Ladies and gentlemen, thank you for standing by. And welcome to the Gilead Sciences Fourth Quarter 2019 Earnings Conference Call. My name is Liz, and I will be your operator today. At this time, all participants are in a listen-only mode. And as a reminder, this conference call is being recorded.

I would now like to turn the call over to Douglas Maffei from Investor Relations. Please go ahead..

Thank you, Liz, and good afternoon, everyone. Just after market closed today, we issued a press release with earnings results for fourth quarter and full year 2019. The press release and detailed slides are available on the Investor Relations website.

Speakers on today's call will be Daniel O'Day, Chairman and Chief Executive Officer; Andrew Dickinson, Chief Financial Officer; Johanna Mercier, Chief Commercial Officer; and Merdad Parsey, Chief Medical Officer.

Also in the room are Christi Shaw, Chief Executive Officer of Kite; and Diana Brainard, Senior Vice President and Head of our HIV and Emerging Viruses Therapeutic Area.

Before we begin with our prepared comments, let me remind you that we will be making forward-looking statements, including plans and expectations with respect to products, product candidates, financial projections, and the use of capital and 2020 financial guidance, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause actual results to differ materially from these statements.

A description of these risks can be found in the earnings press release and our latest SEC disclosure documents. In addition, Gilead does not undertake any obligation to update any forward-looking statements made during the call. Non-GAAP financial measures will be used to help you understand the Company's underlying business performance.

Starting in 2020, Gilead will no longer regularly exclude stock-based compensation expense from its non-GAAP financial information. The GAAP to non-GAAP reconciliations are provided in the earnings press release, as well as on our website. I will now turn the call over to Dan..

Thank you, Doug, and good afternoon, everyone. I'll share a few opening comments before I turn the call over to Andy. And then, Johanna will take you through the commercial highlights of the quarter. And Merdad Parsey, whom as you know, joined us as Chief Medical Officer in November, will offer a few remarks before we open up the call to questions.

We had a very strong quarter capping a solid year for Gilead. Our financial results in 2019 were driven in large part by the outstanding performance of our HIV franchise. It's now been almost a year since I arrived at Gilead. We made key decisions and changes that have positioned us for success.

Over the past decade, the Company has set a high bar, and we hope to raise that high bar over the decades to come. Today, I'm going to focus my comments on three areas. One, our strong base business; two, the existing pipeline opportunities; and three, our new strategy to drive innovation and growth.

So, I'll begin by saying a few words about the strengths of our core business, starting with HIV where we again achieved record revenue for both the quarter and the year. Today, approximately 80% of people living with HIV, who are on therapy in the U.S. are on a Gilead-based regimen.

Across the franchise, we've seen durability and sustainability of the business, which we expect to continue in 2020 and beyond. Much of the strength is being driven by Biktarvy. Today, in the U.S., approximately one in two patients who are new to therapy and patients who are switching therapy are initiating on Biktarvy.

We're also very pleased with the early progress with Descovy for PrEP, the strength of the launch and the positive response we are seeing from patients and providers. Johanna will share more details shortly on that.

Looking to the future, we're focused on the potential of our capsid inhibitor as the anchor molecule for multiple long-acting HIV options. We may be able to dose as infrequently as twice a year, and we're working rapidly to progress this medicine for both HIV prevention and treatment.

Rounding out the antiviral picture, we continue to see sustained revenue from our HCV business. Since the introduction of authorized generics in the U.S., we've regained market share and now hold around 60% share through Asegua and Gilead up 18 points from the beginning of last year.

Finally, as we look across our core business, I'd like to highlight the geographic expansion, and in particular China. During the fourth quarter, we had four medicines Vemlidy, Epclusa, Harvoni and Genvoya included in China's national reimbursement drug list.

This is a significant accomplishment that will enable much broader access to these medicines in the region. So, beyond our core business, our current pipeline concludes several important opportunities that I'd like to cover. We have 14 late-stage studies underway, four of which have received breakthrough therapy designation from the FDA.

During the fourth quarter, we submitted a regulatory filing for filgotinib to the FDA and it's now under priority review for rheumatoid arthritis. Filgotinib is also under review in Japan and the EU. We're actively preparing for competitive launches globally, which Johanna will talk more about later.

I'm encouraged about the potential of filgotinib to be best in class among the JAK inhibitors, and the strength of the gene we have in place to market the medicine following approval. Beyond filgotinib, we are pleased with what we see in the Galapagos pipeline and believe that the partnership has the potential to drive significant future growth.

We are looking forward to the ulcerative colitis data this year, and we remain very optimistic about both our partnership with Galapagos as well as the promising inflammation pipeline we have in hand. In cell therapy, we have a pioneering platform that is enabling us to advance new therapies with the goal of driving long-term innovation and growth.

To that end, our second cell therapy treatment KTE-X19 is now under review in the U.S. and Europe as a treatment for relapsed/refractory mantle cell lymphoma. This followed the presentation of positive data at the American Society of Hematology meeting in the fourth quarter of this year.

We also presented data at ASH showing the approximately half of patients treated with Yescarta for relapsed/refractory large B-cell lymphoma were still alive after three years of treatment in the ZUMA-1 study, confirming Yescarta’s benefit risk profile in the real world setting.

These long-term data speak to the durability of the Yescarta's treatment. Finally, in cell therapy, we look forward to sharing results from our Yescarta Phase 3 second line DLBCL trial in the second half of this year. Merdad will offer some more color on our pipeline in just a few minutes.

In addition to the programs I described that we have in hand, I introduced our new corporate strategy last month. This strategy will guide our work as we seek to drive innovation and growth over the next decade. Over the next 10 years, we aim to introduce 10 new transformative therapies.

To help us achieve that ambition we will expand our access to internal and external innovation. We've already been very active in business development with around 33 strategic partnerships and investment transaction since January 2018. We'll continue to pursue a broad range of opportunities with a clear focus on our core scientific areas of strength.

Specifically, we will continue to make investments in our external pipeline including transformative partnerships such as Galapagos and small to medium-sized bolts-on acquisitions.

Andy will talk more in a few minutes about our capital allocation priorities, including today's announcement of a further increase in our dividend and an additional share repurchase authorization and our strong financial position, which gives us the opportunity to look externally as we strengthen our pipeline.

Before I hand off to Andy who we'll delve into a more detailed financial review, I'd like to say just a few words about the broadening outbreak of coronavirus. As an organization, Gilead has committed to collaborating with global health organizations to support pandemic responses, including this one.

