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7/28/2019 Q3 12 Earnings Slides Final
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1
October 23, 2012October 23, 2012
Q3 2012 Earnings ResultsConference Call and Webcast
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Q3 2012 Corporate Highlights
FDA approved Stribild (elvitegravir 150 mg/cobicistat 150mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg), acomplete once-daily single tablet regimen for HIV-1 infection for
treatment-nave adults
FDA approved once-daily oral Truvada, in combination with safer sexpractices, to reduce the risk of sexually acquired HIV-1 infection in adultsat high risk
Truvada is the first agent to be approved for HIV prevention in uninfected adults, a strategy called pre-exposure prophylaxis
35 total abstracts accepted at the 19th International AIDS Conference inWashington, D.C (July 2012) - presentations included:
24-week data from a Phase 3 SPIRIT (Switching boosted PI to Rilpivirine In Combination with Truvada asa Single Tablet Regimen)
Two-year Phase 3 clinical trial results showed that the integrase inhibitor elvitegravir dosed once daily isnon-inferior to raltegravir dosed twice daily among treatment-experienced HIV patients
Full clinical trial results from a pivotal Phase 3 study evaluating cobicistat, a pharmacoenhancing or
boostingagent for HIV therapy, compared to ritonavir
3
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Q3 2012 Earnings Call Agenda
Introduction Patrick OBrien, VP, Investor Relations
Commentary
Q&A
Robin Washington, SVP and CFO
Kevin Young, EVP, Commercial Operations
J ohn Martin, Chairman and Chief Executive Officer
All Senior Management Including:
J ohn Milligan, President and COO
Norbert Bischofberger, EVP, R&D and CSO
4
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Robin WashingtonSVP and Chief Financial Officer
October 23, 2012October 23, 2012
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$2,066 $2,133$2,208 $2,321 $2,358
$0
$500
$1,000
$1,500
$2,000
$2,500
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
InMi
llions
Total Product Sales
Q3 2012 up 14% over Q3 2011
6
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Product Sales by Geography
$ in millions
Q3 2012 Total Product Sales: $2,358
Europe: $781
(33% of Total)
(5% YoY Growth)
U.S.: $1,396
(59% of Total)
(20% YoY Growth)
Other International: $181
(8% of Total)
(18% YoY Growth)
7
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$384
$371$331
$349
$269
$0
$50
$100
$150
$200
$250
$300
$350
$400
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
In
Millions
Note: Non-GAAP R&D expenses exclude after-tax acquisition-related,restructuring and stock-based compensation expenses.
Non-GAAP R&D Expenses
Q3 2012 up 42% from Q3 2011 Key Metrics
Higher R&D expenses inQ3 2012 over Q3 2011
due primarily to:- Continued advancement
of the product pipeline,particularly in liver diseaseand oncology therapeuticareas
8
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$287$299$308$290$265
$0
$50
$100
$150
$200
$250
$300
$350
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
In
Million
s
Key Metrics
Higher SG&A expenses inQ3 2012 over Q3 2011
driven primarily by:
- Increased expenses tosupport the ongoinggrowth of the business
- Pharmaceutical excise taxresulting from U.S.healthcare reform (excisetax for 2012 estimated at~$80 - $100 million)
Non-GAAP SG&A Expenses
Q3 2012 up 8% from Q3 2011
Note: Non-GAAP SG&A expenses exclude after-taxacquisition-related, restructuring and stock-based compensation expenses.
9
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$745
$1,291
$453
$978$897
$0
$250
$500
$750
$1,000
$1,250
$1,500
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
InMilli
ons
* Q1 2012 included a $194 million payment to Pharmasset employees as part of stock based compensation &other payments.
** Q2 2012 included an inflow of $460 million in collections from Spain.
*
**
Operating Cash Flows
10
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OriginalGuidance
2/2/12
GuidanceUpdated
4/26/12
GuidanceUpdated7/26/12
$ 8,600 $ 8,800 $ 8,800 $ 9,000
Unchanged
$ 1,450 $ 1,525
Unchanged
Unchanged
Unchanged
73% 75%
$ 1,325 $ 1,400
$ 1,225 $ 1,300
26% 28%
$ 0.31 $ 0.34
Unchanged
Unchanged
Unchanged
Unchanged
Unchanged
$ 0.56 $ 0.59^
GuidanceUpdated10/23/12
Net Product Sales $ 9,100 $ 9,200
Non-GAAP*
Product Gross Margin Unchanged
R&D Unchanged
SG&A Unchanged
Effective Tax Rate Unchanged
Diluted EPS Impact of
Acquisition-Related,Restructuring and Stock-BasedCompensation Expenses
$ 0.62 $ 0.65^^
* Non-GAAP product gross margin and expenses exclude the impact of acquisition-related, restructuring andstock-based compensation expenses where applicable.
