Gilead Sciences, Inc. (GILD) Earnings Call Transcript & Summary

Excellent. Well, thank you guys for joining us. Really excited to have Gilead management again in Miami. I think the conference is not complete without you being here, Andy. So thank you for being here.

Thank you. I'm thrilled to be here again. Thank you.

You're the Miami ambassador. Well, I'll let you kick things off, and we'll jump right into it.

Great. Yes. It's an exciting time for Gilead, and I'm pleased to be here to represent the company. I think that the high-level overview of the company, many of you know, Gilead and our HIV business, I think part of what's so exciting now is not only is the HIV business doing incredibly well and growing, and we're diversifying it, which we'll spend a lot of time talking about. But we had 2 other franchises which are also growing. Again, a large liver disease franchise, which includes viral hepatitis treatments and a new treatment for PBC, another liver disease that we're very excited about. And then our oncology franchise, which is today, Trodelvy in cell therapy. So 3 growth drivers that we expect to deliver significant growth between now and the end of the decade and beyond. So it's a great setup for us from here, we believe, and a lot of exciting data and launches and developments.

Outstanding. Well, there's a lot to unpack. I want to go down this sort of linearly. But maybe just to start with something more topical, and we'll dig into in a much more linear way. I know BD is something that comes up a lot. I know you've spent a lot of time on it, obviously, Andy. But just remind us your thoughts on that, what you guys have said? And -- because in my mind, I still think of you guys as doing sort of mid-sized BD deals is sort of where the focus is at, and Immunomedics was more of an exception, but I know there's often like random speculation as well. But could you just...

Yes. No, thank you. I think that's exactly right. I mean, look, what -- at a high level, what we'd say is -- what you should expect for the next 5-plus years is very different than what we had to do over the last 5 or 6 years. When our CEO, Dan O'Day started the company 5 years ago and when I started 8 years ago, we had a reasonably small research group, which we've invested in significantly. It's now much larger. We have a much larger research team in oncology and inflammation to complement our world-class virology research team. You see throughput now in terms of numerous molecules coming from our research group into the clinic, all of which relieves the pressure to do additional BD. And we've also done a lot of late-stage BD to diversify the business to deliver growth drivers. So we'll continue to be active in BD, but the focus is really on ordinary course, licensing deals, small acquisitions. And the acquisition that we did this year of CymaBay is a great example of that. It was a $4 billion acquisition of a late-stage product that was near approval had significant synergies for us. That's the type of BD that we're focused on. So smaller deals, ordinary course. We really like the size, depth and quality of the portfolio that we have today across the company.

And therapeutic area-wise, because I remember you guys were being a little more sort of guiding us to directionally at least. What areas were of more interest?

Yes, it really is inflammation/immunology, oncology and virology.

I&I first?

Yes. Well, no, no. I'd say I&I and oncology are the 2 areas where you see the most opportunities. Virology, we would love to add additional virology assets. There's just not that much happening outside of Gilead and academic centers in virology. So there are a number of virology companies that we follow closely, but there's orders of magnitude more companies focused on oncology and immunology opportunities. And so we look at all of those. And cell therapy is an important piece of the business for us. We always look at cell therapy opportunities, most of which are also in oncology and immunology. So that's the primary focus.

Got it. Got it. Got it. So Andy, I know we've talked about this several times in the past as well. I mean you guys clearly don't have LOEs well into 2030s. And now it looks like with some of the HIV innovation, even that could be pushed out. I'll get to the top line into 2030 and some of that stuff that we've already discussed. But is it -- is there a realistic case that you guys could effectively do it again, what you did to Atripla franchise with...

Biktarvy. Yes.

Biktarvy, and now Biktarvy was something [indiscernible] plus the next-gen thing that you guys are showing some early data on?

Yes. I think that the yes, what Umer is highlighting is that we've always, as a company, out-innovated ourselves and replaced our earlier generation products with next-generation products that deliver unparalleled efficacy. And in some cases, greater convenience. And that's exactly what we're doing now. So in both treatment and prevention, we have the market-leading therapies in HIV. Biktarvy for treatment, Descovy for prevention. If you look at what we expect to launch now in the middle of next year, a next-generation treatment for HIV prevention that should be completely game-changing in terms of both the efficacy that it delivers because it's in every 6-month subcutaneous. And the convenience that it offers patients, and we'll talk more about that. The same thing will be true, we believe, in treatment. We already have 4 or 5 different programs in the clinic. We expect up to 4 new approvals in HIV therapies between the end of the decade. Between 2030 and 2033, maybe another 3 approvals that could be coming. We're going to spend a lot of time talking about this at an HIV Day that we're hosting next week for analysts and shareholders. But we do expect that those programs give us the potential to further transform the HIV treatment market. And that the longer-acting therapies, in particular, should demonstrate additional efficacy above and beyond what you see with daily orals, just given that people don't always take their pills on a daily oral basis.

