Q Earnings Results. October 26, 2017

Transcription

1 Q Earnings Results October 26, 2017

2 Forward-Looking Statements The projected financial results presented in the following slides represent management's estimates of Gilead s future financial results. Gilead cautions readers that forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include: Gilead s ability to achieve its anticipated full year 2017 financial results; Gilead s ability to sustain growth in revenues for its antiviral and other programs; the risk that estimates of patients with HCV or anticipated patient demand may not be accurate; the risk that private and public payers may be reluctant to provide, or continue to provide, coverage or reimbursement for new products, including Yescarta TM, Vosevi, Vemlidy, Epclusa, Descovy, Odefsey and Genvoya; Gilead s ability to successfully commercialize Yescarta and advance Kite s product pipeline and any difficulties or unanticipated expenses in connection with integrating the companies; the potential for increased pricing pressure globally and contracting pressure as well as decreased volume and market share from additional competitive HCV launches; a larger than anticipated shift in payer mix to more highly discounted payer segments and geographic regions and decreases in treatment duration; availability of funding for state AIDS Drug Assistance Programs (ADAPs) and Veterans Administration (VA); continued fluctuations in ADAP and VA purchases driven by federal and state grant cycles which may not mirror patient demand and may cause fluctuations in Gilead s earnings; market share and price erosion caused by the introduction of generic versions of Viread and Truvada outside the United States; potential amendments to the Affordable Care Act or other government action that could have the effect of lowering prices or reducing the number of insured patients; the possibility of unfavorable results from clinical trials involving investigational compounds; the levels of inventory held by wholesalers and retailers which may cause fluctuations in Gilead s earnings; Gilead s ability to submit new drug applications and receive regulatory approval for new product candidates in the timelines currently anticipated or at all, including for BIC/FTC/TAF; Gilead s ability to successfully develop its oncology, inflammation, cardiovascular and respiratory programs; safety and efficacy data from clinical studies may not warrant further development of Gilead s product candidates; Gilead s ability to pay dividends or complete its share repurchase program due to changes in its stock price, corporate or other market conditions; fluctuations in the foreign exchange rate of the U.S. dollar that may cause an unfavorable foreign currency exchange impact on Gilead s future revenues and pre-tax earnings; and other risks identified from time to time in Gilead s reports filed with the U.S. Securities and Exchange Commission (SEC). In addition, Gilead makes estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Actual results may differ significantly from these estimates. You are urged to consider statements that include the words may, will, would, could, should, might, believes, estimates, projects, potential, expects, plans, anticipates, intends, continues, forecast, designed, goal, or the negative of those words or other comparable words to be uncertain and forward-looking. Gilead directs readers to its press releases, Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 and other subsequent disclosure documents filed with the SEC. Gilead claims the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements. This presentation includes GAAP and non-gaap financial measures, a complete reconciliation between these two measures is available on the Company s website at within the investor section. Management believes this non-gaap information is useful for investors, when considered in conjunction with Gilead s GAAP financial statements, because management uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead s operating results as reported under U.S. GAAP. Non-GAAP measures may be defined and calculated differently by other companies in the same industry. 2

3 Q Earnings Call Agenda Introduction Commentary Sung Lee, VP, Investor Relations John Milligan, President and CEO Robin Washington, EVP and CFO Jim Meyers, EVP, Commercial Operations Q&A Also: Kevin Young, COO Norbert Bischofberger, EVP, R&D and CSO Alessandro Riva, EVP, Oncology Therapeutics 3

4 Table of Contents Discussion Slide # John Milligan, President and CEO Kite Update and Yescarta TM Launch 6 AASLD Update 7 B/F/TAF Update 9 Robin Washington, EVP and CFO Income Statement Performance Cash Flow and Return of Capital to Shareholders Guidance Jim Meyers, EVP Commercial Operations HIV HCV Appendix

5 John Milligan, Ph.D. President and CEO

6 Kite Acquisition and Yescarta Approval Establishes Gilead s leadership in cell therapy Yescarta TM approved in the U.S. on October 18, 2017 for adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy Collaborating with academic cancer centers to finalize training and complete certification before launch Marketing Authorization in Europe is anticipated in the first half of 2018 Working to expand manufacturing capacity into Europe Number of studies in other b-cell malignancies, earlier lines of therapy and solid tumors are planned and ongoing 6