Our investigational compound, Remdesivir, has demonstrated in vitro and in vivo activity in animal models against the viral pathogens, MERS and SARS, which are structurally similar to the current strain of the coronavirus. However, there are no antiviral data that show activity against the strain.

We're working with the government and non-government organizations and regulatory authorities to develop a strategy to provide Remdesivir to patients with coronavirus for emergency treatment in the absence of any approved treatment options and to support clinical trials to determine whether it can safely and effectively be used to treat the current strain of the coronavirus.

As a reminder, Remdesivir is an investigational agent. It is not approved anywhere globally and has not been demonstrated to be safe or effective for any use. I'm proud of our teams and the work we've done to offer expertise and resources to help patients and communities fighting coronavirus.

In closing, I'm very optimistic about where we are today and the future. Our base business is strong, durable and growing. As demonstrated by our fourth quarter numbers and year-end results that near-term pipeline provides several important opportunities with readouts expected later this year with filgotinib and Yescarta.

And over the long term, we've introduced a new strategy to drive growth by growing our pipeline internally and importantly also externally through our ongoing BD activities.

On behalf of leadership team, I'd like to thank all of our employees and partners around the world for their dedication and hard work that led to the success of 2019, and whose commitment is driving our success in 2020 and beyond. I remain excited about the potential of Gilead as we enter the next chapter. With that, I'll turn the call over to Andy..

Thank you, Dan. I'm excited to take on the role of CFO, especially during this time as Gilead enters a new chapter. We're pleased to share our financial results for the fourth quarter and the full year 2019 and provide 2020 guidance today. I'll first review financials followed by comments from Johanna. Turning to our financials.

Total revenue for the fourth quarter was $5.9 billion with non-GAAP earnings of $1.30 per diluted share. This compares to revenue of $5.8 billion with non-GAAP earnings of $1.44 per diluted share for the same period last year.

Our non-GAAP earnings would have been $1.77 and $1.75 in the fourth quarter of 2019 and 2018, respectively, excluding unfavorable cost of goods sold impacts.

These impacts were primarily driven by inventory write-downs of $500 million and $410 million, respectively for slow-moving and excess raw material and work in process inventory largely due to lower long-term demand for our HCV products. For the full year 2019, total revenues were $22.4 billion, up 1% year-over-year.

Non-GAAP diluted earnings were $6.63 per share for the year, down from $6.67 per share for the full year of 2018. Excluding the unfavorable cost of goods impacts I mentioned previously, our non-GAAP earnings would have been $7.14 per share for 2019 and $7.01 per share for the prior year.

As noted in our earnings press release, our full year 2019 GAAP diluted earnings of $4.22 per share included a total unfavorable impact of $3.30 per share from the following items.

First, pre-tax upfront collaboration licensing expense of $3.9 billion associated with our global research and development collaboration agreement with Galapagos; secondly, pre-tax impairment charge of $800 million recognized in the fourth quarter of 2019, primarily related to in-process research and development intangible assets for the treatment of indolent non-Hodgkin's lymphoma; and pre-tax write-downs of $547 million for slow-moving and excess raw materials and work in process inventory.

The unfavorable impact was partially offset by a favorable impact of $1.94 per share due to a deferred tax benefit of $1.2 billion related to an intra-entity transfer of intangible assets and gains of $1.2 billion from equity securities held for investments. Now, turning to our product sales.

Product sales for the fourth quarter were $5.8 billion, up 5% sequentially and 2% year-over-year.

For the full year, product sales were $22.1 billion, up 2% year-over-year, primarily due to the continued revenue growth of our HIV franchise, partially offset by the impact of loss of exclusivity on our cardiopulmonary franchise and market dynamics of our HCV franchise.

In the U.S., product sales for the quarter were $4.5 billion, up 8% sequentially and 1% year-over-year. Demand for Biktarvy and Descovy for PrEP was the primary driver of the sequential growth. The seasonal inventory purchases also contributed approximately $290 million to the sequential performance.

In Europe, product sales for the quarter were $840 million, up 4% sequentially and 3% year-over-year. Recall that both the third quarter of 2019 and the fourth quarter of 2018 were negatively impacted by unfavorable adjustments for statutory rebates. Turning to cell therapy.

Worldwide Yescarta sales for the fourth quarter were $122 million, up 3% sequentially and 51% year-over-year. The year-over-year increase was driven by a higher number of therapies provided to patients and Kite's continued expansion in Europe. Now, turning to expenses for the full year 2019.

Non-GAAP cost of goods sold was $3.5 billion, down 1% compared to $3.6 billion in 2018. The decrease was primarily due to lower royalty expenses, partially offset by higher inventory write-downs.

During 2019 and 2018, we recorded write-downs of $547 million and $440 million, respectively for slow-moving and excess raw materials and work in process inventories, primarily due to lower long-term demand for our HCV products. Non-GAAP R&D expense was $3.8 billion, up 7% compared to $3.5 billion in 2018.

The increase was primarily due to higher personnel costs to support cell therapy business. Non-GAAP SG&A expense was $4.1 billion, up 13% compared to $3.6 billion in 2018. The increase was primarily due to higher promotional expenses related to Biktarvy and Descovy for PrEP in the U.S.

and expenses associated with the expansion of our business in Japan and China. Turning to our balance sheet. We generated $9.1 billion in cash from operations for the full year of 2019 and $2.6 billion for the quarter. We ended the year with $25.8 billion in cash and marketable debt securities.

During 2019, we paid $5.6 billion in connection with our global research and development collaboration with Galapagos and our equity investments in Galapagos. In addition, we repaid $2.8 billion of debt. We paid cash dividends of $3.2 billion and we repurchased 26 million shares of stock for $1.7 billion.

Earlier today, we announced an increase in our quarterly dividends from $0.63 a share to $0.68 per share, which will be effective in the first quarter of 2020. This is our fifth consecutive annual increase in our dividends. In addition, our Board authorized an additional $5 billion share repurchase program in January 2020.

We now have over $8 billion of share repurchase authorization available. In 2020, our capital allocation priorities will remain unchanged. First and foremost, we will focus on investment to augment internal and external research and development, our internal research and external development pipeline.

Second, we intend to grow the dividend over time, pointing out of course that any dividend is increased is subject to the approval of our Board. Finally, our commitment to repurchase share in excess of dilution from our equity compensation and at a minimum we expect to repurchase shares in 2020 on par with our 2019 share repurchases.

Turning to guidance. Our 2020 non-GAAP financial guidance is summarized on slides 23 to 26 in the earnings presentation available on our corporate website. Before I start, I'd like to highlight three things that are important for you to understand.