Got it. Since you touched up on it, could you just remind us, so this HIV Analyst Day, I think the time lines are close enough to ASH, but this is dedicated specific to HIV. And is there any specific focus for you guys just in terms of products?

Well, I think the focus is really on where we see the PrEP market going with the expected lenacapavir. So it's going to be equally divided between treatment and PrEP, to be clear. But primary focus is with the incredible PURPOSE 1 and PURPOSE 2 data for lenacapavir for HIV prevention that we -- that came out earlier this year, talking about the data and our expectations for the launch of lenacapavir, which is now expected next summer, summer of 2025, a little bit earlier than previously expected and why we believe that is so transformative for HIV prevention. And then on the treatment side, it's really an opportunity for us to highlight all of the new programs that we have, many of which are in Phase III, Phase II. There are a number in Phase I. And how we see the HIV treatment market evolving over the coming years. Your point of like, how do you go from Biktarvy, which is clearly the gold standard in HIV treatment, and develop additional therapies that are equal in efficacy to Biktarvy but may offer added convenience for people across the globe that have HIV. And as part of that, we'll start sharing some clinical data, both clinical and preclinical data in terms of these long-acting programs and why we're so excited. I think overall, we have in HIV treatment, 9 or 10 programs that are in the clinic or very close to the clinic and try to give people an update on all of the different combinations that we're looking at.

So -- and I want to go through the post Biktarvy, the financials through Biktarvy LOE, as well as the PrEP market.

Sure.

But maybe -- I guess, let me just go more linearly or -- let's just go more linearly. Let's start with near term, the PrEP opportunity. Could you remind us, GSK aptitude launch was not that great. Obviously, lenacapavir data is a lot better. However, does that tell us that this is not exactly a launch that will go kind of like how Biktarvy went? Is that a reasonable way to think about it?

I don't -- I mean, I think it's -- we expect a very strong launch. I mean the clinical data for PURPOSE 1 and PURPOSE 2 is transformative for HIV prevention. So the competitor launch that, as you acknowledge, hasn't gone that well. And it's a product that has a very small piece of the PrEP market. When you look at the PrEP market today, there are 2 orals that are approved, both of which were Gilead products, 1 of which is now generic. They have about 96% of the market. 4% of the market for the 1 long-acting therapy that's available. But you have to remember, that therapy is injected intramuscular, there are 2 intramuscular injections that are required either every month or every 2 months. And it doesn't fit the treatment schedule. It's unpleasant, it's very painful for patients. And they have better options, frankly, with the daily orals that are available today. You fast forward to lenacapavir, and you now have an every 6-month subcutaneous injection that matches in terms of timing, the frequency at which people at risk of getting HIV tend to go see their primary care physician or their physician in any event. And you have data that is really game-changing in terms of the PURPOSE 1 study. As you know, we had 100% efficacy and in PURPOSE 2, 99.9% of people...

Did you guys facilitate a switch from your existing franchise?

Yes, I think we can. Yes, absolutely. And that's the focus in the short run. So the PrEP market, for those of you that don't know the HIV PrEP market, there's about 400,000 to 450,000 people on HIV prevention today. The vast majority of those lives that are on the daily orals that Gilead developed. And that's a small fraction of the people that should be on HIV prevention.

400,000?

400,000 to 450,000 people today. If the market were branded today, if the entire market were branded today, again, when Truvada went generic over 3 years ago, it was about a $2 billion of revenue for us. The market's grown dramatically the PrEP market since that time, even though it's still very early in its development, we believe, not only in the U.S. but globally. Today, if you kind of fast forward, we think it's probably -- if the whole market were branded, about a $3.5 billion market. And the vast majority of people that take HIV prevention don't take their pills every day. So when you kind of run it through your model and you adjust for compliance, let's say that with the long acting, you have a 20% to 40% compliance or adherence uplift. Obviously, the incredible clinical data that we have supports a strong price. There's probably less discounting in the future given that Descovy was more heavily discounted in order to maintain parity access for Truvada in the United States. It's a big opportunity for us out of the gate, just focusing to your point, on people that are currently using PrEP.

