Ladies and gentlemen, thank you for standing-by and welcome to the Gilead Sciences’ First Quarter 2015 Earnings Conference Call. My name is Ashley and I will be the conference 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 conference call over to Patrick O’Brien, Vice President of Investor Relations. Please go ahead. Patrick O’Brien: Thank you, Ashley and good afternoon everyone. Just after market closed today we issued a press release with the details of our earnings results for the first quarter of 2015. The press release along with the detailed slides are available on the Investor Relations section of the Gilead Sciences’ website. The two speakers on today’s call will be Robin Washington, Executive Vice President and Chief Financial Officer. And based on a great deal of interest in Gilead’s R&D pipeline, Norbert Bischofberger, Executive Vice President of Research & Development and Chief Scientific Officer will provide an update on our R&D progress. Also in the room with us for Q&A session are John Martin, our Chairman and Chief Executive Officer; John Milligan, President and Chief Operating Officer; and Paul Carter, our Executive Vice President of Commercial Operations. Before we begin our formal remarks, let me remind you that we will be making forward-looking statements, including plans and expectations with respect to our product candidates and financial projections, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause our actual results to differ materially from these statements. A description of these risks can be found in our latest SEC disclosure documents and the recent press releases. In addition, Gilead does not undertake any obligation to update any forward-looking statements made during this call. We will also be using non-GAAP financial measures to help you understand underlying business performance. The GAAP to non-GAAP reconciliations are provided in our press release as well as on our website. I will now turn the call over to Robin Washington.

Thank you Patrick and thank you all for joining us today. The year is off to a great start and I am pleased to summarize the results of the first quarter of 2015. Gilead performed well across all therapeutic categories, achieving an all time high in net product revenues. We continue to invest in research and development, commercial operations, and initiatives to increase access to treatment, and importantly our medicines are now reaching approximately 10 million people around the world. The company also continues to execute on our capital allocation strategy. Earlier today, we reported non-GAAP diluted EPS for the quarter of 2015 of $2.94 per share and total revenue of $7.6 billion, an increase of 99% and 52% respectively compared to the first quarter of 2014. HCV product sales were $4.6 billion for the first quarter, a doubling year-over-year and an increase of 19% sequentially, driven by continued launches across many geographies. This quarter alone, we estimate that approximately 90,000 patients started on a sofosbuvir based therapy in the U.S. and Europe. Product sales excluding HCV were $2.9 billion, an increase of 10% compared to the first quarter of 2014, driven by continued uptick of our HIV single tablet regimen. Underlying prescription demand grew for our new single tablet regimens Stribild and Complera compared to the fourth quarter of 2014. Overall, HIV product sales were down 16% sequentially, primarily due to an inventory decrease in the U.S. following an inventory build that occurred in the fourth quarter of 2014 and a higher proportion of sales into Medicaid and ADAP programs which are more heavily discounted. Turning to the U.S. in more detail, Q1 2015 net product revenues were $5.2 billion. HIV net product revenues increased 15% year-over-year to $1.4 billion. Growth was driven by our single tablet regimen with…

Thank you Robin. Over the past 25 years at Gilead, I’ve often been asked about the source of our next phase of growth and I’ve never been more confident because of the numerous program we have to address unmet medical need. I will spend the next few minutes detailing some of our programs underway across the therapeutic areas of HIV, liver disease, cardiovascular, oncology and respiratory inflammation. In HIV, we’re advancing various tenofovir alafenamide or TAF containing regimens. TAF is a nucleotide HIV reverse transcriptase inhibitor and some of the key clinical data were presented in February at the CROI conference in Seattle. In two large Phase III studies, the single tablet regimen of E/C/F/TAF were shown to be non-inferior to Stribild with improved safe renal and bone laboratory parameters. And the data from these two studies were published in the April 16 issue of The Lancet, given cadence to these results. Another study demonstrated that E/C/F/TAF could be safely administered to patients with mild to moderate renal impairment. And this study in which nearly 1,500 patients on various regimens were switched to E/C/F/TAF is currently ongoing and we will share the final body of each data from the study at an upcoming conference. The marketing authorization applications for E/C/F/TAF have been submitted in a number of countries. U.S FDA has a assigned a PDUFA date of November 5, 2015. This application was followed just this month by F/TAF, the fixed dose combination of TAF and then emtricitabine, representing an improvement over Truvada. And the third application R/F/TAF a new single tablet regimen combining rilpivirine with the F/TAF backbone is on track to be filed in the third quarter of this year. For the R/F/TAF application, we will be using the Priority Review Voucher which was acquired from Knight Therapeutics…

[Operator Instructions]. And our first question comes from Geoff Meacham of Barclays. Your line is open.

