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What changed in Gilead Sciences's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Gilead Sciences's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+325 added−280 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-22)

Top changes in Gilead Sciences's 2023 10-K

325 paragraphs added · 280 removed · 199 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

62 edited+18 added−26 removed106 unchanged
Biggest changeAs of the end of 2022, these facilities include: • Foster City, California: We conduct process chemistry research, analytical method development and formulation and device development activities, and manufacture API and drug product for our clinical trials. • San Dimas and La Verne, California: We manufacture AmBisome and also package and label the majority of our commercial products for distribution to the Americas and the Pacific Rim. • Oceanside, California: We utilize the facility for commercial retroviral vector manufacturing and clinical manufacturing and process development of our biologics candidates. • El Segundo, California: We utilize the facility for clinical and commercial manufacturing and processing of our cell therapy products. • Frederick, Maryland: We utilize the facility for clinical and commercial manufacturing and processing of our cell therapy products. • Cork and Dublin, Ireland: We utilize the Cork facility for commercial manufacturing, packaging and labeling of our products.
Biggest changeAs of the end of 2023, these facilities include: • Foster City, California: We conduct process chemistry research, analytical method development and formulation and device development activities, and manufacture API and drug product for our clinical trials. • La Verne, California: We manufacture AmBisome and also package and label the majority of our commercial products for distribution to the Americas and the Pacific Rim.
In addition, we have an authorized generic version of Epclusa distributed by our separate subsidiary, Asegua Therapeutics LLC. 3 • Vemlidy ® is an oral formulation of TAF dosed once a day for the treatment of chronic hepatitis B virus (“HBV”) infection in adults and pediatric patients 12 years of age and older with compensated liver disease. • Harvoni ® is an oral formulation of a once-daily, single-tablet regimen of ledipasvir and sofosbuvir for the treatment of chronic HCV infection in adults and pediatric patients 3 years of age and older with: (i) genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis, (ii) genotype 1 with decompensated cirrhosis, in combination with ribavirin, (iii) genotype 1 or 4 who are liver transplant recipients without cirrhosis or with compensated cirrhosis, in combination with ribavirin.
In addition, we have an authorized generic version of Epclusa distributed by our separate subsidiary, Asegua Therapeutics LLC. • Vemlidy ® is an oral formulation of TAF dosed once a day for the treatment of chronic hepatitis B virus (“HBV”) infection in adults and pediatric patients 12 years of age and older with compensated liver disease. • Harvoni ® is an oral formulation of a once-daily, single-tablet regimen of ledipasvir and sofosbuvir for the treatment of chronic HCV infection in adults and pediatric patients 3 years of age and older with: (i) genotype 1, 4, 5 or 6 without cirrhosis or with compensated cirrhosis, (ii) genotype 1 with decompensated cirrhosis, in combination with ribavirin, (iii) genotype 1 or 4 who are liver transplant recipients without cirrhosis or with compensated cirrhosis, in combination with ribavirin.
Oncology • Yescarta ® (axicabtagene ciloleucel), a suspension for intravenous infusion, is a chimeric antigen receptor (“CAR”) T-cell therapy for the treatment of (i) adult patients with large B-cell lymphoma (“LBCL”) that is refractory to first-line chemoimmunotherapy or that relapses within 12 months of first-line chemoimmunotherapy, (ii) adult patients with relapsed or refractory LBCL after two or more lines of systemic therapy, including diffuse LBCL (“DLBCL”) not otherwise specified, primary mediastinal LBCL, high-grade B-cell lymphoma and DLBCL arising from follicular lymphoma (“FL”), and (iii) adult patients with relapsed or refractory FL after two or more lines of systemic therapy.
Oncology • Yescarta ® (axicabtagene ciloleucel), a suspension for intravenous infusion, is a chimeric antigen receptor (“CAR”) T-cell therapy for the treatment of adult patients with (i) large B-cell lymphoma (“LBCL”) that is refractory to first-line chemoimmunotherapy or that relapses within 12 months of first-line chemoimmunotherapy, (ii) relapsed or refractory LBCL after two or more lines of systemic therapy, including diffuse LBCL (“DLBCL”) not otherwise specified, primary mediastinal LBCL, high-grade B-cell lymphoma and DLBCL arising from follicular lymphoma (“FL”) and (iii) relapsed or refractory FL after two or more lines of systemic therapy.
(1) • Trodelvy ® (sacituzumab govitecan-hziy), an injection for intravenous use, is a Trop-2 directed antibody and topoisomerase inhibitor conjugate indicated for the treatment of adult patients with (i) unresectable locally advanced or metastatic triple-negative breast cancer (“TNBC”) who have received two or more prior systemic therapies, at least one of them for metastatic disease, (ii) unresectable locally advanced or metastatic hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting (2) and (iii) locally advanced or metastatic urothelial cancer (“UC”) who have previously received a platinum-containing chemotherapy and either programmed death receptor-1 (“PD-1”) or programmed death-ligand 1 (“PD-L1”) inhibitor.
(1) • Trodelvy ® (sacituzumab govitecan-hziy), an injection for intravenous use, is a Trop-2 directed antibody and topoisomerase inhibitor conjugate indicated for the treatment of adult patients with (i) unresectable locally advanced or metastatic triple-negative breast cancer (“TNBC”) who have received two or more prior systemic therapies, at least one of them for metastatic disease, (ii) unresectable locally advanced or metastatic hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting and (iii) locally advanced or metastatic urothelial cancer (“UC”) who have previously received a platinum-containing chemotherapy and either programmed death receptor-1 (“PD-1”) or programmed death-ligand 1 (“PD-L1”) inhibitor.
Statements regarding these goals and related initiatives are not guarantees or promises that they will be met. Seasonality of Operations Our worldwide product sales do not reflect any significant degree of seasonality in end-user demand. However, in the U.S., fluctuations in wholesaler inventory levels impact our product sales.
Statements regarding these goals and related initiatives are not guarantees or promises that they will be met. 12 Seasonality of Operations Our worldwide product sales do not reflect any significant degree of seasonality in end-user demand. However, in the U.S., fluctuations in wholesaler inventory levels impact our product sales.
Our manufacturing facilities in Canada, Ireland and Netherlands also must obtain local licenses and permits in compliance with local regulatory requirements. 14 FDA may employ one of several tools to facilitate and expedite the development and review of a drug, including Fast Track designation, Breakthrough Therapy designation, Accelerated Approval designation and Priority Review designation.
Our manufacturing facilities in Canada, Ireland and Netherlands also must obtain local licenses and permits in compliance with local regulatory requirements. FDA may employ one of several tools to facilitate and expedite the development and review of a drug, including Fast Track designation, Breakthrough Therapy designation, Accelerated Approval designation and Priority Review designation.
(3) The composition of matter patent has expired in the EU. In the EU and the U.S., patent applications are pending relating to proprietary manufacturing processes of Kite. (4) In 2018, Gilead and Mylan Pharmaceuticals reached an agreement to settle the patent litigation concerning patents that protect cobicistat in our Stribild and Genvoya products.
(3) The composition of matter patent has expired in the EU. In the EU and the U.S., patent applications are pending relating to our proprietary manufacturing processes. (4) In 2018, Gilead and Mylan Pharmaceuticals reached an agreement to settle the patent litigation concerning patents that protect cobicistat in our Stribild and Genvoya products.
Many other countries, including countries in the EU (and the EU under a centralized procedure), have similar regulatory structures. 13 Preclinical Testing Before we can test a drug candidate in humans, we must study the drug in laboratory experiments and in animals to generate data to support the drug candidate’s potential benefits and safety.
Many other countries, including countries in the EU (and the EU under a centralized procedure), have similar regulatory structures. Preclinical Testing Before we can test a drug candidate in humans, we must study the drug in laboratory experiments and in animals to generate data to support the drug candidate’s potential benefits and safety.
Website references are provided throughout this document for convenience. The content on the referenced websites does not constitute a part of and is not incorporated by reference into this Annual Report on Form 10-K. 16
Website references are provided throughout this document for convenience. The content on the referenced websites does not constitute a part of and is not incorporated by reference into this Annual Report on Form 10-K.
Research and Development Our research and development (“R&D”) mission is to discover and develop transformational therapies in areas of high unmet medical need. Our product development efforts are focused primarily in viral diseases, oncology and inflammatory diseases.
Research and Development Our research and development (“R&D”) mission is to discover and develop transformational therapies in areas of high unmet medical need. Our product development efforts are focused primarily on viral diseases, oncology and inflammatory diseases.
Securities and Exchange Commission (“SEC”). SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with SEC. Our website is www.gilead.com.
Securities and Exchange Commission (“SEC”). SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with SEC. 15 Our website is www.gilead.com.
EU Descovy 2031 (2) 2026 Vemlidy 2031 (2) 2026 Complera/Eviplera 2025 2026 Zydelig 2025 2029 Odefsey 2032 (2) 2026 Yescarta 2031 — (3) Stribild 2029 (4) 2028 Genvoya 2029 (4) 2028 Harvoni 2030 2030 Epclusa 2033 2032 Biktarvy 2033 2033 Vosevi 2034 2033 Veklury 2035 2035 Tecartus 2027 — (3) Trodelvy 2028 (5) 2029 Jyseleca 2030 2030 Hepcludex 2030 2029 Sunlenca 2037 2037 The listed expiration dates do not include any potential additional exclusivity (e.g., patent term extensions, supplementary protection certificates or pediatric exclusivity) that has not yet been granted. ______________________________ (1) Where applicable, settlement and license agreements with generic manufacturers relating to the patents that protect our principal products are noted.
EU Descovy 2031 (2) 2026 Vemlidy 2031 (2) 2026 Complera/Eviplera 2025 2026 Zydelig 2025 2029 Odefsey 2032 (2) 2026 Yescarta 2031 — (3) Stribild 2029 (4) 2028 Genvoya 2029 (4) 2028 Harvoni 2030 2030 Epclusa 2033 2032 Biktarvy 2033 2033 Vosevi 2034 2033 Veklury 2036 (5) 2035 Tecartus 2027 — (3) Trodelvy 2028 (6) 2029 Hepcludex 2030 2029 Sunlenca 2037 2037 The listed expiration dates do not include any potential additional exclusivity (e.g., patent term extensions, supplementary protection certificates or pediatric exclusivity) that has not yet been granted. ______________________________ (1) Where applicable, settlement and license agreements with generic manufacturers relating to the patents that protect our principal products are noted.
In addition, employees can receive reimbursement for tuition expenses incurred while pursuing undergraduate, graduate or certificate courses at an accredited college or university. As we strive to be the employer of choice in our industry, our listening strategy gathers input from our employees to shape our engagement strategies and programs and measure our progress.
In addition to internal development, employees can receive reimbursement for tuition expenses incurred while pursuing undergraduate, graduate or certificate courses at an accredited college or university. As we strive to be the employer of choice in our industry, our listening strategy gathers input from our employees to shape our engagement strategies and programs and measure our progress.