How much of the 400,000 are on your brands right now on the Descovy?

Well, it's almost 50% are on Descovy, and the remaining, whatever is 52% to 56% depending on your data are on mostly Truvada, and then a very small percentage on APRETUDE.

So of the -- if the market is $3.5 billion, in branded dollars and let's just call it, $4 billion or so compliance adjusted, $4 billion to $5 billion compliance adjusted, you have half of that right now, which could be transitioned and then you go after the rest and grow the market?

Yes, absolutely. I mean our goal is to transition the entire market as quickly as possible. I mean back to your question of why do some launches go well and some don't go well. And you know this better than I do. There are countless examples in the history of kind of the pharmaceutic -- I mean -- and one of the best one is in HCV. If you look at telaprevir versus the next-generation HCV therapies. It's not a great analog. But there's -- the same thing was true in pulmonary hypertension with the flolan, which was an early inconvenient molecule that had $300 million or $400 million in sales. And then you have Actelion launching Tracleer, which became a massive market. So that is, in general, how we see lenacapavir for PrEP. It has -- it really has the potential, not only with its clinical data, but with its convenience to transform the prevention market in the same way that generally, our HCV therapies, transform the HCV market, even though there were other therapies available when they launched.

Got it. Andy, if there's a question on PrEP that I feel like has not come up at all in the conversations is Merck is putting out data on 1 pill once a month, which you guys are probably very familiar with because it's the same scaffold as islatravir, which you guys were partnered on previously. It's the...

Islatravir. Yes.

Islatravir. I'm curious how you guys think about that 1 pill once a month, any risks with that or not? My personal concern is CD4 accounts with that, but I'm just curious...

Yes. And we're still partnered with Merck on islatravir. So we actually have a weekly oral combination of lenacapavir and islatravir that is in Phase III studies. Look, I do think there probably is an opportunity for once-monthly oral and prevention as well, and we're also working on that. So I think the much bigger opportunity is that every 6 months subcutaneous, and then the every year subcutaneous. So I'll save some of this for discussion at the HIV day next year.

I see. So do you guys have a once-monthly oral as well for PrEP?

We've already formulated lenacapavir as a once daily, once-weekly pill. We believe we can formulate it pretty clearly as a once-monthly oral and then as in every 3 months and every 6-month subcutaneous. I think the big -- for us with lenacapavir for prevention now, not only would we look at long-acting orals, but we will also look at longer-acting injectables. So if you really...

[indiscernible] weekly oral with LEN as well for PrEP?

Absolutely.

And is that a...

So we haven't started any studies. I mean, so that's the -- I mean the question is really the commercial opportunity and where patients want to go. So this is something that -- again, I'll save our commercial team, and our R&D team can speak to this more next week. But there are a number of opportunities there. Overall, at a high level, we think the lenacapavir every 6 months is the perfect opportunity for the vast majority of patients that are in PrEP. And the next big step will potentially be in every year injectable.

But if needed, could you have a very quick transition referencing lenacapavir data and then having...

It's a good question. We look at that closely. It's probably too early to say anything in terms of the regulatory path, given that lenacapavir is already approved now, both for treatment as an every 6-month subcutaneous. And we believe soon to be approved for prevention. So more to come on that question.

Got it. So if the underlying business is growing, let's call it, low single digits and with PrEP coming on board, is mid-single digits the right number from a growth perspective? I know consensus is kind of like a 3% or so through 2030, 3-ish percent is probably the average. How do you think about that? Granted, '25 has different dynamics, but I'm talking...

Yes, '25 has different dynamics with Part D reform. Look, I mean, if you look at the third quarter, we updated our guidance for our HIV business this year to grow 5% this year. So -- and that's a combination of the growth in treatment and the growth in prevention with Descovy. So I do think kind of that directionally is the right way to think about the business through the end of the decade and beyond.

Mid-single digits?

