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

All right. Wonderful. Thank you all for being with us here today. My name is Courtney Breen. I am the Brenstein, U.S. Biopharma analyst. And I'm very pleased to have with me Dan O'Day, CEO and Chairman of Gilead. I will begin by asking Dan to share a few words and a little bit about himself and a little bit about the business, and then we'll dive into Q&A. What I will ask is for all of you in the room and anyone online, please add questions that you have to the [indiscernible], and we'll work to integrate them into the conversation today because we want to make this as relevant as possible for everyone here. So Dan, over to you for a few words.

Thanks, Courtney, and thanks very much for having me here. Thanks for your interest in Gilead. I'm delighted to be here. It's a particularly special time, I think, for the evolution of Gilead, which has had a lot of proud moments in its history. Just as Courtney asked me, I've been at Gilead now for a little over 6 years. And our mandate as a team when we came in was to use the strength of Gilead, but build it in a sustainable way for the future. And I think -- I'm sure we'll get into all these things. But there are really 3 major components to that. One was the HIV business and making sure we had a durable, sustainable, growing HIV business. And my message to you here today is that, particularly with the eminent launch now of lenacapavir for PrEP, it's really the cornerstone of kind of the next generation of our HIV medicines in both treatment and PrEP. And I know we'll talk about that quite a bit. But we're unusual in that as a large biopharma company we really only have one major or larger patent expiry, it's not until 2033 as Biktarvy. And between now and then, we have up to 9 potential launches in both treatment and PrEP for long-acting medicines that will kind of diversify our reliance upon Biktarvy by 2033. So I think that setup is quite unique in biopharma these days and a tribute to what the team has done. So really excited about -- I'm sure we'll talk more about that, but the potential to have that be such an important growing business for us in the future, well into the late 2030s. But that wasn't enough, of course. The second thing we needed to do is diversify into other therapeutic areas as a company of our size, and we did that through a strategic review about 5 years ago, where we said we -- with our immunology scientific background and base, we felt we could apply those skills differentially to oncology and to immunolog/inflammation. And I'm pleased to say that we really made some good progress there. In fact, we now have -- our oncology business at more than a $3 billion run rate, and it really accounts for more than half of our growth on a quarterly basis. And we're just kind of getting going. And that's including both the cell therapy business of Kite, where we're the world global leader there and our non-cell therapy business. And I think particularly when I think about the, if you like, the non-HIV, we have a lot of really exciting launches coming up in the very near term. So I already talked about one in virology that's len for PrEP or lenacapavir for prevention. But then in addition to that, we have a recent launch that we just launched last year, a medicine called Livdelzi, oral form of liver disease, but it works through an inflammatory mechanism. So it falls into that third bucket. And then we have a few exciting oncology or cancer launches coming up. We were just talking Courtney and I about ASCO. We're going to be presenting data there on 1 of our 2 recent positive readouts for Trodelvy, a medicine that is used predominantly in breast cancer today. And these are 2 frontline studies. So today, Trodelvy is approved in both hormone receptor positive breast cancer and triple-negative breast cancer in the later line settings, but this study that we're going to be presenting this coming Saturday is the first of 2 studies in the earlier-line triple-negative breast cancer setting. And although we haven't exposed the data yet, what we have said is it's very clinically meaningful, highly statistically significant and we think it has the potential to change the standard of care. The reason that's important is, first of all, triple-negative breast cancer is a devastating disease, largely afflicting women that are earlier in their life span and there are very few options. So the only option that's really been available in the frontline setting beyond chemotherapy is immunotherapy. And our study with Trodelvy shows that both with and without immunotherapy we have the potential to really advance on chemotherapy, which is really, as I said, been around for about 20 years. So that's certainly exciting for patients. It's also exciting for the growth of our business because the frontline setting more than doubles the patient population for that and a longer durability. There's much more to the cancer story outside of cell therapy, but I won't go into that right now. The other imminent launch is a medicine in our cell therapy business. We're already in lymphoma and leukemia, but we have a very interesting late-stage product now in late-stage clinical trials for multiple myeloma, which is more than double the market of lymphoma and leukemia. And it looks like a very differentiated product in a late-stage trial right now that we'll have some more data on at EHA just after ASCO, but it looks like it could really benefit from a enhanced safety profile and strong efficacy in that cell therapy segment. So this all saying that in our second bucket of diversifying beyond HIV, we're really on a good path and a good cycle. And then the last bucket I would say is we've had to disproportionately invest in order to build this new muscle at Gilead outside of urology over the past 3 or 4 years. We're now at a level of investment that's commensurate with kind of a company our size. So for instance, there's one metric in R&D spend that's around 20% of our sales, which used to be more around 13% or 14%. So we've done that investment. We have really strong both growth potential on the top line, but also we have very good operating margins. We're in the top quartile of the operating margins in the industry because of the areas that we work in, and we intend to keep it that in that way. In other words, leverage is coming back to our model after a time, a purposeful time of investment over the past couple of years. And we remain committed to the dividend and our dividend policy and growing that dividend with this strong financial base. And then finally, we'll do more ordinary course business development moving forward because of the size and the strength of our portfolio. So that's kind of in a nutshell, I think why the Gilead story is interesting right now.

