Robin L. Washington - de.marketscreener.com · Ranolazine (late sodium current inhibitor) - CAD in Type 2 Diabetes Mellitus Ranolazine (late sodium current inhibitor) - Paroxysmal

Q2 2014 Earnings Results

July 23, 2014

Conference Call and Webcast

Forward-looking Statements

2

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 2014 financial results; Gilead's ability to sustain growth in revenues for its antiviral,

cardiovascular and respiratory programs; availability of funding for state AIDS Drug Assistance Programs (ADAPs); continued fluctuations in ADAP

purchases driven by federal and state grant cycles which may not mirror patient demand and may cause fluctuations in Gilead's earnings; the possibility

of unfavorable results from clinical trials involving GS-9973, GS-5806, GS-6615, sofosbuvir, including in combination with other product candidates such

as LDV; Gilead's ability to initiate clinical trials in its currently anticipated timeframes; the levels of inventory held by wholesalers and retailers which may

cause fluctuations in Gilead's earnings; Gilead's ability to submit NDAs for new product candidates in the timelines currently anticipated, including the

fixed dose combination of LDV/SOF with the PDMA; Gilead's ability to receive regulatory approvals in a timely manner or at all, for new and current

products, including sofosbuvir in Japan; the fixed-dose combination of LDV/SOF in the United States and elvitegravir and cobicistat as single agents in

the United States; Gilead's ability to successfully commercialize its products, including Sovaldi, Stribild, Vitekta, Tybost and Zydelig; the risk that

estimates of patients with HCV or anticipated patient demand may not be accurate; Gilead's ability to successfully develop its respiratory, cardiovascular,

oncology and inflammation programs; safety and efficacy data from clinical studies may not warrant further development of Gilead's product candidates;

the potential for additional austerity measures in European countries that may increase the amount of discount required on Gilead's products; Gilead's

ability to complete its share repurchase programs 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. Gilead bases its

estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the

circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources. 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 March 31, 2014 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 www.gilead.com 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.

Q2 2014 Earnings Call Agenda

Introduction Patrick O’Brien, VP, Investor Relations

Commentary

Q&A

John Martin, Chairman and CEO

Paul Carter, EVP, Commercial Operations

Robin Washington, EVP and CFO

Also:

John Milligan, President and COO

Norbert Bischofberger, EVP, R&D and CSO

3

John C. Martin, Ph.D.

July 23, 2014

Chairman and CEO

Q2 2014 Corporate Highlights Corporate

- Announced authorization of a new repurchase plan of up to $5 billion of the

company’s common stock

HCV Highlights

- Submitted New Drug Application (NDA) to Japan’s Pharmaceutical and Medical

Devices Agency (PMDA) for sofosbuvir (SOF) in combination with ribavirin

(RBV) in GT 2 patients

- Announced positive Phase 3 results for the single tablet regimen (STR) of

LDV/SOF, with and without RBV, in GT 1 patients in Japan

Oncology Highlights

- Updated interim results of a Phase 2 study evaluating GS-9973 (Syk inhibitor),

for the treatment of patients with relapsed CLL

5

Gilead’s first approval in oncology

FDA approved on July 23, 2014

Approved for relapsed chronic lymphocytic

leukemia (CLL) in combination with

rituximab

Approved for relapsed follicular lymphoma

(FL) and small lymphocytic lymphoma

(SLL) as monotherapy for patients who

have received at least two prior systemic

therapies

6

Zydelig: A First-In-Class PI3K Delta Inhibitor

Pipeline Product Candidates

7

HIV

Cobicistat (PK enhancer) EU Approved as Tybost; U.S. Regulatory Submission

Elvitegravir (integrase inhibitor) EU Approved as Vitekta; U.S. Regulatory Submission

STR of EVG/cobicistat/FTC/TAF

STR of DRV/cobicistat/FTC/TAF

Liver Diseases

HCV

STR of LDV/SOF (NS5A inhibitor/nucleotide NS5B inhibitor) U.S. and European Regulatory Submissions

FDC of SOF/GS-5816 (pan-genotypic NS5B/NS5A inhibitors)

GS-9669 (non-nuc NS5B site 2 polymerase inhibitor)

GS-9451 (NS3 protease inhibitor)

GS-9857 (pan-genotypic NS3 protease inhibitor)