7 Strong Data Presence at 2017 AASLD Meeting Over 40 abstracts accepted NASH Hepatitis C Hepatitis B NASH - Late breaker American Association for the Study of Liver Diseases (October 20-24, 2017) LB-9: Acetyl-CoA carboxylase (ACC) inhibitor GS-0976 leads to significant improvements in MRI-PDFF in a phase 2, randomized, placebo-controlled trial of patients with NASH Hepatitis C High cure rates in difficult-to-cure patient populations treated with sofosbuvir-based regimens Hepatitis B Improved long-term bone and renal safety following switch to Vemlidy from Viread 7

8 Reaching People in New Geographies: China On September 25, Gilead announced approval of Sovaldi by the China Food and Drug Administration for the treatment of adults and adolescents (aged 12 to 18 years) infected with HCV genotype 1, 2, 3, 4, 5 or 6 as a component of a combination antiviral treatment regimen Sovaldi is Gilead s first product launch in China Expectation of private market launch in early December. Small enterprise footprint focused on medical education and market access Gilead is also studying Harvoni and Epclusa in clinical trials at sites across China, where 10 million people are estimated to be living with HCV Potential for approval of six medicines in China over the next two years including: Harvoni and Epclusa for HCV, Vemlidy for HBV, Genvoya, Descovy, and B/F/TAF for HIV 8

9 Bictegravir/F/TAF Bictegravir is a novel integrase inhibitor In development as a single-tablet regimen with F/TAF B/F/TAF All four Phase 3 studies met the primary objective of non-inferiority 0% resistance development was observed in all four studies at week 48 Data for treatment-naïve patients from Study 1489 and 1490 shared at the IAS Conference on HIV Science in Paris, July 2017 Data for virologically suppressed patients who switched from boosted protease inhibitor-based regimens (Study 1878) shared at the IDWeek 2017 conference in San Diego, October 2017 U.S. PDUFA date February 12, 2018 MAA submitted and was validated by the European Medicines Agency in July

10 Robin Washington EVP and CFO

11 Total Revenues $ in millions Q down 13% from Q $7,500* $7,320 $6,505 $7,141 $6,512 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Note: FX impact to revenues was favorable $59 million QoQ (0.8%). *Q3 16 revenues benefited from a favorable adjustment of $332 million to rebate reserves primarily related to our TDF-based regimens. 11

12 Non-GAAP Diluted EPS Q down 17% from Q $2.75 $2.70 $2.23 $2.56 $2.27 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Note: Non-GAAP diluted EPS excludes acquisition-related, up-front collaboration, stock-based compensation and other expenses. 12

13 Financial Highlights: Q (in millions, except percentages and per share amounts) Q Q Q YoY Change QoQ Change Net Product Sales $7,405 $7,046 $6,402 (14%) (9%) Antiviral Products 6,841 6,439 5,843 (15%) (9%) HCV 3,325 2,868 2,197 (34%) (23%) HIV and HBV 3,516 3,571 3,646 4% 2% Other Products* (1%) (8%) Non-GAAP Costs and Expenses** $2,679 $2,531 $2,372 (11%) (6%) COGS (11%) (8%) Product Gross Margin 88% 87% 87% R&D (24%) (8%) SG&A % (3%) Operating Margin 64% 65% 64% Effective Tax Rate 22% 25% 26% Non-GAAP Net Income** $3,677 $3,372 $2,990 (19%) (11%) Non-GAAP Diluted EPS** $2.75 $2.56 $2.27 (17%) (11%) Diluted Shares 1,339 1,317 1,319 (1%) - * Other Products comprised primarily of Letairis, Ranexa, AmBisome, Zydelig, Cayston and Lexiscan. **Non-GAAP costs and expenses, net income and diluted EPS exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. 13

14 Financial Highlights: Nine Months Ended September 30 (in millions, except percentages and per share amounts) Change Net Product Sales $22,737 $19,825 (13%) Antiviral Products 21,150 18,123 (14%) HCV 11,605 7,641 (34%) HIV and HBV 9,545 10,482 10% Other Products* 1,587 1,702 7% Non-GAAP Costs and Expenses** $7,600 $7,342 (3%) COGS 2,554 2,456 (4%) Product Gross Margin 89% 88% R&D 2,790 2,446 (12%) SG&A 2,256 2,440 8% Operating Margin 67% 64% Effective Tax Rate 20% 25% Non-GAAP Net Income** $12,128 $9,311 (23%) Non-GAAP Diluted EPS** $8.87 $7.06 (20%) Diluted Shares 1,369 1,319 (4%) * Other Products comprised primarily of Letairis, Ranexa, AmBisome, Zydelig, Cayston and Lexiscan. **Non-GAAP costs and expenses, net income and diluted EPS exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. 14