Wonderful. That's a great kind of summation of the business. I'd love to take a minute to zoom back out to the sector as a whole. Because I think the sector is under real pressure at the moment. Arguably, the Gilead stock has actually stayed a little bit more buoyant than many of the other kind of POs in the industry, but there's a lot of pressures on the industry. You kind of think about tariffs, you think about MFN with drug pricing, potential Medicaid cuts, as we look at the big beautiful [ build ], PBM reform, HHS changes, kind of strategies within the organization for the agencies changing in terms of what is acceptable now or what do they see as the bar, but also just straight cuts to those organizations, too. As you think about Gilead specifically in your business, how does some of those kind of relative risks rank for you because it seems to show up quite differently for each company.

Yes. I think you're right to point that out. I do think that everything I just said, for me, the best defense is a good offense, particularly in times of uncertainty. So having the type of portfolio we have with very low patent exposure, strong portfolio, strong fundamental balance sheet and underlying dynamics help us regardless of what happens. I would say -- and that's I think, the reason why we are performing better than the sector significantly over the past 12 months or so. Now specifically, as we dig into these things, and of course, there's a lot of speculation here on many things. But let me just take the tariff issue first, always exciting news when you wake up in the morning on the tariff issue. So -- but let me just say, we split it out into 2 different segments. And here, I think we also have a bit of differentiation on one of the segments. So we talk about non-sector-specific tariffs, those are the general tariffs associated with the construction that we do with steel or the chemicals that we buy for our labs, and what we said at our first quarter results is that we -- while those may be under question after yesterday's announcement, we feel quite confident in being able to navigate those tariffs within the nature of our business within our guidance for 2025. And we can do that because of our balance sheet and our income statement. Also, we're getting a slight benefit on FX headwind or we had some FX tailwinds that also help us offset those. So those are I think less of a concern for us in the short term. I mean I would start by saying every dollar that goes to tariff is a dollar that could be spent in new innovation or returning back to shareholders. So that's important that if we can avoid those, I think that would be important. And then secondarily, for the sector-specific tariffs, one of the reasons we've been called out in general by analyst reports and others is that we're -- while they're unknown right now what they could be, we're likely less exposed. And the reason we're less exposed is because we have as opposed to a lot of our peers, we have the vast majority of our intellectual property in the United States. In fact, about 80% of our intellectual property is in the United States. The reason that's important is because when you transfer medicines from one country to another, it's based upon a transfer price calculation. We transfer our medicines into this country at a relatively high price because our IP is healthier. And we're also a good taxpayer in the United States compared to the large portion of our industry with a marginalized tax rate of around 20%, which is differentiated. So our structure is different. We benefited from the first Trump administration by repatriating quite a bit of our IP. So I think in general, from a sector-specific tariff, not that we're unexposed but we're less exposed. And I think that's also why we're working on those. We fundamentally believe that those are not a good idea, and we'll continue to advocate for that. And then beyond that, I mean, let me just talk about the FDA quickly because I know there's been a lot of speculation around the FDA. Some of our major products that I just spoke about, lenacapavir for PrEP, for instance, we haven't experienced the difference in the way the agency is reviewing our medicines. And it's hard to tell whether that's just because of the nature of our medicines getting their priority status at the FDA, and they do have priority status because of the impact that they have for patients or something else. But as of now, all I can say is that our review processes are going as expected and lenacapavir for PrEP is one, just to put that on the table because it's the most imminent one. It has a so-called PDUFA date or approval date by June 19. Everything is on track for that approval by that date, and we'll see how that goes. And then other interactions we're having with the agency. So while a lot needs to unfold at the FDA, and we're advocating, obviously, for good staffing there and transitioning. Right now, that's worked out quite well for us. And then maybe the last thing, I'll just touch on and then hand over to you Courtney is, the so-called most favorite nation. There's been 2 executive orders out of the White House that are really quite different. One was in favor of things like PBM reform and fixing what's called a pill penalty, which essentially -- it's a technical aspect of the Inflation Reduction Act, which, for a certain segment of products there -- where there is Medicare negotiation. There are certain category of products that are negotiated 13 years after launch, and there are certain categories that are 9 years after launch. Small molecules are 9 years and biologics are 13 years. It doesn't make any sense. In fact, small molecules are some of the most efficient ways to deliver health care, particularly to underserved patients. And we have very strong support within Congress for this and thankfully also in the White House to try to take it 9 years and convert it to 13 years. So we'll see. So that's kind of a positive executive order and still, there's no certainty on any of those things yet because a lot of those things have to [ done ] with legislation. And then there's a second executive order that came out that is on most favored nation. So the concept of the U.S. paying higher drug prices than the rest of the world? And how do you try to square that circle? And it is -- it's a perennial issue. It's one that we've been dealing with for a long time. Part of it has to do with the structure of our U.S. system that is very different than the rest of the world. We're the only country of the world that -- where 50% of every dollar spent on medicines goes to people that don't invent the medicines that's unusual. No other country has that structure. So you have -- it's really apples and oranges comparison. And what I would say is that we want to be productive here. We want to -- as both a company as in the industry, we want to lean into these discussions. We understand the topic. We have ideas for how we're going to be able to solve it. And I fundamentally believe at the end of the day that the administration is not interested in penalizing one of the gems of American industry. I mean we are clearly the envy of the world biopharma in the United States, more than 70% of global investment like global peers that have headquarters in Europe or in Asia, more than 70% of the global investment in the industry goes in the United States today. Why would you want to disrupt that right? And there's also national security issues, obviously, associated with China and having drug supplies and other things. So I think there's a lot to work on with the administration, and we also have to be very clear about what's a bad idea.