HBV

TAF (nucleotide reverse transcriptase inhibitor)

GS-4774 (Tarmogen T cell immunity stimulator) - HBV

GS-9620 (TLR-7 agonist) - HBV/HCV

Other

Simtuzumab (monoclonal antibody) - Liver Fibrosis

Simtuzumab (monoclonal antibody) - NASH

Simtuzumab (monoclonal antibody) - Primary Sclerosing Cholangitis

GS-5745 (MMP9 mAb inhibitor) - Ulcerative Colitis

GS-6637 (ALDH-2 inhibitor) - Drug Addiction

1 2 3

Regulatory

Submissions

Phase

Pipeline Product Candidates (continued)

8

Oncology/Inflammation

Idelalisib (PI3K delta inhibitor) - iNHL European Regulatory Submission

Idelalisib (PI3K delta inhibitor) - CLL European Regulatory Submission

Idelalisib (PI3K delta inhibitor) - Frontline CLL

Momelotinib (JAK inhibitor) - Myelofibrosis

Idelalisib (PI3K delta inhibitor) - Frontline iNHL

Momelotinib (JAK inhibitor) - Pancreatic Cancer

Simtuzumab (monoclonal antibody) - Pancreatic Cancer

Simtuzumab (monoclonal antibody) - Myelofibrosis

Simtuzumab (monoclonal antibody) - Colorectal Cancer

GS-9973 (Syk inhibitor) - Hematological Malignancies

GS-5745 (MMP9 mAb inhibitor) - Solid Tumors

Cardiovascular

Ranolazine (late sodium current inhibitor) - Incomplete Revascularization Post PCI

Ranolazine (late sodium current inhibitor) - CAD in Type 2 Diabetes Mellitus

Ranolazine (late sodium current inhibitor) - Paroxysmal Atrial Fibrillation

GS-6615 (late sodium current inhibitor) - LQT-3 Syndrome

GS-6615 (late sodium current inhibitor) - Hypertrophic Cardiomyopathy

GS-6615 (late sodium current inhibitor) - Ventricular Tachycardia/Ventricular Fibrillation

GS-4997 (ASK-1 inhibitor) - Diabetic Nephropathy

GS-4997 (ASK-1 inhibitor) - PAH

Respiratory

GS-5806 (fusion inhibitor) - Respiratory Syncytial Virus

Simtuzumab (monoclonal antibody) - IPF

Phase Regulatory

Submissions1 2 3

Submitted NDA on June 27, 2014

Filing is supported by results from SOF Phase 3 study in

GT 2 HCV infected patients

– Regimen of SOF + RBV dosed for 12 weeks

– Achieved overall SVR12 97% (n=148/153)

– Achieved SVR12 98% (n=88/90) in treatment naïve patients

– Achieved SVR12 95% (n=60/63) in treatment experienced

patients

9

Sofosbuvir GT 2 Regulatory Filing in Japan

STR of LDV/SOF Regulatory Filings

10

Filed NDA in the U.S. on February 10, 2014

– Priority review granted with PDUFA date of October 10, 2014

– Granted Breakthrough Therapy designation by FDA

– Treatment naïve and treatment experienced GT 1 patients

– +/- RBV dosed for 8 or 12 weeks of therapy

MAA fully validated by European Medicines Agency (EMA) on

March 27, 2014

– Granted accelerated review by EMA

Agreement with the Japan’s PMDA

– Positive Phase 3 results with overall response rate of 99% SVR12

in GT 1 patients

– Anticipate filing for approval in Q4 2014

Study 102 Phase 2 Study: SOF/GS-5816 in GT 1-6 HCV Treatment-Naïve

12 Study Weeks

11

SOF 400 mg QD / GS-5816 25 mg QD

(GT 3 w/o cirrhosis)

SOF 400 mg QD / GS-5816 100 mg QD



(GT 2, 4, 5, or 6 w/o cirrhosis)

SOF 400 mg QD / GS-5816 100 mg QD

(GT 2, 4, 5, or 6 w/o cirrhosis)



N = 77

SOF 400 mg QD / GS-5816 100 mg QD


(N = 154)

N = 77

SVR12: 94.8% (73/77)

SVR12: 96.1% (74/77)

TAF STR Phase 3 Studies in Treatment Naïve HIV-1 Patients

Studies 104 (n=866) and 111 (n=868):