15 Total Product Sales $ in millions $7,405 $3,325 Q down 14% from Q By Therapeutic Area By Geography $7,216 $7,046 $6,377 $7,405 $7,216 $5,062 $4,931 $3,229 $2,576 $2,868 $2,197 $1,412 $1,415 $4,450 $931 $4,982 $870 $4,542 $7,046 $665 $1,266 $661 $1,399 $1,197 $663 $3,516 $3,366 $3,265 $3,571 $3,646 $6,402 $6,377 $6,402 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 HIV and HBV HCV Other * Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 U.S Europe Other Int'l *Other comprised primarily of Letairis, Ranexa, AmBisome, Zydelig, Cayston and Lexiscan. 15

16 Non-GAAP R&D Expenses $ in millions Q down 24% from Q Key Metrics $981 $959 $889 $812 $745 YoY decrease primarily due to the 2016 impact of a $200 million milestone expense associated with Nimbus Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Note: Non-GAAP R&D expenses exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. 16

17 Non-GAAP SG&A Expenses $ in millions Q up 3% from Q Key Metrics $780 $938 $807 $827 $806 YoY increase primarily due to higher marketing expenses partially offset by lower Branded Prescription Drug (BPD) fee P&L impact of BPD fee: BPD Fee $M 2015 Actual $ Actual $ Estimate $350-$450 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Note: Non-GAAP SG&A expenses exclude acquisition-related, up-front collaboration, stock-based compensation and other expenses. 17

18 Other Select Financial Information (in millions, except days sales outstanding) Jun. 30, 2017 Sep. 30, 2017 Cash, Cash Equivalents & Marketable Securities $36,576 $41,360 Operating Cash Flows During the Quarter * $3,526 $2,694 Inventories $1,408 $1,144 Days Sales Outstanding (Accounts Receivable) Share Repurchases During the Quarter $130 $153 Interest Expense and Other Income (Expense), net (non-gaap)** ($139) ($123) Diluted Shares Used in Per Share Calculation for the Quarter 1,317 1,319 Basic Shares Outstanding 1,307 1,306 * Operating cash flows during the quarter ended June 30, 2017 and September 30, 2017 reflect the impact of adoption of Accounting Standards Update Improvements to Employee Share-Based Payment Accounting. ** Non-GAAP Interest Expense and Other Income (Expense), net excludes acquisition-related expenses. 18

19 Return of Capital to Shareholders Cash dividend program - Paid quarterly dividend in Q of $0.52 per share - Declared Q quarterly dividend of $0.52 per share, payable December 28, 2017 to stockholders of record as of the close of business on December 15, 2017 Share repurchase program - Repurchased $153 million of stock and retired 2.0 million shares at an average price of $76.02 in open market repurchases in Q $8.2 billion of the January 2016 $12 billion share repurchase program remaining as of September 30, Since 2012, repurchased approximately 21% of shares outstanding (over 322 million shares) 19

20 Q Share Activity Type of Activity Dollar Amount (In Millions) Shares Average Purchase Price Q Q Q Total Open Market Share Repurchase Open Market Share Repurchase Open Market Share Repurchase Open Market Share Repurchase $565 7,921,267 $71.34 $130 1,961,148 $66.29 $153 2,012,615 $76.02 $848 11,895,030 $71.30 A $12 billion share repurchase program was authorized in January 2016, which we began in Q Under this program, we have repurchased a total of 47.6 million shares with an average purchase price of $80.91 in open market repurchases. As of September 30, 2017, $8.2 billion remains outstanding under the January 2016 program. 20