When you guys think about durability of the Hep C market, what have you learned so far about the capacity to treat in the U.S. and EU and the cure patients that are waiting therapy also U.S. and Europe?

This is something clearly on our mind as well as we asses and think about our guidance going forward during this year. So the U.S had 70,000 starts in quarter one and a large number of those, the vast majority of those were Harvoni starts in GT1. We think that there are various dynamics here that probably were some patients being warehoused at the end of quarter four waiting for Harvoni. We then had the impact of all the contract negotiations early in the year and we had a widening of the pipeline in a sense of intensive fibrosis restrictions by many of the payors that we have made contracts with. Going forward, we see the prescriptions, the same data as you see and we do see a kind of flattening off at the moment. But we also think that in general we’re very early days into this launch. So, the run rate would imply that with somewhere north of the 250,000 patients that we indicated last time with all this possible in the U.S this year. I was at EASL last week myself and spoke to a number of physicians who I asked this question, did I think they were seeing physician capacity being reached. And the answer was not physician capacity per se but really back office capacity to deal with the bureaucracy and paper work. And whether that thins out a little bit in the rest of the year is to be seen. But I think the run rate we’re seeing with some of these dynamics of fibrosis restrictions opening up with prior authorization, sort of patient flow stemming to ease up a little bit. But at the same time with the physician office capacity sort of challenges, it’s kind of somewhere between 250 and the high…

Our next question comes from Mark Schoenebaum of Evercore ISI Group. Your line is open.

Great Hep C number, congratulations. I was just wondering that the IMS data that we all watched for the hepatitis C market, seem to indicate a flattening and then a decline in the new prescriptions which has now translated in due an apparent flattening to decline in the total prescriptions. So, I guess I’m wondering should we view -- interpretation that data be that the U.S. hepatitis C market has peaked or is there something relative to IMS data or alternatively is there a reason that we should think of a reacceleration coming up in sometime this year?

That’s a hard question to answer. I think again I would just emphasize it is early days still in the U.S. as some of the contracts that payors we contracted with in the first quarter that starts to sort of unfold. Some of them have very open fibrosis restrictions, some of them are still fairly restricted to sicker patients. We have this dynamic of warehousing; we also have things like being direct to consumer campaign that you may have just noted starting. And I think all of these things of dynamics that are moving. Again the data points that we’ve seen I agree with you would imply a slight flattening of the U.S. market. But I would say there is still a possibility of further growth in the rest of the year. But again, I’d just emphasize it’s very early days to make a prediction on that.

Our next question comes from Geoff Porges of Bernstein. Your line is open.

Thank you very much and add my congratulations on remarkable quarter and progress. May be just change gear a little bit, Robin could you update us on where your cash is and where your cash flow is? And then really phenomenal cash flow, are you sort of thinking about how else you might use that other than the dividend and the share repurchase; I mean obviously just kind of have massive amount of cash flow? Related to that, can you raise debt in Europe against that cash flow, is that something you’ve done or just to be punctual?

Sure Geoff, so just to get the stats out of the way, if you look at our cash, and the full year we expect our cash balance, 40% or so that we expect to be onshore. And relative to cash flow, it’s slightly less. About a third of our cash flow is generated in the U.S. We still think we have fairly significant capacity to borrow in the U.S. If we do discuss borrowing externally, it’s not something we plan to do it immediately relative to our overall cash balance, very similar to what we’ve been saying all along. And we’re very focused on investing in our pipeline, we continue to look at strategic opportunities that may make sense for us with the focus on Phase 2 or earlier stage assets and the rest as you see that we’ve been doing is we will redeploying and returning it to shareholders via dividends and share repurchases.