The first change is that beginning in the first quarter, we will no longer regularly exclude stock-based compensation expense from our non-GAAP financial information.

Stock-based compensation has always been an important part of how we reward our employees in a way that aligns their interests with those of our shareholders, and it's an important component of our compensation structure.

As such, although it's not a cash expense, we believe it to be a cost that should be included when measuring our financial performance.

For comparability purposes, full year 2019 non-GAAP operating income and non-GAAP diluted earnings per share would have been $10.4 billion and $6.13 per share, respectively, had stock-based compensation expense not been excluded.

Our second change is that we're modifying our guidance metrics for 2020 as we will now be providing guidance for earnings and operating income. In addition to the metrics that we've historically shared. Our guidance is aligned with how the management team and our Board evaluate our financial performance and manage our operations.

Finally, our guidance excludes the impact of any future significant business development transactions, certain development milestones, and any product option exercise fees that they're contingent on various future events, which have a high degree of uncertainty.

With that background, we expect that our product sales for 2020 will be in the range of $21.8 billion to $22.2 billion.

This guidance reflects robust underlying growth in our base business of approximately $800 million to $1 billion, which is expected to offset the full year impact of the loss of exclusivity for our cardiopulmonary products in 2019 and the initial entry of the generic version of Truvada in the U.S later this year.

I would also like to highlight that as we look towards Q1 of 2020, we anticipate that total product sales will decline sequentially that quarter by a percentage similar to what we've seen over the past three years, which has been as high as 12% to 14%, primarily driven by U.S.

seasonal inventory patterns and buying patterns of public payers that negatively impact our payer mix. We also anticipate that our Q1 2020 product sales will decline in comparison to Q1 2019, primarily due to lower sales of our cardiopulmonary products, Ranexa for Nexon and Letairis.

As a reminder, generic versions of our Ranexa and Letairis were launched in the first quarter and second quarter of 2019, respectively. Despite this anticipated sequential decline in total product sales in Q1, I want to underscore our confidence in the health of our worldwide HIV business from which we expect year-on-year growth again in 2020.

Turning to our product gross margins. Our non-GAAP product gross margins are expected to be in the range of 86% to 87% in 2020.

We expect that both non-GAAP R&D and SG&A expenses will increase mid single digit percentage in support of our continued growth at Biktarvy, our Descovy for PrEP launch, preparation for competitive launches of filgotinib in RA in the U.S. Japan and Europe, and continued investments in our pipeline, cell therapy and external partnerships.

Non-GAAP operating income is expected to be in the range of $10.1 billion to $10.8 billion. For the full year, our non-GAAP effective tax rate is expected to be approximately 21%. Non-GAAP diluted EPS is expected to be in the range of $6.05 per share to $6.45 per share, which again, I'll remind you, no longer excludes stock-based compensation.

GAAP diluted EPS is expected to be in the range of $5.15 to $5.55. Finally, our diluted EPS guidance includes repurchases, largely consistent with 2019. I'll now turn the call over to Johanna..

Thank you, Andy. And good afternoon everyone. I'm really pleased to share the highlights of our excellent Q4 and full year commercial performance. I wanted to begin with a continued strength of our HIV franchise, which was driven by the continued uptake of Biktarvy as well as the successful early launch of Descovy for PrEP.

I'll then provide an update on HCV, touch briefly on our cardiopulmonary business and finally close with a few remarks as we look ahead to the filgotinib launch. As Dan mentioned, approximately 80% of people living with HIV who are on therapy in the U.S.

are taking at least one Gilead drug as sign of a sustained and durable strength we see across the franchise. We reached another all-time high with our HIV product sales for both the full year and quarter. For 2019 HIV sales were $16.4 billion, up 12% from 2018. Global HIV sales for Q4 were $4.6 billion, up 9% sequentially and 13% year-over-year.

This marks the seventh consecutive quarter of double-digit year-over-year growth for the franchise. U.S. HIV product sales were $3.8 billion in Q4, up 11% sequentially and 12% year-over-year. The year-over-year increase was primarily driven by underlying prescription demand growth of 10%.

Within our prevention market, we're really pleased with the early progress of Descovy for PrEP, which launched in the U.S. in Q4 2019. Approximately 27% of individuals on PrEP are now taking Descovy, and by Q4 2020, we expect that number will have risen to anywhere between 40% and 45%.

Across the prevention market, we saw a growth of more than 20% in the number of individuals taking PrEP year-over-year. There are now more than 230,000 people taking one of our HIV prevention medicines in the U.S., and this only represents approximately 20% of those who could actually benefit from it. Turning to the U.S.

HIV treatment market, Biktarvy sales were $1.4 billion in Q4, up 23% sequentially. The market is continuing to consolidate around Biktarvy, which is the number one prescribed HIV regimen in the U.S. and as Dan noted, approximately one in two of every naïve and switch patients are now initiated on Biktarvy.

In Europe, Q4 HIV product sale were $562 million, up 1% sequentially and 10% year-over-year. The year-over-year growth was driven by the continued strength of our Biktarvy launches in Europe, declining impact of generic launches and unfavorable non-recurring pricing adjustments in Q4 of the prior year.

Biktarvy is now available in 29 countries in Europe and it's number one in naïve and switch in Germany, France, Spain, and now Italy as well. Turning to our HCV business. Q4 HCV sales were $630 million, down 7% sequentially and 15% year-over-year.

2019 sales were $2.9 billion for the full year, down 20%, primarily due to lower average net selling price and declining patient starts. U.S. revenues for Q4 were $337 million, down 11% sequentially and 18% year-over-year.

In the U.S., we now have approximately 60% market share with our Gilead branded and authorized generic partner products and are continuing to sustain revenue. In Europe HCV product sales for Q4 were $151 million, up 36% sequentially and down 20% year-over-year. The sequential performance was impacted by the seasonality of product sales.

Overall, the HCV market continued to see a more predictable decline in patient starts and performed in line with our expectations. Before turning to filgotinib, I just wanted to make a few comments on the cardiopulmonary business where we have seen generic competition enter the market early last year.

As anticipated, significant volume erosion has occurred. And as of last December, we have seen 90% erosion of Ranexa and 65% erosion of Letairis, a trend that we expect to continue into this year. So, in closing, I'm really excited to share with you a few words about the filgotinib launch.

As Dan noted, our teams have now completed regulatory filings for rheumatoid arthritis in the U.S. where filgotinib is under priority review, as well as in Europe and Japan. In December, we announced a co-promotion agreement in Japan with Eisai.