Absolutely. And I think kind of this notion of finding common ground seems to be something that the entire industry is behind when it comes to this [indiscernible] .

Very much so. And we want to be at the table. We want to -- we are not -- we want to be part of the solution.

Absolutely. In terms of -- and this is a question that's just come through and kind of everyone speculates on how big is that difference in price between U.S. versus ex U.S.? And I think we heard from Moderna this morning that on vaccines, it's often much more comparable than perhaps for other medicines. Is there anything you can share about your exposure relative to others? And I know this is a difficult question to answer.

No, it is. And it's -- it gets back to this kind of what do you compare I think that's important. And it is very different medicine to medicine. In some cases, it can be 10x more in the U.S. on a pure face value, kind of, if you like, list price kind of perspective. In other cases, it can be 5x. But the important thing is, I think, that you need to correct some of those apples and oranges. So we do provide discounts here in the United States, significant discounts to the government, to the 340B system. So I think as a starting point, you have to start at kind of a net price in the United States. And then likewise, I think when you go outside the United States, you do have to factor for different GDP. So I mean, let's just take France. I mean it has about half the GDP of the U.S. You need to kind of double that price to get -- so I think the differences are often [ conflated ] and confused. What I would say is that, obviously, there's little traction in Congress for a legislative approach to MFN, and we can talk about that if you want to. So most things that could be done today -- could be done through kind of the administration or through administrative action. And those things are largely done through CMS or the government payer Association, and they're largely done through things like demonstration projects. So I would say that because -- and back to Gilead, because we're in a launch phase, right, we're launching so many products in the short to medium term that if you're launching a product into an environment where you may understand how MFN is to be applied, you can make different decisions about how you launch that product outside the United States to reduce the impact accordingly. And we do that today, by the way. There are many medicines that we, as a company and other companies don't launch in certain countries because we just can't get the level of value. It's unfortunate. We always put the patient first. But you just -- there are some countries that make it impossible to launch. And so in a forward-looking basis with the young portfolio, the young product, that's how we think about being agile and adaptive depending if anything does come out of the MFN.

That makes a lot of sense, a bit of optionality in terms of how you play things going forward if there is a new world order perhaps. The next question I wanted to ask, and you touched on this a little bit in your opening is kind of this diversification strategy. And it feels like if we look back perhaps 12 months, 2 years ago, that was very focused on oncology. It feels like perhaps if we look back more of thresholds last 6 to 9 months, the conversation has been diversification within HIV, but also diversification outside and perhaps the size or the quantum of the bits that you're making and the cash that you're having to outlay, to make those bets is also changing. Can you just talk a little bit about kind of how the strategy has evolved there and perhaps where you're at now? And why it looks a little different today than it did 2 or 3 years ago?