Thank you. Our next question comes from Yaron Werber of Citi. Your line is open.

It’s a question I guess for whoever wants to pick it up, just a little bit of understanding. Where are you in the peer mix and sort of the rebid mix in the U.S. Hep C market. And can you give us a sense, what’s going on with Medicaid? I mean it was about $1 billion book of business for you last year, a very much mix geographically around the country, how is the ramp going there?

So we have negotiated and signed contracts I think now with about 90% of the covered lives in the U.S. Of that 90%, 83% have direct access to Harvoni, either through an exclusive arrangement or through a parity arrangement. I would take this opportunity to say once more that Gilead really believes prescribing should be in the hands of doctors and their patients, not through these exclusive arrangements. The payor mix is around 70% what I would call commercial and 30% public. And within that commercial that includes Medicaid Part D at roughly half that amount. And the reason I made that split is because the rebates associated with those covered lives, would be in the same sort of ballpark with clearly higher discounts with the public payors. Medicaid, I am not going to comment on extensively except to say that we have ongoing negotiations. And I am sure you appreciate from a competitive point of view why I can’t talk too much about that. Nevertheless, we are winning some exclusive arrangements and our competitors are winning some exclusive arrangements. And I think that’s all I can say really at this point.

Thank you. Our next question comes from Matt Roden of UBS. Your line is open.

At the EASL meeting last week, nice to see you out there. Dramatically, one of the things that was emerging is a lot more emphasis hepatitis B drug development. And you guys have your two programs where I think you’re going to see data this year. So Norbert, can you just talk about these programs and what you are looking for as basis for go no go in Phase 3 decision? And I guess are you looking for a functional cure in these studies or are you looking for a basis to come define the right combinations to move that forward?

With the TLR7 agonist 9620, we’re looking for S reduction. So it doesn’t have to be complete S conversion but if we will see like you know too long [ph] or so. So I mean that clearly indicates S-antigen goes down, that would be in to go into Phase 3. And with the 4774 the therapeutic vaccine, yeast-based vaccine, we’re looking more of immunological parameter. So we see a robust anti S-antibody or S-antigen or anything that would indicate a specific hepatitis B infected either antibody or T-cell immune response. The other thing I would like to point out Matt is hepatitis B cure as we call it here is one of our largest research programs right now. So, we have a fair amount of headcount particular biology. We’re looking at you know compounds that could inhibit cccDNA, that could make cccDNA go away, we’re looking at epigenetic approaches and few others that I don’t want to talk about because it’s too early and too confidential. But that is a big area of focus for us and we hope to see something towards the second half of this year. I would like to point out one last thing Matt, these two studies both the TLR-7 agonist and yeast vaccine are in virally suppressed patients. So whether or not we see anything with these virally suppressed patients, we will then go into treatment naïve non-virally suppressed and actually have initiated already the study with the TLR-7 agonist that’s the second follow-up study that looks at the same compound in viremic patients because there were reasons to believe why immunologically good work and viremic patients that it couldn’t work in virally suppressed.

Thank you. Our next question comes from the Michael Yee of RBC Capital Markets. Your line is open.

Norbert, you made some comments on BD and whatnot. I just wanted to ask broadly what you can say to your appetite for deals whether small, medium or big, specifically John Milligan, I’m sure he’s in the room, had commented earlier that as a corporation are not really ready for a big transaction. I wonder if anything has changed and how you should be thinking about your capacity for deals, small, medium or large as we get through Hep C?

We have talked about this in the past about having constraints on what we could do basically, the limitations on the kinds of activities we’re going to undertake because of how difficult it was to get Sovaldi and then replace it with Harvoni in such short order. And as we exited last year, we really thought that we had achieved a greater balance across the company and that we had the capability to do more things and to look at more things than we had in the past and that has as each month and quarter goes on, we actually gained more ability to do those things as we move forward. Now Norbert highlighted all the very exciting opportunities that we have in our pipeline. So, we do feel that we have a very full pipeline. But I think with our position as a company with the cash flow that we have and with our appetite to continue to do more things for more patients around the world, there are some good opportunities, some good time -- it would be a good time for Gilead to consider wide range of things. But I can’t tell you that we have an appetite for things large or small, it has to be kind of the right fit for Gilead. We typically like things where we can have impact on Phase 3 and where we can accelerate those products either into the approval process or integrator indications after the approval process. And I tend to think still we’re looking for things where we feel we can catalyze the development of those products and have a greater utility over them overall. So, we are open to suggestion; there have been many mentioned out there. But I would say that I want to sick very closely to kinds of areas we’re in here today.