It's estimated that approximately 600,000 to 1 million people in Japan are living with RA, and this agreement allows us to draw on the strengths of both companies with the goal of bringing this important new medicine to those individuals.

As you're aware, despite currently available treatment options, many patients are still living with symptoms of inadequately controlled RA around the world. In fact, only one out of five patients living with RA achieve complete remission at year one, which means four to five do not.

Filgotinib has a compelling and differentiated clinical profile that we believe may uniquely address the significant unmet need for patients with RA.

We have highly experienced teams preparing for the launch later this year and our focus will be on the strength of our data and the compelling risk benefit profile which serves across both tested doses of this oral medicine. I look forward to working with this great team of people to deliver on the promise of these medicines.

And I'll now turn the call over to Merdad..

Thank you, Johanna, and good afternoon, everyone. It's been a pleasure to meet some of you over the past few weeks. I'm pleased to participate in the first earnings call at Gilead today. I'm excited to join a team to extend the Gilead story and improve the lives of patients around the world.

As we implement our new corporate strategy, I'm confident we can leverage our existing pipeline and to expand with internal and external approaches. Building on Gilead's impressive innovation in HIV, including the launch of 11 products in 17 years, our goal is to continue to transform the lives of people affected by HIV.

Our next wave of HIV innovation will be driven by long-acting options for treatment and prevention. We listen to what patients want and we're committed to continuing to pursue and provide more options that meet the needs of people affected by HIV.

We believe our capsid inhibitor has the potential for a truly unique profile, offering both oral and subcutaneous dosing, the potential for self administration as well as multiple dosing frequencies and options for HIV treatment and prevention.

We recently presented data from two Phase 1 studies, demonstrating potent antiviral activity and the potential dosing in role of up to every six months. We've initiated Phase 2 -- 3 studies including one of the -- one in heavily treatment experienced patients and we received breakthrough therapy designation for this use.

The capsid inhibitor will be the foundation of our long-acting options and we're exploring multiple partner agents to pair with it. As Dan said, we've set the ambitious goal of bringing 10 transformative medicines to patients over next decade.

The first of these 10 transformative medicines will be filgotinib, which has a potential best-in-class profile. I've been impressed with the strength of the filgotinib data.

And speaking with key opinion leaders, there's a real appreciation for the results and an excitement for the potential combination of efficacy and safety of this selective oral JAK 1 inhibitor.

Across the FINCH studies, we've seen consistently strong efficacy and demonstrated the safety profile that is highly favorable from a benefit-risk standpoint, and this is true at both doses tested. We've now filed filgotinib in three regions, the U.S., Europe and Japan, and as Johanna mentioned, we are gearing up for the launch.

Filgotinib has the potential for five new indication launches in the next four years, and we look forward to the upcoming ulcerative colitis data this year. This timing could get filgotinib one of the first labels in ulcerative colitis for a JAK inhibitor.

We've also had -- I've also had the opportunity to meet the Galapagos team and discuss opportunities that are being pursued beyond filgotinib. This remarkable partnership has a potential to double our research footprint and has a number of programs that could add to our inflammation portfolio.

Turning to oncology, we have a broad portfolio today including Kite and have a total of 15 clinical stage programs. Our approach is to build transformative therapies across complementary immuno-oncology platforms including both cell therapy and non-cell therapy.

We're actively pursuing and evaluating innovative programs and technologies externally to build our presence in oncology. In total, across our current pipeline, we have 40 clinical stage programs.

As Dan mentioned, of these programs, 14 are either being registered right now or in label enabling trials, and four of these programs have breakthrough therapy designation. As we pursue external opportunities, we'll continue to build around antiviral therapies, inflammation, fibrosis and immuno-oncology.

I'm excited to work with Dan and the entire Gilead team to expand on the great things that have been done to date and go further for people living with HIV and the patients we serve. This work internal and external will enable us to grow in the mid to long term. I look forward to sharing more with all of you about our progress in future calls.

Thank you very much. And now, we'll open the call for questions.

Operator?.

[Operator Instructions] Our first question comes from Michael Yee with Jefferies. Your line is now open..

Hey, guys. Thanks for the question, and thanks for the color on the guidance. I guess, I just wanted to ask about your perspective on guidance for 2020, and thinking about both the revenue guidance, which is seemingly flat to downish versus ‘19 and EPS on backing out the stock option seems to be flattish to downish.

Maybe you can just comment about your perspective of 2020, is that an investment year? Is there potential to be a growth year, both on revenue and EPS? And how do you think about it -- of 2020 versus, say, what you think about broadly speaking for ‘21? Thanks..

Yes. Thanks a lot, Michael, for the question. And I would say, again, based upon the strong results coming off of 2019 that our base business, our HIV business is really robust and continues to grow.

And of course we need to offset, as Andy mentioned in his comments, the full year effect of the cardiopulmonary franchise and just the beginning of the Truvada expiry. And we feel confident in our ability to be able to do that.

Our guidance reflects the revenue that is essentially flat year-on-year, and of course, we'll keep you updated as we go throughout the year, based on a variety of events on the commercial side.

On the investment side, I would say, yes, absolutely, we feel that we need to invest on the commercial side to make sure that we are preparing ourselves well for the most recent launches that have gone out, and that's Biktarvy and Descovy but also well prepare ourselves for a very competitive launch for filgotinib, where you've heard us say, we really think we have a unique medicine with a best-in-class profile.

And we want to make sure, as we know, there's only one chance to get a launch right. We want to make sure we're well prepared for that. Now, we have obviously looked hard at our expense base on a commercial side, reallocated resources from cardiopulmonary and are well-prepared to put our investments on the growth drivers.

And as you can see in our qualitative guidance, feel we need to increase slightly from year-on-year for the SG&A guidance.

Likewise, with the investments that we've made both in our internal pipeline, the expansion of life cycle programs around medicines like filgotinib and others that we need and including external innovation that we've brought in over the past two years, including 33 different collaborations and/or acquisitions, we want to make sure, we invest appropriately in those to take them to the next decision point and decide about future investment accordingly.

And we'll continue to work on that portfolio as we move forward. Andy, do you have some other things you want to add to that..

Yes. Thank you. And, Michael, thanks for the question. I would just add two things. Again, as many of you’ve heard, our primary focus is on building a predictable, sustainable top-line growth profile that you would expect to see of companies like Gilead, so. And that at times requires investment.

It has in the history of Gilead, as you go back to the Pharmasset acquisition and the investments that were made following that and it will going forward. So, that is our primary focus, as you know. And then, I'd also add that we also felt that it was important to provide additional transparency and accuracy in measuring our financial performance.