Yes. And I like that you articulated diversification within HIV and outside of HIV. I think it's hard to overstate the importance of diversifying within HIV. I mean HIV is a disease that is still growing throughout the world, unfortunately, and particularly in certain parts of the world, but certain parts of this country, too, which are really important. So why it's important to diversify within HIV, just to give you some of that dynamics is that, first of all, in the treatment side of the market, there's still about 40% of people in this country that have HIV that are not virologically suppressed. And if you're not virologically suppressed with HIV, you can still pass the illness on to others. So there's opportunity within the treatment market, which is the vast majority of our revenue today to not only give optionality to patients with Biktarvy, a one pill once-a-day to more -- to less frequent options, and we're working on everything from once weekly pills to once monthly pills to once every 3- and 6-months subcutaneous injections on the treatment side. So I think that's an important optionality for patients, but it also allows us to actually access a part of the market that we can't access today with a one pill once-a-day. So that's important for the longevity of our business over time. On the prevention side, just to put this into context, we have a very effective -- Gilead was the first company to have a prevention medicine. It's very effective if you take the pill once a today, up to 99% effective in preventing HIV. But the concept of people that don't have an illness in the prime of their life, taking one pill once-a-day medicine, you can imagine that not a lot of people do that and people that do that aren't very compliant. So of -- somewhat conservative 1.3 million people that are identified by CDC today that could be at risk for HIV. There's only about 400,000 people today that are on some type of a PrEP regimen. And of that 400,000 people, if you do the averages, only -- there's only about 50% compliance on that. So there's a huge need here for a -- finding a medicine that can really expand that. So that's why diversification in HIV has been so important. So lenacapavir for PrEP is a medicine that's shown to be 99.9% effective in preventing HIV across 2 large studies with a twice year injection. I mean it's -- and -- we just presented data at a medical conference this year that suggests that we can get to a once-a-year injection as well. Those studies are going on right now, but we're about to launch the twice-a-year injection. So the ability to expand that market over the next several years in comparison to where we were 5 or 6 years ago, that whole diversification within HIV has been fundamentally important for us. And I think we've -- people now understand because there was always the question, well, Dan, Gilead is your HIV business durable? And that was a question that meant, could you continue to come up with innovation that would beat people where they are? And is your patent life long enough that it's durable? And I think most people now understand why that is so durable weight -- late into the 2030s. But beyond that, of course, I think your question was around the diversification beyond that. I think we've really come a long way. As I've said with both Livdelzi, Trodelvy, cell therapy, it's not just oncology, you're right. We also have now a really budding inflammation portfolio. Livdelzi is kind of the beginning of that. But we have very interesting molecules in the Phase II development on both oncology and inflammation mechanisms that could really provide significant advantage to a lot of inflammatory diseases like alpha-4-beta-7 or IRAK-4 or STAT6 that I think are the kind of the next wave of innovation for Gilead whereas HIV is the here and now and the future. Oncology is the here and now and the future but growing slowly. And inflammation is kind of what could come in the next 5 years to the next 15 years. And those are the cycle times we have to think about in our business on the portfolio side. And we're not done yet. I mean we'll continue both through our own research efforts, as I said, through normal ordinary course BD to continue to supplement that -- in those 3 therapeutic areas.

Absolutely. And perhaps on that BD point, kind of as you think about M&A, I think there has been an evolution of going from perhaps the Immunomedics deal and others that were kind of really sizable transactions to more of the business as usual that you're now talking about? Can you define what kinds of deals are interesting to Gilead at the moment? What are the parameters you're looking for? Does the policy uncertainty impact kind of what might be on the table or not? Did it raise the hurdle rates or anything along those lines? Can you give us a frame of reference there?

Yes, absolutely. I mean there's always risk from a regulatory perspective or an FTC perspective that you have to factor in. But maybe just to be clear, we had to put a lot of capital to work in the first 5 years of my tenure. In other words, you have to get a footing in some of these new therapeutic areas. You can't just grow it through internal mechanisms. And that's why we put quite a bit of capital to work and particularly in the oncology segment in deals like Immunomedics in the past. Fast forward 5 years, we're no longer in that world where we need to put that type of capital to work. We have a very robust portfolio. We draw the line very, very high on our R&D spend. We're disciplined about that. I love that because that means there's things you aren't funding. There's always got to be things you're not funding because otherwise, you're funding things that aren't going to be transformational accordingly. So that's where we're at right now. So that means both the external BD and the internal innovation competes for each other at a high bar level within the organization. But it also means you deploy less capital externally. So the way we think about it is you always have to be feeding the early part of your pipeline. But that's a relatively capital-efficient way to apply resources. We put a rough plus or minus $1 billion to work on things in late research or early development a year, sometimes maybe a little bit more, a little bit less. Back to the dynamics associated with the administration or uncertainty in your cycle time, any of those things, it's 10 years, it can't be fixated under current administration. So don't worry about that at all. And back to the later-stage deals, as I've said, we do think it's healthy for a company our size to be putting capital to work. We've said if you find the right opportunities in late-stage development or potentially even on market that in the sweet spot of mid-single-digit billions every couple of years, if you find an asset like that, you bring it in. I mean just to be tangible. One example of that is last year when we bought a company called CymaBay, for about $4 billion. It was in liver. It fit really nicely into our commercial channel. We have a lot of synergies there and it's already off to a really good launch. I think that was -- that's the way we think about putting late-stage capital to work. I mean back to -- are there opportunities or the risks associated with what's going on in the internal environment? Obviously, biotech evaluations are down. So that presents an opportunity for us, on the one hand. On the other hand, I don't think it's going to fundamentally change our bar for innovation. I mean it may make things a little bit more cost effective on that front. But the innovation still has to succeed at a high level better than something you have internally. So it's not like all of a sudden because valuations are down in biotech, we're going to do 5 mid-single digits. That's just -- there aren't that many assets out there and there aren't many assets that are interested out there. So I don't think fundamentally that the current environment with our cycle times really grossly affects our capital. I know it does to other participants in our industry, but not to a large biopharma like ourselves.