Randomized 1:1

48 weeks

48 weeks

Treatment Arm 1

Treatment Arm 2

STR TAF 10mg/EVG 150 mg/COBI 150 mg/

FTC 200 mg + placebo-to-match Stribild

Stribild + placebo-to-match STR EVG 150 mg/

COBI 150 mg/FTC200 mg/TAF 10 mg QD

Randomization stratified by:

HIV-1 RNA level (≤ 100,000 c/mL, > 100,000 to ≤400,000 c/mL or >400,000 c/mL),

CD4 count (<50 cells/µL, 50-199 cells/µ or ≥200 cells/µL) and region (US vs. Ex-US at screening).

12

TAF STR Phase 3 Studies Ongoing to Address Several Populations

13

Multiple studies could

support a broad label at

launch

Potential to replace Stribild.

Adult Switch Patients (n = 1,734)

Adults with Mild/Moderate Renal

Impairment (n = 249 Tx Naïve or Tx Exp)

Adults on Failing Treatment (n = ~100)

Adults on Complex, Multi-Pill

Regimen (n = ~170)

Adolescents (n = ~50 Tx Naïve)

EVG/COBI/FTC/TAF

STR

Significant Pipeline Milestones Anticipated in 2014

HIV

TAF

Q2 14

Q2 14

Q3 14

Initiated Phase 3 study: FTC/TAF versus FTC/TDF (Truvada)

Completed enrollment of additional Phase 3 studies for switch

and renal impairment

Top-line data from Phase 3 treatment naïve studies

Elvitegravir Q2 14

Q4 14

Resubmitted U.S. NDA

FDA approval (PDUFA October 4)

Cobicistat Q4 14 FDA approval (PDUFA October 3)

Stribild Q4 14 Complete switch studies (NNRTI and PI/r)

14

Significant Pipeline Milestones Anticipated in 2014 (Continued)

15

Liver Disease

Sofosbuvir Q3 14 Filed Japan NDA for SOF + RBV in GT 2 patients

Ledipasvir/

Sofosbuvir

Q4 14

Q4 14

Q4 14

FDA approval of STR of LDV/SOF (PDUFA October 10) in GT 1

HCV patients

EMA approval of STR of LDV/SOF in GT 1 HCV patients

Japan Regulatory submission for the STR of LDV/SOF in GT 1

patients

Sofosbuvir/

GS-5816 Q3 14 Initiate Phase 3 HCV studies

TAF Q4 14 Complete enrollment in Phase 3 HBV studies

GS-9620 Q3 14 Initiated Phase 2 study in HBV patients

Simtuzumab Q3 14

Q3 14

Complete enrollment of Phase 2 studies in NASH

Complete enrollment of Phase 2 study in PSC

16

Oncology/Inflammation

Idelalisib

Q2 14

Q3 14

Q3 14

Q4 14

Initiated Phase 3 study for Idelalisib use in frontline CLL

Received FDA approval in CLL, FL, and SLL

EMA approval in CLL and iNHL

Initiate Phase 2 study for Idelalisib use in frontline iNHL

Momelotinib

Q2 14

Q2 14

Initiated Phase 3 study in Myelofibrosis in patients previously

treated with Ruxolitinib

Initiated Phase 2 study in frontline Pancreatic Cancer

Simtuzumab Q4 14 Top-line Phase 2 data in Pancreatic and Colorectal Cancer and

Myelofibrosis

Significant Pipeline Milestones Anticipated in 2014 (Continued)

Cardiovascular

Letairis Q3 14 Top-line data from AMBITION study

GS-6615 Q3 14 Initiate Phase 2 studies in cardiovascular conditions

GS-4997 Q3 14 Initiate Phase 2 study in diabetic nephropathy

Paul Carter

July 23, 2014

EVP, Commercial Operations

HIV

$1

,37

4

$1

,39

0

$1

,64

0 $3

,36

1

$4

,52

3

$7

56

$7

50

$7

95

$9

49

$1

,23

3

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(in

Mil

lio

ns

)

U.S. Europe Other International

Key Metrics

U.S.:

● Growth driven by launch of

Sovaldi

● Inventory for HIV and

cardiopulmonary products

remained at low end of the

range

● Inventory levels for Sovaldi

are within inventory

management agreement

(IMA) ranges

Europe:

● Growth driven by launch of

Sovaldi and continued

uptake of Eviplera and

Stribild

Antiviral Product Sales

19

$2,314 $2,327 $2,641

$4,508

$6,012

U.S. HIV Market Dynamics

0

200

400

600

800

1,000

1,200

1,400

HIV Infected Diagnosed On Antiretroviral

Treatment

On a Gilead HIV

Product

(Es

tim

ate

d P

ati

en

ts i

n 0

00

's)

~1,145*

~964*

~697**

~590**

Up 6%^

~84%

~72%

~85%

Sources:

* CDC estimates at the end of 2010 taken from the HIV Surveillance Supplemental Report vol. 18 no. 5.

** Ipsos Healthcare U.S. HIV Monitor Q1 2014.

^ Growth rate calculated as MAT (moving annual total).

20

Gilead U.S. STR Share in Naïve Patients

Base: All initiations within each quarter.

Source: Ipsos Healthcare HIV U.S. Scope & Monitor Q1 2014.

21

89%

70%

28%

23%19% 19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

On a Gilead HIVProduct

Gilead STR Stribild Complera Truvada Atripla

(% o

f N

aïv

e P

ati

en

ts)

Q1 2012 Q1 2013 Q1 2014

Top Prescribed HIV Regimens

Source: Ipsos Healthcare HIV U.S. Therapy Monitor Q1 2014.

22

Rank Naïve All Patients

1 Stribild Atripla

2 Complera Complera

3 Atripla Stribild

4 Truvada + other 3rd

Agent

Truvada + other 3rd

Agent

5 Other NRTI + other 3rd

Agent

Truvada + other 3rd

Agent

Single tablet regimens

U.S. Europe Big-5

Rank Naïve All Patients

1 Eviplera Atripla

2 Atripla Eviplera


Agent

Truvada + other 3rd

Agent

4 Stribild Truvada + other 3rd

Agent


Agent

Truvada + other 3rd

Agent

EU Naïve Source: Ipsos Healthcare HIV EU Scope Q1 2014.

EU All Patient Source: Ipsos Healthcare HIV EU Monitor Q1 2014.

$9

7

$1

35

$1

86

$1

87

$2

29

$0

$50

$100

$150

$200

$250

$300

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)


Key Metrics*

U.S.:

● Captured 28% of naïve

HIV patient share

● Third most prescribed

HIV regimen across all

treated patients

Europe:

● Captured 5.5% of naïve

HIV patient share in Big-5

● Launched in Big-5 as well

as seventeen additional

countries

*Sources:

U.S. data from Ipsos Healthcare HIV U.S. Therapy Monitor

Q1 2014.

EU data from Ipsos Healthcare HIV EU Scope Q1 2014.

Note: Stribild is indicated for the treatment of HIV-1

infection in antiretroviral treatment naïve patients.

23

$99

Stribild Product Sales

$144

$204 $215

$270

$1

20

$1

27

$1

53

$1

30

$1

54

$5

9 $7

4

$9

5

$1

09

$1

32

$0

$50

$100

$150

$200

$250

$300

$350

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)


Key Metrics*

U.S.:


HIV patient share

● Number two most

prescribed HIV regimen

across all patients

Europe:


HIV patient share in Big-5

● Preferred status in Big-5

● Most switched to HIV

regimen in Big-5

*Sources:


Q1 2014.

EU data from Ipsos Healthcare HIV EU Scope Q1 2014.

Complera/Eviplera Product Sales

24

$211

$189

$262 $251

$299

25

Source: IMS Monthly LRx Data (Aug 2011 to May 2014), data is subject to restatement.

Note: Stribild and Complera are indicated for the treatment of HIV-1 infection in antiretroviral treatment naïve patients. Stribild and Complera are not indicated for use in

treatment-experienced patients and are not promoted to such patients.

