KITE-753 for third-line large B-cell lymphoma in the first quarter of 2026. In autoimmune diseases, KITE-363 is enrolling patients for its Phase I trial in rheumatology and a Phase I study in neuroinflammatory conditions is expected to start in the first quarter of 2026. We look forward to providing updates from these earlier-stage programs. Together with our partner, Arcellx, we plan to share additional follow-up data from the pivotal iMMagine-1 trial of anito-cel at an upcoming medical meeting. We continue to believe anito-cel has the potential to offer a best-in-class efficacy and safety profile for patients with relapsed and/or refractory multiple myeloma. The target commercial launch in fourth-line plus relapsed and/or refractory multiple myeloma remains in 2026. On Slide 20, I will quickly highlight the key milestone updates. First, we have received European Commission marketing authorization of Yeytuo and remain on track to provide updates for our Phase III ARTISTRY-1 and ARTISTRY-2 trials for BIC/LEN and for our pivotal Phase II iMMagine-1 trial for anito-cel in the fourth quarter. Finally, we now also expect ASCENT-07 data in the fourth quarter.

Thank you, Dietmar, and good afternoon, everyone. Starting on Slide 22, our third quarter results showed continued strong execution across the company. Our base business was up 4% year-over-year to $7.1 billion, driven by growth in Biktarvy, Descovy, and Livdelzi. Veklury sales were down 60% year-over-year to $277 million, which continues to reflect fewer COVID-related hospitalizations. Including Veklury sales, total product sales were $7.3 billion. Moving to Slide 23, you can see we benefited from a $400 million contribution in royalty, contract, and other revenues in the third quarter. This relates to an IP asset sale from 2018. Given we are now able to reasonably estimate future royalty and milestone payments, we are required to recognize this revenue in the third quarter. This is a nonrecurring accounting item and does not reflect cash received during the quarter. As a reminder, this contribution was not part of our product sales and therefore did not impact our product gross margin in the third quarter, but it does otherwise flow through to the bottom line, contributing approximately $0.25 after tax. Moving to our non-GAAP results on Slide 24, third quarter product gross margin was 86%, in line with 87% in the third quarter of 2024. R&D expenses of $1.3 billion were down 3% compared to the third quarter of 2024. Year-to-date 2025 R&D expenses were $4.1 billion, in line with 2024, suggesting we are on track for our full year goal. Acquired IPR&D expenses were $170 million in the third quarter, including a $120 million upfront payment to Pregene for a research and licensing collaboration in the in vivo cell therapy space. SG&A expenses of $1.4 billion were down 4% compared to the third quarter of 2024, modestly lower than we expected due to the timing of spending. Third quarter operating margin was 50%, reflecting the continued focus on operating expense discipline and leverage. The non-GAAP effective tax rate was 18% this quarter, slightly below our expectations due to a $79 million tax settlement. And finally, non-GAAP diluted EPS was $2.47 for the quarter. Excluding the $400 million nonrecurring other revenue, non-GAAP diluted EPS would have been $2.22 for the third quarter. Moving to our full year guidance on Slide 25, we are raising the low end of our product sales range by $100 million to reflect our strong performance year-to-date. As a reminder, the $400 million included in our royalty, contracts, and other revenue in the third quarter does not impact our full year guidance as we do not guide to total revenue. We now expect total product sales, excluding Veklury, to be between $27.4 billion and $27.7 billion, primarily reflecting higher HIV growth. Driven by the outperformance of both Biktarvy and Descovy year-to-date, we now anticipate our HIV franchise will grow approximately 5% year-over-year versus our prior guidance of 3%. Consistent with last quarter, I'll note that our assumptions for the impact of the Medicare Part D redesign remain unchanged from the beginning of the year, and we continue to expect approximately $900 million of impact to our HIV business in 2025. Our 2025 assumptions for Yeztugo also remain unchanged, and we remain very encouraged by the launch so far, particularly the accelerated timeline for payer coverage. In other parts of our business, strength in HIV is expected to be partially offset by weaker cell therapy estimates, where we now forecast approximately a 10% decline for the full year 2025 versus full year 2024. For Veklury, we continue to expect full year revenue of approximately $1 billion. As a result, total product sales are anticipated to be in the range of $28.4 billion to $28.7 billion. As noted earlier, this reflects a $100 million increase at the low end of the range from our previous guidance. Finally, we continue to expect the impact of known tariffs to be manageable in 2025. Moving to the rest of the P&L, there is no change to our prior non-GAAP guidance for product gross margin, R&D, and SG&A expenses. We continue to expect product gross margin of approximately 86%, R&D expenses to be roughly flat on a dollar basis from 2024, and SG&A expenses to decline by a mid- to high single-digit percentage compared to 2024. Similar to last year, we expect a step-up in both R&D and SG&A expenses in the fourth quarter, reflecting normal end-of-year trends. We have updated our IPR&D expectations for the full year to reflect our actuals through the third quarter and our known fourth quarter commitments, including $300 million relating to the Interius acquisition. We now expect full year acquired IPR&D to be $900 million. Rounding out the P&L, we expect operating income to be between $13.1 billion and $13.4 billion, reflecting an increase of $100 million at the low end of the prior guidance range. We continue to expect our effective tax rate to be approximately 19%. And finally, we expect non-GAAP EPS in the range of $8.05 and $8.25, raising non-GAAP EPS by $0.10 at the low end of the range. GAAP EPS is expected to be in the range of $6.65 to $6.85. On Slide 26, our capital priorities remain unchanged, and we returned $1.4 billion to shareholders in the third quarter, which included $435 million of 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 three quarters of 2025. Overall, we are pleased with the strong performance this quarter, highlighted by our clinical and commercial execution and supported by our disciplined operating model. We continue to be 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.

