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July 26, 2010 Gregg Alton Executive Vice President Corporate and Medical Affairs AAAS Science and Human Rights Coalition.

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Presentation on theme: "July 26, 2010 Gregg Alton Executive Vice President Corporate and Medical Affairs AAAS Science and Human Rights Coalition."— Presentation transcript:

1 July 26, 2010 Gregg Alton Executive Vice President Corporate and Medical Affairs AAAS Science and Human Rights Coalition

2 About Gilead Sciences Worldwide presence –4,000 employees –25 offices on 4 continents 13 marketed drugs –Primary therapeutic focus in HIV/AIDS, liver disease and serious cardiovascular and respiratory conditions Eight successful acquisitions –Expanding companys therapeutic reach

3 Strong Geographical Presence Australia Ireland U.K. Portugal Germany Switzerland Austria Italy Greece Turkey Branford, CT San Dimas, CA Foster City, CA Palo Alto, CA Edmonton, Alberta Seattle, WA LEGEND Research and Development Locations Manufacturing Operations China France Spain Belgium Sweden Denmark Norway Finland The Netherlands Gilead Locations New Zealand Mississauga, ON Durham, NC Sales and Marketing Operations

4 Regional Partners to Support Registrations, Product Distribution and Medical Education Aspen* Stendhal Puerto Rico Pharma Delta IDS Anspec Traphaco Medicopharmacia Nicholas Piramal 11 Distributors and 48 Sub-Distributors Reaching 130 Countries Gador Quadri *Manufacturing and Distribution for Africa, in Africa

5 Our Therapeutic Areas AtriplaTruvadaVireadEmtriva Truvada/rilpivirine FDR (Ph III) Quad (Ph III) Elvitegravir (Ph III) Cobicistat (Ph III) Heart Disease RanexaLexiscan Regadenoson (filed with EMEA) Ranolazine (Ph II) PAHLetairis Cicletanine (Ph II) Metabolic GS 9667 (Ph I) InfluenzaTamifluCFCayston Aztreonam (Ph III) Bronchiectasis Aztreonam (Ph II) IPF Ambrisentan (Ph III) Pulmonary GS 6201 (Ph I) HBVHepseraVireadHCV GS 9190 (Ph II) GS 9256/GS 9190 (Ph I) NASH GS 9450 (Ph II) HIV/AIDSCardiovascularRespiratory Liver Disease

6 Evolution of Fixed-Dose Combinations Lamivudine (3TC; 1995) Zidovudine (AZT; 1987) Combivir ® (AZT/3TC;1997) Trizivir ® (ABC/AZT/3TC; 2000) Abacavir (ABC; 1998) Epzicom ® (3TC/ABC; 2004) Tenofovir (TDF; 2001) Truvada ® (FTC/TDF; 2004) Atripla ® (EFV/FTC/TDF; 2006) Emtricitabine (FTC; 2003) Efavirenz (EFV; 1998) GlaxoSmithKline Gilead / Bristol-Myers Squibb / Merck

7 2006: Single Tablet Regimen Approved 1996 30+ Pills a day 2006 Introduction of Atripla ®

8 HIV Pipeline – Addressing Unmet Needs Truvada/rilpivirine fixed-dose regimen –Would be only second single-tablet regimen for HIV –Safer for use in pregnant women –Fewer CNS side effects Cobicistat (novel PK enhancer) –No HIV activity –Good chemical stability (heat stable) –Enabling once-daily dosing of elvitegravir (integrase inhibitor) –Broader role with protease inhibitors for tolerable and safe combination therapy

9 HIV Research – New Targets Active early-stage, preclinical research program identifying compounds that may inhibit HIV at newer targets in the virus life cycle –LEDGF Inhibitors –Capsid Assembly Inhibitors Exploring strategies and compounds to eradicate HIV in latently infected cells –Eliminate cells actively replicating HIV –Infection by newly produced virus particles blocked by ARVs D. D. Richman et al., Science 323, 1304 -1307 (2009)