And that's why you're seeing additional guidance that helps give you a fuller picture of how we see the business for the coming year. And I think the guidance speaks for itself, and Dan's points were right on..

Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is now open..

Thanks so much for taking my question. As you look across your mid stage portfolio and to new corporate strategy, I was wondering, if you could elaborate a little bit more on the areas of most interest to build out or to wind down.

Where does Gilead's team stand today to most optimally take advantage of external opportunities? And how do you guys balance potential versus risk as you look at investing in assets both internally and externally? Thanks..

Great. Thanks a lot, Brian. I'll start, and then I'll ask Merdad to comment on the portfolio because one of the big efforts that we have underway is with Merdad coming to the organization, his breadth of experience in building world-class portfolios.

That's exactly what he's involved in right now, and really leveraging the strengths accordingly, across the portfolio. So, I'd say a couple of things, Brian. I think, as you know, we've kind of elevated the full disclosure and openness on our portfolio. We started that at JP Morgan.

You can expect us to continue to be very transparent about the portfolio, the decisions we take and we make. But, I think, just the very fact that we have 40 clinical stage programs, 14 of which are in registrational trials is something that I think may be underappreciated as we -- from the outside.

Now, you asked about, what are the things that are most interesting? I'm going to let Merdad give that as well.

But I remind you that our strength in viral diseases will continue to be invested in and that's the discussion around capsid, and really, truly providing kind of next generation therapies that we think patients and customers, -- well, we know patients and customers are asking for out there.

Having said that, I think, the extension of our inflammatory disease portfolio with the Galapagos transaction is something that excites me. I think, there's lots of potential shots on goals there. There's ways to think about between Gilead and Galapagos, building combination approaches in the future.

And I think, we've really got a strength in inflammatory diseases that is building. Fibrotic diseases is something that we have a depth of expertise in. And we understand the challenges associated with that disease state.

And so, as Merdad builds the portfolio, I think he'll come in, we have to make sure that we're putting the right level of investment in there that makes sense for the big unmet medical need, but also the risk associated with some of the natures of those diseases.

And then, finally, there's been significant effort, long before Merdad or I joined on oncology. Of course, the Kite acquisition provides was the immediate step up and knowledge and knowhow and a breadth of portfolio there.

But the non-Merdad portfolio is something that's really built up over the past couple of years, both internally and through our collaborative. We know it's early and we know that we're going to have to continue to pursue those programs and build on it. So, that's my two cents.

And Merdad, you have a deeper and kind of a refresh view cause you've just entered not too long ago. So, it'd be good to hear your reaction..

Yes. And I won't belabor what Dan said. I think, he hit on the main things, which is sort of making sure, the capsid molecule looks really interesting. And I think we're pretty excited about that one. And building a partner for that -- for both treatment and prevention is going to be an important goal of ours.

And then, in inflammation, getting the filgo launch, right. And then, supplementing, filgo in our -- filgotinib in our pipeline is going to be an important task for us to focus on as well to build around the inflammation portfolio and to enable broader reach as we develop there. And then, oncology.

I think, that's an area where we are going to spend time building out, looking for opportunities, especially in immuno-oncology and working with our colleagues at Kite to make sure that we're finding the right balance and bringing the non-cell therapy portfolio upto complement the cell based therapy.

I think more qualitatively, maybe I'd say, I think what you're hearing is this idea about focus for us, making sure that we're really thoughtful about where we focus and where we build our expertise so that we can build a portfolio around those areas of focus as you've heard me and Dan lay out.

And also that we find a balance to address your other question around risk, to find balance around how we approach the overall portfolio. So, that we have a mix in there, some high risk, high reward programs, balanced with some other programs that are less risky and have a more higher likelihood of success.

And so, we are going to approach the portfolio that way and broadly across the entire portfolio inclusive of oncology inflammation, fibrosis and HIV..

Our next question comes from Geoff Meacham with Bank of America. Your line is now open..

Johanna, I wanted to ask you a couple on HIV. So, the Descovy and PrEP targets, what gets you there to 40%, 45% and how are you dealing so far with generics to grab share. And then, when you look at the Biktarvy franchise, obviously pretty dominating share there.

But what populations have you seen of late that are going to continue to add to the switch dynamic? I mean, I guess the question is how many of the switches that you've seen thus far in the U.S. are kind of laggards and maybe where they're coming from? Thank you very much. .

So, maybe, I'll hit your Descovy question first and then go to Biktarvy. So, we exited the year about 27% with Descovy and what we're seeing is really nice uptake. But if you recall, there's a real fragmented market in the prevention market versus the treatment market. In the treatment market, you have 3,000, 4,000 prescribers.

In the prevention market, it's much larger than that, like five, tenfold. And so therefore it's really -- how do we get there is making sure we focus on the higher volume, which is the same folks that actually are prescribing and prevention are also prescribing in the treatment -- HIV treatment world.

And those are physicians that truly understand the benefits of going from a TDF agent to task with all the boat and renal safety that comes with it. And so, we've actually seen that share of that segment increase very rapidly.

We also have another big piece of the pie that is about 20%, 25% of the volume that are folks that have never prescribed an HIV treatment. And so, these are folks that we are visiting and obviously using different means of communication to make sure they're educated around the fact of the benefits for a tap agent like Descovy.

And so, what we're seeing is that increase month-to-month, and we're very pleased with where we are today, after only three months of launch. Having said that, we believe that's going to continue with some challenges potentially on the payer side.

And that's how we get to the 40%, 45%, towards the end of the year in light of the fact that Truvada is losing its patent later this year in October. And so, some payers are already planning ahead a little bit on that one. And so, we're working with them very closely to make sure that patients get the best, most appropriate compound for them.

And so, I guess, we're -- we believe that that's where we're going to adapt about 40%, 45% of conversion by October of this year. So, that's the Descovy story. From a Biktarvy standpoint, I think what you were saying, good quarter, and I think, I would say it's an excellent quarter for Biktarvy, if I do think of it myself.

I'm very proud of the team on that front. And it's been obviously very active, very competitive in the market space as you well know.

The Biktarvy is really being used for with the majority of patients, and that's really the profile of Biktarvy and what it brings to the table in light of the combination of convenience, tolerability, the high barrier to antiviral resistance. And so that kind of what Biktarvy has to offer.

What I would say is, as you think about all the ending the epidemic initiatives, that's where the rapid start with Biktarvy is becoming a really increasingly point of differentiation and very important one for physicians. And I think that's really helping the Biktarvy growth as well as, as you move forward.