^Diluted EPS impact of acquisition-related, restructuring and stock-based compensation expenses increased $0.25related to the acceleration of unvested stock options in the Pharmasset acquisition and included in the $11.1billion acquisition price.
($ in millions, except percentages and per share amounts)Full Year 2012 Guidance
^ Diluted EPS impact of acquisition-related, restructuring and stock-based compensation expenses increased$0.06 driven by changes in anticipated payments associated with the successful progression of our oncology andnon-HCV liver pipeline. 11
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Projected product gross margin GAAP to non-GAAP reconciliation:
GAAP projected product gross margin
Acquisition-related amortization of purchased intangibles
Non-GAAP projected product gross margin*
Projected research and development expenses GAAP to non-GAAP reconciliation:
GAAP projected research and development expenses
Acquisition-related expenses
Restructuring expenses
Stock-based compensation expenses
Non-GAAP projected research and development expenses
Projected selling, general and administrative expenses GAAP to non-GAAP
reconciliation:GAAP projected selling, general and administrative expenses
Acquisition-related expenses
Restructuring expenses
Stock-based compensation expenses
Non-GAAP projected selling, general and administrative expenses
Projected diluted EPS impact of acquisition-related, restructuring and stock-basedcompensation expenses:
Acquisition-related expenses**
Restructuring expenses
Stock-based compensation expenses^
Projected diluted EPS impact of acquisition-related, restructuring and stock-based compensation expenses
10/23/12
($ in millions, except percentages and per share amounts)Full Year 2012 Guidance
72% - 74%1% - 1%
73% - 75%
$1,448 - $1,529
(10) - (11)
(6) - (6)
(207) - (212)
$1,225 - $1,300
$0.17 - $0.18
0.01 - 0.01
0.44 - 0.46
$1,718 - $1,809
(85) - (87)
(6) - (8)
(177) - (189)
$1,450 - $1,525
* Stock-based compensation expenses have a less than one percent impact on non-GAAP projected product gross margin.** Acquisition-related expense includes $0.02 related to transaction expense for the Pharmasset acquisition.
Impacted by $193.9 million or $0.25 per diluted share of compensation charge related to the acceleration ofunvested stock options in the Pharmasset acquisition and included in the $11.1 billion acquisition price.
$0.62 - $0.65
12
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13
October 23, 2012October 23, 2012
Kevin Young CBEEVP Commercial Operations
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$0
$500
$1,000
$1,500
$2,000
$2,500
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Salesin
Mill
ions
U.S. Europe Other International
Key Metrics
U.S.:
Growth driven by solid
demand Inventory levels remained at
the low-end of the range consistent with prior quarters
Non-retail purchasingsignificantly lower than Q1and Q2 2012
Europe:
Year-on-year revenue growth
driven by demand No austerity price actions
taken in Big 5 markets YTD2012
Antiviral Franchise Q3 2012 Financial Performanceand Key Metrics
Q3 2012 up 13% from Q3 2011
$1,795
$984.8
$677.
0
$1,860
$1,0
44.0
$684.
3
$1,0
82.6
$696.
5
$1,926$2,012
$717.
4
$1,1
43.9
$2,036
$710.
1
$1,1
70.2
14
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Stribild: First Integrase Containing Single TabletRegimen for the Treatment of HIV
Launched in the U.S. following FDA approval August 27,2012
Q3 2012 sales of $17.5 million (wholesaler inventory fill)
WAC ~$28,500/ per year
Approved for the use in HIV infected treatment-naveadults
European MAA approval anticipated Q1 2013
15
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$0
$25
$50
$75
$100
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Salesin
Millions
U.S. Europe Other International
Key Metrics*
U.S.:
Captured 25% of nave
patient share Primarily being used in
healthier patients, AfricanAmericans and women ofchild bearing age
Europe & Other International:
Launched in 16 countriesincluding; UK, Germanyand France
Complera/Eviplera Q3 2012 FinancialPerformance and Key Metrics
*Sources:
U.S. data from Ipsos Healthcare U.S. SCOPE Q2 2012.
EU data from Ipsos Monitor Q2 2012 & SCOPE Q3 2012 andGilead estimates.