If our trade secrets or confidential information become known or independently discovered by competitors, or if we enter into disputes over ownership of inventions, our business and results of operations could be adversely affected. 10 Manufacturing and Raw Materials Our products are manufactured either at our own facilities or by third-party contract manufacturers.
If our trade secrets or confidential information become known or independently discovered by competitors, or if we enter into disputes over ownership of inventions, our business and results of operations could be adversely affected. 9 Manufacturing and Raw Materials Our products are manufactured either at our own facilities or by third-party contract manufacturers.
Risk Factors “Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and other discounts on our products and other pricing pressures.” and “We face challenges in accurately forecasting sales because of the difficulties in predicting demand for our products and fluctuations in purchasing patterns or wholesaler inventories.” 15 Health Care Fraud and Abuse Laws; Anti-Bribery Laws We are subject to various U.S. federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claim laws.
Risk Factors “Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and discounts, and other pricing pressures” and “We face challenges in accurately forecasting sales because of the difficulties in predicting demand for our products and fluctuations in purchasing patterns or wholesaler inventories.” Health Care Fraud and Abuse Laws; Anti-Bribery Laws We are subject to various U.S. federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claim laws.
In addition to ongoing internal and external data collection and benchmarking, we conducted comprehensive reviews of the employee experience in 2021 and again in 2022, including through the use of employee surveys. The results of these surveys play a key role in determining the direction of our culture as well as the company’s broader response to emerging developments.
In addition to ongoing internal and external data collection and benchmarking, we conducted comprehensive reviews of the employee experience in 2022 and again in 2023, including through the use of employee surveys. The results of these surveys play a key role in determining the direction of our culture as well as the company’s broader response to emerging developments.
For example, pursuant to our collaboration with Janssen, we receive revenue share from cobicistat, FTC and TAF that are components of Symtuza (darunavir/cobicistat/FTC/TAF), a fixed-dose combination product commercialized by Janssen. We include our revenue share from Symtuza in our Product sales. For a description of our collaborations with Janssen and other partners, see Note 10.
For example, pursuant to our collaboration with Janssen, we receive revenue share from cobicistat, FTC and TAF that are components of Symtuza (darunavir/cobicistat/FTC/TAF), a fixed-dose combination product commercialized by Janssen. We include our revenue share from Symtuza in our Product sales. For a description of our collaborations with Janssen and other partners, see Note 7.
We are required to obtain a marketing authorization in the EU before we can market our medicinal products on the relevant market. The conduct of clinical trials in the EU is governed by, among others, Directive 2001/20/EC and Directive 2005/28/EC and the EU (ICH) Good Clinical Practice rules.
We are required to obtain a marketing authorization in the EU before we can market our medicinal products on the relevant market. The conduct of clinical trials in the EU is governed by, among others, Directive 2001/20/EC and Directive 2005/28/EC and the ICH Good Clinical Practice guidelines.
Additionally, we are required to maintain a complex chain of identity and custody with respect to patient material as such material moves to the manufacturing facilities, through the manufacturing process, and back to the patient. 11 Access to Raw Materials We need access to certain raw materials to conduct our clinical trials and manufacture our products.
Additionally, we are required to maintain a complex chain of identity and custody with respect to patient material as such material moves to the manufacturing facilities, through the manufacturing process, and back to the patient. 10 Access to Raw Materials We need access to certain raw materials to conduct our clinical trials and manufacture our products.
Similar patent term extensions may be available for other products we are developing, but we cannot be certain we will obtain them in some countries. 9 It is also important that we do not infringe the valid patents of third parties.
Similar patent term extensions may be available for other products we are developing, but we cannot be certain we will obtain them in some countries. 8 It is also important that we do not infringe the valid patents of third parties.
In 2022, our primary revenue-generating products and the approved indications in the U.S. were as follows: HIV • Biktarvy ® is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients.
In 2023, our primary revenue-generating products and the approved indications in the U.S. were as follows: HIV • Biktarvy ® is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients.
For more information, see Item 1A. Risk Factors “We are impacted by evolving laws, regulations and legislative or regulatory actions applicable to the health care industry.” Environment We are subject to a number of laws and regulations that require compliance with federal, state, and local regulations for the protection of the environment.
For more information, see Item 1A. Risk Factors “We are impacted by evolving laws, regulations and legislative or regulatory actions applicable to the healthcare industry.” Environment We are subject to a number of laws and regulations that require compliance with federal, state, and local regulations for the protection of the environment.
In addition, our employee resource groups (“ERGs”) support diverse employees and aim to raise awareness of different cultures within the workplace, cultivate diversity as a business strength and support Gilead’s talent acquisition strategy to source, attract and recruit diverse candidates.
In addition, our employee resource groups (“ERGs”) support diverse employees and aim to raise awareness of different cultures within the workplace, cultivate diversity as a business strength and support Gilead’s talent acquisition strategy to promote equal opportunities and to source, attract and recruit diverse candidates.
Environmental, Social and Governance (“ESG”) Investing in corporate responsibility is core to our business strategy and reflects our values of accountability, inclusion, teamwork, excellence and integrity. This is in service to our mission to advance global health by providing innovative therapeutics in areas of unmet need in a way that is socially responsible and environmentally sustainable.
Corporate Responsibility Investing in corporate responsibility is core to our business strategy and reflects our values of accountability, inclusion, teamwork, excellence and integrity. This is in service to our mission to advance global health by providing innovative therapeutics in areas of unmet need in a way that is socially responsible and environmentally sustainable.
The following table shows the estimated expiration dates (including patent term extensions, supplementary protection certificates and/or pediatric exclusivity where granted) in the U.S. and the European Union (“EU”) for the primary (typically compound) patents for our key product candidates as described above.
The following table shows the estimated expiration dates (including patent term extensions, supplementary protection certificates and/or pediatric exclusivity where granted) in the U.S. and the EU for the primary (typically compound) patents for our key product candidates as described above.
Gilead’s ESG programs reflect this commitment to our stakeholders. ESG strategy and performance are overseen by the Nominating and Corporate Governance Committee of our Board of Directors, and managed by a Corporate Responsibility Committee comprised of leaders from key departments across our company.
Gilead’s corporate responsibility programs reflect this commitment to our stakeholders. Environmental, social and governance (“ESG”) strategy and performance are overseen by the Nominating and Corporate Governance Committee of our Board of Directors, and managed by a Corporate Responsibility Committee comprised of leaders from key departments across our company.
EU Viral Diseases: Lenacapavir 2037 2037 Bulevirtide 2030 2029 Inflammatory Diseases: Cilofexor 2032 2032 Filgotinib 2030 2030 Oncology: Axicabtagene ciloleucel 2031 — (1) Brexucabtagene autoleucel 2027 — (1) Sacituzumab govitecan-hziy 2028 (2) 2029 Magrolimab 2031 2031 Zimberelimab (3) 2036 (2036) (4) Domvanalimab (3) 2037 (2037) (4) The listed expiration dates do not include any potential additional exclusivity (e.g., patent term extensions, supplementary protection certificates or pediatric exclusivity) that has not yet been granted. _______________________________ (1) The composition of matter patent has expired in the EU.
EU Viral Diseases: Lenacapavir 2037 2037 Bulevirtide 2030 2029 Oncology: Axicabtagene ciloleucel 2031 — (1) Sacituzumab govitecan-hziy 2028 (2) 2029 Zimberelimab (3) 2036 (2036) (4) Domvanalimab (3) 2037 (2037) (4) The listed expiration dates do not include any potential additional exclusivity (e.g., patent term extensions, supplementary protection certificates or pediatric exclusivity) that has not yet been granted. _______________________________ (1) The composition of matter patent has expired in the EU.
(4) Dates in parentheses reflect the estimated expiration date of patents which may issue from currently pending applications. 8 The following table shows the actual or estimated expiration dates (including patent term extensions, supplementary protection certificates and/or pediatric exclusivity where granted) in the U.S. and the EU for the primary (typically compound) patents for our principal products.
(4) Dates in parentheses reflect the estimated expiration date of patents that may be issued from currently pending applications. 7 The following table shows the actual or estimated expiration dates (including patent term extensions, supplementary protection certificates and/or pediatric exclusivity where granted) in the U.S. and the EU for the primary (typically compound) patents for our principal products.
Gilead also implemented multiple programs to train managers on inclusion and diversity topics, and created strategies and initiatives focused on attracting, developing and retaining diverse talent and driving an inclusive culture in our workplace, which organizational leaders were required to regularly review starting in 2021.
In 2020, Gilead implemented multiple programs to train managers on inclusion and diversity topics and created strategies and initiatives focused on attracting, developing and retaining diverse talent and driving an inclusive culture in our workplace, which organizational leaders have been required to regularly review since 2021.
The Corporate Responsibility Committee is responsible for reviewing ESG issues and, as appropriate, integrating them into our overall business strategy and operations. Additional information about this program and ESG highlights are available in Gilead’s 2021 year in review on Gilead’s website at https://www.gilead.com/-/media/files/pdfs/yir-2021-pdfs/2021-gilead-yir_desktop.pdf. Our ESG goals are aspirational and may change.
The Corporate Responsibility Committee is responsible for reviewing ESG issues and, as appropriate, integrating them into our overall business strategy and operations. Additional information about this program and ESG highlights are available in Gilead’s 2022 ESG Impact Report on Gilead’s website at https://www.gilead.com/-/media/files/pdfs/yir-2022-pdfs/2022-environmental-social-governance-impact-report.pdf. Our ESG goals are aspirational and may change.
In the EU and the U.S., patent applications are pending relating to proprietary manufacturing processes of Kite, a Gilead company (“Kite”). (2) Regulatory exclusivity in the U.S. expires in 2032. (3) In collaboration with Arcus.
In the EU and the U.S., patent applications are pending relating to our proprietary manufacturing processes. (2) Regulatory exclusivity in the U.S. expires in 2032. (3) In collaboration with Arcus.
During the year ended December 31, 2022, approximately 89% of our product sales in the U.S. and approximately 63% of our total worldwide revenues were from three large wholesalers: AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation.
During the year ended December 31, 2023, approximately 91% of our product sales in the U.S. and approximately 66% of our total worldwide revenues were from three large wholesalers: Cencora, Inc. (formerly known as AmerisourceBergen Corporation), Cardinal Health, Inc. and McKesson Corporation.
As our products mature, pricing pressures from private insurers and government payers often result in a reduction of the net product prices. Further, as new branded or generic products are introduced into major markets, our ability to maintain pricing and market share may be affected. For more information, see Item 1A.
In addition, standard reimbursement structures may not adequately reimburse for innovative therapies. 14 As our products mature, pricing pressures from private insurers and government payers often result in a reduction of the net product prices. Further, as new branded or generic products are introduced into major markets, our ability to maintain pricing and market share may be affected.