Thank you. Our next question comes from Ian Somaiya of Nomura Securities. Your line is open.

I was just looking at your slide 22 where you speak to the patient dynamics in the U.S., the ones that are considering sofosbuvir and wondering how that’s going to change or if you could speak to how that could change by the time some of the companies reach the market, some of the further combination products to reach the market? And maybe taking a step further just thinking about your triple combo. Teams like the goal likely be limited to an eight-week regimen and how we should think about the competitive implications of that as other companies also pursue a triple combination?

Just on slide 22, which is the type of patients that are being treated in terms of genotype, fibrosis score and whether they are naïve or not. I think there will be some dynamics through this year as the sicker patients get treated. And I think payors that are currently restricting fibrosis scores will start to open up a little bit. That’s something I would imagine will stop to happen in 2016. Although there are plenty of patients that seems through all scores at the moment. We have some data on intent to prescribe during the first quarter, which shows that physician level in the U.S. where doctors intended to prescribe actually slightly more than half of their patients being fibrosis scores zero through S2. In reality, we know that the payors are putting some restrictions, not all payors but some of them. And so most likely the actual treatment is going to be towards the sicker patients and that will start to unfold. We also saw very, as you can see from the chart, 82% of patients naïve to treatment. I guess that would stay the same, possibly even increase the experienced patients get addressed. You asked about how we would see that change with other competitors in the market. I would just emphasize, we are extremely pleased with the chemical profile of Harvoni and at EASL last week, we saw more data showing how Harvoni can deal with -- really sick patients extremely effectively and some other genotypes. And that clinical profile will only get stronger during the course of this year as we -- an incredible amount of real world data. And I think that data will be very advantageous for us as are the competitors with no real world data and to the market next year. So, I think the dynamics of type of patients will change a little bit over time, but there’s plenty of patients out there and we’re seeing plenty of patients coming from the diagnosis pull into treatment and plenty to keep this market going for a number of years.

You asked the second part of the question about the triple and the duration of therapy. And I would say we have some conflicting reports coming out of EASL. But I can tell from our own interactions with physicians and thinking about the dynamic of the market, we do think it could get down to a shorter duration, I think certainly as Norbert said that 12, 8 and 6 week durations that we’ll be looking at our triple combination. It’s our goal to try to collapse the most number of patients down to the shortest duration possible. And it will be interesting to see how this triple works across the wide range of different kinds of diseases, both by genotype and by stage of diseases, still those severely ill patients have fewer options because many of these agents can’t be used in severely ill patients. And they don’t tend to cure as higher rate; we’ve seen that certainly as you get into Child’s B and Child’s C scores. I think what will happen here is that it will go down to some easy duration to use. But the pushback we’ve been getting from doctors and from regulators is that six versus eight doesn’t really matter to them. In fact I’m not sure eight versus twelve matters all that much. As long as it’s simple; as long as it’s safe and as long as there is surety that they will get high cure rates, that’s what they’re looking for. So it’s the outcome that seems to matter more than the duration. And we can also tell you from the regulators’ point of view, they don’t view shorten duration as an important parameter at all. So that will create even a further bearer on all of us as we try to get to shorter durations, if we can’t provide that simplicity across a wide range of patients and that will make it more difficult for those products to come to market.

Our next question comes from Phil Nadeau of Cowen and Company. Your line is open.

On simtuzumab, Norbert, it sounded like in your prepared remarks you said we’re going to get the 96-week data at the end of 2016. I think in prior calls suggested that the 48-week data to come out late this year. So, I guess two parts to the question. One, are we now not going to get the 48-week data from simtuzumab and then two, what’s your most recent thinking on the ability of Gilead to file for approval of simtuzumab on its Phase 2 data?