Absolutely. And certainly, with that long duration, I think it makes sense, particularly if you're buying at the discovery or Phase 1 -- at Phase I stage, you've got a long time to go.

Right. And Usually, those are launch products where if MFN does come into play, you have a chance to price it from the launch in a way that is commensurate with whatever is going on in the environment at the time.

Absolutely. I want to shift to lenacapavir. I think we've touched on it a couple of times, but it's a particularly important part of the Gilead story at the moment and the next big launch. You mentioned the PDUFA date. Great to hear that everything is on track there with the FDA so far. Kind of we've had a question coming through here, what's the long-term ambition with lenacapavir and I'll have got a few other follow-ups, but I'll follow on but I think maybe start with that ambition.

Well, maybe just to put this into context, and I give credit completely to the Gilead scientists on this. But lenacapavir was the breakthrough medicine of the year last year in Science magazine. So if you don't have to believe me, you can believe a third-party reference. But it's quite an extraordinary molecule. Even for a company that's been working in HIV for 3 decades because this molecule has been working on for 16 years. And while most things -- and most of the medicines we use in HIV attack the viral enzyme, not to get too scientific, this is a completely novel mechanism. It attacks the coating of where the viral enzymes are. It's so-called capsid inhibitor. It's the first ever capsid inhibitor that has been created. It was thought of as a nondruggable target, which is why it took 16 years to work on because the Gilead scientists said, no, no, we don't believe that. But not only were they able to drug the target, which is one task of scientific, what we call it a unicorn strategy sometimes, but they were able to get it to this very long half-life. And again, it takes really talented chemists in this case, because it's a small molecule to try to find a half-life that you could actually only dose a patient or a person in this case, every 6 months and get the type of the efficacy that we got. I think the entire world was even stunned at the level of efficacy that we got last year with 2 very large studies with thousands of patients where we showed 100% of patients in one trial did not get HIV as compared to the control arms. And it was about 95% in the others. So the combined is about 99.9%. So it's actually quite extraordinary. And so it's hard to overstate how important this is for people living with HIV or people that are at risk of HIV. And I would just say -- I don't know if I said this already because I've had so many conversations, say the PK profile is such that we believe we can get this to a once-a-year medicine as well.

That was really exciting part [indiscernible].

Yes. It is really exciting. So if you can imagine a medicine -- and we don't equate it to a vaccine because vaccines are not 100% effective. So I mean, it's a medicine that has extraordinary benefits in the developed world, in the developing world, and we have a very we have a keen strategy to make sure that everybody in the world that wants access to this can get it working through voluntary licensing and generic manufacturers for 120 low and middle-countries because you never get to extinguishing the disease if you only extinguish it one continent. So we're quite clear on that. But so yes, it's critically important to help all those people that are getting HIV today. And in this country alone, 700 people get HIV every week. 100 people die, 53% of them are women. And a lot of them are underserved community in the rural South. So I mean it's -- and because the one pill once- a-day has not been -- it hasn't met people in the stigma and discrimination associated with disease where it needs to meet it. So it is critically important to preventing the disease, but it's equally important. It is the backbone to all of our long-acting treatments because this molecule is so unique. They were formulating in once-weekly versions, once-monthly versions and once every 3- and 6-month versions. Now the key in treatment is you need a partner molecule because you can't have a single agent like you can in prevention. You need a partner molecule because of the nature of HIV and [ resistant ]. And we have a very broad program. As I said, up to 9 potential launches across those ranges of different conveniences for patients and things that will help those people that aren't on it today between now and 2033. So it is the backbone of our conviction when we say that HIV business is durable well into the late 2030s. It's lenacapavir based.