As a result, the price increases we implement from time to time on certain products may have a limited effect on our net product sales in certain markets. In addition, standard reimbursement structures may not adequately reimburse for innovative therapies.
As a result, the price increases we implement from time to time on certain products may have a limited effect on our net product sales in certain markets.
We intend to continue committing significant resources to internal R&D opportunities and external business development activity to drive innovation and growth of our business. The development of product candidates and investigational therapies in our pipeline is subject to various risks and uncertainties.
We have committed significant resources to internal R&D opportunities and external business development activity to drive innovation and growth of our business. The development of product candidates and investigational therapies in our pipeline is subject to various risks and uncertainties that could result in delays or prevent completion of the development and approval of our product candidates.
In collaboration with Merck Sharp & Dohme LLC (“Merck”), (1) sacituzumab govitecan-hziy is being evaluated in combination with Merck’s pembrolizumab as (i) a first-line treatment for PD-L1 positive metastatic TNBC and (ii) a first-line treatment for NSCLC. Sacituzumab govitecan-hziy is also being evaluated in combination with pembrolizumab as a treatment for adjuvant TNBC.
In collaboration with Merck Sharpe & Dohme LLC (“Merck”), (1) it is also being evaluated in combination with Merck’s pembrolizumab as (i) a first-line treatment for PD-L1 positive metastatic TNBC and (ii) an adjuvant treatment for early TNBC. In lung and thoracic cancer, sacituzumab govitecan-hziy is being evaluated as a second- or third-line treatment for non-small cell lung cancer (“NSCLC”).
In collaboration with Arcus, (1) the combination of zimberelimab and domvanalimab with chemotherapy is also being evaluated as (i) a first-line treatment for NSCLC and (ii) a first-line treatment for upper gastrointestinal tract cancer. In collaboration with Arcus (1) and AstraZeneca, the combination of domvanalimab and durvalumab is being evaluated for the treatment of Stage 3 NSCLC.
(“Arcus”), (1) the combination of zimberelimab, an anti-PD-1 monoclonal antibody, and domvanalimab, an Fc-silent anti-TIGIT antibody, with chemotherapy is being evaluated as (i) a first-line treatment for NSCLC and (ii) a first-line treatment for upper gastrointestinal tract cancer. In collaboration with Arcus, (1) the combination of zimberelimab and domvanalimab is being evaluated as a first-line treatment for NSCLC.
We typically observe strong wholesaler and sub-wholesaler purchases of our products in the fourth quarter, resulting in inventory draw-down by wholesalers and sub-wholesalers in the subsequent first quarter.
In recent years, we have observed strong wholesaler and sub-wholesaler purchases of our products in the second half of the year, resulting in inventory draw-down by wholesalers and sub-wholesalers in the subsequent first quarter.
Employee Development and Engagement Employee development and engagement maximizes the potential and performance of each member of our workforce and is critical to achieving our business goals. Gilead offers a number of internal and external professional, management and leadership development training programs to help our employees develop technical, cross-functional and leadership skills and tools to grow their careers.
Gilead offers a number of internal and external professional, management and leadership development training programs to help our employees develop technical, cross-functional and leadership skills and tools to grow their careers.
ITEM 1. BUSINESS Gilead Sciences, Inc. (“Gilead,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer.
ITEM 1. BUSINESS Gilead Sciences, Inc. (including its consolidated subsidiaries, referred to as “Gilead,” the “company,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people.
Vemlidy FDA approved an expanded use of Vemlidy for the treatment of chronic HBV infection in pediatric patients 12 years of age and older with compensated liver disease. Trodelvy FDA approved Trodelvy for the treatment of unresectable locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.
Trodelvy FDA approved Trodelvy for the treatment of unresectable locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.
It has been granted both Orphan Drug and Breakthrough Therapy designations by FDA for this indication. Approval is pending resolution of certain manufacturing and delivery concerns cited in a complete response letter issued by FDA in October 2022.
Approval is pending resolution of certain manufacturing and delivery concerns cited in a complete response letter issued by FDA in October 2022.
It is not unusual, however, for FDA to decline to approve an application because it believes that the drug candidate is not safe enough or efficacious enough (i.e., does not have an appropriate benefit-risk profile) or because it does not believe that the data submitted is reliable or conclusive.
It is not unusual, however, for FDA to decline to approve an application because it believes that the drug candidate is not safe enough or efficacious enough (i.e., does not have an appropriate benefit-risk profile) or because it does not believe that the data submitted is reliable or conclusive. 13 At any point in this process, the development of a drug candidate can be stopped for a number of reasons, including safety concerns, lack of treatment benefit or manufacturing issues.
COVID-19 • Veklury ® (remdesivir), an injection for intravenous use, is a nucleotide analog RNA polymerase inhibitor indicated for the treatment of coronavirus disease 2019 (“COVID-19”) in certain adults and pediatric patients (28 days of age and older and weighing at least 3 kg) who are (i) hospitalized or (ii) not hospitalized and have mild-to-moderate COVID-19, and are at high risk for progression to severe COVID-19, including hospitalization or death.
COVID-19 • Veklury ® (remdesivir), an injection for intravenous use, is a nucleotide analog RNA polymerase inhibitor indicated for the treatment of COVID-19 in certain adults and pediatric patients (28 days of age and older and weighing at least 3 kg) who are (i) hospitalized or (ii) not hospitalized and have mild-to-moderate COVID-19, and are at high risk for progression to severe COVID-19, including hospitalization or death. 3 Viral Hepatitis • Epclusa ® is an oral formulation of a once-daily single-tablet regimen of sofosbuvir and velpatasvir for the treatment of chronic hepatitis C virus (“HCV”) infection in adults and pediatric patients 3 years of age and older with genotype 1, 2, 3, 4, 5 or 6: (i) without cirrhosis or with compensated cirrhosis or (ii) with decompensated cirrhosis for use in combination with ribavirin.
For example, in response to the COVID-19 pandemic, we provided meaningful benefits to employees and refined our approach to flexible work arrangements. We believe our flexible work program positions us to be competitive for talent and support employee well-being while also creating the collaborative environment and connections that fuel innovation.
To promote employee productivity, we continue to address our employees’ needs by providing meaningful benefits and a flexible approach to work arrangements. We believe our flexible work program positions us to be competitive for talent and support employee safety and wellbeing while also creating the collaborative environment and connections that fuel innovation.
Our policy is that compensation decisions are made without regard to personal characteristics such as gender, race, color, national or ethnic origin, age, disability, sexual orientation, gender identity or expression, genetic information, religion, or veteran status. We also conduct an annual pay equity review of employee compensation in an effort to strive to make our pay practices gender- and race-neutral.
Our employee salaries are informed by market research and market-based ranges and are assessed annually through performance reviews. Our policy is that compensation decisions are made without regard to personal characteristics such as gender, race, color, national or ethnic origin, age, disability, sexual orientation, gender identity or expression, genetic information, religion, or veteran status.
Stribild is a single-tablet regimen of a fixed-dose combination of our antiretroviral medications, elvitegravir, cobicistat, TDF and FTC.
Stribild is a single-tablet regimen of a fixed-dose combination of our antiretroviral medications, elvitegravir, cobicistat, TDF and FTC. • Sunlenca ® is an HIV-1 capsid inhibitor in tablet form for oral use and as an injection for subcutaneous use.
Our Total Rewards program (which varies by country) includes competitive base salary and incentive compensation, stock awards, an employee stock purchase plan, a 401(k) savings plan with a company match that vests immediately, health and welfare and other valuable benefits, such as flexible work arrangements, flexible spending accounts, paid time off, family leave, family care resources, fertility, adoption and surrogacy assistance, student loan repayment and tuition assistance, employee assistance programs and global wellbeing reimbursement, among many others.
Our portfolio (which varies by country and is subject to employee eligibility requirements) includes but is not limited to: • Competitive base salary • Incentive compensation • Stock awards • Employee stock purchase plan • 401(k) savings plan with a company match that vests immediately • Health and wellbeing benefits • Flexible work arrangements • Flexible spending accounts • Paid time off • Paid family leave • Family support services • Family planning assistance (e.g., fertility, adoption and surrogacy) • Health care navigation for our LGBTQ+ community • Cancer support services • Student loan repayment and tuition assistance • Employee assistance programs • Digital wellbeing platform • Global wellbeing reimbursement We are a pay-for-performance company and are committed to addressing pay equity.
Our innovative medicines represent advancements by offering first-in-class therapies, greater efficacy, enhanced modes of delivery, more convenient treatment and prevention regimens, improved resistance profiles and reduced side effects.
Our Business Products We have transformed care for people around the world by discovering, developing and delivering innovative medicines to address unmet medical needs in virology, oncology and other therapeutic areas. Our innovative medicines represent advancements by offering first-in-class therapies, greater efficacy, enhanced modes of delivery, more convenient treatment and prevention regimens, improved resistance profiles and reduced side effects.
Collaborations and Other Arrangements of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
In January 2024, we announced discontinuation of further enrollment in this study. ________________________________ (1) For additional information regarding our collaborations with Merck and Arcus, see Note 7. Collaborations and Other Arrangements of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Sacituzumab govitecan-hziy Sacituzumab govitecan-hziy is being evaluated as (i) a second- or third-line treatment for non-small cell lung cancer (“NSCLC”); (ii) a first-line treatment for PD-L1 negative metastatic triple-negative breast cancer (“TNBC”); and (iii) a second-line treatment for metastatic urothelial cancer.
Sacituzumab govitecan-hziy In breast cancer, sacituzumab govitecan-hziy is being evaluated as (i) a first-line treatment for PD-L1 negative metastatic TNBC and (ii) HR+/HER2- chemo-naive metastatic breast cancer.
Executive sponsors and leaders of our ERGs contribute to the advancement of our inclusion and diversity commitments through service on our Global Inclusion and Diversity Council. We believe Gilead’s inclusive and diverse workforce is the foundation for innovation and productivity. Gilead’s commitment to equal employment opportunity furthers its efforts to cultivate and celebrate an equitable culture of belonging.
Executive sponsors and leaders of our ERGs contribute to the advancement of our inclusion and diversity commitments through annual planning and collaborative efforts to support our communities inside and outside of Gilead. We believe Gilead’s inclusive and diverse workforce is the foundation for innovation and productivity.
The Global Inclusion and Diversity Council is chaired by our Chairman and Chief Executive Officer and includes members of our leadership team. In 2020, we introduced our Advancing Black Leadership Strategy, a multi-year initiative that outlines our commitments to create internal and external pipelines for diverse talent and to build awareness, capabilities and accountability among our people managers.
The Global Inclusion and Diversity Council is chaired by our Chairman and Chief Executive Officer (“CEO”) and includes members of our leadership team. Gilead is an equal opportunity employer and is committed to inclusive practices, creating internal and external pipelines for diverse talent, as well as building awareness, capabilities and accountability among our people managers.
(5) Regulatory exclusivity in the U.S. expires in 2032. Patent Protection and Certain Challenges Patents and other proprietary rights are very important to our business.