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. And then related, but just looking to the balance of the year, are there any demand drivers that could give you some momentum going into 2026?

Thanks, Geoff, and welcome. I'll hand it right over to Johanna.

Great. Thanks, Geoff. Yes. So we're really excited about the launch so far and really much in line with our expectations of an injectable into an oral market. To your point about where the Yeztugo sourcing is coming from, it's really across the board. So it's more switches, as you'd expect in this marketplace, versus naive. But really across the switches, what we're really pleased to see is that we're getting the source of business is actually coming from the long-acting injectable currently on the market, also the oral branded such as Descovy, but also oral generics. And so you're seeing a real nice balance mix across the board for switches, and we expect that to continue. And of course, as the market grows and continues to grow and the awareness of Yeztugo increases, we also believe that the naive patient population will also grow with time as well.

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? And I ask because IMS was implying something like 2,300 patients. So I'm just trying to get a sense of it all.

Thank you, Umer, for your question. I'll provide some additional context on Yeztugo in relation to your inquiry. While we haven't shared patient numbers specifically, we have generated approximately $54 million in sales year-to-date as of the third quarter. Around $15 million of that was reported in late June for inventory management, and we've effectively seen that inventory flow through, leaving minimal stock remaining in the system. We've been monitoring various indicators to ensure our launch is progressing well, and we're excited because achieving 75% coverage for access nearly three months ahead of schedule, with very few prior authorizations and essentially no co-pays, positions us favorably as we look ahead to 2026 and beyond. Many commercial plans, including UnitedHealth and ESI, are participating, and we have about 20 out of the 25 large PrEP states for Medicaid, which represents over 80% of the PrEP Medicaid volume. This has been our primary focus. Additionally, with the J-code becoming effective on October 1, all these developments will support buy-and-bill modeling as well. These recent access wins will take some time to implement account-by-account within practices, but they establish a strong foundation for accelerating Yeztugo's uptake. We've also noticed a significant improvement in conversion rates from prescription to approval. Our ongoing efforts are aimed at synchronizing drug delivery and patient schedules shortly after reimbursement approval. Overall, I'm very pleased with the progress we've tracked in intakes, access, healthcare provider awareness and interest, as well as conversion rates, all of which are moving in a positive direction. We anticipate Yeztugo sales for the full year to be around $150 million, including the $54 million year-to-date, which should provide a clearer perspective on patient numbers as we conclude the year.