Naïve, 42%

Switch Atripla,

15%Switch

Complera, 5%

Switch Other, 9%

Switch PI, 22%

Switch Integrase Inhibitor,

7%

Stribild(Aug 2012 – May 2014)

Naïve, 40%

Switch Atripla,

25%

Switch Other, 12%

Switch PI, 19%

Switch Integrase Inhibitor,

4%

Complera(Aug 2011 – May 2013)

U.S. Stribild and Complera Source of Patients (21 months post-launch)

$6

11

$5

76

$6

15

$4

90

$5

78

$2

71

$2

57

$2

56

$2

37 $

23

4$0

$250

$500

$750

$1,000

$1,250

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)


Atripla Product Sales

Key Metrics*

U.S.:

● Most prescribed HIV

regimen with 28% of all

treated patients


HIV patient share

Europe:


regimen with 20% of all

treated patients


HIV patient share**

*Sources:


Q1 2014.

EU data from Ipsos Healthcare HIV EU Therapy Monitor Q1

2014 & Ipsos Healthcare HIV EU Scope Q1 2014.

**Note: In the EU Atripla does not have an indication for the

treatment of naïve patients and there is no Atripla

promotion concerning treatment naïve patients. Note: Efavirenz (the active pharmaceutical component in Atripla purchased

from Bristol-Myers Squibb) accounted for approximately 37% of Atripla sales

in Q2 2014 which represented $318 million to be paid to BMS.

26

$938 $900

$934

$780

$871

$4

16

$4

30

$4

17

$3

68

$4

00

$3

25

$3

14

$3

25

$3

23

$3

38

$0

$250

$500

$750

$1,000

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)


Key Metrics*

U.S.:

● Captured 30% of all

treated HIV patients


HIV patient share

Europe:


product with 34% of all

treated patients


HIV patient share

*Sources:


Q1 2014.

EU data from Ipsos Healthcare HIV EU Therapy Monitor.

Q1 2014 & Ipsos Healthcare HIV EU Scope Q1 2014.

27

$808

Truvada Product Sales

$814 $814

$760

$807

HCV

U.S.

─ ~70,000 patients initiated treatment since launch

(through June 30, 2014)

─ Q2 2014 sales of $3.0 billion

o ~65% of usage in GT 1

o Predominately with SMV (COSMOS) or PegIFN +

RBV

European Commission approval January 17, 2014

─ ~10,000 patients initiated treatment since launch

(through June 30, 2014)

─ Q2 2014 sales of $400 million

o Sales predominately in France and Germany

─ Pricing and reimbursement discussions throughout the

year

─ Positive health technology assessments received in

France, Germany, and Scotland

29

Sovaldi: A New Treatment for Patients Infected with HCV

®

Cost of HCV Therapy (GT 1 in U.S.)

$97,095 $96,890 $94,245

Sovaldi Regimen

– Provides higher cure

rates

– Shorter treatment

duration

– Better tolerated

SMV/PegIFN/R*

TVR/PegIFN/R*

SOF/PegIFN/R

*Represents blended 36 weeks

Cost of Regimen

30

U.S. HCV Market Dynamics

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Prevalence Diagnosed Under Treater Care Treated

(Es

tim

ate

d P

ati

en

ts i

n 0

00

's)

4.1M

1.7M

64

~41%

~16%

31

393 ~23%

Sources: Chak et al 2008, Armstrong et al 2005, Volk et al 2011, Culver et al 2000, Decision resources: 2008, CDA AASLD 2012,

NHANES 2012, Ipsos Monitor Q1 2014 and Gilead estimates.

Note: Data is applicable to the 12 month period beginning April 2013 through March 2014.

0.8M

210

440

500

1,000

1,500

2,000

2,500

3,000

Prevalence Diagnosed Under Treater Care Treated

(Es

tim

ate

d P

ati

en

ts in

‘0

00

s)

2.6M

Europe Big-5 HCV Market Dynamics

~31%

~26% ~21%

Source: Gilead estimates.

32 Note: Data is pre-European Union approval, January 17, 2014.

Japan HCV Market Dynamics

0

200

400

600

800

1,000

1,200

Prevalence Diagnosed Treated

(Es

tim

ate

d P

ati

en

ts i

n 0

00

's)

1.1M

745

37

~68%

~5%

33

Source: Ipsos HCV Monitor Q212 and Gilead estimates.

Sovaldi Patient Support Path Program

34

Robin Washington

July 23, 2014

EVP and Chief Financial Officer

$2,767 $2,783$3,120

$4,999

$6,535

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Mil

lio

ns

)

Total Revenues

36

$0.50 $0.52 $0.55

$1.48

$2.36

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Non-GAAP Diluted EPS

37

Note: Non-GAAP diluted EPS excludes acquisition-related,

restructuring and stock-based compensation expenses.