$19
$19.0
$19.5
$20
$48.6
$52
$73
$65.0
$82.1
$99
$14.3
16
At i l Q3 2012 Fi i l P f
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$0
$250
$500
$750
$1,000
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Salesin
Millions
U.S. Europe Other International
Atripla Q3 2012 Financial Performanceand Key Metrics
Key Metrics*
U.S.:
Most prescribed regimen
in HIV with 32% of alltreated patients
Captured 34% of navepatient share
Europe:
Most prescribed regimenin HIV with 24% of alltreated patients acrossthe Big 5 markets
Captured 23% of navepatient share
Note: efavirenz (the active pharmaceutical component in Atripla purchased fromBMS) accounted for approximately 37% of Atripla sales in Q3 2012 whichrepresented $317 million to be paid to Bristol-Myers Squibb.
*Sources:U.S. data from Ipsos Healthcare U.S. HIV Monitor Q2 2012.EU data from Ipsos Monitor Q2 2012 & SCOPE Q3 2012 and
Gilead estimates.
Note: Atripla does not have a nave indication in Europe and is notpromoted to this group of patients.
Q3 2012 up 9% from Q3 2011
$795
$
501.6
$255.0
$863
$
547.5
$267.5
$
562.0
$270.7
$888
$280.1
$
570.8
$904
$270.3
$539.8
$865
17
T d Q3 2012 Fi i l P f
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$0
$250
$500
$750
$1,000
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Salesin
Millions
U.S. Europe Other International
Key Metrics*
U.S.:
Most prescribed product
in HIV with 37% of alltreated patients
Captured 31% of navepatient share
Europe:
Most prescribed productin HIV with 42% of alltreated patients
Captured 50% of nave
patient share
Truvada Q3 2012 Financial Performanceand Key Metrics
*Sources:
U.S. data from Ipsos Healthcare U.S. HIV Monitor Q2 2012.
EU data from Ipsos Monitor Q2 2012 & SCOPE Q3 2012 andGilead estimates.
Q3 2012 up 8% from Q3 2011
$745
$357
.7
$3
19.1
$746
$373
.6
$3
17.0
$373
.3
$3
21.9
$758
$3
28.8
$786
$393
.0
$414
.5
$3
29.9
$804
18
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John Martin, Ph.D.
Chairman and Chief Executive Officer
October 23, 2012October 23, 2012
Anticipated Key Pipeline Milestones in 2H 2012
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Anticipated Key Pipeline Milestones in 2H 2012and 1H 2013
HIV/AIDSHIV/AIDS
Stribild
Q3 12
Q4 12
Q4 12
Q4 12
Q1 13
; U.S. FDA marketing approval August 27, 2012
Release top-line 96 week data from Phase 3 Studies 102 and 103
at HIV11 (Glasgow)
RAL 12 week switch study data
Initiate dosing in WAVES study Stribild to ATV/r + TVD in women
Anticipate European MAA approval
Truvada Q3 12 ; U.S. FDA PrEP marketing approval J uly 16, 2012
GS-7340
Q4 12
Q2 13
1H 13
Top-line data from Phase 2 24-week GS-7340 Quad vs. Stribild in
HIV study
Complete Phase 2 study with GS-7340 PI vs. Viread PI in HIV
Initiate two Phase 3 studies with GS-7340 Quad
CobicistatQ3 12
Q2 13
; Present 48 week Cobi vs. Ritonavir at IAC
Anticipate NDA approval for Cobicistat (PDUFA April 28, 2013)
ElvitegravirQ3 12
Q2 13; Present 96 week data from Phase 3 Study 145 at IAC
Anticipate NDA approval for Elvitegravir (PDUFA April 27, 2013)
Complera
Q3 12
Q4 12
;Top-line data from Phase 3b 48 week protease switch study
Top-line data from Phase 3b 48 week Atripla head-to-head study(Glasgow)
20
Anticipated Key Pipeline Milestones in 2H 2012
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Anticipated Key Pipeline Milestones in 2H 2012and 1H 2013 (contd)
Liver DiseaseLiver Disease
GS-7977
Q4 12
Q4 12
Q4 12
Q1 13
1H 13
Q2 13
; Initiate Phase 3 GS-7977 + GS-5885 FDC study in GT-1
HCV patients
Present SVR-4 data from Phase 2 Electron GS-7977 +
GS-5885 + RBV 12 weeks study in GT-1 treatment nave
HCV patients at AASLD
Top-line SVR-12 data from Phase 3 Positron study in
interferon ineligible and intolerant HCV patients
Top-line SVR-12 data from Fission, Fusion and NeutrinoPhase 3 studies
Initiate second confirmatory Phase 3 study with