(5) In January 2024, FDA granted pediatric exclusivity for Veklury, which extends all non-expired exclusivities by six months, and which is reflected in the presently reported date. (6) Regulatory exclusivity in the U.S. expires in 2032. Patent Protection and Certain Challenges Patents and other proprietary rights are very important to our business.
This indication received FDA approval in February 2023. Phase 3 Axicabtagene ciloleucel Axicabtagene ciloleucel, a CAR T-cell therapy, is being evaluated as a second-line and later treatment for high-risk follicular lymphoma.
Phase 3 Lenacapavir Lenacapavir is being evaluated for an HIV PrEP indication. 5 Product Candidates in Oncology Product Candidates Description Phase 3 Axicabtagene ciloleucel Axicabtagene ciloleucel, a CAR T-cell therapy, is being evaluated as (i) a second-line and later treatment for high-risk FL and (ii) a first-line treatment for high risk LBCL.
Health and Safety Gilead is committed to providing a workplace for its employees that promotes health, safety, wellness and productivity. We have a workplace safety, training and security program together with various compliance protocols to support this commitment. We routinely train and educate our employees on workplace safety and security.
We provide a competitive benefits package to support the health and wellbeing of our employees — see “Total Rewards” below. We have a workplace safety, training and security program together with various compliance protocols designed to support the safety of our employees, and we routinely train and educate our employees on workplace safety and security.
Below is a summary of our product candidates that are in Phase 3 or registrational Phase 2 clinical trials or pending marketing authorization review by FDA or European Medicines Agency (“EMA”). 5 Product Candidates in Viral Diseases Product Candidates Description Regulatory Filings Bulevirtide A Biologics License Application (“BLA”) has been filed with FDA for bulevirtide for the treatment of chronic hepatitis delta virus (“HDV”) infection.
Product Candidates in Viral Diseases Product Candidates Description Regulatory Filings Bulevirtide A Biologics License Application has been filed with FDA for bulevirtide for the treatment of chronic hepatitis delta virus (“HDV”) infection. It has been granted both Orphan Drug and Breakthrough Therapy designations by FDA for this indication.
Each year, we reassess our Total Rewards package to confirm whether it offers benefits and incentives that align with our total reward philosophy. 12 We are a pay-for-performance company and are committed to addressing pay equity. Our employee salaries are informed by market-based ranges and are assessed annually through performance and career development reviews.
Each year, we reassess our Total Rewards package to confirm whether it offers benefits and incentives that align with our total rewards philosophy.
As of December 31, 2022, Gilead had approximately 17,000 employees, and Gilead’s global workforce was approximately 53% female. Additionally, women represented 36% of Gilead’s leadership (defined as vice president level and above). In the U.S., based on our employees’ voluntary self-identification, our workforce was 38% White, 37% Asian, 13% Hispanic, 8% Black and 4% Other.
Gilead’s commitment to equal employment opportunity furthers its efforts to cultivate and celebrate an equitable culture of belonging. As of December 31, 2023, Gilead had approximately 18,000 employees, and Gilead’s global workforce was approximately 53% female. Additionally, women represented 36% of Gilead’s leadership (defined as vice president level and above).
Magrolimab is also being evaluated in combination with venetoclax and azacitidine as a first-line treatment for unfit AML. 6 Domvanalimab and Zimberelimab In collaboration with Arcus Biosciences, Inc. (“Arcus”), (1) the combination of zimberelimab, an anti-PD-1 monoclonal antibody, and domvanalimab, an Fc-silent anti-TIGIT antibody, is being evaluated as a first-line treatment for NSCLC.
It is also being evaluated in combination with Merck’s pembrolizumab as a first-line treatment for PD-L1 positive NSCLC. In genitourinary cancer, sacituzumab govitecan-hziy is being evaluated as a second-line treatment for metastatic UC. FDA granted accelerated approval for Trodelvy in second-line metastatic UC in April 2021. Domvanalimab and zimberelimab In collaboration with Arcus Biosciences, Inc.
This indication received FDA approval in February 2023. 7 In addition, we seek to enhance our commercial portfolio and clinical pipeline across multiple therapeutic areas through acquisitions, in-licensing and strategic collaborations.
EC approved Trodelvy as monotherapy for the treatment of adult patients with unresectable or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the advanced setting. In addition, we seek to enhance our commercial portfolio and clinical pipeline across multiple therapeutic areas through strategic collaborations, in-licensing and acquisitions.
In 2022, we continued to invest in and advance our R&D pipeline across our therapeutic areas.
In 2023, we continued to invest in and advance our R&D pipeline across our therapeutic areas. Below is a summary of our product candidates that are in Phase 3 clinical trials or pending marketing authorization review by FDA or European Medicines Agency (“EMA”).
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We operate in more than 35 countries worldwide, with headquarters in Foster City, California. Our Business Products We have transformed care for people around the world by discovering, developing and delivering innovative medicines to address unmet medical needs in virology, oncology and other therapeutic areas.
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We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, coronavirus disease 2019 (“COVID-19”) and cancer. We operate in more than 35 countries worldwide, with headquarters in Foster City, California.
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Viral Hepatitis • Epclusa ® is an oral formulation of a once-daily single-tablet regimen of sofosbuvir and velpatasvir for the treatment of chronic hepatitis C virus (“HCV”) infection in adults and pediatric patients 3 years of age and older with genotype 1, 2, 3, 4, 5 or 6: (i) without cirrhosis or with compensated cirrhosis or (ii) with decompensated cirrhosis for use in combination with ribavirin.
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Sunlenca, in combination with other antiretroviral(s), is indicated as a twice-yearly treatment of HIV-1 infection in heavily treatment-experienced adults with multidrug resistant HIV-1 infection failing their current antiretroviral regimen due to resistance, intolerance or safety considerations.
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(2) This indication received FDA approval in February 2023.
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For more information about these risks and uncertainties, see Item 1A. Risk Factors “We face risks in our clinical trials, including the potential for unfavorable results, delays in anticipated timelines and disruption.” Drug development is inherently risky, and many product candidates and investigational therapies fail during the development process.
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In December 2022, we received FDA approval for Sunlenca ® (lenacapavir), a HIV-1 capsid inhibitor in tablet form for oral use and as an injection for subcutaneous use. Sunlenca, in combination with other antiretrovirals, is approved as a twice-yearly treatment option for HIV-1 infection in heavily treatment-experienced adults with multidrug resistant HIV-1 infection.
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In 2023, we also received regulatory approvals or authorizations from FDA and European Commission (“EC”) for new products and expanded indications of our products, including: Product Regulatory Approval or Authorization Veklury FDA and EC approved an expanded use of Veklury to treat COVID-19 in appropriate patients with mild to severe hepatic impairment as well as people with severe renal impairment, including those on dialysis.
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These risks and uncertainties include challenges in clinical trial protocol design, our ability to enroll patients in clinical trials, the possibility of unfavorable or inadequate trial results to support further development of our product candidates, including failure to meet a trial’s primary endpoint, safety issues arising from our clinical trials, and the need to modify or delay our clinical trials or to perform additional trials.
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Hepcludex EC granted full marketing authorization for Hepcludex for the treatment of adults with HDV and compensated liver disease. Hepcludex was initially granted conditional marketing authorization in July 2020. Bulevirtide remains the only approved treatment for HDV in the European Union (“EU”) and is not approved in the U.S.
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As a result, we may be unable to successfully complete our clinical trials on our anticipated timelines, or at all. Based on trial results, it is possible that FDA and other regulatory authorities do not approve our product candidates, or that any market approvals include significant limitations on the products’ use.
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Yescarta FDA approved a label update to Yescarta to include overall survival data from the Phase 3 ZUMA-7 study, which showed a statistically significant overall survival improvement for Yescarta in second-line relapsed or refractory LBCL versus standard of care.
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Further, we may make a strategic decision to discontinue development of our product candidates if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. Therefore, our product candidates may never be successfully commercialized, and we may be unable to recoup the significant R&D and clinical trial expenses incurred.
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In 2023, we entered into multiple strategic transactions spanning our work in virology, oncology and inflammation, including: • We entered into new strategic collaborations, including with (i) Assembly Biosciences, Inc. to advance the research and development of novel antiviral therapies, including for herpesviruses, HBV and HDV; (ii) Tentarix Biotherapeutics, Inc.
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We expect to expend significant time and resources on our R&D activities without any assurance that we will recoup our investments or that our efforts will be commercially successful. Drug development is inherently risky, and many product candidates and investigational therapies fail during the development process.
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(“Tentarix”) to discover and develop novel therapies across oncology and inflammation using Tentarix’s proprietary Tentacles platform; and (iii) Arcellx, Inc.
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In Europe, Hepcludex ® (bulevirtide) has been granted Conditional Marketing Authorization by the European Commission (“EC”) and PRIority MEdicines (“PRIME”) scheme eligibility by the EMA as the first approved treatment in adults with chronic HDV infection with compensated liver disease. Phase 3 Lenacapavir Lenacapavir is being evaluated for an HIV PrEP indication.
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(“Arcellx”) to co-develop and co-commercialize Arcellx’s CART-ddBCMA for the treatment of relapsed or refractory multiple myeloma. 6 • We expanded our existing collaborations with (i) Arcellx to exercise an option for the ARC-SparX ACLX-001 program in multiple myeloma, expand the scope of the existing anito-cel collaboration to include lymphomas, and make an additional equity investment of $200 million; (ii) Arcus to include research programs in inflammatory diseases; and (iii) Nurix Therapeutics, Inc. to exercise an option to license investigational targeted protein degrader molecule NX-0479, which has potential applications in the treatment of rheumatoid arthritis and other inflammatory diseases. • We entered into an exclusive license agreement with Compugen Ltd. for later-stage development and commercialization of novel pre-clinical anti-IL18 binding protein antibodies, including COM503, that have the potential to treat various tumor types. • We completed the acquisitions of (i) XinThera, Inc. to add additional early pipeline assets in oncology and inflammation, including rights to a portfolio of small molecule inhibitors targeting PARP1 for oncology as well as mK2 for inflammatory diseases; and (ii) Tmunity Therapeutics, Inc. to add next-generation CAR T-cell therapies and technologies, including an “armored” CAR T technology platform that has the potential to enhance anti-tumor activity and rapid manufacturing processes.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeEnforcement activities under anti-bribery laws could subject us to administrative and legal proceedings and actions, which could result in civil and criminal sanctions, including monetary penalties and exclusion from healthcare programs. 26 Other risks inherent in conducting a global business include: • Restrictive government actions against our intellectual property and other foreign assets such as nationalization, expropriation, the imposition of compulsory licenses or similar actions, including waiver of intellectual property protections. • Protective economic policies taken by foreign governments, such as trade protection measures and import and export licensing requirements, which may result in the imposition of trade sanctions or similar restrictions by the U.S. or other governments. • Business interruptions stemming from natural or man-made disasters, such as climate change, earthquakes, hurricanes, flooding, fires, extreme heat, drought or actual or threatened public health emergencies, or efforts taken by third parties to prevent or mitigate such disasters, such as public safety power shutoffs and facility shutdowns, for which we may not have sufficient insurance.