Yes. I mean yes, I mean, directionally, and the PrEP launch has potential to drive that higher. The treatment market is very clearly in all major geographies, growing 2% to 3% each year, just in terms of the incidence of HIV. And then the PrEP market is growing much faster. And you saw an acceleration in growth of the PrEP market in the third quarter. That may have been because of the increased awareness from the lenacapavir studies. But the PrEP market has the potential to grow much, much more than the treatment market and to drive the overall growth through the end of the decade and beyond in a way that's consistent with what you've seen in the last couple of years. I mean the other thing to say, Umer, as you know, if you look at the last 3 years of our HIV business, the business has performed incredibly well. So what we saw in the third quarter and the updated guidance for 5% growth this year in the HIV business is not at all inconsistent with what you've seen over the last couple of years. The business just continues to really, really perform well.

So Andy, as you guys do the HIV Analyst Day, we're starting to get more visibility on PrEP. Now the next gen treatments as well to lay the past half well beyond Biktarvy, which is technically a conversation into 2040s perhaps are approaching that. Would you guys ever consider putting out some sort of long-term guidance talking about what the EPS power of the company could look like?

When we talk about it and debate it, I mean, obviously, there's always long-term guidance can be a double-edged sword in terms of my experience, our CEO's experience of what we've seen companies do when they put themselves in that position. I do think it's fair to say -- and we provided guidance that, as you know, that we expect to have a positive CAGR through the end of the decade and beyond. So just a step back with the HIV business, Biktarvy does not go generic until the end of 2033. It's December of 2033 at the earliest that you could see Biktarvy go generic. Between now and then, we could have up to 7 launches. We'll continue to innovate new products, and you have -- that's just 7 launches in treatment potentially. And then you have the PrEP growth as well. So there's no doubt there's -- I mean, this is a $18 plus billion business for us that's growing, as you said, kind of currently at mid-single digits. And we've got this incredible PrEP launch in front of us that we expect to kind of redefine the HIV prevention market, not only in the U.S. and beyond. So you should see meaningful growth in our HIV business. I guess the key -- one of the key takeaways we think from the HIV Day coming up will be that people will have a better sense of the stability and durability of our HIV business beyond the Biktarvy patent cliff.

Got it. Okay. Maybe -- and I want to transition to some of the other parts of the business as well. Maybe a quick one on the all oral, the Biktarvy plus lenacapavir combination. I guess the one question I wonder is a similar question I asked GSK a while back. No nuke, how do you think about the risk of that in an all-oral regimen? Wouldn't you want to have a nuke? Or is it not the only option.

It's not the only option. First of all, Biktarvy will continue to be the standard of care for patients that are diagnosed with HIV. So for those that don't follow the market, 50% of the patients with HIV in the United States currently take Biktarvy. I think it's 60% or 70% start on Biktarvy. There are -- and Biktarvy is the clinical data, the real-world data is just incredible. There are no limitations with Biktarvy. The doublet that we are developing includes bictegravir as the integrase backbone, which we think is the most important. And lenacapavir as an HIV capsid backbone. Both of those independently have very high barriers to genetic resistance. And so we are comfortable that that is an incredibly powerful combination as a doublet. It's really more of an opportunity for switch. I mean, if you -- there is 1 doublet available today that has about 10% of the market. This is an opportunity for patients that, for whatever reason, want a doublet to have another option of the doublet, which we believe contains the 2 best molecules in HIV treatment. So our scientists, we wouldn't -- maybe to answer your question, we wouldn't put forward the doublet if we didn't think it would deliver outstanding efficacy and safety. And the clinical data in the Phase II study supports that. So the very strong Phase II data. We're in Phase III studies now. But there's a big part of today's market that is on a doublet in both the U.S. and Europe, and this gives them what we think will likely be a better option. And of course, then there will be a series of additional long-acting options that come that many people may want to switch on to as well.

Got it. Let's transition to oncology business. A couple of things there. I think the first one is -- maybe just to -- for folks that may have missed it. There's always like market speculation that comes up from a BD perspective as well. But I think one of the comments you made at the start, which I think you guys have been pretty consistent on is the scope of BD is limited to small to midsized transactions, and that's kind of the direction you guys are going?

Yes. Yes. I mean that's absolutely right. I mean look, when I say -- and it's more small transactions. I mean, the transaction -- CymaBay was like a $4 billion transaction, we still view that as a small transaction. We generate a lot of free cash flow. You saw us generate $4.3 billion of free cash flow. In the third quarter alone, you'll -- I mean, our cash position is very strong. It grows significantly over time. And I mean, this is more about the quality and depth of the portfolio that we have today versus what we had. So when I think of the Kite acquisition is an $11 billion acquisition, that was more midsize. Immunomedics was a much bigger acquisition at $21 billion. It is unlikely that we do any deals like that, and that's really not our focus, given the quality and depth of the portfolio today.