21 Full Year 2017 Guidance (in millions, except percentages and per share amounts) Initially Provided 2/7/2017 Reiterated 5/2/2017 Updated 7/26/2017 Updated 10/26/2017 Net Product Sales* $ 22,500 $ 24,500 $ 24,000 $ 25,500 $ 24,500 $ 25,500 Non-HCV Product Sales $ 15,000 $ 15,500 $ 15,500 $ 16,000 $ 16,000 $ 16,500 HCV Product Sales $ 7,500 $ 9,000 $ 8,500 $ 9,500 $ 8,500 $ 9,000 Non-GAAP** Product Gross Margin 86.0% 88.0% 86.0% 88.0% 86.0% 87.0% R&D Expenses $ 3,100 $ 3,400 $ 3,200 $ 3,400 $ 3,300 $ 3,400 SG&A Expenses $ 3,100 $ 3,400 $ 3,200 $ 3,400 $ 3,300 $ 3,400 Effective Tax Rate 25.0% 28.0% 25.0% 28.0% 25.0% 27.0% Diluted EPS Impact of GAAP to Non-GAAP Adjustments*** $ 0.84 $ 0.91 $ 0.86 $ 0.93 $ 1.02 $ 1.17 * This guidance is subject to a number of uncertainties including the accuracy of estimates of HCV patient starts for the remainder of 2017 and/or market share in HCV; lower than expected market share and greater price erosion as the result of the introduction of generic versions of TDF and the fixed dose combination of FTC/TDF outside the U.S; slower than anticipated growth in the HIV franchise; an increase in discounts, chargebacks and rebates due to ongoing contracts and future negotiations with commercial and government payers; a larger than anticipated shift in payer mix to more highly discounted payer segments such as PHS, FSS, Medicaid and the VA, as well as volatility in foreign currency exchange rates. ** Non-GAAP product gross margin, expenses and effective tax rate exclude amounts related to acquisition-related, up-front collaboration, stock-based compensation and other expenses. *** Includes amounts related to acquisition-related, up-front collaboration, stock-based compensation and other expenses. A reconciliation between GAAP and non-gaap full year 2017 guidance is provided in the tables on slide

22 GAAP to Non-GAAP Reconciliation of Full Year 2017 Guidance (in millions, except percentages and per share amounts) Projected product gross margin GAAP to non-gaap reconciliation: GAAP projected product gross margin Acquisition-related expenses (1)(3) Initially Provided 2/7/2017; Reiterated 5/2/ % - 84% 4% - 4% Updated 7/26/ % - 84% 4% - 4% Updated 10/26/ % - 83% 4% - 4% Non-GAAP projected product gross margin (2) 86% - 88% 86% - 88% 86% - 87% Projected research and development expenses GAAP to non-gaap reconciliation: GAAP projected research and development expenses Stock-based compensation expenses (1)(3) Acquisition-related (1) / up-front collaboration expenses Non-GAAP projected research and development expenses $3,295 - $3,640 (180) - (195) (15) - (45) $3,100 - $3,400 $3,410 - $3,655 (195) - (210) (15) - (45) $3,200 - $3,400 $3,535 - $3,685 (220) - (240) (15) - (45) $3,300 - $3,400 Projected selling, general and administrative expenses GAAP to non-gaap reconciliation: GAAP projected selling, general and administrative expenses Stock-based compensation expenses (1)(3) Acquisition-related expenses-transaction costs and other (1) $3,305 - $3,615 (205) - (215) - $3,435 - $3,645 (235) - (245) - $3,755 - $3,940 (375) - (435) (80) - (105) Non-GAAP projected selling, general and administrative expenses $3,100 - $3,400 $3,200 - $3,400 $3,300 - $3,400 Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses: Acquisition-related(1) / up-front collaboration expenses Stock-based compensation expense (1) $ $ $ $ $ $ Projected diluted EPS impact of acquisition-related, up-front collaboration, stock-based compensation and other expenses $ $0.91 $ $0.93 $ $1.17 (1) Acquisition-related expenses, including acquisition-related amortization of intangible assets and stock-based compensation expenses, associated with Gilead s acquisition of Kite are subject to adjustments pending completion of preliminary purchase accounting and valuation. (2) Total stock-based compensation expenses have a less than one percent impact on non-gaap projected product gross margin. (3) Amounts include preliminary estimates of a range between $188 million and $251 million total stock-based compensation expenses associated with Gilead s acquisition of Kite 22