So, there is a 48-week analysis but it’s a utility analysis that is being done by DSMB. So, if the DSMB comes to the conclusion, there is absolutely no change that will ever rich the end point then they will recommendation to stop this study and then of course the decision is up to us. If they don’t see that then they will simply tell us continue. And the real end point is 96 weeks and by the way this was negotiated and agreed upon with FDA. FDA felt for somewhere NASH that is a chronic potentially lifelong disease 48 weeks is not enough of a treatment duration; they would like to see 96 weeks. But if we can show a convincing reduction in the Sovaldi study, so there are two NASH studies one is in Sovaldi. And the end point there has been pressure going, if we see a clinically meaningful reduction at week 48 and week 96 in HVPG; that would get us potentially accelerated approval under the sub part. I can’t remember what it’s called for biologics; it’s sub part agent for small molecules guidelines.

Would you care to elaborate on what’s clinically meaningful?

So, FDA was -- to be answering that, completely informed about HVPG. So we have to have another meeting with them to talk with the thought leaders. But the thought leaders felt 20% reduction would be a huge clinically meaningful benefit.

Our next question comes from Robyn Karnauskas of Deutsche Bank. Your line is open.

So, I guess just as follow-up to the color you provide on Hep C discount. So, does your guidance of 46% still hold? And how do we think about this quarter stocking for the quarter? And then lastly, when you think about that hitting that 46%, how do we think about when you’ll start 46%?

So, we made a very atypical last quarter by describing gross to net. And by the way gross to net is not as same as discount to rebate; there are other items in that. And we’ve taken a view that for competitive reasons, I hope you appreciate why we don’t want to discuss gross to net really ever again this year. Having said that during the first quarter, some of the contracts and Robin said this in her script that we signed -- started to be executed during the first quarter. So, I would say we’re in steady state really from quarter two and the guidance that we just we’ve given absolutely reflects our assumptions around gross to net in the U.S. hepatitis market. I hope that answers. I didn’t very last part of the question. Stocking, yes. There was actually very minimal stock increase during the first quarter, I would say not material in the hepatitis market; a very slight increase of Harvoni stocking matched by a slight decrease in Sovaldi stocking.

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

May be if I could just ask something, so both you and your competitor AbbVie have indicated that most of the contracts have started to come in but didn’t fully come in and there is potentially an acceleration, at least AbbVie has of their run rate and the market share into April. I am wondering if you can just comment on dynamics in April. I know you said during the quarter you had about a 90% share, I am just wondering if that has shifted dramatically if some of these additional contracts that come in. And if I can sneak one in for Robin. Can you just say what the one-time impact was from the branded prescription to you on SG&A?

So the April share data, I actually don’t have anything on my fingertips Matthew, but I am not sensing any dramatic change whatsoever in the dynamics and the share and the prescriptions that we’re getting. Robin?

So to your point, the majority of the SG&A quarter-on-quarter decline was driven by the one-time impact and then like sort of further decline because we got a preliminary invoice from the IRF. So we took down our accrual a bit with under 200 million associated with the new estimate that we’ve got and I’ll reemphasize that it is just an estimate. So we will see what happens longer terms when we get the final invoice in August.

Thank you. Our next question comes from Cory Kasimov of JP Morgan. Your line is open.

Most of questions are already asked, but for Robin, can you comment more on the impact or magnitude of the unpaid rebates and from the cash flow standpoint that you alluded to in your prepared remarks?

So, as you know we had a significant increase in contracting that’s occurred in Q1 primarily related to Harvoni. It usually takes the payors and governments up to about three months to six months, sometimes even nine months to ultimately come back and charge us for those rebates or charge backs. So, if you look at our cash flow it grew over $2 billion quarter-on-quarter. So, what we were seeing is that shift because that cash hasn’t actually been paid out. So, our run rate really is not at the $5.7 billion going forward in further quarters.

Thank you. Our next question comes Howard Liang of Leerink. Your line is open

Regarding the patient treated, the fibrosis side of the patients treated, you gave us a stats in U.S., can you talk about similar information for Europe? And can you also give us a sense of the pricing point that you negotiated in Italy and Spain and the budget cuts?