Absolutely. It's very exciting, and I think kind of the data is very, very compelling. As we think about this near-term launch for prevention after the June PDUFA date, what will be key to a successful launch, number one. And number two, Descovy is currently used in this segment for prevention that one pill once-a-day, not in an adherent way though. Will Descovy in the segment go down to 0?

So I think Descovy will continue to have a role some people may prefer to take a one-pill once-a-day. We think the vast majority of the people would prefer to have it be less frequent -- but back to the launch dynamics. So this is important. I mean this is -- it's a -- it's disease-changing type therapy, and it's something new and different for people. I mean oncologists are using -- used to giving administration in their office. HIV physicians or general practitioners aren't. So we've got to wrap around to make this as simple and as easy as possible. I mean the first thing is it's a subcutaneous injection. So it's not an intramuscular injection. It's a bit easier to administer. But secondly, we have teams of people that have -- that are designed to make sure the practice that administers this medicine has everything taken care of. Insurance coverage, making sure they get the medicine at the right time for the injection, reminders for people to come back every 6 months. If there's anything that Gilead is very good at, it's understanding the HIV community of practice, working with advocates, working with patient communities. And I can tell you, I mean, getting that right is really, really important to launch. Of course, payer coverage is very important. And as usual for -- I mean, PrEP in general enjoys a very high payer coverage. Today, Descovy has more than a 90% payer coverage here in the United States because of the benefit it provides. So we expect that to be the same for lenacapavir for PrEP. But in the first couple of quarters, as usual, as you know, it takes a little while to get that payer coverage up and going. Having said that, because of the extraordinary nature of this, we believe we'll be at about a 75% payer coverage within 6 months and probably 90% payer coverage in 12 months. So getting that payer piece fixed out, making sure providers understand what it is and then eventually getting to new audiences that we haven't gotten to. I mean the low-hanging fruit, as you point out, is to convert people that are perhaps noncompliant, so the once-a-day is something they can be compliant on and be better protected on. But then, of course, we don't stop there. We go to new populations of people in this country, some of the populations I've already mentioned here today. And then globally -- this is largely a U.S. market. Globally, countries outside the United States are now very interested in this, even more so than they were with the one-pill once-a-day much more. So because they see that they can actually reduce the incident significantly in their market with this because they know adherence is more prescribed. They can achieve the adherence they need. And if you achieve the adherence you need, you reduce the number of people in your country with HIV. And for every person that's infected in this country, it's about $1.1 million of lifetime cost with HIV. So if you protect somebody perhaps not their whole life, but in a period of time where they have multiple sexual partners, and you avoid that cost per patient. It's a very strong pharmacoeconomic story for other countries as well where it hasn't been as strong with the one-pill once-a-day. So we see the ability to expand this well beyond the United States as well.

Absolutely. And I think the points that you made around the kind of practice changing nature of this opportunity. I was quite impressed at the HIV Day when kind of Joanna, I think, [ got out there ] and detailed all the different things that you're working on it. It feels like this is a really reinforced plan and perhaps there's a risk that you're slightly over investing, but you'd rather overinvest than kind of face the risk.

Agreed. I think I was at the launch meeting last week. The team is ready. It's been the place for people to come and want to work in HIV. And If we are slightly overprepared, I'm okay with that.

Another kind of HIV opportunity that doesn't get as much airtime is the [ bictegravir ] plus lenacapavir combination. This perhaps isn't coming and bringing kind of necessarily the long-acting option, but it is your first doublet coming into that treatment space. Arguably, this could be used in many more patients than just the kind of clinical trial set that you're kind of currently targeting. Can you talk a little bit about where else this could go?

Yes. I think it's very exciting. It's the most nearest term of kind of our oral version of lenacapavir. And Biktarvy, to be clear, is the standard of care today. It's a 3-drug regimen. And it's a 3-drug regimen because those mechanisms require 3 different mechanisms to get the level of efficacy and the resistance that we have. because lenacapavir is a brand new mechanism and it works differently, we've seen in our data so far that a 2-drug regimen can be as strong potentially as Biktarvy for some patients. And so I think the differentiation factor for us is we're running studies in both switch patient populations and naive patients. And this will give optionality, I think, for patients that either may prefer a 2-drug regimen or may for whatever reason, need to switch from Biktarvy to another Gilead regimen that is novel, that's new, that has strong data. And so we're expecting that data in the relatively near term. And then obviously, moving from that to once-weekly to once-monthly pills is kind of the next generation of those lenacapavir backbones.

Absolutely. And I think something that I've heard throughout the conversation is it feels like you're really looking to provide that optionality for the patients that exist rather than pick an option and kind of run after that with your innovation?