23 Jim Meyers EVP, Commercial Operations

24 HIV

25 Top Prescribed HIV Regimens U.S. Rank Naïve All Patients Europe-5* Rank Naïve All Patients 1 Genvoya Genvoya 1 Genvoya Other STR 2 Other STR Other STR 2 Other STR Genvoya 3 Stribild Atripla 3 Eviplera Eviplera 4 Complera Stribild 4 Truvada + other 3 rd Agent Atripla 5 Odefsey Complera 5 Atripla Stribild US Source: Ipsos Healthcare HIV U.S. Therapy Monitor/Scope Q EU Naïve Source: Ipsos Healthcare HIV EU Scope Q EU All Patient Source: Ipsos Healthcare HIV EU Therapy Monitor Q *Europe-5 comprised of France, Spain, Italy, UK, and Germany. Gilead STR Regimen contains a Gilead product 25

26 TAF-Containing Total HIV Product Sales $ in millions Q up 14% from Q (Total Worldwide Product Revenues) $1,600 $1,247 $251 $1,401 $286 $316 $296 $654 $867 $149 $227 $258 $88 $155 $105 $461 $563 $769 $857 $988 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Genvoya Odefsey Descovy 26

27 U.S. HIV Market Dynamics Estimated Patients in 000 s ~1,108 ~942 ~705 ~558 ~85% ~75% ~79% HIV Infected Diagnosed On Antiretroviral Treatment On a Gilead HIV Product Sources: CDC and Ipsos Healthcare HIV U.S. Therapy Monitor/Scope Q

28 Gilead U.S. Share in HIV Treatment Naïve Patients % of Naïve Patients Initiating Therapy Base: All initiations within each quarter. Source: Ipsos Healthcare HIV U.S. Scope Q

29 TAF Portfolio Uptake in the U.S.* Launched Aligned Monthly TRx Months Post Launch Source: Based on data derived from IMS NPA Monthly. *As measured post launch for respective products. 29

30 TAF Portfolio Uptake in France* Launched Aligned Monthly Packs Packs/Month Triumeq (ViiV) Atripla Stribild Months Post Launch Source: Based on data derived from IMS/GERS. *As measured post launch for respective products. 30

31 TAF Portfolio Uptake in Germany* Launched Aligned Monthly Packs Packs/Month Triumeq (ViiV) Atripla Stribild Source: Based on data derived from IMS PharmaScope. *As measured post launch for respective products. Months Post Launch 31

32 TAF Portfolio Uptake in Italy* TRx/Month Packs/Month Atripla Triumeq (ViiV) Stribild Months Post Launch Source: Based on data derived from IMS/GERS. *As measured post launch for respective products. 32

33 HCV

34 Total HCV Product Sales by Geography $ in millions Q down 34% from Q $3,325 $3,229 $681 $579 $2,576 $2,868 $368 $604 $628 $487 $401 $591 $2,197 $2,040 $2,022 $1,688 $1,909 $1,410 $397 $390 U.S.: Key Metrics Sequential decrease driven primarily by declining patient starts and the impact of increased competition. Europe: Sequential decline was primarily due to the recognition of deferred revenue in the second quarter related to an HCV contract as well as lower total HCV patient starts. Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 U.S. Europe Other Int'l 34

35 Total HCV Product Sales by Product $ in millions Q down 34% from Q $3,325 $3,229 $825 $1,860 $1,640 $1,371 $1,382 $973 $640 $1,048 $892 $1,171 $882 $541 $2,576 $2,868 $315 $313 $2,197 $123 $219 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Harvoni Epclusa Sovaldi Vosevi 35

36 HCV Patient Initiations on Sofosbuvir-Based Regimens (in thousands) Note: Graph illustrates the estimated number of patients that started therapy with a Gilead HCV drug for each quarter. Patient numbers are subject to adjustments. Sovaldi was approved in the U.S. in December 2013 and in the EU in January Harvoni was approved in the U.S. in October 2014 and in the EU in November Epclusa was approved in the U.S. in June 2016 and in the EU in July In Japan, Sovaldi launched in May 2015 and Harvoni launched in September Vosevi was approved in the U.S. and in the EU in July

37 Vosevi: The First Once-daily Single-Tablet HCV Regimen Approved as Salvage Therapy for Certain Patients U.S. Approved by the FDA on July 18, 2017 For the re-treatment of HCV infection in adults with genotype 1, 2, 3, 4, 5 or 6 previously treated with an NS5A inhibitor-containing regimen, or with genotype 1a or 3 previously treated with a sofosbuvir-containing regimen without an NS5A inhibitor $117 million in Q Europe Approved by the European Commission on July 28, 2017 For the treatment of HCV infection in patients with and without compensated cirrhosis, with all genotypes (GT1-6) of HCV infection regardless of prior therapy, including 8 weeks of treatment for HCV direct-acting antiviral (DAA)-naïve patients without cirrhosis, as well as 12 weeks of treatment for patients who have previously failed therapy with a DAA-containing regimen 37