Congrats on all the progress. Switching a little bit to HIV treatment. Now that you are guiding for 5% year-over-year growth, combined 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? How should we think about it going forward given that you have had such impressive growth this year?

Thanks, Mohit, for that. I do agree with you. I think we've had such impressive growth, and it's really driven by a couple of things. It's driven by the market, both in treatment and in PrEP, and real demand-driven growth, specifically Biktarvy, Descovy, are really the ones that are impacting this year's growth. So as you think about Biktarvy growing year-on-year about 6% and this, to your point, is despite Part D redesign and those assumptions have not changed. And Biktarvy growing at 6 points, but also Descovy growing at about 20%. And if you think about just for PrEP, and if you think about the three-quarter of that product being driven by prevention, you're looking at almost over 30% growth for Descovy, let alone, if you think about HIV prevention, at Gilead is over 40%. So both HIV treatment and HIV prevention are really driving the growth. And you could assume that actually if Part D redesign hadn't played out, we would probably be around the numbers you were talking about, 8% to 9%.

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

Sure, Salveen. It's Johanna again. In Q3, we didn't have an inventory buy-in; it occurred during the last two weeks of June and the first two weeks of our launch. This was reflected in the first month of Q3, and what you're seeing in the 39 is genuine demand. Regarding CVS access, payers have varying timelines for their formulary decisions, and we are engaging with all of them to expedite access while also highlighting the innovative value of Yeztugo. Our talks with the remaining 25% of payers, including CVS, are ongoing, and we are optimistic about achieving our goal of securing access for 90% within the first year of launch. We believe we are on track to meet these objectives.

Livdelzi continues to perform exceptionally well and appears to be succeeding as a clear strategic fit to your business. Can you just talk to me about the level of appetite for additional BD and liver-focused indications such as NASH?

Andy, why don't you start there?

Sure, Evan, thanks for your question. As we've mentioned, we don't comment specifically on any subsectors. However, we are actively exploring opportunities across the entire business development spectrum in all areas of strategic interest, which includes liver disease, oncology, cell therapy broadly, virology, and immunology. We consistently believe in adding more best-in-class therapies like Livdelzi that meet patient needs regularly. We will look for late-stage de-risked assets every two to three years at a minimum to include in our portfolio. Overall, we are really pleased with the size and shape of our portfolio, the growth drivers we have, and the additional launches that Dietmar mentioned. We are keen to add further growth drivers while maintaining a disciplined approach. Therefore, you can expect us to explore deals in all sectors, including liver disease.

Can I just dig into Yeztugo in 4Q and heading into '26 in a little bit more detail? I mean it seems like you're pointing to a step-up in sales next quarter, but we're getting obviously a lot of coverage. I'm just trying to understand a little bit more about how you're envisioning the shape of the curve. Is this kind of like a gradual acceleration or a bigger step function as we move into 2026? I'm just trying to get, again, a little bit more color on that dynamic.

So Chris, it's Johanna. I think that's a fair question. I think what we're seeing is a lot of the access to get up to the 75% goal most recently really happened in the last couple of weeks. And so it's important to understand that those don't turn on just overnight. And so practices need to actually integrate these changes into their working practices. And so we're working with them to make sure that happens. Same thing goes for the J-code. Some people will update right away. Some people update biannually. And so January 1 could be kind of for some that update to really help the buy-and-bill, folks that are interested in buy-and-bill. And so we do believe it's going to be a gradual ramp-up. And then for us, it really sets up the platform for the ramp for Yeztugo in 2026. And so that's what we're kind of focusing on.