7977 + GS-5885 in GT 1 nave patients
File for FDA and EMEA approval of GS-7977 in GT 2/3
patients with RBV and in GT 1, 4, 5 and 6 patients withPEG/RBV
GS-6624 4Q 12 Initiate three Phase 2b studies (2 in NASH and 1 in PSC)
21
Anticipated Key Pipeline Milestones in 2H 2012
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Anticipated Key Pipeline Milestones in 2H 2012and 1H 2013 (contd)
Cardiovascular/RespiratoryCardiovascular/Respiratory
Ranolazine
Q3 12
Q4 12Q2 13
; Initiate third Phase 3 study with metformin in patients with
type 2 diabetes mellitus
Complete Phase 4 Ranexa study (TERISA) Submit NDA and MAA for Ranexa (TERISA and SPECT MPI)
GS-6624 Q4 12 Initiate Phase 2 study LOXL2 mAb inhibitor for IPF
GS-1101
Q4 12Q4 12
Q4 12
Initiate Phase 3 study in CLL in combination with ofatumumab Initiate Phase 3 studies in iNHL in combination with rituximab
Initiate Phase 3 studies in iNHL in combination with
rituximab/bendamustine
Inflammation/OncologyInflammation/Oncology
22
Pipeline Product Candidates:
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Pipeline Product Candidates:HIV and Liver Disease
HIV/AIDSStribild (elvitegravir/FTC/TDF/cobicistat) European Regulatory Submission
Cobicistat (PK enhancer) U.S. and European Regulatory Subm issionsElvitegravir (integrase inhibitor) U.S. and European Regulatory Subm issions
GS-7340 (TAF) in Various STRs
Liver Disease
HCVGS-7977 (nucleotide NS5B inhibitor)
GS-5885 (NS5A inhibitor)
GS-9451 (NS3 protease inhibitor)
GS-9256 (NS3 protease inhibitor)
GS-9190(non-nuc NS5B site 1 polymerase inhibitor)GS-9669(non-nuc NS5B site 2 polymerase inhibitor)
Liver Fibrosis
GS-6624(monoclonal antibody)
HBV
GS-9620 (TLR-7 agonist) - HBV/HCVGS-7340 (nucleotide reverse transcriptase inhibitor)
32
Phase
1Regulatory
Submissions
23
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Pipeline Product Candidates (contd)
Respiratory
Aztreonam for Inhalation Solution - Bronchiectasis
GS-6624(monoclonal antibody) - IPF
GS-5806 - Respiratory Syncytial Virus
Cardiovascular/Metabolic
Ranolazine (late sodium current inhibitor) - Incomplete revascularization post PCIRanolazine (late sodium current inhibitor) -CAD in Type 2 Diabetes Melli tus
Ranolazine (late sodium current inhibitor) -Paroxysmal atrial fibrillation
Oncology/Inflammation
GS-1101 (PI3K delta inhibitor) - CLLGS-1101(PI3K delta inhibitor) - iNHL
GS-6624 (monoclonal antibody) - Myelofibrosis
GS-6624 (monoclonal antibody) - Pancreatic Cancer
GS-6624 (monoclonal antibody) - Colorectal Cancer
32
Phase
1
24
GS 7340 Phase 2 Studies in
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GS-7340 Phase 2 Studies inTreatment Nave HIV-1 Patients
Study 292: (Fully Enrolled, Data Q4 12)
(n = 171)
24 weeks
Screening
24 weeks
Randomization stratified by:HIV RNA level ( 100,000 c/mL or > 100,000 c/mL)
Treatment Arm 1 (n=114)
Treatment Arm 2 (n=57)
STR GS-7340 10mg/EVG 150 mg/COBI 150 mg/FTC 200 mg
+ placebo-to-match Stribild
Stribild + placebo-to-match EVG 150 mg/COBI 150 mg/
FTC200 mg/GS-7340 10 mg QD
Study 299: (Fully Enrolled, Data Q2 13)
(n = ~150)
24 weeks
Screening
24 weeks
Randomization stratified by:
HIV RNA level ( 100,000 c/mL or > 100,000 c/mL)
Treatment Arm 1 (n=100)
Treatment Arm 2 (n=50)
STR GS-7340 10mg/EVG 150 mg/COBI 150 mg/FTC 200 mg
+ placebo-to-match DRV 800 mg (400 mg tablet x2)/
COBI 150 mg/FTC 200 mg/TDF 300 mg QD
DVR 800 mg (400 mg tablet x2)/COBI 150 mg/
FTC 200 mg/TDF 300 mg
+ placebo-to-match STR GS-7340 10 mg QD/DVR 800 mg/
COBI 150 mg/FTC200 mg
Primary Endpoint:
Evaluate efficacy by the achievement HIV-1 RNA,
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Primary objective:Evaluate antiviral efficacy measured by (SVR 12) of the study regimens inpatients with chronic HCV infection
*SVR 4 data presented at CROI, one patient had not yet reached SVR 4.