So, the fact that, one out of two patients are actually starting on Biktarvy, whether that's a naïve patient or a switch patient, that is really where you're seeing how the market is consolidating around Biktarvy. And we believe that will just continue, not only in 2020 but beyond that just because of what Biktarvy has to offer for patients.

Hopefully that answered your question, Geoff..

Yes. Thank you..

Our next question comes from Geoffrey Porges with SVBLeerink. Your line is now open. .

Thank you very much. I appreciate the question.

I have to ask one about Remdesivir, which is, have there been any other anecdotal reports or responses other than the one that was in the journal, over the weekend? And do you have manufacturing capacity that you could scale up quickly? And then, I just wondered if Merdad could talk a little bit about fibrotic disease.

You're obviously still involved in NASH, but there are a lot of other fibrotic diseases. And I just wondered if your ambition span all fibrotic diseases, or still pretty much confined to NASH. Sorry about the double up..

That's all right. Thanks for the question. On Remdesivir, we have not had any other anecdotal reports to date. And so, we'll obviously keep an eye on that very closely and see how that progresses.

In terms of manufacturing, our team has really been working night and day, it's been very impressive to watch this team over the past couple of weeks really ramp up to the extent that we can. Our capacity is going up every day. We're looking at all the options we have expecting to be prepared for what may come.

Obviously we are waiting for data, both in vitro and then in people to ensure that the drug actually works. And it's important just for everyone to keep that in mind that this is still investigational and we are still waiting for more data to know. But at risk, we are investing pretty heavily to make sure that we're prepared as best as we can.

In terms of fibrotic disease, we think of it fairly broadly, but I guess from my perspective, when I think about fibrotic disease, to your point, we -- NASH, as you know, we've had programs in diabetic, kidney disease, we have a program idiopathic pulmonary fibrosis right now. And those are biologically related.

And one of the things that we are always have in our mind is to think about where to apply a particular mechanism, which disease to apply particular mechanism.

And so, what I would say is that as we see the readouts on the IPF study as they come forward, as we have the discussions with the agency about the NASH program and as we see novel molecules that come through, we'll do those in a gated way. Fibrosis is a challenging area, and we don't underestimate how difficult that's going to be..

Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open..

I was hoping you could address what you see as the opportunity in China. You obviously mentioned that fervently and then pointed out some of your HCV medicines are approved there. But I don't think you've talked about how big you think that could be or how much a contributor you think that could be over the next couple of years? Thanks. .

Thanks, Matt. We’ll have Johanna address that. Thanks..

Yes. So, in China, we're excited about the fact that this is really our first opportunity with reimbursed compounds. So, I think, Dan mentioned which ones. But just to highlight, from a hepatitis C stand point, it's Harvoni and Epclusa.

And then, only other product is with a tender process in China and the only other product approved is [indiscernible], reimbursed, I should say. And so, I mean, of course, this is more of a volume opportunity than anything else. And this is one that we believe many patients are in need. And we have a real opportunity to help those patients.

That's in hepatitis C. In hepatitis B, vemlidy also got reimbursement, which of course as you know, hepatitis B is biggest market from a patient standpoint, it’s also in China. And then last one is Genvoya and HIV, which HIV is going to be the first time that actually products will get reimbursed in China, in HIV the class.

And so, we believe that's also one that we're cautiously optimistic that more patients can really get that treatment that they need. So, we are cautiously optimistic about our China business opportunity. You can appreciate that with everything going on right now in China, the focus is not on some of these new products that got reimbursement.

The focus is really on the people and what's going on with the coronavirus. And so, we do think that might be a little bit delayed in 2020 as we see kind of that play out.

But I do think from a longer term standpoint, this is how we should be thinking about China and the opportunity moving forward, because of the patient pool that is so predominant in the specific disease areas that we offer potential solutions for patients..

I think that's great, Matthew. The only thing I would say, Johanna’s captured it really well. But, we kind of put this into the durable base part of our strategic story. And I think, that's because it is a volume game.

I think, there is real opportunity here obviously for patients in China but also for our business, but it helps us kind of stabilize and navigate that durable base over the course of the years to come. And it's important for patients and also for our business to build that in.

And then, we have the inflection points on top of that with Yescarta business with filgotinib with a variety of things that are in our hands right now and a larger portfolio to inflect for the -- to provide our confidence in the mid-to-long term growth. Thanks..

Our next question comes from the line of Umer Raffat with Evercore ISI. Your line is now open..

Hi. Thanks so much for taking my questions. Perhaps first one for Johanna. Johanna, I know you worked -- in your prior role, you headed a commercial organization which was best in class in oncology and a very established organization in primary care with the Eliquis.

And my question to you is, as you look at Gilead where it stands today, how prepared is the organization to compete with AbbVie and Pfizer, two companies very well entrenched in the -- with their JAKs respectively? I'm just trying to understand, the level of organizational preparedness, especially in light of which I think is probably something like $200 million plus or minus the year-over-year incremental SG&A expense possibly heading into the filgotinib launch.

And one for Merdad. I know, the filgotinib UC trial selection one's due any day. I also understand that there's inadequate responders to Entyvio in there. So, those patients in particular, what percentage is that of the trial? And do you expect filgotinib to be active in Entyvio non-responders. Thank you..

So maybe I'll kick it off, Umer, with your first part of your question. So, specific to filgotinib, I think that you're right. Obviously, we are very well aware that it's going to be a very competitive environment. There's no doubt about that. But, I think we're being really smart about it.

And what I mean by that is because I think what we're thinking about is making sure we're going to bring focus to the table. So, we’re going to be -- we are very clear about where we want to play, and where we play, we win. And that's about commercial excellence and medical excellence, to be honest with you.

Because medical and commercial are going to need to partner very closely and we are already around the clinical data and the profile of this compound, and how that really needs to be at the center of everything we do with filgotinib.

I would also say that, if I take other disease areas where we had similar competitive dynamics and similar competitors to be honest, we've done actually quite well in that space. And HCV is a great example of that where we've regained share.

Now, we're at 60% share in HCV across the marketplace, which I do think shows others including internally and externally that we can be very comparative when we need to be. And I think that's exactly what you're going to see with filgotinib. We are preparing the teams.

We are making sure that we are hiring the right people, with the right level of experiences to making sure that we are absolutely ready for an expected launch later this year. And, I think that I'm really excited about it, to be honest with you.