Got it. That makes sense. I ask also because there's always like Street speculation that comes up on you guys and some of your partners and if it would make sense to consolidate the economics. I know anito-cel, for example, on the Arcellx, that's a program that gets a lot of Street attention, but also some amount of speculation as well on sort of from Gilead BD perspective as well. So could you just remind us just the broad strategy on the ecosystem you guys operate in? The focus is really on external innovation in some of the other areas rather than consolidating economics.

Yes. I mean we have dozens of really important partnerships with great partners across the globe, and we're expanding that over time. One of the most prominent and one that we are incredibly excited about is our partnership on anito-cel with Arcellx, to your question. And that's a partnership that's structured to really benefit both companies, and you've seen that. So all of our partnerships, we really work on creating a unique structure for each individual partnership that should benefit both companies. The mindset is always you have to align interest and create value for both companies in order to deliver a great result. And I think that's exactly what we've done there. The -- there's always the question of do you consolidate those over time. That's not our base case. It shouldn't be your base case. Because we structured this to create significant value for both companies over time. Of course, we'll always look at it. We have a very open discussion with our partners. But it also comes at any time you think about that, again, just speaking generally, my colleagues and I would always have to consider what are the alternative uses of that capital. So there are times where that could make sense for you to do that. But the base case is that you're using your capital to further diversify and bring in other similar opportunities. I will say...

[indiscernible] time of these partnerships.

Yes, exactly, exactly. I mean, anito-cel, though, is an incredible cell therapy construct. We -- there will be additional data presented at ASH next week that we are very excited, and I know Arcellx is excited to share. It clearly appears that it has the potential to be the best-in-class BCMA cell therapy, not only in terms of efficacy, but also in terms of safety. And it appears -- I mean, we have treated over 140 patients to date. And every which way we look at it, we believe that this looks like a really special cell therapy.

Andy, not to take you down the wheelhouse of sort of the clinical trial design conduct nuances, but there's the school of thought out there that the LEGEND trials were not as intense on steroids or very, very light on steroids. And then the Arcellx trials were very intense on steroids. And maybe that's what explains some of the differences. I'm sure that topic's come up, but what you hear on that?

Yes, we look at that -- I mean, we look at it closely. I mean, the other thing that you hear is that there are some later line patients and one -- I think from our perspective, when we look at it, there's not that big of a difference we see in terms of response rates between fourth line and fifth line patients. For instance, where you really see a difference are the patients that have extramedullary disease. I'll get back to your question on steroids. From our vantage point, the patients that have been treated by Arcellx with anito-cel overall are sicker and have more advanced disease generally and you still see phenomenal efficacy. In terms of kind of the pretreatment, we've looked at it. I think our belief is that the difference in the side effect profile which you're really alluding to is less about pretreatment and much more about the unique engineering of the D domain binder that Arcellx has in the cell therapy. And what it really -- there's always been this debate about the length of time that the binder binds to the ligand and the potential for tonic signaling. And the D domain binder, which is very different than your typical kind of antibody binder, as I understand it, has a very short kind of binding and synapsis that we believe likely leads to this -- the better safety profile. So we'll see over time. But I know there's a lot of debate. At the end of the day, the data is really remarkable. You'll see next week more data, larger data set and longer treatment in patients. So I expect people will have more information to look at as they look through it. But I think it's more likely the construct and less likely the protocol for treatment.

So if it is best-in-class, are you guys thinking this is a peak sales that approaches $5 billion, in those types of ranges, the types of numbers J&J put out for you?

Yes. I mean, it's pretty simple. What we've said publicly is that the second line plus opportunity for BCMA CAR Ts is a $12 billion-plus opportunity in second-line multiple myeloma. I mean maybe the other way to think about it, Umer, as you know, is we have about $2 billion of sales today with Yescarta and Tecartus in predominantly DLBCL, but also follicular lymphoma and a couple of other smaller indications. Those are much -- and that's only 15% of the people getting those cell therapies that should be getting them in the United States. It's higher in Europe. In multiple myeloma, there appears to be a much greater pull from physicians for curative cell therapy and the multiple myeloma market is at least 2x as big as the DLBCL market. So when you kind of think of the BCMA multiple myeloma opportunity in the context of what we're already doing with Yescarta and DLBCL. It's not hard to imagine a cell therapy getting to $5 billion plus in sales. So again, I'm not providing specific guidance, but -- what I can say is we said earlier this year at our CAR T Day that think the second line plus opportunity for CAR Ts is $12 billion plus. And I think that's consistent with what you've heard from some of our competitors.