Biggest changeOther risks inherent in conducting a global business include: • Restrictive government actions against our intellectual property and other assets such as nationalization, expropriation, the imposition of compulsory licenses or similar actions, including waiver of intellectual property protections. • Protective economic policies taken by governments, such as trade protection measures and import and export licensing requirements, which may result in the imposition of trade sanctions or similar restrictions by the U.S. or other governments. • Political instability or disruption in a geographic region where we operate, regardless of cause, including war, terrorism, social unrest and political changes, including in China, Russia, Ukraine, Israel and surrounding areas. • Increasing use of social media platforms and modern technologies present new risks and challenges, and inappropriate or unauthorized use of these platforms can result in exposure of sensitive data or information and damage our brand and reputation.
Congress has enacted the Inflation Reduction Act of 2022 (the “Act”), which, among other changes, (1) requires the Department of Health and Human Services to “negotiate” Medicare prices for certain drugs (starting with 10 drugs in 2026, adding 15 drugs in 2027 and 2028, and adding 20 drugs in 2029 and subsequent years), (2) imposes an inflation-based rebate on Medicare Part B utilization starting in 2023 and Part D utilization beginning October 1, 2022, and (3) restructures the Medicare Part D benefit to cap out-of-pocket expenses for Part D beneficiaries beginning in 2024 and, effective January 1, 2025, increases Part D plans’ contributions in the catastrophic coverage phase and increase manufacturers’ discount contributions across coverage phases such that manufacturers must pay a 10% discount in the initial coverage phase and a 20% discount in the catastrophic phase on drugs utilized by all Part D beneficiaries, including low income subsidy patients.
Congress has enacted the Inflation Reduction Act of 2022 (the “Act”), which, among other changes, (1) requires the Department of Health and Human Services to “negotiate” Medicare prices for certain drugs (starting with 10 drugs in 2026, adding 15 drugs in 2027 and 2028, and adding 20 drugs in 2029 and subsequent years), (2) imposes an inflation-based rebate on Medicare Part B utilization starting in 2023 and Part D utilization beginning October 1, 2022, and (3) restructures the Medicare Part D benefit to cap out-of-pocket expenses for Part D beneficiaries beginning in 2024 and, effective January 1, 2025, increases Part D plans’ contributions in the catastrophic coverage phase and increases manufacturers’ discount contributions across coverage phases such that manufacturers must pay a 10% discount in the initial coverage phase and a 20% discount in the catastrophic phase on drugs utilized by all Part D beneficiaries, including low income subsidy patients.
For challenges related to the reimbursement of Yescarta and Tecartus, see also “Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and other discounts on our products and other pricing pressures.” We rely on third-party sites to collect patients’ white blood cells, known as apheresis centers, as well as shippers, couriers, and hospitals for the logistical collection of patients’ white blood cells and ultimate delivery of Yescarta and Tecartus to patients.
For challenges related to the reimbursement of Yescarta and Tecartus, see also “Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and discounts, and other pricing pressures.” We rely on third-party sites to collect patients’ white blood cells, known as apheresis centers, as well as shippers, couriers, and hospitals for the logistical collection of patients’ white blood cells and ultimate delivery of Yescarta and Tecartus to patients.
For example, as a result of an impairment analysis we conducted following our receipt of data in March 2022 from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with hormone receptor-positive, human epidermal growth receptor 2-negative metastatic breast cancer, we recognized a partial in-process research and development impairment charge on our Consolidated Statements of Income during 2022.
For example, as a result of an impairment analysis we conducted following our receipt of data in March 2022 from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with hormone receptor-positive, human epidermal growth receptor 2-negative metastatic breast cancer, we recognized a partial in-process research and development impairment charge on our Condensed Consolidated Statements of Income during 2022.
In addition, new domestic data privacy and security laws, such as the California Consumer Privacy Act and the California Privacy Rights Act and other laws that have been or may be passed, similarly introduce requirements with respect to personal information, and non-compliance with such laws may result in liability through private actions (subject to statutorily defined damages in the event of certain data breaches) and enforcement.
In addition, domestic data privacy and security laws, such as the California Consumer Privacy Act and the California Privacy Rights Act and other laws that have been or may be passed, similarly introduce requirements with respect to personal information, and non-compliance with such laws may result in liability through private actions (subject to statutorily defined damages in the event of certain data breaches) and enforcement.
For a description of our pending patent litigation, see Note 13. Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. Furthermore, we also rely on unpatented trade secrets and improvements, unpatented internal know-how and technological innovation.
For a description of our pending patent litigation, see Note 13. Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 25 Furthermore, we also rely on unpatented trade secrets and improvements, unpatented internal know-how and technological innovation.
Failure to comply with these or other requirements imposed by FDA could result in significant civil monetary penalties, fines, suspensions of regulatory approvals, product recalls, seizure of products and criminal prosecutions. 23 We are impacted by evolving laws, regulations and legislative or regulatory actions applicable to the healthcare industry.
Failure to comply with these or other requirements imposed by FDA could result in significant civil monetary penalties, fines, suspensions of regulatory approvals, product recalls, seizure of products and criminal prosecutions. We are impacted by evolving laws, regulations and legislative or regulatory actions applicable to the healthcare industry.
If we were to encounter any of these difficulties, our ability to conduct clinical trials on product candidates and to manufacture and sell our products could be impaired. Regulatory and Other Legal Risks Our operations depend on compliance with complex FDA and comparable international regulations.
If we were to encounter any of these difficulties, our ability to conduct clinical trials on product candidates and to manufacture and sell our products could be impaired. 23 Regulatory and Other Legal Risks Our operations depend on compliance with complex FDA and comparable international regulations.
Congress has enacted laws requiring manufacturer refunds on certain amounts of discarded drug from single-use vials beginning in 2023 and eliminating the existing cap on Medicaid rebate amounts beginning in 2024. 19 • U.S.
Congress has enacted laws requiring manufacturer refunds on certain amounts of discarded drug from single-use vials and eliminating the existing cap on Medicaid rebate amounts beginning in 2024. 19 • U.S.
The healthcare industry is subject to various federal, state and international laws and regulations pertaining to drug reimbursement, rebates, price reporting, healthcare fraud and abuse, and data privacy and security.
The healthcare industry is subject to various federal, state and international laws and regulations pertaining to drug approval, reimbursement, rebates, price reporting, healthcare fraud and abuse, and data privacy and security.
For example, as a result of the cash used and the debt issued in connection with our acquisition of Immunomedics in 2020, S&P Global Ratings downgraded our credit rating. We may be adversely impacted by any failure to overcome these additional risks. Changes in our effective income tax rate could reduce our earnings.
For example, as a result of the cash used and the debt issued in connection with our acquisition of Immunomedics, Inc. in 2020, S&P Global Ratings downgraded our credit rating. We may be adversely impacted by any failure to overcome these additional risks. 30 Changes in our effective income tax rate could reduce our earnings.
Therefore, our product candidates may never be successfully commercialized, and we may be unable to recoup the significant R&D and clinical trial expenses incurred. We expect to expend significant time and resources on our clinical trial activities without any assurance that we will recoup our investments or that our efforts will be commercially successful.
Therefore, our product candidates may never be successfully commercialized, and we may be unable to recoup the significant R&D and clinical trial expenses incurred. We expect to spend significant time and resources on our clinical trial activities without any assurance that we will recoup our investments or that our efforts will be commercially successful.
Additionally, diverted products may be used in countries where they have not been approved and patients may source the diverted products outside the legitimate supply chain. These diverted products may be handled, shipped and stored inappropriately, which may affect the efficacy of the products and could harm patients and adversely impact us.
Additionally, diverted products may be used in countries where they have not been approved and patients may source the diverted products outside the legitimate supply chain. These diverted products may be handled, shipped and stored inappropriately, which may affect the quality and/or efficacy of the products and could harm patients and adversely impact us.
Problems with any of the single suppliers or facilities we depend on, including in the event of a disaster, such as an earthquake, equipment failure or other difficulty, may negatively impact our development and commercialization efforts.
Problems with any of the single suppliers or facilities we depend on, including in the event of a disaster, such as an earthquake, flood or fire, equipment failure or other difficulty, may negatively impact our development and commercialization efforts.
We rely on independent third-party contract research organizations (“CROs”) to perform most of our clinical studies, including document preparation, site identification, screening and preparation, pre-study visits, training, program management, patient enrollment, ongoing monitoring, site management and bioanalytical analysis. Many important aspects of the services performed for us by the CROs are out of our direct control.
We rely on independent third-party contract research organizations (“CROs”) to perform most of our clinical studies, including document preparation, site identification, screening and preparation, pre-study visits, training, program management, patient enrollment, ongoing monitoring, site management and bioanalysis. Many important aspects of the services performed for us by the CROs are out of our direct control.
In the U.S., these laws include anti-kickback and false claims laws, laws and regulations relating to the Medicare and Medicaid programs and other federal and state programs, such as the Medicaid Rebate Statute and the 340B statute, laws that regulate written and verbal communications about our products, individual state laws relating to pricing and sales and marketing practices, the Health Insurance Portability and Accountability Act and other federal and state laws relating to the privacy and security of health information.
In the U.S., these laws include anti-kickback and false claims laws, Federal Food, Drug, and Cosmetic Act, laws and regulations relating to the Medicare and Medicaid programs and other federal and state programs, such as the Medicaid Rebate Statute and the 340B statute, laws that regulate written and verbal communications about our products, individual state laws relating to pricing and sales and marketing practices, the Health Insurance Portability and Accountability Act and other federal and state laws relating to the privacy and security of health information.
As part of our annual impairment testing of our goodwill and other indefinite-lived intangible assets in the fourth quarter, and earlier if impairment indicators exist, as required under U.S. generally accepted accounting principles, we may need to recognize impairment charges related to the products, intellectual property and technologies that are acquired or licensed.
As part of our annual impairment testing of our goodwill and other indefinite-lived intangible assets in the fourth quarter, and earlier if impairment indicators exist, as required under U.S. generally accepted accounting principles, we have in the past and may in the future need to recognize impairment charges related to the products, intellectual property and technologies that are acquired or licensed.
These initiatives and such other legislation may cause added pricing pressures on our products, and the resulting impact on our business is uncertain. • Many countries outside the U.S., including the EU member states, have established complex and lengthy procedures to obtain price approvals and coverage reimbursement and periodically review their pricing and reimbursement decisions.
These initiatives and such other legislation may cause added pricing pressures on our products, and the resulting impact on our business is uncertain at this time. • Many countries outside the U.S., including the EU member states, have established complex and lengthy procedures to obtain price approvals and coverage reimbursement and periodically review their pricing and reimbursement decisions.