$488 $489$511

$558$542

$0

$100

$200

$300

$400

$500

$600

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Mil

lio

ns

)

Non-GAAP R&D Expenses

Note: Non-GAAP R&D expenses exclude acquisition-related,


Key Metrics

● Higher R&D expenses in

Q2 2014 over Q2 2013

driven primarily by:

- Progression of clinical

studies in HIV and

Oncology

- Expenses to support

geographic expansion,

marketed products and

infrastructure related to

R&D activities

38

$376 $377

$471$500

$569

$0

$100

$200

$300

$400

$500

$600

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)

Key Metrics

● Higher SG&A expenses in

Q2 2014 over Q2 2013


- Support the expansion of

the business, particularly

in HCV and anticipated

launch of idelalisib

• Pharmaceutical excise tax

for 2014 is estimated

between $150 - $170

million*

Non-GAAP SG&A Expenses

39

Note: Non-GAAP SG&A expenses exclude acquisition-related,


*The 2014 pharmaceutical excise tax is based on 2013 sales.

Non-GAAP Effective Tax Rate*

Q2

2013**

Q4

2013**

Q1

2014

Q2

2014

Effective Tax Rate 28.3% 27.5% 23.2% 14.6%

Cumulative Adjustment to Q1 14

Tax Rate to reflect higher HCV sales

projections

3.6%

Year to date 2014 Effective Tax Rate 18.2%

40

*The Non-GAAP Effective Tax Rate excludes the impact of acquisition-related and restructuring expenses.

**The 2013 tax rates include the federal research tax credit which expired on December 31, 2013.

$953$753 $727

$1,568

$4,185

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)

Operating Cash Flows

41

Key Metrics

● Higher Operating Cash

Flow in Q2 2014 driven

primarily by:

- Collections related to the

Sovaldi sales ramp in Q1

2014 and growth in

current quarter Sovaldi

sales*

*As we continue to launch Sovaldi ex-U.S., particularly in Southern Europe, we expect DSO to increase.

Type of

Repurchase

Dollar

Amount* (In Millions)

Shares

Repurchased

Average

Purchase Price

Q1 2014 Open Market $450.0 5,743,223 $78.35

Q2 2014 Open Market $1,200.0 15,176,020 $79.07

YTD 2014 $1,650.0 20,919,243 $78.87

As of June 30, 2014, we had $1.7 billion remaining on our $5.0 billion authorization from January 2011, which we plan to

use in the third quarter 2014, prior to its expiration in September 2014. An additional $5.0 billion share repurchase

program was authorized in May 2014. During the period from January 2010 through June 2014, ~53% of free cash flow

was utilized to purchase and retire ~21% of shares outstanding.

42

2014 Share Repurchase Activity

*Excludes commissions.

43

Initially provided 2/4/14;

Reiterated on 4/22/14 Updated on 7/23/2014

Net Product Sales $ 11,300 – $ 11,500 $ 21,000 – $ 23,000

Non-GAAP**

Product Gross Margin 75% – 77% 85% – 88%

R&D Expenses $ 2,200 – $ 2,300 $ 2,300 – $ 2,400

SG&A Expenses $ 2,100 – $ 2,200 $ 2,300 – $ 2,400

Effective Tax Rate 28% – 29% 17.5% – 20.5%

Diluted EPS Impact of Acquisition-

Related and Stock-Based

Compensation Expenses

$ 0.63 – $ 0.66 $ 0.63 – $ 0.66

*This guidance is subject to a number of uncertainties, including, but not limited to, the assumption the LDV/SOF STR (STR) will be

approved on the PDUFA date, the level and speed of market acceptance of the STR, the pricing and rate of reimbursement for the STR, the

amount of patient warehousing prior to approval, the rate of decrease in wholesaler inventories of Sovaldi as more patients are prescribed

the STR and the launch timing and market acceptance of competitive drugs.

**Non-GAAP product gross margin, expense and effective tax rate exclude the impact of acquisition-related, restructuring and stock-based

compensation expenses where applicable.