38 Appendix Slides

39 Pipeline Milestones Anticipated in HIV B/F/TAF Q1 18 Q3 18 Approval in the U.S. (PDUFA February 12, 2018) Approval in the EU GS-9620 Q4 17 Complete 6mg cohort Phase 1 study in HIV cure Descovy Q3 18 Complete Phase 3 study in PrEP NASH, PBC, PSC, and AH Q2 18 Complete enrollment of STELLAR 4 Phase 3 study of NASH Selonsertib Q2 18 Complete Phase 2 study in AH (GS-4997) Q3 18 Complete enrollment of STELLAR 3 Phase 3 study of NASH GS-9674 (FXR agonist) GS-0976 (ACC inhibitor) HCV Vosevi Q4 17 Q1 18 Q1 18 Interim analysis from Phase 2 study in PBC Primary endpoint analysis from Phase 2 in PSC Complete Phase 2 study in NASH Q3 17 Complete Phase 2 study in NASH Q3 17 Q3 17 Approved in the U.S. Approved in the EU 39

40 Pipeline Milestones Anticipated in (Continued) Hematology/Oncology Axicabtagene ciloleucel Entospletinib Andecaliximab (GS-5745) Tirabrutinib (GS-4059) Q4 17 Q4 17 1H 18 Q3 17 Q3 17 Q3 17 Q1 18 Q1 18 2H 18 Approval in the U.S. for aggressive NHL (PDUFA November 29) 1-year follow up data from ZUMA-1 Approval in the EU for aggressive NHL Initiate Phase 2 study with R-CHOP in DLBCL Complete expansion of cohort with newly diagnosed AML patients fit for chemotherapy Interim analysis (futility) from Phase 3 study for gastric cancer Complete Phase 2 study with nivolumab for gastric cancer Interim analysis (efficacy) from Phase 3 study for gastric cancer Achieve 24-week endpoint in Phase 2 combination studies in R/R CLL 40

41 Pipeline Milestones Anticipated in (Continued) Inflammation/Respiratory Filgotinib Presatovir (GS-5806) 1H 18 Q2 18 Q2 18 Q2 18 Interim analysis from Phase 3 study in UC Complete Phase 2 study in ankylosing spondylitis Complete Phase 2 study in psoriatic arthritis Complete Phase 2 study in adults with infection in upper respiratory tract Entospletinib Q1 18 Interim analysis from Phase 2 study in cgvhd Q4 17 Complete Phase 2 study in RA GS H 18 Complete Phase 2 study in Sjogren s syndrome and cutaneous lupus erythematosus Other GS H 18 Complete Phase 2 study in ebola survivors 41

42 Pipeline Product Candidates HIV Phase Indication/Area B/F/TAF* HIV U.S. and EU Regulatory Submission Descovy PrEP GS-9620 (TLR-7 agonist) HIV GS-9722 (bnab) HIV Reg. Sub. Liver Diseases GS-9688 (TLR-8 agonist) Selonsertib** (ASK-1 inhibitor) GS-9674 (FXR agonist) GS-0976 (ACC inhibitor) Other GS-5734 (Nuc inhibitior) HBV NASH Alcoholic Hepatitis NASH PBC PSC NASH Ebola *Bictegravir is abbreviated B and was formerly called GS **Formerly called GS

43 Pipeline Product Candidates (continued) Hematology/Oncology Axicabtagene ciloleucel KTE-C19 KITE-585 (anti-bcma) Trial Indication/Area ZUMA-1 DLBCL, PMBCL & TFL EU Regulatory Submission ZUMA-5 ZUMA-6 ZUMA-2 ZUMA-3 ZUMA-4 Indolent NHL DLBCL (PD-L1 mab) MCL Adult ALL Pediatric ALL MM Phase KITE-718 (MAGE A3/A6) Solid Tumor Idelalisib (PI3K delta inhibitor) Andecaliximab* (MMP9 mab inhibitor) Entospletinib (Syk inhibitor) Tirabrutinib** (BTK inhibitor) GS-5829 (BET inhibitor) R/R CLL Gastric Cancer Solid Tumors Heme Malignancies AML B-cell Malignancies Solid Tumors Note: ZUMA-7, ZUMA-8, Humanized anti-cd19 Control CAR (3 rd Gen), KITE-796, KITE-439 are at the pre-ind stage and are not displayed. *Formerly called GS **Formerly called GS