We are involved in a number of litigation, investigation and other dispute-related matters that require us to expend substantial internal and financial resources. These matters could require us to pay significant monetary amounts, including royalty payments for past and future sales.
We are involved in a number of litigation, investigation and other dispute-related matters that require us to expend substantial internal and financial resources. From time to time, these matters require us to pay significant monetary amounts, including royalty payments for past and future sales.
For example, see Part II, Item 7 of this Annual Report on Form 10-K for a discussion of our exposure to movements in foreign currency exchange rates, primarily in the Euro, and the impacts from foreign currency exchange, net of hedges, for the year ended December 31, 2022. • Interest Rates and Inflation: We hold interest-generating assets and interest-bearing liabilities, including our available-for-sale debt securities and our senior unsecured notes and credit facilities.
For example, see “Foreign Currency Exchange Impact” in Part II, Item 7 of this Annual Report on Form 10-K for a discussion of our exposure to movements in foreign currency exchange rates, primarily in the Euro, and the impacts from foreign currency exchange, net of hedges, for the year ended December 31, 2023. 26 • Interest Rates and Inflation: We hold interest-generating assets and interest-bearing liabilities, including our available-for-sale debt securities and our senior unsecured notes and credit facilities.
Any such issues may require changes to our product labels, such as additional warnings, contraindications or even narrowed indications, or to halt sales of a product.
Any such issues may require changes to our product labels, such as additional warnings, contraindications or even narrowed indications, or the halt of product sales.
During the year ended December 31, 2022, sales of our HIV products accounted for approximately 64% of our total product sales. We may be unable to sustain or increase sales of our HIV products for any number of reasons, including market share gains by competitive products, including generics, or the inability to introduce new HIV medications necessary to remain competitive.
During the year ended December 31, 2023, sales of our HIV products accounted for approximately 67% of our total product sales. We may be unable to sustain or increase sales of our HIV products for any number of reasons, including market share gains by competitive products, including generics, or the inability to introduce new HIV medications necessary to remain competitive.
Malicious actors seek to steal money, gain unauthorized access to, destroy or manipulate data, and disrupt operations, and some of their attacks may not be recognized or discovered until launched or after initial entry into the environment, such as novel or zero-day attacks that are launched before patches are available and defenses can be readied.
Malicious actors seek to steal money, gain unauthorized access to, destroy or manipulate data, and disrupt operations, and some of their attacks may not be recognized or discovered until after a significant period of time well after initial entry into the environment, such as novel or zero-day attacks that are launched before patches are available and defenses can be readied.
Operational Risks Our business has been, and may in the future be, adversely affected by outbreaks of epidemic, pandemic or contagious diseases, including the ongoing COVID-19 pandemic. Actual or threatened outbreaks of epidemic, pandemic or contagious diseases, or other public health emergencies, may significantly disrupt our global operations and adversely affect our business, financial condition and results of operations.
Operational Risks Our business has been, and may in the future be, adversely affected by outbreaks of epidemic, pandemic or contagious diseases. Actual or threatened outbreaks of epidemic, pandemic or contagious diseases, or other public health emergencies, may significantly disrupt our global operations and adversely affect our business, financial condition and results of operations.
Changes to the calculation of rebates under the Medicaid program could substantially increase our Medicaid rebate obligations and decrease the prices we charge 340B-covered entities. We recently implemented a contract pharmacy integrity initiative for our branded hepatitis C virus (“HCV”) products. This integrity initiative will not involve any products from Asegua Therapeutics LLC.
Changes to the calculation of rebates under the Medicaid program could substantially increase our Medicaid rebate obligations and decrease the prices we charge 340B-covered entities. In March 2022, we implemented a contract pharmacy integrity initiative for our branded hepatitis C virus (“HCV”) products. This integrity initiative does not involve any products from Asegua Therapeutics LLC.
For example, in October 2022, we announced that FDA issued a complete response letter for our Biologics License Application for bulevirtide for the treatment of adults with hepatitis delta virus infection. In addition, see Note 8.
For example, in October 2022, we announced that FDA issued a complete response letter for our Biologics License Application for bulevirtide for the treatment of adults with hepatitis delta virus infection.
Reliance on collaborative relationships poses a number of risks, including the risk that: 27 • we are unable to control the resources our corporate partners devote to our programs or products; • disputes may arise with respect to the ownership of rights to technology developed with our corporate partners; • disagreements with our corporate partners could cause delays in, or termination of, the research, development or commercialization of product candidates or result in litigation or arbitration; • contracts with our corporate partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform; • our corporate partners have considerable discretion in electing whether to pursue the development of any additional products and may pursue alternative technologies or products either on their own or in collaboration with our competitors; • our corporate partners with marketing rights may choose to pursue competing technologies or to devote fewer resources to the marketing of our products than they do to products of their own development; and • our distributors and our corporate partners may be unable to pay us.
Reliance on collaborative relationships poses a number of risks, including the risk that: • we are unable to control the resources our corporate partners devote to our programs or products; • disputes may arise with respect to the ownership of rights to technology developed with our corporate partners; • disagreements with our corporate partners could cause delays in, or termination of, the research, development or commercialization of product candidates or result in litigation or arbitration; • contracts with our corporate partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform; • our corporate partners have considerable discretion in electing whether to pursue the development of any additional products and may pursue alternative technologies or products either on their own or in collaboration with our competitors; • our corporate partners with marketing rights may choose to pursue competing technologies or to devote fewer resources to the marketing of our products than they do to products of their own development; and • our distributors and our corporate partners may be unable to pay us. 28 Given these risks, there is a great deal of uncertainty regarding the success of our current and future collaborative efforts.
We and our third-party manufacturers and corporate partners are subject to Good Manufacturing Practices (“GMP”), which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards as defined by FDA and European Medicines Agency (“EMA”), as well as comparable regulations in other jurisdictions. Manufacturing operations are also subject to routine inspections by regulatory agencies.
We and our third-party manufacturers and corporate partners are subject to Good Manufacturing Practices (“GMP”), which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards as defined by FDA and European Medicines Agency (“EMA”), as well as comparable regulations in other jurisdictions.
For example, our corporate headquarters in Foster City and certain R&D and manufacturing facilities are located in California, a seismically active region.
Additionally, our corporate headquarters in Foster City and certain R&D and manufacturing facilities are located in California, a seismically active region.
In addition, we have observed that strong wholesaler and sub-wholesaler purchases of our products in the fourth quarter typically results in inventory draw-down by wholesalers and sub-wholesalers in the subsequent first quarter.
In addition, we have observed that strong wholesaler and sub-wholesaler purchases of our products in the second half of the year typically results in inventory draw-down by wholesalers and sub-wholesalers in the subsequent first quarter.
We face numerous risks and uncertainties with our clinical trials that could result in delays or prevent completion of the development and approval of our product candidates, including challenges in clinical trial protocol design, our ability to enroll patients in clinical trials, the possibility of unfavorable or inadequate trial results to support further development of our product candidates, including failure to meet a trial’s primary endpoint, safety issues arising from our clinical trials, and the need to modify or delay our clinical trials or to perform additional trials.
Even successfully completed large-scale clinical trials may not result in marketable products. 21 We face numerous risks and uncertainties with our clinical trials that could result in delays or prevent completion of the development and approval of our product candidates, including challenges in clinical trial protocol design, our ability to enroll patients in clinical trials, the possibility of unfavorable or inadequate trial results to support further development of our product candidates, including failure to meet a trial’s primary endpoint, safety issues arising from our clinical trials, and the need to modify or delay our clinical trials or to perform additional trials.
Likewise, data privacy or cybersecurity incidents or breaches by employees or others can result in the exposure of sensitive data, including our intellectual property or trade secrets or the personal information of our employees, patients, customers or other business partners to unauthorized persons or to the public. Cybersecurity attacks and incidents are increasing in their frequency, sophistication and intensity.
Likewise, data privacy or cybersecurity incidents or breaches by employees or others can result in the exposure of sensitive data, including our intellectual property or trade secrets or the personal information of our employees, patients, customers or other business partners to unauthorized persons or to the public.
For a description of our government investigations and related litigation, see Note 13. Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. We are subject to risks if significant safety issues arise for our marketed products or our product candidates.
Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 24 We are subject to risks if significant safety issues arise for our marketed products or our product candidates.
Our business and technology partners face similar risks and any security breach of their systems could adversely affect our security posture. Like many companies, we have experienced cybersecurity incidents, including data breaches and service interruptions.
Our business and technology partners face similar risks and any security breach of their systems could adversely affect our security posture. 29 Like many companies, we have experienced and expect to continue to be the target of cybersecurity incidents, including data breaches and temporary service interruptions.
Any adverse developments affecting or resulting from our manufacturing operations or the operations of our third-party manufacturers and corporate partners may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products.
Manufacturing operations are also subject to routine inspections by regulatory agencies. 22 Any adverse developments affecting or resulting from our manufacturing operations or the operations of our third-party manufacturers and corporate partners may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products.
In addition, if deliveries of materials from our suppliers are interrupted for any reason, we may be unable to ship certain of our products for commercial supply or to supply our product candidates in development for clinical trials.
In addition, if deliveries of materials from our suppliers are interrupted for any reason, including as a result of natural disasters or extreme weather conditions, we may be unable to ship certain of our products for commercial supply or to supply our product candidates in development for clinical trials.
Although we believe that our integrity initiative complies with the requirements of the 340B statute, additional legal or legislative developments with respect to the 340B program, including potential litigation with HHS, may negatively impact our ability to implement or continue our integrity initiative. In addition, standard reimbursement structures may not adequately reimburse for innovative therapies.
However, additional legal or legislative developments with respect to the 340B program, including potential litigation with HHS or other stakeholders, may negatively impact our ability to implement or continue our integrity initiative. In addition, standard reimbursement structures may not adequately reimburse for innovative therapies.
If there are any changes to the treatment or prevention paradigm for HIV that cause nucleoside-based therapeutics to fall out of favor, our HIV product sales would be adversely impacted. Veklury We face risks related to our supply and distribution of Veklury, which was approved by U.S.
If there are any changes to the treatment or prevention paradigm for HIV, and nucleoside-based therapeutics do not remain the preferred regimen, our HIV product sales would be adversely impacted. Veklury We face risks related to our supply and sale of Veklury, which was approved by U.S.
We have limited insurance for product liabilities that may arise and claims may exceed our coverage. For a description of our litigation, investigation and other dispute-related matters, see Note 13. Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
For a description of our litigation, investigation and other dispute-related matters, see Note 13. Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Our sales in countries with relatively higher prices may be reduced if products can be imported and resold into those countries from lower price markets. For example, U.S. sales could also be affected if FDA permits importation of drugs from Canada.
Prices for our products are based on local market economics and competition and sometimes differ from country to country. Our sales in countries with relatively higher prices may be reduced if products can be imported and resold into those countries from lower price markets. U.S. sales could also be affected if FDA permits importation of drugs from Canada.