Exactly. I mean it's definitely not one size fits all in HIV. There may be some people that really want to keep taking that daily pill. We think that's going to be lower and lower because if you can get into a mechanism, if you're taking your pill once a week or once a month, I think compliance is still strong with that, and it gives people optionality and some people may like injections in less frequent, some people may not like injection. So the more optionality you can give -- first of all, the more likely people are to stay on their medicines, they virally suppressed and not pass the disease on, which is really important. But then you could also get to patient populations that just aren't even taking a pill once a day. And that -- both those things are critically important.

Absolutely. I want to pivot to the CAR T space. There's another place where you are a leader as a company and you've kind of began in the lymphoma space and kind of mastered the manufacturing and perhaps there hasn't been quite as much advancement in the pipeline yet, but we're beginning to see that come through. I would love to hear a little bit, we've got kind of a [indiscernible] kind of the next big thing on the horizon. There was an update last quarter with the MRD, which is the minimal residual disease endpoint being added to the trial because multiple myeloma tends to take a long time to read out potentially a faster part to market. Do you think that still stands given kind of the changes we've seen at the FDA and perhaps differing perspective evolving and what's acceptable as an endpoint or kind of trials to be approved under this particular administration?

We do. And again, we're starting in kind of fourth line multiple myeloma setting, where single-arm trials, particularly when you have an improved safety profile with at least as good efficacy, I think that's been a tried and true path with the FDA. We're not seeing anything there in this patient population that would adjust our thinking on that nor are we hearing anything from the agency. We go up in lines of therapy in multiple myeloma, those are randomized trials. And I think -- and you pointed out the potential advantage of having a minimum residual disease endpoint, which is an earlier approval endpoint then is followed by other clinical manifestations of the disease later on. So it presents an ability to get a medicine sooner. No, I think we're really excited about it. You're going to see some ongoing data from that as we go throughout the course of this year. It continues to be robust and hold up in our mind. And we could have this approved as early as next year in the fourth line setting. The other piece that is important is not just the medicine, but cell therapy for those of you that may not be familiar with it, the infrastructure that you need for cell therapy is a competitive advantage and the ability to have turnaround time. So what cell therapy is it's really the ultimate personalized medicine. In other words, every medicine is an N of 1 from the patient. You take you literally take T cells from the body, you ship them to 1 of our manufacturing facilities of which we have 4 around the world, and then they're shipped back to that patient and infused back in the patient's body. So it's -- we have a competitive advantage because we have the largest manufacturing network, the shortest turnaround time. So you need to have a short turn on time because people are are put in immunocompromised state, while they're waiting for their cells to come back, and you want to make sure you get those back as quickly as possible so you get the best clinical benefit. And we're world-leading there on our lymphoma and leukemia business. And our multiple myeloma asset, the imuno-cell will go right into that infrastructure and into that process into that turnaround time that we continue to kind of decrease in time. So we think there is significant at advantages, both in terms of our ability to fulfill. I mean today, in multiple myeloma, the demand can't be fulfilled with the current incumbents out there. And so we really think that with our ability to come in with our world-class cell therapy position, we'll be in a good shape. And then beyond that, we're not done with multiple myeloma or moving up the lines of therapy. We have some interesting data coming up at ASCO and kind of the next generation of leukemia lymphoma assets, and also even some early data on a solid tumor in glioblastoma that's really interesting. And then we're doing work on autoimmune disease. So cell therapy, and the reason it's so important is because of the clinical benefit you get. I mean just on the approved product today, about 50% of patients are cured with 1 treatment, which is extraordinary when you go back to presell therapy in that same disease state, you had on average about 6 months to live. So these are important therapies. They're transformational and we believe we can bring these to different disease states and earlier lines of therapies to get even more cures out of this, not only in cancer, certainly, hematological latencies in solid tumors, but potentially now as we see the play out in other disease conditions like autoimmune.

Absolutely. There's lots of shared biology between kind of so many disease states out there as well. We've had a couple of questions come through that I want to make sure we hit on as well. One of them kind of comes back to a theme that I think we've seen through many of the conversations over the last couple of days is AI. And the question here is, can you help us understand a little bit more about how AI is helping to improve either the time line or cost of drug discovery Certainly, the way that I think about it is you've got an efficiency opportunity. We've got an innovation opportunity as well. It feels like a lot of companies are going after an efficiency first, it's easier. And then there's innovation as well. So maybe you can tell us a little bit about those 2 and what you're felling about that?