Note: Part 1 (Arms 1-4 in GT 2/3 treatment naives) all achieved 100% SVR 4, SVR 12 and SVR 24.
ELECTRON Phase 2 Study Arms: Focus onOutcomes from HCV GT1 Arms to Support Phase 3
(SVR 12) (SVR 24)(SVR 4)12 1684 24 36Study Weeks
GS-7977 400 mg QD (GT 2/3)N = 1060% 60%60%
Arm 5
GS-7977 400 mg QD + RBV (GT 1 null responders)N = ~1011% (1/9)*
N = ~10 GS-7977 400 mg QD + RBV + Peg-IFN (GT 2/3)100%
Arm 6
Arm 7
GS-7977 400 mg QD + RBV (GT 1 Tx-naive)N = ~2588% (22/25)
GS-7977 400 mg QD + RBV (GT 2/3 Tx-experienced)N = ~2580% (12/15)
Arm 8
Arm 9
GS-7977 400 mg QD + GS-5885 90 mg + RBV (GT 1 null responders)N = ~10
GS-7977 400 mg QD + RBV 800 mg, fixed dose (GT 2/3 Tx-naive)N = ~10
GS-7977 400 mg QD + RBV (GT 2/3 Tx-naive)N = ~25
GS-7977 400 mg QD + GS-5885 90 mg + RBV (GT 1 Tx-naive)N = ~25
Arm 10
Arm 11
Arm 12
Arm 13
GS-7977 400 mg QD + GS-9669 500 mg QD + RBV (GT 1 null responders)N = ~10Arm 14
GS-7977 400 mg QD +GS-9669 500 mg QD + RBV (GT 1 Tx-naive)N = ~25Arm 15
26
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GS-7977 Phase 3 Programs: GT2/3
Primary objective:
Evaluate antiviral efficacy measured by sustained virologic response(SVR, defined as HCV RNA < lower limit of quantification (LLOQ) 12weeks post treatment)
Genotype 2/3(nave)
Genotype 2/3(IFN intolerant)
GS-7977 400mg QD+ RBV
Peg-IFN + RBV
N=~250
N=~250
N=~180
N=~60
SVR12
SVR12
12 24 36
GS-7977 placebo+ RBV placebo
SVR12
SVR12
POSITRON
FISSION
GS-7977 400mg QD+ RBV
study commenced March 2012, fully enrolled end of May 2012
Study Weeks
study commenced December 2011, fully enrolled end of April 2012
Genotype 2/3(treatment-experienced)
N=~100
N=~100GS-7977 400mg QD +
RBV (500 or 600mg) BID
SVR12
SVR12
FUSIONGS-7977 400mg QD +
RBV (500 or 600mg) BID
study commenced June 2012, fully enrolled July 2012
16 28
27
GS 7977 Ph 3 P GT 1 4 5 6
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12 24
N=~300
GS-7977 Phase 3 Program: GT 1,4,5,6
GS-7977 400 mg QD +PEG 180 g/week +
RBV 500 or 600 mg BID
Study Weeks
SVR 12
study commenced June 2012 fully enrolled early August 2012
NEUTRINO:Treatment-nave patients, multicenter, open-label study
Primary objective:
Determine efficacy of 12 weeks of treatment withGS-7977+PEG+RBV as measured by SVR12
Evaluate the safety and tolerability
28
Now Enrolling: GS-7977/GS-5885 Initial
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gPhase 3 FDC Study
Interim analysis (SVR4 of the 12 week arms) after200 patients (50/arm) have been enrolled
Design of 2nd confirmatory study TBD
GS-7977 400 mg + GS-5885
90 mg FDC
GS-7977 400 mg + GS-5885 90 mg FDC SVR12
GS-7977 400 mg + GS-5885
90 mg FDC/RBV
GS-7977 400 mg + GS-5885 90 mg FDC/RBV SVR12n=200/arm
GT1 TreatmentNave Patients
12 weeks 24 weeks
SVR12
SVR12
29
GS-1101 Phase 3 Studies
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GS 1101 Phase 3 StudiesRelapsed-refractory CLL Patients
Arm 1 (n=80)
Placebo +
Rituximab 375 mg/m2 week 0 +Rituximab 500 mg/m2 week 2, 4, 6, 8, 12, 16, 20
GS-1101 150 mg BID +Rituximab 375 mg/m2 week 0 +
Rituximab 500 mg/m2 week 2, 4, 6, 8,12,16, 20
Arm 2 (n=80)
Screening
(Randomized Double-Blind Initial Therapy)(Double-Blind Continuing Therapy)
Until PD
GS-1101 150 mg BID
Placebo BID
Study 116
Study 115
Arm 1 (n=195)
Placebo +Bendamustine 70 mg/m2 D1,2 Q4 weeks +
Rituximab 375 C1, 500mg/m2 C2-6
GS-1101 150 mg BID +Bendamustine 70 mg/m2 D1,2 Q4 weeks +
Rituximab 375 C1, 500 mg/m2 C2-6
Arm 2 (n=195)
Screening
(Randomized Double-Blind Initial Therapy)24 Weeks
(Double-Blind Continuing Therapy)Until PD
GS-1101 150 mg BID
Placebo BID