Sure. So fibrosis scores in Europe interestingly do very somewhat between countries. So in fact in Germany there’s fairly opened treatments restrictions, therefore there’s a range of patients from sick to not sick being treated; that’s different in France and in Italy and Spain in particular where the budget constraints are really ensuring that only sickest rate patients are being prioritized at this stage, so really in Spain and Italy for example and a majority of the French patients are S3 and S4.

Price point?

I wouldn’t comment on the price points except that the listed price points are between EUR 41,000 and EUR 45,000 for Sovaldi and we would anticipate probably a premium of around 15% for Harvoni when those numbers get announced.

Thank you. Our next question comes from Terence Flynn of Goldman Sachs. Your line is open.

Just wondering on HIV franchise, now that you have a very broad strategy with respect to the TAF combos, can you help us think about just the longer term market share that you think you can retain post the entry of generic Viread and may be some other generic competitors down the road as you think about the longer term longevity of that franchise?

Well that’s a really tough question, predicting into the future. I mean today as I think everyone knows, we have a very substantial market share in the HIV world. And even in this quarter, we see in the U.S. about eight out of 10 patients naïve to treatment going for Gilead product but six out of 10 are getting a Gilead single tablet regimen with Truvada backbone. And we’re seeing very good growth of our Truvada based single tablet regimens like Stribild which is going 75% year-on-year Complera 33% year-on-year. And you can see both in Europe and in U.S. that the top three or four regimens remain Gilead’s single tablet regimens. So we’re in a very, very kind of strong position today. And we’re competing with the GSK products and we do see their impact. I mean for example we were getting seven out of 10 patients in the U.S. on a Gilead single tablet regimen; we’re getting about six. But I do think that emphasizes the single tablet regimens are the way forward here. We have very strong data with E/C/F/TAF and we hope to have switch data launch. And as we mentioned earlier PDUFA date is 5th of November this year. We are getting our organization very much tuned up for that launch and we will be focusing of course on really trying to bring the conversation back to the importance of a great backbone. And we have great confidence that the F/TAF backbone is a great innovation over Truvada with very high efficacy and safety benefits which are really increasingly important for the ageing HIV population. So, I think that it’s all about whether doctors feel that the F/TAF backbone warrants a priority. And we’re going to make sure that our medical organization and our therapy -- our specialists out in the field convey that data very clearly.

Mr. O’Brien, we have time for one more question. Our last question comes from Ying Huang of Bank of America. Your line is open.

Firstly, I want to look at the Sovaldi weekly and NRx number which is about stabilizing at about 600. What are those patients, are those just genotype 2 or genotype 2 and 3, currently being treated with Sovaldi? And shall we use that as a study rate if we do GT1 versus GT3 at about 4:1 ratio in the U.S. in the steady state in the future? And then the second question here is about the -- I guess payor mix. So you said that in the first quarter 70:30, but in the next three quarters, what is your assumption for the payor mix that you see the market in U.S.?

So, two questions in that. The second question, I think we think that the payor mix will stay relatively steady and the reason as I said earlier the 70:30 was because these are broad buckets of rebate kind of rates. So, we think that that will remain steady. John, do you want to answer the first question?

Well first question was about where we think Sovaldi to be used and it is principally used in genotype 2 and genotype 3 patients. As we exited the quarter it was clear there were still some patients on simeprevir, probably patients finishing out their regimen from last year. We don’t know how that will continue now, but I expect there is a smattering of use in certain patient types for that. And there is probably still little bit of use for patients who are in combination with interferon. And your question is about the run rate; I think there seems to be a steady flow of patients for genotype 2 and genotype 3 in the United States, but Harvoni is quickly making Sovaldi obsolete in many areas. And I suspect that more data rolls out, there will be more and more Harvoni use and less and less Sovaldi use.

There is a little bit more of a different genotype profile in Europe, some of the countries have more genotype 2 and 3, UK actually is an example of that. So, we would expect Sovaldi to continue to have some utility, especially in some countries like the UK for example. Patrick O’Brien: Thank you, Ashley and thanks to all for joining us today. We appreciate your continued interest in Gilead and the team here looking for [indiscernible] we will update on future progress. Thanks.