I agree with you, by the way. First of all, I mean, it affects every part of our business. And I think there's a lot to do on the efficiency case. And most of our use case examples as we come into the company are around efficiency. I mean, we're getting good leverage in our clinical trial placement and construct going to those sites through AI and through emerging databases that allow us to pick the right sites and therefore, recruit faster I mean it is efficiency, but it's also innovation to a certain extent because if you get that medicine to patients 6 months or a year sooner, it's obviously better for patients. It's certainly better for shareholders. So I think it's hard to tease those things apart. But those are what I would call not easy, but low-hanging fruit cases. And we do the same thing in our commercial organizations and some of our manufacturing processes. I think the holy grail of this is, can it help you discover medicines that you may not have been able to discover without the use of AI. I think we're still at the early stages there. Obviously, there's a lot of capital flowing into that area. We have a lot of partnerships. We're doing a lot with that. There's been tried and true things like can you accelerate chemistry protein folding using AI, which again, I don't know whether you call that innovation or efficiency. In some cases, it could be both, but that could also shave 6 months off of a long cycle time. There's antibody engineering that can be placed with AI. And there's just a lot of experimentation going on and whether it will help us more fundamentally identify new targets or find different ways to drug targets. That's still early. We still need humans and a lot of humans. But the more we can enable humans to focus on the most intractable scientific problems, the better. And then there's the whole back office efficiency, which, of course, we're working.

And every industry in the world is kind of [indiscernible].

Exactly. So diffusion is the [ name ] of the day, we're diffusing those principles into our business as well.

Fantastic. Just because you were talking about 6 months here, 6 months there in terms of opportunity kind of as you think about some of the things that you've deployed today, how much time do you think you're potentially saving on the average, the average life-cycle?

It's a good question. I don't know that we've actually done all that analysis. If you do it across the weighted average portfolio of probability of success, I don't know that we've run those numbers yet. So it's probably hard to do on the aggregate basis. I think it's probably easier to point to examples. But for sure, it's starting to reduce the time to market.

And it certainly sounds like it's in the months to low years to kind of range.

Yes. I would say so. Yes.

Fantastic. You also mentioned there's another [indiscernible] come up a couple of times and it's come up in a couple of the different conversations I've been in as you think about the comment you made earlier, 50% of drug spend in the U.S. doesn't go to manufacturers. And I think different people quite different numbers, 51%, 60%. It's above 50%. You know that. Do you have any views on how that's split across different players kind of where that gets distributed? Or kind of is there a way that kind of list price becomes a net price? And basically, there are savings in the environment. And -- but yet, the pharma industry doesn't get hit from a revenue perspective.

No. It's a yes. And there are third-party published studies that break that more than 50% down to the different players. And I think about 1/4 goes to kind of the PBMs of the process, other things go to other kind of government channels as well. So yes, I think there are great sources on that. And again, that's aggregated information. Sometimes you can have 90% going to the middle man, sometimes you can have 30% or 40%. What was the second half of your question?

The second half of the question is, is there an opportunity with kind of pulling list price down to net price, we get savings [indiscernible].

I think there are and there has to be cooperation in the whole health care system. In other words, let me just give you one example. I know other companies have -- can point to examples like this. But during the hepatitis C times, we had both a branded product and an authorized generic product. And the authorized generic project was more priced at the net price. But because of the nature of our system, there was very little uptake of the branded generic. So a different purchase price because there is much less margin to be made by that 50%, it's even the 50% of $100 or 50% of $50. Unfortunately, there's a lot of perverse incentives in our system that leave the folks in the middle to prefer the high-priced medicine. And obviously, that's not good for the health care system. It's not good for patients. So could I perceive a world where you can get to a net price? Yes. But there's got to be some type of -- probably not cooperation, but regulation that allows those savings to be passed on to get us there. And again, we're very open to those types of concepts. If if it truly helps the fundamental system. And most importantly, the patients or employers that are paying for health care coverage if it helps them, then yes, we're all in.

And I think this comes back to that comment you made earlier about finding kind of constructive ways to collaborate with the administration and finding opportunities to actually really set the health care system straight and find a [indiscernible].

And just you'd leave on this note. I think -- I won't speak on behalf of all my peers, but I think -- there was a time when our industry was accused of only playing defense. I think we're very much leaning into solutions. And some of those solutions like in the IRA Act like what's affecting our company today like Part D reform cost the industry money. But at the end of the day, that helps the patient out-of-pocket costs go down. And as an industry, I think we're very into those impacts on our industry if it helps. What we're averse to is things that impact our industry that don't do anything to help patients. I think those things, that's not productive before the industry and it's not productive for the problem we're trying to solve in this country.

Absolutely. Well, thank you so much. We really appreciate the conversation today.

Thank you very much, Courtney. Good to be with you.