10 Worldwide Impact of HIV/AIDS DEVELOPING WORLD ~33 million infected 2.7 million new infections per year Life expectancy in sub-Saharan Africa: 51 Without AIDS, life expectancy would be 62 UNITED STATES ~1 million infected 56,300 new infections per year 3 million years of human life saved Life expectancy upon entering care: 24+

11 Gilead Access Program Particular focus on countries hardest hit by the HIV/AIDS epidemic –130 countries –Including all of Africa Pricing tiers –Based on a countrys economic status and HIV prevalence Support for: –Regional distributors –Supply chain tools –Medical education –Product registrations

12 Access Initiatives – Generic Partnerships Goal: Achieve the lowest price for least developed countries Rationale: Indian manufacturers have proven track record in delivering high volume/low margin quality products Parameters: –Full technology transfer to speed production and ensure quality –Develop any tenofovir-based FDC or pediatric formulation –Free to sell API within India with no royalty payment to Gilead –Free to set own price for finished product –Distribute within India and 94 other countries, pay 5% royalty to Gilead –Seek WHO or tentative FDA approval

13 Expanding Access to HIV Treatment: Lower Prices, More Patients Lowest generic price/month

14 Case Study: Matrix 55 Countries covered by Matrix – 58% of licensed territory

15 The Cost of Viread U.S. WAC $21.43 ~U.S. Government Mexico Manufacturing Cost $0.57 15% Dist. Margin $1.00 Cost of manufacturing, pre-distribution, pharmacovigilance, medical education + 5% royalty Intellectual Property Return on investment, incentive for innovation Canada $17.13 $4.00 LMI (China, Peru, Thailand) Brazil $1.75 Access Price COST OF VIREAD TABLET (PER DAY)

16 Model is Financially Self-Sustaining FY 2009FY 2008 Total Revenue (in $,000) 33,11719,365 Total COGS (in $,000) 25,95916,809 Operating Expenses (in $,000) 3,5564,243 Total Contribution Margin (in $,000) 3,601(1,688) Total Contribution Margin (as % of Total Revenue) 10.9%-8.7%

17 Full Year 2010 Guidance * Non-GAAP product gross margin and expenses are non-GAAP and exclude the impact of acquisition, restructuring and stock-based compensation expenses, where applicable. Management believes this non-GAAP information is useful for investors, taken in conjunction with Gileads GAAP financial statements, because management currently uses such information internally for its operating, budgeting and financial planning purposes. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of Gileads operating results as reported under U.S. GAAP. ($ in millions, except percentages and per share amounts) Net Product Sales Non-GAAP Product Gross Margin* Non-GAAP Expenses R & D* S G & A* Effective Tax Rate Diluted EPS Impact of Acquisition, Restructuring and Stock-Based Compensation Expenses $ 7,400 – 7,500 $ 0.27 – 0.30 $ 900 – 920 $ 850 – 870 25% – 26% 75% – 77% Provided on 4/20/10 $ 7,300 – 7,400^ $ 0.25 – 0.28^^^ $ 900 – 920 $ 850 – 870 26.5% – 27.5%^^ 75% – 77% Updated on 7/20/10 ^ Reduction in net product sales guidance for full year 2010 was driven by the impact of foreign currency fluctuations. ^^ Increase in effective tax rate for full year 2010 was driven by higher U.S. revenue growth and lower revenues in Europe. ^^^ Decreases in diluted EPS impact of acquisition, restructuring and stock-based compensation expenses for full year 2010 was driven by lower projections of stock-based compensation expenses, partially offset by higher restructuring expenses related to our decision to close operations in Durham, North Carolina.

18 Looking Ahead Continued commitment to R&D – new targets, new treatments for HIV Expand Gilead Access Program –Build on existing generic partnerships –As approved, introduce new products into program (e.g., TMC278 fixed-dose regimen) UNITAID Patent Pool –Gilead is actively participating in discussions to move this important initiative forward –Like partnerships with generic manufacturers, a patent pool could increase access by lowering prices, while respecting IP Evaluate participation in new efforts for expanding access while encouraging innovation

19 Thank You

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