Our global operations are accompanied by certain financial, political, economic and other risks, including those listed below: • Foreign C urrency Exchange: For the year ended December 31, 2022, approximately 31% of our product sales were outside the U.S.
Our global operations are accompanied by certain financial, political, economic and other risks, including those listed below: • Foreign Currency Exchange: For the year ended December 31, 2023, approximately 26% of our product sales were denominated in foreign currencies.
When reimbursement is not aligned well to account for treatment costs, Medicare beneficiaries may be denied access as this misalignment could impact the willingness of some hospitals to offer the therapy and of doctors to recommend the therapy. Additionally, in the EU, there are barriers to reimbursement in individual countries that could limit the uptake of Yescarta and Tecartus.
When reimbursement is not aligned well to account for treatment costs, Medicare beneficiaries may be denied access as this misalignment could impact the willingness of some hospitals to offer the therapy and of doctors to recommend the therapy.
Foreign Corrupt Practices Act and similar worldwide anti-bribery laws that govern our international operations with respect to payments to government officials. Our international operations are heavily regulated and require significant interaction with foreign officials. We operate in parts of the world that have experienced governmental corruption to some degree.
Our international operations are heavily regulated and require significant interaction with foreign officials. We operate in parts of the world that have experienced governmental corruption to some degree.
The results from these studies do not always accurately predict results in later, large-scale clinical trials. Even successfully completed large-scale clinical trials may not result in marketable products.
The results from these studies do not always accurately predict results in later, large-scale clinical trials.
For example, the General Data Protection Regulation (“GDPR”) established regulations regarding the handling of personal data, and non-compliance with the GDPR may result in monetary penalties of up to four percent of worldwide revenue.
Regulators globally are also imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations. For example, the EU’s General Data Protection Regulation (“GDPR”) established regulations regarding the handling of personal data, and non-compliance with the GDPR may result in monetary penalties of up to four percent of worldwide revenue.
Additionally, the non-retail sector in the U.S., which includes government institutions, including state AIDS Drug Assistance Programs, the U.S. Department of Veterans Affairs, correctional facilities and large health maintenance organizations, tends to be less consistent in terms of buying patterns and often causes quarter-over-quarter fluctuations that do not mirror actual patient demand for our products.
Department of Veterans Affairs, correctional facilities and large health maintenance organizations, tends to be less consistent in terms of buying patterns and often causes quarter-over-quarter fluctuations that do not mirror actual patient demand for our products.
We expect these matters will continue to require a high level of internal and financial resources for the foreseeable future.
We expect these matters will continue to require a high level of internal and financial resources for the foreseeable future. These matters have reduced, and are expected to continue to reduce, our earnings and require significant management attention.
The launch of commercially successful products is necessary to grow our business, cover our substantial R&D expenses, and offset revenue losses when existing products lose market share due to factors such as competition and loss of patent exclusivity. There are many difficulties and uncertainties inherent in drug development and the introduction of new products.
If we are unable to launch commercially successful new products or new indications for existing products, our business will be adversely impacted. The launch of commercially successful products is necessary to grow our business, cover our substantial R&D expenses, and offset revenue losses when existing products lose market share due to factors such as competition and loss of patent exclusivity.
If we are unable to purchase enough of these materials or find suitable alternative materials in a timely manner, our development efforts for our product candidates may be delayed or our ability to manufacture and sell our products could be limited. 22 Suppliers of key components and materials must be named in the new drug application or marketing authorization application filed with the regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required.
Suppliers of key components and materials must be named in the new drug application or marketing authorization application filed with the regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required.
Therefore, the full impact of the Act on the profitability of our business and the pharmaceutical industry as a whole remains uncertain at this time. • Many state legislatures are considering, or have already passed into law, legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing, such as requiring manufacturers to publicly report proprietary pricing information, creating review boards for prices, and encouraging the use of generic drugs.
While the full impact of the Act on our business and the pharmaceutical industry remains uncertain at this time, we anticipate that the Act will increase our payment obligations under the redesigned Part D discount program, limit the prices we can charge for our products, and increase the rebates we must provide government programs for our products, thereby reducing our profitability and negatively impacting our financial results. • Many state legislatures are considering, or have already passed into law, legislation that seeks to indirectly or directly regulate pharmaceutical drug pricing, such as requiring manufacturers to publicly report proprietary pricing information, creating review boards for prices, establishing drug payment limits, and encouraging the use of generic drugs.
These matters have reduced, and are expected to continue to reduce, our earnings and require significant management attention. 25 In addition, the testing, manufacturing, marketing and use of our commercial products, as well as product candidates in development, involve substantial risk of product liability claims. These claims may be made directly by consumers, healthcare providers, pharmaceutical companies or others.
In addition, the testing, manufacturing, marketing and use of our commercial products, as well as product candidates in development, involve substantial risk of product liability claims. These claims may be made directly by consumers, healthcare providers, pharmaceutical companies or others. We have limited insurance for product liabilities that may arise and claims may exceed our coverage.
We are dependent upon information technology systems, infrastructure and data, including our Kite Konnect platform, which is critical to maintain chain of identity and chain of custody of Yescarta and Tecartus. The multitude and complexity of our computer systems make them inherently vulnerable to service interruption or destruction, malicious intrusion and ransomware attack.
We are dependent upon information technology systems, infrastructure and data, including our Kite Konnect platform, which is critical to maintain chain of identity and chain of custody of Yescarta and Tecartus.
Legislative and regulatory actions affecting government prescription drug procurement and reimbursement programs occur relatively frequently. For example, in September 2020, FDA issued a final rule implementing a pathway for the importation of certain prescription drugs from Canada. This rule is subject to ongoing litigation.
As our products mature, pricing pressures from private insurers and government payers often result in a reduction of the net product prices. Legislative and regulatory actions affecting government prescription drug procurement and reimbursement programs occur relatively frequently. For example, in September 2020, FDA issued a final rule implementing a pathway for the importation of certain prescription drugs from Canada.
We are frequently asked by investors and other stakeholders to set ambitious ESG goals and provide new and more robust disclosure on goals, progress toward goals and other matters of interest to ESG stakeholders.
Institutional and individual investors are increasingly using ESG screening criteria to determine whether Gilead qualifies for inclusion in their investment portfolios. We are frequently asked by investors and other stakeholders to set ambitious ESG goals and provide new and more robust disclosure on goals, progress toward goals and other matters of interest to ESG stakeholders.
Product Reimbursements Successful commercialization of our products depends, in part, on the availability and amount of third-party payer reimbursement for our products and related treatments and medical services in the markets where we sell our products. As our products mature, pricing pressures from private insurers and government payers often result in a reduction of the net product prices.
Our existing products are subject to reimbursement pressures from government agencies and other third parties, required rebates and discounts, and other pricing pressures. Product Reimbursements Successful commercialization of our products depends, in part, on the availability and amount of third-party payer reimbursement for our products and related treatments and medical services in the markets where we sell our products.
For the year ended December 31, 2022, approximately 89% of our product sales in the U.S. were to three wholesalers, AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation. The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine end-user demand and may not be accurate in matching their inventory levels to actual end-user demand.
The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine end-user demand and may not be accurate in matching their inventory levels to actual end-user demand.
We have incurred, and will continue to incur, inventory write-off charges and other expenses for products that fail to meet specifications and quality standards, and we may need to undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase our manufacturing costs, cause us to lose revenues or market share and damage our reputation.
We have incurred, and will continue to incur, inventory write-off charges and other expenses for products that fail to meet specifications and quality standards as well as changes we may adopt in our manufacturing strategy, and we may need to undertake costly remediation efforts or seek more costly manufacturing alternatives. For example, see Note 10.
Due to the specialized and technical nature of our business, the failure to attract, develop and retain highly qualified personnel could adversely impact us.
If these efforts fail, our product development or commercialization of new products could be delayed or revenues from products could decline. Due to the specialized and technical nature of our business, the failure to attract, develop and retain highly qualified personnel could adversely impact us.
Our success depends to a significant degree on our ability to: • obtain patents and licenses to patent rights; • preserve trade secrets and internal know-how; • defend against infringement of our patents and efforts to invalidate them; and • operate without infringing on the intellectual property of others. 24 Because patent applications are confidential for a period of time after filing, we may not know if our competitors have filed applications for technology covered by our pending applications or if we were the first to invent or first to file an application directed toward the technology that is the subject of our patent applications.
Because patent applications are confidential for a period of time after filing, we may not know if our competitors have filed applications for technology covered by our pending applications or if we were the first to invent or first to file an application directed toward the technology that is the subject of our patent applications.
Actual claims and payments may vary significantly from our estimates. 20 We may experience adverse impacts resulting from the importation of our products from lower price markets or the distribution of illegally diverted or counterfeit versions of our products. Prices for our products are based on local market economics and competition and sometimes differ from country to country.
In the U.S., actual rebate claims are typically made by payers one to three quarters in arrears. Actual claims and payments may vary significantly from our estimates. We may experience adverse impacts resulting from the importation of our products from lower price markets or the distribution of illegally diverted or counterfeit versions of our products.
If we, or our agents and vendors, are deemed to have failed to comply with laws, regulations or government guidance in any of these areas, we could be subject to criminal or civil sanctions. Any similar violations by our competitors could also negatively impact our industry reputation and increase scrutiny over our business and our products.
There has also been enhanced scrutiny by governments on reimbursement and other patient support offerings, clinical education programs and promotional speaker programs. If we, or our agents and vendors, are deemed to have failed to comply with laws, regulations or government guidance in any of these areas, we could be subject to criminal or civil sanctions.
The resulting impact on our business is uncertain and could be material. In addition, government price reporting and payment regulations are complex, and we are continually assessing the methods by which we calculate and report pricing in accordance with these obligations.
In addition, government price reporting and payment regulations are complex, and we are continually assessing the methods by which we calculate and report pricing in accordance with these obligations. Our methodologies for calculations are inherently subjective and may be subject to review and challenge by various government agencies, which may disagree with our interpretation.
Department of Defense health programs, actions against executives overseeing our business and significant remediation measures, negative publicity or other consequences. These laws and regulations are broad in scope and subject to changing and evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our sales or marketing practices.
These laws and regulations are broad in scope and subject to changing and evolving interpretations, which could require us to incur substantial costs associated with compliance, alter one or more of our sales or marketing practices, or impact our ability to obtain or maintain regulatory approvals. The resulting impact on our business is uncertain and could be material.
Additionally, changes to U.S. immigration and work authorization laws and regulations could make it more difficult for employees to work in or transfer to one of the jurisdictions in which we operate. Significant cybersecurity incidents could give rise to legal liability and regulatory action under data protection and privacy laws and adversely affect our business and operations.
Furthermore, changes to immigration and work authorization laws and regulations could make it more difficult for employees to work in or transfer to one of the jurisdictions in which we operate.