Johanna, could you just give us an update on Yeztugo's buy-and-bill and white bagging mix? And does reaching this 75% ahead of schedule equate to reaching a bigger portion of white bagging sooner?

Sure. The trend shows that white bagging and buy-and-bill are expected to grow, as we mentioned during our HIV Day in 2024. We're seeing a greater shift towards specialty pharmacy for prescriptions, with white bagging likely making up around 70% to 80%. The remaining portion is from buy-and-bill. This situation is not fixed and will change as more people become familiar with the process and integrate the J-code into their practices. All these factors will develop over time, but that's the current observation.

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?

So what we're seeing thus far, and it's still early, right? Because we're trying to see how this all plays out. But most of the plans so far have added Yeztugo to their formulary with zero co-pays. So high 80s, if you're looking for a number and very few step edits and prior auths. And if they are, they're very simple. And so we do think it's really important. It's one thing to have access. The quality of the access is also very important for us and to make sure that the people who may want or need PrEP can have access to it. And that's very much in line. I mean those goals were set because of Descovy. And Descovy as of September, access is at about 99% of lives covered with about 88% unrestriction, no restrictions. And so that gives you a little bit of a flavor of kind of the direction of where Yeztugo is going. Not there yet, but definitely well on its way.

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? And really just wondering, like what are the biggest barriers for a patient wanting to switch to do so?

Sure, Brian. I'm glad to provide an update. The situation is evolving. Currently, we're seeing a significant reduction in the time it takes from when a physician writes a prescription for Yeztugo to when it reaches a specialty pharmacy and goes through the approval process. Previously, this could take over a month, sometimes 4 to 6 weeks. Now, that timeframe has been cut by more than half as access improves. However, we still need to ensure that the logistics are in place, making sure the approval aligns with when the drug arrives at the office and when the patient comes back for their appointment. This process can still take a week or two, depending on both patient and doctor availability. We're closely monitoring the conversion rates from prescription to approval, and from approval to administration, since that's when the data gets captured. We are consistently seeing improvements each month in these metrics, and as familiarity with the process increases, it should become even smoother. On another note, the buy-and-bill model simplifies the process since everything occurs at the doctor’s office. With buy-and-bill gaining traction, we are likely to see even quicker turnaround times. I hope this gives you a clearer picture of the patient's journey.

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? Any color would be appreciated.

Sure, Carter. There's a lot of week-to-week variability with IQVIA versus what we're seeing. Obviously, we track as well. And it really depends on the reports that you're looking at within IQVIA as well. I think it's going to take a couple of quarters for this to stabilize a little bit. I think it's a good directional indicator. And depending on the report, just make sure you're looking at both the SP intakes but also the buy-and-bill and kind of merging those two pieces together. Those two pieces together, although sometimes accounts are missing, directionally are in line with the overall of what we're seeing. But the volatility with IQVIA is definitely real right now, and I think it's going to take a little while to settle. We've seen that before with other products as well.

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?

Sure, Terence. I think that's the right way to think about it. I think 14%, 15% is the right approach for this market growth. This is obviously fueled by many of us to make sure that there is increased awareness of the options within PrEP. And I think that will continue to be fueled as the noise kind of increases as we go into 2026, whether it's through social media or direct-to-consumer advertising. And so I would assume about a 14% to 15% growth continuing with PrEP.

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?

Tyler, we'll hand it over to Cindy to give Johanna a break.

We haven't disclosed our filing dates for anito-cel, nor do we intend to. However, we are eager for a launch in the second half of next year, and we're on track for that. As Dan and Dietmar mentioned earlier, we will present a data cut for anito-cel at ASH, and we look forward to sharing that information. Regarding your inquiry about similar efficacy and improved safety, we are pleased with the safety data, which is comparable to what we presented at EHA, and we are excited to share that data at ASH.

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.

