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July 26, 2010
Gregg AltonExecutive Vice President
Corporate and Medical Affairs
AAAS Science and Human Rights Coalition
About Gilead Sciences
Worldwide presence
– 4,000 employees
– 25 offices on 4 continents
13 marketed drugs
– Primary therapeutic focus in HIV/AIDS, liver disease and serious cardiovascular and respiratory conditions
Eight successful acquisitions
– Expanding company’s therapeutic reach
Strong Geographical Presence
Australia
Ireland
U.K.
Portugal
Germany
Switzerland
Austria
ItalyGreece
TurkeyBranford, CT
San Dimas, CA
Foster City, CAPalo Alto, CA
Edmonton, Alberta
Seattle, WA
LEGEND
Research and Development Locations
Manufacturing Operations
China
France
Spain
Belgium
Sweden
Denmark
Norway
Finland
The Netherlands
Gilead Locations
New Zealand
Mississauga, ON
Durham, NC
Sales and Marketing Operations
Regional Partners to Support Registrations, Product Distribution and Medical Education
Aspen*Stendhal
Puerto RicoPharma
Delta
IDS
Anspec
Traphaco
Medicopharmacia
Nicholas Piramal
11 Distributors and 48 Sub-Distributors Reaching 130 Countries
Gador
Quadri
*Manufacturing and Distribution for Africa, in Africa
Our Therapeutic Areas
AtriplaAtriplaTruvadaTruvadaVireadViread
EmtrivaEmtrivaTruvada/rilpivirine FDR Truvada/rilpivirine FDR
(Ph III)(Ph III)Quad Quad (Ph III)(Ph III)
Elvitegravir Elvitegravir (Ph III)(Ph III)Cobicistat Cobicistat (Ph III)(Ph III)
Heart DiseaseHeart DiseaseRanexaRanexa
LexiscanLexiscanRegadenoson Regadenoson (filed (filed
with EMEA)with EMEA)Ranolazine Ranolazine (Ph II)(Ph II)
PAHPAHLetairisLetairis
Cicletanine Cicletanine (Ph II)(Ph II)
MetabolicMetabolicGS 9667 GS 9667 (Ph I)(Ph I)
InfluenzaInfluenzaTamifluTamiflu
CFCFCaystonCayston
Aztreonam Aztreonam (Ph III)(Ph III)
BronchiectasisBronchiectasisAztreonam Aztreonam (Ph II)(Ph II)
IPFIPFAmbrisentan Ambrisentan (Ph III)(Ph III)
PulmonaryPulmonary GS 6201 GS 6201 (Ph I)(Ph I)
HBVHBVHepseraHepseraVireadViread
HCVHCVGS 9190 GS 9190 (Ph II)(Ph II)
GS 9256/GS 9190 GS 9256/GS 9190 (Ph I)(Ph I)
NASHNASHGS 9450 GS 9450 (Ph II)(Ph II)
HIV/AIDSHIV/AIDS CardiovascularCardiovascular RespiratoryRespiratoryLiver DiseaseLiver Disease
Evolution of Fixed-Dose Combinations
Lamivudine (3TC; 1995)Lamivudine (3TC; 1995)
Zidovudine (AZT; 1987) Zidovudine (AZT; 1987) Combivir® (AZT/3TC;1997)Combivir® (AZT/3TC;1997) Trizivir® (ABC/AZT/3TC; 2000)Trizivir® (ABC/AZT/3TC; 2000)
Abacavir (ABC; 1998)Abacavir (ABC; 1998) Epzicom® (3TC/ABC; 2004)Epzicom® (3TC/ABC; 2004)
Tenofovir (TDF; 2001)Tenofovir (TDF; 2001) Truvada® (FTC/TDF; 2004)Truvada® (FTC/TDF; 2004) Atripla® (EFV/FTC/TDF; 2006)Atripla® (EFV/FTC/TDF; 2006)
Emtricitabine (FTC; 2003)Emtricitabine (FTC; 2003)
Efavirenz (EFV; 1998)Efavirenz (EFV; 1998)
GlaxoSmithKlineGlaxoSmithKline
Gilead / Bristol-Myers Squibb / MerckGilead / Bristol-Myers Squibb / Merck
2006: Single Tablet Regimen Approved
199630+ Pills a day
2006Introduction of Atripla®
HIV Pipeline – Addressing Unmet Needs
Truvada/rilpivirine fixed-dose regimen– Would be only second single-tablet regimen for HIV– Safer for use in pregnant women– Fewer CNS side effects
Cobicistat (novel PK enhancer) – No HIV activity – Good chemical stability (heat stable)– Enabling once-daily dosing of elvitegravir (integrase
inhibitor)– Broader role with protease inhibitors for tolerable and safe
combination therapy
HIV Research – New Targets
Active early-stage, preclinical research program identifying compounds that may inhibit HIV at newer targets in the virus’ life cycle– LEDGF Inhibitors
– Capsid Assembly Inhibitors
Exploring strategies and compounds to eradicate HIV in latently infected cells– Eliminate cells actively replicating HIV
– Infection by newly produced virus particles blocked by ARVs
D. D. Richman et al., Science 323, 1304 -1307 (2009)
Worldwide Impact of HIV/AIDS
DEVELOPING WORLD
~33 million infected
2.7 million new infections per year
Life expectancy in sub-Saharan Africa: 51
Without AIDS, life expectancy would be
62
UNITED STATES
~1 million infected
56,300 new infections per year