Primary objective: Evaluate the effect of adding GS-1101 to rituximab on progression-free
survival (PFS)30
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31
Appendix Slides
October 23, 2012October 23, 2012
Fi i l Hi hli ht Q3 2012
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Financial Highlights: Q3 2012(US$ mill ions, except per share amounts)
% ChangeQ3 2011Q3 2012
$ 1.00Non-GAAP diluted EPS*
287SG&A*
384R&D*580COGS*
$ 1,250Non-GAAP costs and expenses*
$ 2,427Total revenues
69Royalty, contract and other revenues
215Viread
804
Atripla 865
Truvada
2,036Antiviral products
14%$ 2,358Product sales
13%
(2%)
9%
8%
11%
28Cayston 20%87AmBisome 6%
105Letairis 33%
Ranexa 95 16%
23%
14%
19%
$ 789Non-GAAP net income* (1%)
99Complera/Eviplera
$ 1.02
265
269
512
$ 1,047
$ 2,122
56
79
19
193
745
795
1,795
82
82
$ 795
$ 2,066
24
13%42%
8%
421%
*Non-GAAP costs and expenses, net income and diluted EPS exclude the impact of acquisition-related,restructuring and stock-based compensation expenses where applicable. 32
Fi i l Hi hli ht Y t D t
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Financial Highlights: Year to Date(US$ mill ions, except per share amounts)
% ChangeYTD 2011YTD 2012
$ 2.89Non-GAAP diluted EPS*
894SG&A*
1,086R&D*1,742COGS*
$ 3,722Non-GAAP costs and expenses*
$ 7,114Total revenues
227Royalty, contract and other revenues
256AmBisome
622Viread
2,348
Atripla 2,657
Truvada
5,974Antiviral products
15%$ 6,888Product sales
Ranexa 274
15%
1%
13%
10%
14%
3%
16%
5%
15%
22%
$ 2,261Non-GAAP net income* (2%)
19224
547
2,129
2,361
5,190
$ 5,969
$ 2.87
805
7691,480
$ 3,054
$ 6,185
216
24974Cayston 14%65
294Letairis 37%215
236
$ 2,296
Complera/Eviplera
18%41%
11%
1078%
*Non-GAAP costs and expenses, net income and diluted EPS exclude the impact of acquisition-related,restructuring and stock-based compensation expenses where applicable. 33
Total Revenues
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$2,427$2,405$2,282
$2,200
$2,122
$0
$500
$1,000
$1,500
$2,000
$2,500
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
InMilli
ons
Total Revenues
Q3 2012 up 14% over Q3 2011
34
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Other Product Sales
ProductProduct
($ in Millions)($ in Millions)
Q32011
Q42011
Q12012
Q22012
Q32012
YTD2012
%From Q3
2011
Viread $192.9 $190.9 $191.7 $215.4 $214.9 $622.0 11%
Letairis $79.0 $78.7 $87.3 $101.6 $105.1 $294.0 33%
Stribild NA NA NA NA $17.5 $17.5 NA
Ranexa $82.0 $83.7 $83.2 $95.6 $95.1 $273.8 16%
AmBisome $82.2 $80.8 $84.8 $83.7 $87.4 $255.9 6%
Hepsera $35.6 $32.3 $29.3 $26.2 $27.3 $82.8 (23%)
Cayston $23.6 $25.9 $22.8 $23.0 $28.3 $74.1 20%
35
European Total Product Sales Increased 8%
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Year-over-Year Excluding FX
FX impact to European revenues was unfavorable $7
million QoQ and unfavorable $22 million YoY
FX impact to international revenues (including ROW) was
unfavorable $6 million QoQ and unfavorable $21 million
YoY
FX impact to pre-tax income was unfavorable $2 million
QoQ and unfavorable $7 million YoY
SalesinMillions
$745 $749
$764
$786 $781
$500
$600
$700
$800
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12
Q3'12 Q3'11 YoY Excl FX
Atripla $270 $255 6% 9%
Truvada $330 $319 3% 6%
Viread $82 $83 (1%) 4%
Eviplera $14 $0 NM NM
Hepsera $12 $18 (34%) (31%)
AmBisome $60 $61 (2%) 3%
Other $13 $9 41% 53%
Total $781 $745 5% 8%
36
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$0
$25
$50
$75
$100
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
SalesinMillions
Tamiflu Other
Key Metrics
Q3 2012 increased from
Q3 2011 due to:- Increase in other royalty