Absolutely, I'm glad to provide that information. Regarding ISRs or injection site reactions, this is typical with any injectable. We've made a strong effort to educate healthcare professionals and their teams about the proper administration of the injection, as well as pre- and post-treatment techniques, such as applying ice to improve the experience. We've successfully trained over 7,000 healthcare professionals across more than 1,500 accounts, achieving a 98% satisfaction rate from the training. Our nurse educator team has been instrumental in reaching out to every clinic across the country, and this has proved to be very beneficial. For those opting to use Yeztugo, we believe that a little information can significantly enhance the experience for both patients and healthcare providers.

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?

Thanks, Courtney. This is Dan. I appreciate your question. It's important to emphasize that we are continuing to have positive and productive discussions with the administration on a variety of topics. In every meeting with the team, it has become clear that the administration wants the U.S. to lead in biotech and pharmaceuticals while also addressing the costs patients pay out of pocket in the U.S. and encouraging other countries to better recognize the value of innovation. These principles guide our discussions, and we are making strong progress. Regarding any specific information about Gilead, I can only refer to what has been publicly disclosed. Recently, we announced a partnership with the U.S. State Department related to PEPFAR to bring lenacapavir to low and middle-income countries as an example of this productive dialogue. Gilead's unique role in combating global epidemics aligns with the administration's objectives, whether related to national defense or public health crises, and this has been well-received. Additionally, I want to remind you that as we engage with the administration, the majority of our intellectual property is based in the United States. Consequently, tariffs related to transfer pricing may have a more limited effect on us compared to our peers. We have over 80% of our intellectual property in the U.S. and pay about 90% of our taxes here. Our research and development infrastructure is nearly all based in the U.S., and we are committed to investing significantly more, around $32 billion. Our conversations are broad, and we will continue to update you on any new developments, like our recent announcement with the State Department. Overall, we feel optimistic about the constructive nature and direction of these discussions.

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?

Great. So we'll start with Dietmar. Welcome, Dietmar and another quick break...

Another quick break. Yes, Joey, thank you for the question. I mean we're not, of course, commenting in depth on the regulatory strategy. But different factors give us confidence. One, we have additional data with regards to how the medicine is injected, what's the experience also that patients would have with the injection. And also, we have really the experience from Europe where the drug is used now for some time, and that gives us additional data from the real-world setting that we can also utilize. So overall, these additional data sets plus then further work on the filing for the U.S. gives us the confidence that we can move forward here.

Yes. I'll close by discussing the market opportunity, tying back to earlier comments about the strategic alignment with Livdelzi. Hepatitis B affects a small percentage of the population, and it's a rare disease. A minority of these hepatitis B patients also have hepatitis D, which can lead to worsening conditions like liver cirrhosis, liver cancer, and even death. Therefore, it's crucial to reach these patients promptly. We believe that given our presence in the hepatitis B market, we are well-positioned to make a meaningful impact for these patients. Though the market is smaller, it enhances our overall footprint. This is why we consider Hepcludex significant, especially in light of the unmet needs currently, since there are no other treatment options available at this time.

Terrific. So let me, first of all, thank all of you for joining today. We really appreciate your interest and time. I also would be remiss not to thank the Gilead teams for another great quarter in our growth journey here. And as you've seen, I just want to point this out, strong commercial and clinical execution along with disciplined expense management in a consistent way quarter-to-quarter is what you have seen from us and what you should continue to expect from us. So we believe we're very well positioned as we go into 2026, not only with the current and upcoming product launches that we have today and spoke about a lot today, but also the strong clinical pipeline. And I just want to point out, we have some important readouts coming up in oncology and HIV in this quarter and into next year. I just would remind you again that really, we're in a relatively unique position with no patent expiries before 2036. So for that, I'd like to, again, thank you for your time today. Jacquie and team, as usual, are here to follow up with you on any of the questions that you have. Please don't hesitate to reach out and wish you all a good rest of your day. Thank you.