I think, the team has really come up as a line, and I think we've brought in some really good external talent that we already had some very good internal talent as well. And building the two together, I think we'll make for a very successful launch moving forward..

Maybe I'll start by clarifying the timing because I think you may have given my team a heart attack. I don't think it's any day now. I think we've got it to a little bit later in the first half of the year. So, please be patient with us. We will get it out there as quickly as we can.

In terms of the Entyvio non-responders, I won't know the precise proportion until after we see the demography of the study afterwards, after the trial is done. So, I'm not going to -- I’ll be speculating as to sort of where we land on that. So, I'm going to beg your patients on that one as well.

But, in terms of expectations of response, I think if you look at this population, as you know, they cycle through a variety of medications.

And while the response rate, when they cycle to the next medication, isn't usually as robust as a naïve patient, there are good -- there's good evidence that going from let's say Entyvio to a TNF inhibitor or vice versa, you have -- you still have a good proportion of patients who respond in that.

So, I think our expectations are fairly realistic about what the response -- that we'll have responders in there to filgotinib..

Our next question comes from Cory Kasimov with JP Morgan. Your line is now open. .

I wanted to ask you on the corporate strategy front with -- well, everyone's pretty clearly waiting for the Company to engage in more substantial business development, but how much of a sense of urgency do you have on this front, given kind of the new management team all coming together now? And how successful do you think Gilead can be without outside help, basically relying on the first two pillars of your strategy?.

Yes. Thanks, Cory. I'll give a start and if Andy wants to add as well. So look, I think, first of all, I believe we're coming at this from a position of strength, a position of strength now that we have a complete management team with depth of experience. Of course, we're still building experience in some of our new therapeutic areas.

But, we have now a team that is accomplished, that understands what good looks like, that understands how to take appropriate risks and that's relatively recent that we have this team together like this.

So, it allows us, if you like, when we look at external opportunities in our areas of expertise, which is not unimportant because we've really decided to focus there. I think, it allows us to move fast.

And we know that moving fast is important, and being first to the table at the right time, some cases, that's more risk, some cases that’s the less risk, depending on the nature of what we're looking at. But, I think we're well prepared to be able to pivot to be first at the table or close to first at table and to make things happen.

So, we have a solid pipeline, but we have a sense of urgency of course around building this. And I think we've been clear about the areas we intend to build in. We will also be disciplined.

We're not going to -- we're going to take appropriate risks, but I think risks that will help us build the shape of the portfolio, very much like Merdad mentioned before. And we'll take that into account too.

So, it's not just about an individual target or assets, it's also about how that fits into the complementary nature of that therapeutic area and, or other therapeutic areas. And that's where we'll pivot and move with. But rest assured, our sense of urgency around this is high, but so is our expertise I would say as well.

Andy, do you want to add to that?.

The only thing I would add, I agree that there is a sense of urgency. We'll be disciplined. I’d say, to some extent, Cory that that best proxy is just looking at the past couple of years. I mean, we've outperformed commercially the last two years. We've given very clear guidance for 2020. Obviously, we will work incredibly hard to outperform again.

We see opportunities, things that we can potentially do better. We would like to find external assets to supplement our pipeline, but we also feel that the durability of our existing business and our existing pipeline are both underappreciated.

So to answer your second question on, can we compete without doing large business development deals? Absolutely. I mean, and we think that we can continue to build a sustainable business. Would we like to supplement it with outside assets, especially to build our late stage pipeline? Yes. And we are actively working on that.

But, to reiterate what Dan said, we're going to be thoughtful and disciplined in how we do it..

Our next question comes from Mohit Bansal with Citi. Your line is now open..

Thanks for taking my question. And if you could talk a little bit about the market opportunity with the capsid inhibitor, especially in heavily treated patients? Should we think about this as an incremental opportunity, or you think the portion of it could be from existing Gilead products? Thank you..

So, I think, I can touch on it from a commercial standpoint and then maybe pass it over to Diana to touch a little bit more on its clinical profile and its offerings. From a commercial standpoint, we're thinking about the caspid in two ways. One, in prevention and the other one in treatment.

Obviously, we think there's probably an opportunity we'll see to see if there's monotherapy and prevention and potentially obviously, we're looking for combination in the treatment. And Diana can touch on that a little bit more.

In prevention, I do think with Descovy right now in prevention and the launch of what's going on, we do think that’s probably going to be something that could be very interesting for patients, if you think about that marketplace and thinking potentially after six months.

And that's really what patients are looking for to have something every six months. This could be something very interesting and exciting for patients.

And that would be with the timing that we're thinking about for this compound is assuming all plays out, then it could be actually more of a switch in the prevention market from Descovy to the capsid inhibitor. Having said that in treatment that could look very different.

And I do think that’s potentially a market expansion because it would really be, if we can find a combination that would really work in the treatment setting, I do think that would offer a long-acting that patients actually really want. And that's the biggest piece of the puzzle.

What we're trying to do is making sure that we match up what the patients are telling us with our clinical development plan.

And what I mean by that is as we've done so much market research with our patient pool, what they're telling us is yes, weekly oral would be interesting and potentially something that they might be interested over a daily compound, but it's not for everyone.

And then, when you go from weekly oral to potentially what else would they want, would they rather an injectable to subcu, subcu wins out, if they'd rather three months in six months, six months wins out. And so, that's really where we have focused our clinical development team to make sure that we're addressing the needs of patients.

And maybe with that, I'll turn it over to Diana..

We recognize the bar is very high because Biktarvy has really set the standard. But, we also know that within the U.S., for example only 85% of people with HIV are in treatment. And if we want to end the epidemic, we have to do better. And the capsid inhibitor is going to be one of those tools.

And we really see it, as Johanna was saying, as a market expander. Because one of the reasons that those people aren't in treatment is that the treatments right now are not amenable to their lifestyles. And so, a long-acting is a way to make the umbrella a little bit larger. It's a complement to Biktarvy and what we have already..

Our next question comes from Alethia Young with Cantor Fitzgerald. Your line is now open..

I just wanted to ask maybe perhaps Dan and Merdad about the NASH and hep B space. I mean, I know it's one that's been pretty tough in the clinical side, but obviously there's a lot of leverage to your business, since you have the sales force in place.

So, I guess, I'm just trying to figure out where are you guys going to think about that going forward over the next 12 months? Thanks. .

For NASH, I think, we definitely are working hard on the results from the ATLAS trial. And we'll be talking with the regulators and looking to see what the path forward is. As you said….

The data will be published at EASL..