Excludes the impact

of HCV Product Sales

Full Year 2014 Guidance (in millions, except percentages and per share amounts)

All Products*

Projected product gross margin GAAP to non-GAAP reconciliation:

GAAP projected product gross margin

Acquisition related-expenses

Non-GAAP projected product gross margin*

Projected research and development expenses GAAP to non-GAAP reconciliation:

GAAP projected research and development 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



Non-GAAP projected selling, general and administrative expenses

Projected diluted EPS impact of acquisition-related and stock-based compensation

expenses:



Projected diluted EPS impact of acquisition-related and stock-based compensation expenses

Updated on 7/23/14

(in millions, except percentages and per share amounts)

Full Year 2014 Guidance

82% - 84%

3% - 4%

85% - 88%

$2,477 - $2,589

(1) - (1)

(176) - (188)

$2,300 - $2,400

$0.49 - $0.51

0.14 - 0.15

$0.63 - $0.66

$2,467 - $2,611

(36) - (69)

(131) - (142)

$2,300 - $2,400

*Stock-based compensation expenses have a less than one percent impact on non-GAAP projected product gross margin.

44

Financial Appendix Slides

July 23, 2014

Financial Highlights: Q2 2014 (in millions, except percentages and per share amounts)

*Other Products comprised primarily of Cayston and Lexiscan.

**Non-GAAP costs and expenses, net income and diluted EPS exclude the impact of acquisition-related, restructuring and stock-based


Note: Amounts may not sum due to rounding. 46

Q2 2014 Q2 2013 % Change

Net Product Revenues $6,413 $2,657 141%

Sovaldi 3,480 NA NM

Antiviral products excluding Sovaldi 2,532 2,314 9%

Antiviral products 6,012 2,314 160%

Letairis, Ranexa, AmBisome and Other Products* 401 344 17%

Non-GAAP Costs and Expenses** $1,834 $1,525 20%

COGS 723 661 9%

Product Gross Margin 89% 75%

R&D 542 488 11%

SG&A 569 376 51%

Operating Margin 72% 45%

Non-GAAP Net Income** $3,930 $840 368%

Non-GAAP Diluted EPS** $2.36 $0.50 376%

Financial Highlights: 1H 2014 (in millions, except percentages and per share amounts)

47

YTD 2014 YTD 2013 % Change

Net Product Revenues $11,284 $5,051 123%

Sovaldi 5,755 NA NM

Antiviral products excluding Sovaldi 4,766 4,375 9%

Antiviral products 10,521 4,375 140%

Letairis, Ranexa, AmBisome and Other Products* 763 676 13%

Non-GAAP Costs and Expenses** $3,503 $2,929 20%

COGS 1,334 1,272 5%

Product Gross Margin 88% 75%

R&D 1,100 948 16%

SG&A 1,069 709 51%

Operating Margin 70% 45%

Non-GAAP Net Income** $6,417 $1,642 291%

Non-GAAP Diluted EPS** $3.84 $0.98 293%


**Non-GAAP costs and expenses, net income and diluted EPS exclude the impact of acquisition-related, restructuring and stock-based


Note: Amounts may not sum due to rounding.

$2,657 $2,710$3,043

$4,871

$6,413

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Millio

ns)

Total Product Sales

48

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

%

Change

from

Q2 2013

Sovaldi NA NA $139.4 $2,274.3 $3,480.3 NM

Viread $250.2 $231.6 $266.9 $210.6 $260.7 4%

Letairis $128.3 $135.1 $138.5 $122.9 $144.7 13%

Ranexa $106.6 $115.8 $129.9 $111.6 $122.0 14%

AmBisome $75.1 $97.8 $93.6 $92.1 $94.8 26%

Other Products* $33.8 $34.2 $40.0 $35.9 $39.3 16%

49

Other Product Sales (in millions)


Q2 2014: $6,413

50


Europe: $1,307

(20% of Total)

(60% YoY Growth)

U.S.: $4,821

(75% of Total)

(195% YoY Growth)

Other International: $285

(4% of Total)

(41% YoY Growth)

Product Sales by Geography (in millions, except percentages)

FX impact to European revenues was favorable $15 million

QoQ and favorable $45 million YoY

FX impact to international revenues (including ROW) was

favorable $13 million QoQ and favorable $38 million YoY

FX impact to pre-tax income was favorable $6 million QoQ

and unfavorable $21 million YoY

European Total Product Sales increased 54% Year-over-Year Excluding FX

51

$818 $824 $871

$1,020

$1,307

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Q2'13 Q3'13 Q4'13 Q1'14 Q2'14

in M

illio

ns


Q2'14 Q2'13 YoY Excl FX

Atripla $234 $271 (13%) (17%)