revenues, whichincluded higher royaltiesfrom GSK for Volibris
and J apan Tobacco forTruvada
Total Royalty, Contract and Other Revenues
Q3 2012 up 23% from Q3 2011
$56
$3.7
$67
$10.1
$74
$7.6
$28.1
$84
$69
$4.7
37
N GAAP P d t G M i
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75.5%74.3%74.5%73.4%75.3%
0%
25%
50%
75%
100%
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Note: Non-GAAP product gross margins exclude after-tax acquisition-related, restructuring andstock-based compensation expenses.
Non-GAAP Product Gross Margins
Key Metrics
Q3 2012 increased from
Q2 2012 due to:- Higher royalty expense
in Q2 2012
- Lower Atripla revenuemix in Q3 2012
- Minimal impact fromStribild
- Maintaining full yearguidance at 73% - 75%
38
N GAAP O ti M i
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48.5%47.2%47.3%45.2%50.7%
0%
20%
40%
60%
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Key Metrics
Q3 2012 decreasefrom Q3 2011 driven
primarily by:
- Increasedinvestments in R&D
Non-GAAP Operating Margins
Note: Non-GAAP operating margins exclude after-tax acquisition-related, restructuring and stock-based compensation expenses.
39
N GAAP Eff ti T R t
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Non-GAAP Effective Tax Rate
Effective tax rate increased year-over-year due to:
Expiration of the federal R&D tax credit
Geographic mix of earnings
Q32011
Q32012
YTD2012
Effective Tax Rate 24.3% 27.6% 27.2%
40
Non-GAAP Diluted EPS
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$1.00$0.99
$0.91$1.02 $0.97
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Notes: Non-GAAP diluted EPS excludes after-tax acquisition-related, restructuring and stock-based compensation expenses.
^
Includes the impact from the one-time charge of $40 million related to Greek bonds as a result of the Greekgovernments debt restructuring or $0.05.
Q3 2012 down 2% from Q3 2011
41
GAAP to Non-GAAP
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Earnings Per Share Reconciliation
Three MonthsEnded
Sept. 30, 2012
GAAP EPS $0.85
Stock-Based Compensation Expenses $0.05
Acquisition-Related Expenses $0.09
Non-GAAP EPS $1.00
Note: Amount may not sum due to rounding.
42
Other Selected Financial Information
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Other Selected Financial Information
($ in Millions, except days sales outstanding)Jun. 30,
2012Sept. 30,
2012
Cash, Cash Equivalents & Marketable Securities $2,271.7 $2,651.1
Interest Expense (Non-GAAP) andOther Income (Expense), net
($89.5) ($92.8)
Inventories $1,603.4 $1,617.4
Days Sales Outstanding (Accounts Receivable) 56 59
Common Shares Repurchased During the Quarter* $240.9 $205.2
Diluted Shares Used in Per Share Calculation for the Quarter(Non-GAAP)
778.9 791.0
Diluted Shares Used in Per Share Calculation for the Quarter(GAAP)
780.5 792.3
Common Shares Outstanding 756.2 757.9
* $5.0 billion share repurchase program authorized J anuary 20, 2011, with $4.1B remaining as of September 30, 2012.43
Pharmasset Acquisition Financing
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Pharmasset Acquisition Financing
Deal
Structure
Sample Deal
Structure
Funding Sources
At AcquisitionClose
Jan. 2012Sept. 30,
2012
Senior Credit Facilities $2.15 B $1.10 B
$3.70 B
~2.2x
Senior Unsecured Notes(3, 5, 10 and 30 year maturities)
$3.70 B
Debt to EBITDA* ~2.4x
* Inclusive of all outstanding debt.Net interest impact from the acquisition is projected to be ($230) million for 2012.Total interest expense and amortization from all debt sources anticipated at ~$90 million per quarter in 2012.