44 Pipeline Product Candidates (continued) Inflammation/Respiratory Filgotinib (JAK1 inhibitor) Presatovir* (fusion inhibitor) Entospletinib (Syk inhibitor) GS-9876 (Syk inhibitor) Indication/Area Rheumatoid Arthritis Crohn's Disease Ulcerative Colitis Inflammatory Diseases RSV cgvhd Sjogren's Syndrome Lupus Phase *Formerly called GS

45 Non-GAAP Product Gross Margin 87.6% 88.1% 88.3% 87.3% 87.2% Key Metrics Lower Non-GAAP Product Gross Margin in Q3 17 compared to Q3 16 primarily due to change in product mix Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Note: Non-GAAP product gross margin excludes acquisition-related, up-front collaboration, stock-based compensation and other expenses. 45

46 Non-GAAP Operating Margin 64.3% 62.3% 62.5% 64.6% 63.6% Key Metrics Lower Non-GAAP Operating Margin in Q3 17 compared to Q3 16 primarily driven by lower gross margin from a change in product mix and growth in SG&A expenses Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Note: Non-GAAP operating margin excludes acquisition-related, up-front collaboration, stock-based compensation and other expenses. 46

47 European Product Sales FX impact to European revenues was favorable $28 million QoQ Q down 15% (-17% excluding FX) from Q Q3 16 Q3 17 YoY Excl FX Epclusa $40 $263 * * Truvada $217 $154 (29%) (30%) Genvoya $46 $ % 210% $ in millions $1,412 $1,415 $1,266 $1,399 $1,197 Eviplera $143 $133 (7%) (9%) Harvoni $380 $110 (71%) (72%) Atripla $129 $79 (39%) (39%) Descovy $23 $65 * * Viread $77 $55 (29%) (29%) AmBisome $52 $51 (2%) (1%) Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Stribild $78 $40 (49%) (49%) * Percentage not meaningful. Odefsey $10 $37 * * Sovaldi $184 $19 (90%) (90%) Vosevi $0 $5 * * Other $33 $40 21% 15% Total $1,412 $1,197 (15%) (17%) 47

48 U.S. HCV Estimated Patient Initiations: Patient Starts (in 000s) Launch of Pegylated Interferons Launch of Protease Inhibitors Launch of Sovaldi & Harvoni Source: Gilead estimates and 3 rd party databases. 48

49 Outstanding Adjusted Debt (in billions) Dec. 31, 2016 Mar. 31, 2017 Jun. 30, 2017 Sep. 30, 2017 Adjusted Debt* (Senior Unsecured Notes and Floating Rate Borrowings) Total Adjusted Debt to Adjusted EBITDA** $26.56 $26.53 $26.50 $29.47 ~1.41x ~1.48x ~1.50x ~1.73x *Adjusted Debt amount shown at face value. **Represents the last twelve months of adjusted EBITDA. Total interest expense and amortization from all issued debt is expected to be approximately $1,060 million for full year Please refer to the GAAP to non-gaap table for a reconciliation of the non-gaap measures presented above. 49

50 GAAP to Non-GAAP Reconciliation of Outstanding Adjusted Debt and Adjusted EBITDA (in billions) Dec. 31, Mar. 31, Jun. 30, Sep Senior Unsecured Notes and Floating rate Borrowings, net $26.35 $26.32 $26.30 $29.26 Debt discounts, premiums and issuance costs Total Adjusted Debt 1 $26.56 $26.53 $26.50 $29.47 Last Twelve Months Ended Dec. 31, Mar. 31, Jun. 30, Sep Net income attributable to Gilead $13.50 $12.63 $12.22 $11.60 Add: Interest expense & Other income (expense), net Add: Tax Add: Depreciation Add: Amortization Adjusted EBITDA $18.81 $17.95 $17.68 $17.08 Adjusted Debt to Adjusted EBITDA ratio ~1.41x ~1.48x ~1.50x ~1.73x 1 Adjusted Debt amount shown at face value. 50

51 Q Earnings Results October 26, 2017