Eviplera $132 $59 123% 115%

Stribild $31 $2 NM NM

Truvada $338 $325 4% 0%

Viread $88 $88 (1%) (3%)

Sovaldi $400 $0 NM NM

LDV/SOF $0 $0 NM NM

AmBisome $64 $55 16% 14%

Other $19 $18 4% 0%

Total $1,307 $818 60% 54%

$53

$7 $9

$52 $58

$57

$66 $68

$76 $64

$0

$25

$50

$75

$100

$125

$150

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

(In

Mil

lio

ns

)

Tamiflu Other

Total Royalty, Contract and Other Revenues

52

$110

$73 $77

$128 $122

75.1% 75.7% 74.5%

87.4% 88.7%

0%

25%

50%

75%

100%

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Non-GAAP Product Gross Margins

Note: Non-GAAP product gross margins exclude acquisition-

related and stock-based compensation expenses.

53

Key Metrics

● Higher Non-GAAP

Product Gross Margins

Q2 2014 over Q2 2013

driven primarily by

Sovaldi sales and

favorable HIV mix

44.9% 45.2% 43.6%

66.6%

71.9%

0%

25%

50%

75%

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

Non-GAAP Operating Margins

Note: Non-GAAP operating margins exclude acquisition-related,


54

Key Metrics

● Higher Non-GAAP

Operating Margins in

Q2 2014 over Q2 2013


- Higher gross margin from

Sovaldi sales

- Slower operating expense

growth than revenue

growth

GAAP to Non-GAAP

Diluted Earnings Per Share Reconciliation

Q2 2014

GAAP Diluted EPS $2.20

Acquisition-Related Expenses $0.12

Stock-Based Compensation

Expenses $0.04

Non-GAAP Diluted EPS $2.36


55

2014

Notes

2016

Notes

Total

Dilution*

Average share price

Q2 2014 $77.84; YTD 2014 $78.13

Convertible Notes** (Current Outstanding)

$0M $858M

Conversion Price $22.54 $22.71

Q2 2014 Share Dilution 2.2M 29.1M 31.3M

YTD Share Dilution 4.6M 30.5M 35.1M

Warrants

Warrant Exercise Price $28.38 $30.05

Q2 2014 Share Dilution 35.2M 33.8M 69.0M

YTD Share Dilution 35.3M 33.9M 69.2M

Total Q2 2014 Dilution from

Convertible Notes and Warrants*** 100.3M

*May not sum/recalculate due to rounding

**At issuance, the amount outstanding on the 2014 and 2016 convertible notes was $1.25B each. The remaining 2014 convertible notes were repaid in May.

***Represents 6% of diluted non-GAAP shares outstanding. In the third quarter 2014, the warrants (55.5 million shares) related to the May 2014 convertible

debt will expire. We have the ability to settle the warrants in cash or shares. If we settle in cash, we will utilize approximately $3.1 billion to $3.7 billion of our

current U.S. cash balance.

56

Dilution from Outstanding Convertible Notes

Other Selected Financial Information (in millions, except days sales outstanding)

Mar. 31,

2014

Jun. 30,

2014

Cash, Cash Equivalents & Marketable Securities $6,858.9 $9,581.4

Interest Expense and

Other Income (Expense), net ($94.2) ($105.6)

Inventories $2,140.2 $2,068.8

Days Sales Outstanding* (Accounts Receivable) 51 42

Share Repurchases During the Quarter** $450.0 $1,200.0

Diluted Shares Used in Per Share Calculation for the Quarter

(Non-GAAP) 1,679.0 1,663.5

Diluted Shares Used in Per Share Calculation for the Quarter

(GAAP) 1,679.9 1,664.4

Basic Shares Outstanding 1,537.6 1,526.0

57

*With the launch of Sovaldi in the U.S., DSO is historically low. As we continue to launch Sovaldi ex-U.S., particularly in Southern Europe,

we expect DSO to increase.

**Excludes commissions.

Q2 2014 Earnings Results

July 23, 2014

Conference Call and Webcast

Documents

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