EASL, right, exactly. So, in April we'll show the data to everyone in April at EASL. And we have plans for a sort of midyear discussion with the agency to sort of see if there's a path forward and what that might look like and make a decision based on those discussions.

Just a reminder that we've been studying more F3 and F4 patients, the more severe patients than most of the other competition has where they're looking at the milder patient populations, the F1s to F3s --F2s and F3s, sorry, primarily. So, it does pose some unique challenges. So, we will continue to work there.

And I think that -- I would say the same thing for HBV, right? I think it's -- HBV is a bit different in that. It is a core part of our business. We have therapies, we have a sales force, to your point on that. We're continuing to be committed to that space and working there. Our focus is on a cure.

We have ongoing work with a number of programs to try to hit our move from where we are today in treatment to moving towards a cure. That's going to be a challenging road, but we're committed to it and continue to work there..

Yes. I think, I couldn’t agree more with Merdad’s view. The only thing I would maybe add to that, Alethia, is just to say, particularly in hep B we understand that at the end of the day this is going to take partnerships. So, we have to decide, what do we do internally, what do we do with partners.

Care is significantly more difficult than treatment in this area.

And so, I think that gets back into some of the comments that both Merdad and I had around how much do we invest in ourselves, how much do we do with partnerships, what percentage of our total investment goes into these very, very important unmet medical needs and making sure that we also invest appropriately in other areas that we know have even greater realization potential that also have big unmet medical needs.

So, that balance will continue to play out. The reality is we have very good expertise in both these diseases. And I think we'll be able to make good decisions..

Our next question comes from Salim Syed with Mizuho. Your line is now open. .

Thanks so much guys for taking my question. And I appreciate all the color on the guidance, Andy. Just one for me on sort of the long-term picture here. And I’m not asking for long-term guidance. Maybe this is for Dan or Andy. Obviously, you guys provided a lot of color. Johanna, you mentioned Biktarvy, majority of patients through 2033.

You guys seem relatively excited about what you have currently in the pipeline with filgotinib et cetera. But with consensus as you modeled at $22 billion, sort of flattish for the next few years, do you need M&A to grow your top-line or do you think you can grow your top line without any additional M&A? Thanks so much..

Yes. Thanks, Salim. I’ll certainly have others comment here as well. But look, I think, as we've tried to build the story and as I've come to investigate the story and some of the other colleagues around the table, I think the first answer to your question is how durable is our base business.

Because I think that has a very different -- depending on how durable you feel it is, that has a very different perspective on our confidence around the mid to long term growth. So, I think, and we've talked quite a bit about this, we feel very confident with the durability of our base business.

And this is different, by the way, compared to a lot of companies in the industry. Yes, we have, as you know, from our guidance we’re issuing today, we've got some patent expiry to deal with this year and some patent expiry to deal with next year in terms of Truvada.

But then, as you look out in terms of time, we feel well-prepared for the Descovy patent expiry in ‘25, ‘26. And we basically then have a very durable franchise out until 2033. So that's the first part of the answer into the story.

Then we do feel that we have growth engines internally and that's exactly why we've tried to highlight them a bit more, give you exposure to them, be transparent about it, but also be very clear about where those inflection points are, things that we have in our hands today.

And of course, some of the obvious ones, we have on the plate with things like ulcerative colitis, potentially reading out this year, second line DLBCL, capsid inhibitor coming next year, but we didn't talk about a variety of things that are coming to the Galapagos pipeline that also have optionality for us, if you like.

And that's, osteoarthritis, the Phase 2 will come true this year. And then we'll have an IPF interim next year. So, there are a variety of things in our hands, including other collaborations. I'm not speaking out here today that are in Phase 1 or label enabling Phase 2s that are going to read out.

And we're giving you all the exposure to the pipeline and portfolio. So, can we grow based upon what we have in house? Yes. I'm confident we can. And I also believe that we're going to supplement that and de-risk that over time.

And we're going to continue to do it in a way that you've seen us do that with proper partnerships and proper M&A transactions to get to a portfolio strength that's even more obvious to everybody and even more reliable. And that's going to take some time to build that and to grow it.

But, we're firmly committed to do that and we have the resources to be able to do it. I mean, that's what I would say, Andy. Would you….

No. I think that’s perfect. I don’t have anything else to add..

Our last question comes from the line of Phil Nadeau with Cowen and Company. Your line now open..

One question for Andy, the 2020 guidance, just kind of maybe three moving parts that weren't mentioned on slide 25. and I was just curious to get your thoughts on whether these will materially impact revenue in 2020.

So, the positive side first is filgotinib, any expectations for filgotinib revenue contemplated in your guidance? Then, maybe as potential headwinds in HIV, the nucleotide sparing regimens are launching, any expectation for those to gain share through the course of the year? And on HCV, price has been deteriorating over the last couple of years, any expectations for further declines in price, again, contemplated in the guidance? Thank you.

.

Yes. At a high level, and Johanna may want to comment on the HIV headwinds. In filgo, there's limited contribution in 2020, as you'd expect, given the projected launch date. So, there is potential upside there, if that develops. We think it's been a lot of time in the HIV market.

So, as you might expect, our expectations for the competitive dynamic in the HIV market are built into our guidance. And then, in the HCV space, we do expect there to be continued price pressure in the HCV space. If you see from third quarter to the fourth quarter, if you look at our slides, the number of patients that were treated actually went up.

Nonetheless, revenues are down, given kind of the dynamic in that space. So, obviously, it's a smaller -- speaking HCV, it's a smaller piece of our business. But, we -- our guidance assumes continued decrease in that business over time, but it's still an important business for us. It generates a lot of cash flow.

And on a percentage basis, although the increase is the same on a dollar basis, it's less and less year-over-year, and at some point, it may stabilize. But, that's how I would think about it, still at a high level. I don't know, Johanna, if you want to add, anything to that..

Yes. No, I'm totally aligned with what you said. I would just add from HCV standpoint, the only thing I would add to that is, it's just so much more predictable today than it was. And so -- and the declines are much, much softer. And so, what you're going to see is still continued price erosion across U.S.

and Europe, and the patient starts are a little bit less every single quarter. But having said that, it's nothing like what we've seen in the past. So, I think much more predictable marketplace for us.

In HIV, I think we have had some of those, I guess headwinds, as you say, from a competitors standpoint, mid last year, I guess, or so when competition came into the marketplace. And we have been able to manage that extremely well and very limited impact to Biktarvy and its growth trajectory. And so, we believe the same will continue throughout 2020..

I think, that's the end of our call today.

Operator?.

Ladies and gentlemen, thanks for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a good day..