3 million years of human life saved
Life expectancy upon entering care:
24+
Gilead Access Program
Particular focus on countries hardest hit by the HIV/AIDS epidemic– 130 countries
– Including all of Africa
Pricing tiers– Based on a country’s economic
status and HIV prevalence
Support for:– Regional distributors
– Supply chain tools
– Medical education
– Product registrations
Access Initiatives – Generic Partnerships
Goal: Achieve the lowest pricefor least developed countries
Rationale: Indian manufacturershave proven track record in deliveringhigh volume/low margin qualityproducts
Parameters:– Full technology transfer to speed production and ensure quality– Develop any tenofovir-based FDC or pediatric formulation– Free to sell API within India with no royalty payment to Gilead– Free to set own price for finished product– Distribute within India and 94 other countries, pay 5% royalty to
Gilead– Seek WHO or tentative FDA approval
Expanding Access to HIV Treatment: Lower Prices, More Patients
$7.25
$8.25
$12.42
$12.00
$17.00702,911
31,000
508,103
129,279
$4
$6
$8
$10
$12
$14
$16
$18
2006 2007 2008 2009 2010
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
# pa
tient
s re
ache
d
Price
Patients
Lo
we
st g
ener
ic p
rice
/mo
nth
Lo
we
st g
ener
ic p
rice
/mo
nth
Case Study: Matrix
55 Countries covered by Matrix – 58% of licensed territory
The Cost of Viread
U.S. W
AC
$21.43
~U.S.
Governm
ent
Mexic
o
Manufa
cturin
g Cost
$0.57
15% Dist. Margin
$1.00
Cost of manufacturing,
pre-distribution,
pharmacovigilance,
medical education
+ 5% royalty
Intellectual Property
Return on investment,
incentive for innovation
Canada
$17.13$4.00
LMI (
China, P
eru, T
hailand)
Brazil
$1.75
Access Pric
e
COST OF VIREAD TABLET (PER
DAY)
Model is Financially Self-Sustaining
FY 2009 FY 2008
Total Revenue
(in $,000)33,117 19,365
Total COGS
(in $,000)25,959 16,809
Operating Expenses
(in $,000)3,556 4,243
Total Contribution Margin
(in $,000)3,601 (1,688)
Total Contribution Margin
(as % of Total Revenue)10.9% -8.7%
Full Year 2010 GuidanceFull Year 2010 Guidance
* Non-GAAP product gross margin and expenses are non-GAAP and exclude the impact of acquisition, restructuring and stock-based compensation expenses, where applicable. Management believes this non-GAAP information is useful for investors, taken in conjunction with Gilead’s GAAP financial statements, because management currently uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gilead’s operating results as reported under U.S. GAAP.
($ in millions, except percentages and per share amounts)
Net Product Sales
Non-GAAP Product Gross Margin*
Non-GAAP Expenses
R & D*
S G & A*
Effective Tax Rate
Diluted EPS Impact of Acquisition, Restructuring and Stock-Based Compensation Expenses
$ 7,400 – 7,500
$ 0.27 – 0.30
$ 900 – 920
$ 850 – 870
25% – 26%
75% – 77%
Provided on 4/20/10
$ 7,300 – 7,400^
$ 0.25 – 0.28^^^
$ 900 – 920
$ 850 – 870
26.5% – 27.5%^^
75% – 77%
Updated on 7/20/10
^ Reduction in net product sales guidance for full year 2010 was driven by the impact of foreign currency fluctuations.
^^ Increase in effective tax rate for full year 2010 was driven by higher U.S. revenue growth and lower revenues in Europe.
^^^ Decreases in diluted EPS impact of acquisition, restructuring and stock-based compensation expenses for full year 2010 was driven by lower projections of stock-based compensation expenses, partially offset by higher restructuring expenses related to our decision to close operations in Durham, North Carolina.
Looking Ahead
Continued commitment to R&D – new targets, new treatments for HIV
Expand Gilead Access Program
– Build on existing generic partnerships
– As approved, introduce new products into program (e.g., TMC278 fixed-dose regimen)
UNITAID Patent Pool
– Gilead is actively participating in discussions to move this important initiative forward
– Like partnerships with generic manufacturers, a patent pool could increase access by lowering prices, while respecting IP
Evaluate participation in new efforts for expanding access while encouraging innovation
Thank You