Got it. So speaking of Yescarta, one of the things I noticed was 7% drop quarter-over-quarter. And if I looked at U.S. more specifically, it goes from $250 million down to $208 million, which kind of got me worried a little bit. Can you speak to that dynamic? Is it just competition from other antibodies or other CAR-Ts? Or is it something else happening?

It's both. I think what's really happening is that you're not seeing the increase in CAR T class usage in the United States that you should see with what appear to be curative regimens. And to put it in context, where I mentioned earlier -- I mean, for those of you that don't follow CAR-T, I mean, you're looking at data with CAR-T in lymphoma patients that have been through at least 2 other therapies, in many cases, 3 or 4 other therapies. They have months to live, and 40% to 50% of these patients appear to be cured after 5 years. It's incredible data. Only despite that, given some of the complexities of CAR-T treatment and in particular, the fact that you -- most of the treatment is done in academic centers or large city hospitals. Only 15% of the patients in the U.S. that should be getting CAR Ts are getting CAR Ts. If you contrast that to France, for instance, 40-plus percent of patients are getting CAR T in second line plus and DLBCL. So that's the real challenge. And so our job is to further the CAR-T penetration, not only in the academic centers, but in the community, where 80% of the patients are today. And that doesn't happen overnight. And we need to get that 15% usage in the U.S. to 40% or 50% usage over time. In the meantime, the -- to your point, there is increased competition, both from one other CAR-T player, in particular, that now has greater manufacturing capabilities and availability and from some of the bispecifics. In each center, it kind of varies in terms of what's driving it. The other thing that you see is there are lots of cell therapies that are in clinical studies that are competing for capacity at the transplant centers. And then finally, the multiple myeloma cell therapies as they become more and more available, they're also competing for some of the beds in the treatment center.

Is that Novartis competition on the CAR T side?

No. It's more J&J and BMS in terms of the BCMA and the...

Sorry, I'll go back in the Yescarta.

No, no, no. No, I think -- I mean, the vast majority, if you look at lymphoma and Yescarta, the vast majority of the competition is between Yescarta and Breyanzi today. The -- and then you have the bispecifics. But maybe just to kind of step back, though, in terms of -- so in the short run, what we've said is you likely see kind of flat quarter-over-quarter sales in the fourth quarter. You'll see modest growth overall in 2024. But we do very much believe that the cell therapy business is a significant growth business over the next 5 years, 10 years and 15 years. And that's not just anito-cel cell. That's our Yescarta franchise, the next generation of Yescarta. We also have cell therapies in I&I indications that we're moving into the clinic and in glioblastoma. There's a really exciting cell therapy that we licensed from [ Penn.] So there's a lot of growth drivers, but there will be both in the fourth quarter and certainly, at least in the first half of next year, continued headwinds in the U.S. The other thing I should say, Umer, is the business is still growing beautifully outside of the U.S. We are seeing increased competition in some of the major geographies in Europe as well. But there's a significant push on our side to continue to build out our CAR-T sales and marketing effort outside of the major geographies in the U.S. and Europe.

Could some of these headwinds we're seeing in CAR T business also replicate on Trodelvy next year with the Enhertu competition?

Well, I mean it's a different -- completely different dynamic, but we're already -- there's already -- Trodelvy has always faced stiff competition. And with the Enhertu launch, has been facing stiff competition. And again, we like cell therapy, we still see Trodelvy as a significant growth franchise for us over time.

In '25 as well?

Yes, it should grow. And again, we'll provide more specific guidance, but the oncology business should continue to grow, not only in '25 but beyond, and that's both Trodelvy and cell therapy. The -- we also have some important data readouts with Trodelvy in breast cancer, including in earlier lines triple-negative breast cancer, either coming out later this year or next year that we'll see could provide a significant further growth opportunity there.

Enhertu in triple negative, getting that indication overlap, could that meaningfully change competition, competitive dynamic next year?

It could. It will change the competitive dynamic, and we think it's manageable.

But that will be baked into the guidance?