Goal by Mid-2013 - Debt to EBITDA of ~1.5x
44
2012 YTD Share Repurchase Activity2012 YTD Share Repurchase Activity
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2012 YTD Share Repurchase Activity2012 YTD Share Repurchase Activity
Type ofRepurchase
DollarAmount
(In Millions)
ShareNumber(In Millions)
AveragePurchase Price
Q1 2012 Open Market $20.8 0.4 $51.62
Q2 2012 Open Market $240.9 4.8 $49.74
Q3 2012 Open Market $205.2 3.5 $59.29
Totals $466.9 8.7 $53.62
$5.0 billion share repurchase program authorized J anuary 20, 2011, with $4.1B remaining as of September 30, 2012.45
Dilution from Outstanding Convertible NotesDilution from Outstanding Convertible Notes
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Dilution from Outstanding Convertible NotesDilution from Outstanding Convertible Notes
2013 2014 2016Total
Dilution*
Average share priceQ3 2012 $57.34YTD 2012 $51.65
Convertible Notes $650M $1.25B $1.25B
Conversion Price $38.10 $45.08 $45.41Q3 Share Dilution 5.7M 5.9M 5.7M 17.4M
YTD Share Dilution 4.5M 3.5M 3.3M 11.3M
WarrantsWarrant Exercise Price $53.90 $56.76 $60.10
Q3 Share Dilution 1.0M 0.3M - 1.3M
YTD Share Dilution - - - -
Dilutive Impact of Outstanding Notes
* May not total due to rounding.46
U.S. and Big 5 EU HIV Market Dynamics
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0
200
400
600
800
1,000
1,200
1,400
HIV Infected* Diagnosed* In Care** On Antiretroviral
Treatment**
P
atients
in
000's
~1,200
~941
~634~737
In the U.S., ~600,000 HIV infected peopleNOT on antiretroviral treatment
U.S. and Big 5 EU HIV Market Dynamics
^Moving annual total.
7%^
Sources:
* March 2012 CDC estimates as of the end of 2008.
** Ipsos Healthcare U.S. HIV Monitor Q2 2012.
0
100
200
300
400
500
600
700
800
HIV Infected* Diagnosed* In Care** On Antiretroviral
Treatment**
Patientsin000's
In the Big 5 EU, ~300,000 HIV infected peopleNOT on antiretroviral treatment
Sources:
* National Surveillance Units per country & ECDC 2011.
** IMS/GERS Q2 2012 & Ipsos EU HIV Monitor Q1 2012.
~645
~424~336
~394
6%^
47
Gileads Ongoing HIV R&D Focus
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Gilead s Ongoing HIV R&D Focus
Marketed Single Tablet Regimens ATRIPLA (1550 mg)
1st NNRTI-Based STR
COMPLERA (1150 mg) 2nd NNRTI-Based STR
STRIBILD (1350 mg)
EVG/COBI/FTC/TDF 1st Integrase Inhibitor-Based STR
Future Single Tablet Regimens GS-7340 / Darunavir / Cobicistat / Emtricitabine
(1600 mg)
1st Protease Inhibitor-Based STR (Phase 2)
GS-7340 Quad (1050mg) GS-7340 / Elvitegravir / Cobicistat / Emtricitabine 2nd Integrase Inhibitor-Based STR (Phase 2)
ATRIPLA
COMPLERA
STRIBILD
GS-7340/DRV/COBI/FTC
GS-7340/EVG/COBI/FTC
Bring Forward New Once-Daily, Single Tablet Regimens toProvide Additional Options for Patients
Bring Forward New Once-Daily, Single Tablet Regimens toProvide Additional Options for Patients
48
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49
October 23, 2012October 23, 2012
Q3 2012 Earnings Results
Conference Call and Webcast