Yes. And again, the data, for those of you that don't follow Trodelvy that closely, the data in triple-negative breast cancer and the hazard ratio that you saw in the Phase III studies at Trodelvy, it's really remarkable, as you know. So it's a very high bar for any competitor, including Enhertu. And we feel really good about our competitive position there. The same thing is true in triple-negative breast cancer, where I think we have strong data. There is more competition -- I'm sorry, not in triple, in hormone receptor positive breast cancer, there's strong competition as well. But when you step back, again, short-term headwinds in terms of additional competition in the long run, Trodelvy is very much a growth driver for us, not only in breast cancer, potentially also in lung cancer and endometrial cancer.

Got it. So then I guess as I think about next year, Part D reform hitting you in HIV, which takes the growth down over there. Oncology, you expect growth on cell therapy and Trodelvy regardless of the competition. But the net-net overall for Gilead top line, could you remind us the thought process?

Yes. I mean, we'll give more specific guidance early next year, but we expect the business to grow overall. I mean the key next year is, if you look at the growth of the business prior to the overlay of Part D, you should expect to see strong growth in the business just like you did in '22, '23 and this year so far. So just to remind people, our base business grew 8% in '22, 7% last year, so far this year, and you saw it in the third quarter, relatively similar growth, very strong growth, including in the HIV business. All of that will carry forward into 2025. You then have the overlay of the Part D reform, which will offset most, if not all, of the growth in the HIV business has been our guide. So the overall business will grow, but the growth in that year is obfuscated, so to speak, by the Part D reform. And then in '26 and beyond, you'll be able to see that growth kind of from a year-over-year basis again.

Okay. So you do expect overall business to grow next year?

Yes.

Okay. I'll tell you why I was sort of really focusing on this, Andy. So the overall business growth, at least as per consensus numbers, is like sub $500 million, more like $300 million to $400 million year-over-year, net of all the Part D reform and all that. However, oncology growth is $500 million, meaning the oncology growth being modeled by consensus for next year exceeds the overall growth for the business. Now oncology is primarily, I'm thinking Trodelvy and cell therapy. Both of them have this competitive dynamic going on. So I guess I'm just thinking and trying to stress test the model, could there be a scenario where Trodelvy is kind of flat because of Enhertu competition and then cell therapy could theoretically have a flat scenario as well? And if those dynamics happen, then there's not growth next year. And I guess, will a low end of the guidance range try to incorporate some of those challenges as well?

Yes. I mean I guess what I'd say is you have to hold some of those questions until we provide specific guidance. I mean, all I can say is what I've already said, which is that we have 3 separate franchises, all of which we expect to grow overall through the end of the decade and beyond. And the other thing maybe just to highlight in terms of your question, is we have 2 launches, one of which is underway with seladelpar that should drive growth really that you'll see meaningfully starting in 2025. There is growth in the third quarter, there will be growth in this quarter, but it's harder to see as you move through all the step edits and to get patients on this rare disease therapy. And then obviously, the launch in HIV of lenacapavir for HIV prevention is coming a little bit earlier than expected. So that will go into our calculus as well.

So that's late next year?

It was late last -- next year, and now we've updated our guidance to highlight that we expect to launch lenacapavir in the summer. So we're making significant progress in terms of preparing the regulatory filings and having very productive discussions with regulators.

Got it. Excellent. On seladelpar, if there's 1 confusion I've had is I know there's a sales expectation. I think consensus is at about $1 billion or so. I think there was an 8% royalty to J&J.

Just the peak sales. Yes.

Peak sales. $1 billion or so. There's an 8% royalty, I think that was baked in. But that royalty sale that happened from J&J for only $300 million really, really confused me because that implies peak sales are materially less than that. And I was not sure what happened. Was it the impact of the royalty market?

Yes, I mean that's more of a question for J&J on their view. I mean, obviously, we paid $4.3 billion for the company. We've said consistently that we think PBC is a much bigger opportunity than the market appreciates based on historic sales. I've talked a lot about the analog of the pulmonary hypertension market. These are very similar markets, similar size, similar pricing, large orphan disease. So that was a great -- I mean, the royalty sale is simply just a great opportunity for us to clean up a royalty at a price that we found very attractive relative to our expectations. So I can't speak for J&J in terms of what they were thinking. It was great, it's a company that we've had a long relationship.

We're you guys surprised about the price you're getting?

I mean I don't know that we were surprised, but I mean it was a price that worked for us, right? It worked for them and it worked for us. So I think it truly was a win-win. I mean, look, they're a very sophisticated company and a longtime partner of Gilead. We have nothing but great things to say about them and their team.

Got it. Maybe in the last few minutes, some of the under -- some of the programs that are a bit more under the radar beyond HIV, beyond some of the core programs. Alpha 4 beta 7, are you guys -- how are you guys sort of messaging around that, the oral?

Yes. We have an oral small molecule alpha 4 beta 7 that we've developed. We believe it has best-in-class profile. It's in Phase II studies. Now it's actually one of many inflammation immunology molecules that we've developed that are in Phase II studies and that there really isn't a lot of attention paid to them. The alpha 4 beta 7 obviously, it's a validated target with the ENTYVIO sales. There's one oral small molecule competitor that Eli Lilly recently purchased. You can imagine, as with all of our molecules, we do a lot of benchmarking in terms of making the molecules and looking at them. I think when we look at the selectivity profile of our molecule and the selectivity for alpha 4 -- alpha 4 versus beta 7, if I remember correctly, as well as the potential for once-daily dosing, which we think this molecule will likely have, we're really excited about it. It may be something that we want to partner with another large company at some point in terms of looking at combination therapy. So a lot of what we're doing in immunology, if you look at the it's our IRAK4 programs. We have a TPL 2 program, alpha 4 beta 7. These are all small molecules that could potentially be combined with other molecules in the I&I space and potentially taken forward as combination therapies.

And the oral GLP, I think your messaging has been very guarded. Let's take it to...

It's actually continue to be guarded.

Any [ GLPR unlike ] scaffold, we'll see how the Phase I profile looks?

Yes. I mean it's a unique molecule that just started Phase I. It crosses the blood-brain barrier, which could be -- it could be something that's a positive, it could be a big liability in this space. So we are in the middle of the Phase I study. We'll have data next year into '26 depending on kind of where this goes. Again, we've said consistently, set cautious expectations here. It's a Phase I molecule. It's a very competitive space. I think our CEO has said, we would only take it forward if we think it has potential to be best-in-class. And even then, if it goes forward, we'd probably try to find a partner for it given kind of the commercial effort that would need to be behind it in the metabolic space.

Got it. Andy, I've heard buzz in the industry that this molecule hung out in preclinical for longer than usual and -- which theoretically would mean there's something around safety that was being navigated around? Is there anything like that?

No, I think it was more of just how we were allocating our resources over time. .

Prioritizing.

Yes, and prioritizing, I wouldn't read anything into that. I mean, look, the alpha 4 beta 7 has been in our pipeline for a long time too. And it's all about making sure that we're allocating our R&D dollars to the programs that we think have the highest probability of success and make the most sense for us. So yes.

Got it. Maybe last minute, the quick one for me is -- and if there's any questions from the audience, we'll take those as well. But my last one is, can you remind us the TAF case, where do we stand now? Is there like a Supreme Court date that's getting posted?

The Supreme Court decision in California should come later this year. So just to remind people...

Without a hearing?

Well, I believe there will be an oral argument, and then you'll get the discussion.

When you say late next year or...

Yes, next year, I'm sorry. I'm already moving into 2025. Sorry. Sorry. Yes. Thank you.

So the decision is late 2025?

Yes. I think -- I don't know what we've said specifically. I think that the briefing documents in the Supreme Court have been filed, where we are right now is there are a number of amicus briefs that are being filed, which is really encouraging. Again, you continue to see groups even outside of the pharma industry filing amicus briefs saying that this theory of action makes -- doesn't make sense would be really problematic not only for the pharmaceutical industry, but others. The other thing, we entered into a settlement agreement with the federal cases, which gives you a very good sense. So again, we have utmost confidence at the end of the day, the California Supreme Court should throw out these cases. And the cause of action, the fact that the Supreme Court took it for review, we find, is really encouraging. There's a lot of support from other companies. And then again, worst-case scenario, you see kind of what happened in the federal cases. This is very manageable from our perspective. So the federal cases were settled.

Is there any hearing coming up in any case prior to the Supreme Court decision.

No, I think all the case -- if I remember correctly, all the cases have been put on stay until both the federal settlement is finalized -- and that requires -- we have the ability to -- the settlement is not binding on Gilead until we get, I believe, it's 96% or 98% of the plaintiffs in the federal case to sign on to it. I think we're close, but not but not quite there. And then on the state cases, as I understand it, they're all stayed pending the Supreme Court review.

Excellent. Anything in the audience? Outstanding. I think you just nailed everything. Thank you again.

Thank you very much. Appreciate you having us.