Fluctuations in interest rates, including the U.S. Federal Reserve’s recent increases in interest rates, could expose us to increased financial risk. In addition, high inflation, such as what we are seeing in the current economic environment, has adversely impacted and may continue to adversely impact our business and financial results. • Anti-Bribery: We are subject to the U.S.
In addition, high inflation, such as what we are seeing in the current economic environment, has adversely impacted and may continue to adversely impact our business and financial results. • Anti-Bribery: We are subject to the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws that govern our international operations with respect to payments to government officials.
Such cybersecurity incidents can cause the loss of critical or sensitive information, including personal information, and could give rise to legal liability and regulatory action under data protection and privacy laws. 28 Regulators globally are also imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations.
Such cybersecurity incidents can cause the loss of critical or sensitive information, including personal information, and could give rise to legal liability and regulatory action under data protection and privacy laws. Financial, legal, business, or reputational losses may result from a cybersecurity incident or breach of our information technology systems.
(“Immunomedics”) in 2020. 21 As a result, we may be unable to successfully complete our clinical trials on our anticipated timelines, or at all. Based on trial results, it is possible that FDA and other regulatory authorities do not approve our product candidates, or that any market approvals include significant limitations on the products’ use.
Based on trial results, it is possible that FDA and other regulatory authorities do not approve our product candidates, or that any market approvals include significant limitations on the products’ use. In addition, clinical trials involving our commercial products can raise new safety issues for our existing products, which could adversely impact our business.
Moreover, we estimate the rebates we will be required to pay in connection with sales during a particular quarter based on claims data from prior quarters. In the U.S., actual rebate claims are typically made by payers one to three quarters in arrears.
Additionally, in the EU, there are barriers to reimbursement in individual countries that could limit the uptake of Yescarta and Tecartus. 20 Moreover, we estimate the rebates we will be required to pay in connection with sales during a particular quarter based on claims data from prior quarters.
A high rate of failure is inherent in the discovery and development of new products, and failure can occur at any point in the process, including late in the process after substantial investment. We face challenges in accurately forecasting sales because of the difficulties in predicting demand for our products and fluctuations in purchasing patterns or wholesaler inventories.
We face challenges in accurately forecasting sales because of the difficulties in predicting demand for our products and fluctuations in purchasing patterns or wholesaler inventories. We may be unable to accurately predict demand for our products, including the uptake of new products, as demand depends on a number of factors.
In addition, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees and agents.
In addition, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees and agents. Enforcement activities under anti-bribery laws could subject us to administrative and legal proceedings and actions, which could result in civil and criminal sanctions, including monetary penalties and exclusion from healthcare programs.
The product development cycle is characterized by significant investments of resources, long lead times and unpredictable outcomes due to the nature of developing medicines for human use. We expend significant time and resources on our product pipeline without any assurance that we will recoup our investments or that our efforts will be commercially successful.
There are many difficulties and uncertainties inherent in drug development and the introduction of new products. The product development cycle is characterized by significant investments of resources, long lead times and unpredictable outcomes due to the nature of developing medicines for human use.
Malicious actors are also increasingly developing methods to avoid prevention, detection and alerting capabilities, including employing counter-forensic tactics making response activities more difficult. Such attacks and incidents include, for example, the deployment of harmful malware, ransomware, denial-of-service, social engineering and other means to affect service reliability and operatio ns and threaten data confidentiality, integrity and availability.
Malicious actors are also increasingly developing methods to avoid prevention, detection and alerting capabilities, including employing counter-forensic tactics making response activities more difficult.
In addition, clinical trials involving our commercial products can raise new safety issues for our existing products, which could adversely impact our business. Further, we may make a strategic decision to discontinue development of our product candidates if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline.
Further, we have in the past and we may in the future make a strategic decision to discontinue development of our product candidates, including but not limited to situations where we believe commercialization will be difficult relative to other opportunities in our pipeline.
There also continues to be enhanced scrutiny of company-sponsored patient assistance programs, including co-pay assistance programs and manufacturer donations to third-party charities that provide such assistance. There has also been enhanced scrutiny by governments on reimbursement and other patient support offerings, clinical education programs and promotional speaker programs.
If the government disagrees with our reported calculations, we may need to restate previously reported data and could be subject to additional financial and legal liability. There also continues to be enhanced scrutiny of company-sponsored patient assistance programs, including co-pay assistance programs and manufacturer donations to third-party charities that provide such assistance.
While Veklury sales generally reflect COVID-19 related rates and severity of infections and hospitalizations, as well as the availability, uptake and effectiveness of vaccines and alternative treatments for COVID-19, we are unable to accurately predict our revenues or supply needs over the short- and long-term due to the dynamic nature of the COVID-19 pandemic.
Food and Drug Administration (“FDA”) as a treatment for patients with coronavirus disease 2019 (“COVID-19”). Veklury sales generally reflect COVID-19 related rates and severity of infections and hospitalizations, as well as the availability, uptake and effectiveness of vaccines and alternative treatments for COVID-19.
We may be unable to accurately predict demand for our products, including the uptake of new products, as demand depends on a number of factors. For example, product demand may be adversely affected if physicians do not see the benefit of our products.
For example, product demand may be adversely affected if physicians do not see the benefit of our products. Additionally, the non-retail sector in the U.S., which includes government institutions, including state AIDS Drug Assistance Programs, the U.S.
Our success depends on developing and commercializing new products or expanding the indications for existing products. If we are unable to launch commercially successful new products or new indications for existing products, our business will be adversely impacted.
Any delays or quality issues with our manufacturing operations could adversely affect our business and damage our reputation. In addition, we may not be able to sufficiently increase manufacturing network capacity to meet growing demand. Our success depends on developing and commercializing new products or expanding the indications for existing products.
Goodwill and Intangible Assets of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of the partial in-process research and development impairment charge that we recognized during the three months ended March 31, 2022 related to assets we acquired from Immunomedics, Inc.
Other Financial Information of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of certain charges we incurred related to changes in our manufacturing strategy. Such developments could increase our manufacturing costs, cause us to lose revenues or market share and damage our reputation.
Our aspirations, goals and disclosures related to environmental, social and governance (“ESG”) matters expose us to numerous risks, including risks to our reputation and stock price. Institutional and individual investors are increasingly using ESG screening criteria to determine whether Gilead qualifies for inclusion in their investment portfolios.
Our suppliers and third-party manufacturers and corporate partners face similar transition risks and may pass along any increased costs to the company. 27 Our aspirations, goals and disclosures related to environmental, social and governance (“ESG”) matters expose us to numerous risks, including risks to our reputation and stock price.
Removed
Food and Drug Administration (“FDA”) in October 2020 as a treatment for patients hospitalized with coronavirus disease 2019 (“COVID-19”), in Janua ry 2022 as a treatment for non-hospitalized adult and adolescent patients who are at high risk of progression to severe COVID-19, including hospitalization or death, and in April 2022 as a treatment for pediatric patients who are 28 days of age (and older), weighing at least 3 kg, and are either hospitalized with COVID-19 or have mild-to-moderate COVID-19 and are considered at high risk for progression to severe COVID-19, including hospitalization or death.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located in Foster City, California, where we house our administrative, manufacturing and R&D activities. We also have administrative facilities in Raleigh, North Carolina and Washington, D.C., and we have R&D facilities in Emeryville, Oceanside and Santa Monica, California; Seattle, Washington; Frederick, Maryland; Morris Plains, New Jersey; Edmonton, Canada; and Dublin, Ireland.
Biggest changeWe also have administrative facilities in Raleigh, North Carolina; Parsippany, New Jersey; and Washington, D.C., and we have R&D facilities in Emeryville, Oceanside and Santa Monica, California; Seattle, Washington; Frederick, Maryland; Edmonton, Canada; Dublin, Ireland; Cambridge and Oxford, United Kingdom.
Our principal manufacturing facilities are in El Segundo, La Verne, Oceanside and San Dimas, California; Edmonton, Canada; Cork, Ireland and Hoofddorp, Netherlands. For more information about our manufacturing facilities, see Item 1. Business “Our Manufacturing Facilities . ” Our global operations include offices in Europe, North America, Asia, South America, Africa, Australia and the Middle East.
Our principal manufacturing facilities are in El Segundo, La Verne, Oceanside and Santa Monica, California; Frederick, Maryland; Edmonton, Canada; Cork, Ireland and Hoofddorp, Netherlands. For more information about our manufacturing facilities, see Item 1. Business “Our Manufacturing Facilities . ” Our global operations include offices in Europe, North America, Asia, South America, Africa, Australia and the Middle East.
Added
ITEM 2. PROPERTIES Our corporate headquarters are located in Foster City, California, where we house our administrative, manufacturing and R&D activities.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2022, the remaining authorized repurchase amount under the 2020 Program was $4.9 billion. 32 The table below summarizes our stock repurchase activity for the three months ended December 31, 2022: Total Number of Shares Purchased (in thousands) Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (in thousands) Maximum Fair Value of Shares that May Yet Be Purchased Under the 2016 Program (in millions) Maximum Fair Value of Shares that May Yet Be Purchased Under the 2020 Program (in millions) October 1 - October 31, 2022 282 $ 66.91 241 $ 649 $ 5,000 November 1 - November 30, 2022 5,788 $ 82.94 5,729 $ 174 $ 5,000 December 1 - December 31, 2022 3,581 $ 88.02 3,404 $ — $ 4,874 Total (1) 9,651 $ 84.35 9,374 ______________________________________________________ (1) The difference between the total number of shares purchased and the total number of shares purchased as part of a publicly announced program is due to shares of common stock withheld by us from employee restricted stock awards in order to satisfy applicable tax withholding obligations.
Biggest changeWe started repurchases under the 2020 Program in December 2022. 35 The table below summarizes our stock repurchase activity for the three months ended December 31, 2023: Total Number of Shares Purchased (in thousands) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (in millions) October 1 - October 31, 2023 863 $ 76.86 808 $ 3,962 November 1 - November 30, 2023 800 $ 76.57 738 $ 3,905 December 1 - December 31, 2023 709 $ 79.37 391 $ 3,874 Total (1) 2,371 $ 77.51 1,937 ______________________________________________________ (1) The difference between the total number of shares purchased and the total number of shares purchased as part of a publicly announced program is due to shares of common stock withheld by us from employee restricted stock awards in order to satisfy applicable tax withholding obligations.
Accordingly, these numbers are not determinable. 31 Performance Graph (1) The following graph compares our cumulative total stockholder return for the past five years to two indices: the Standard & Poor’s 500 Stock Index (“S&P 500 Index”) and the Nasdaq Biotechnology Index (“NBI Index”).
Accordingly, these numbers are not determinable. 34 Performance Graph (1) The following graph compares our cumulative total stockholder return for the past five years to two indices: the Standard & Poor’s 500 Stock Index (“S&P 500 Index”) and the Nasdaq Biotechnology Index (“NBI Index”).
(2) Shows the cumulative return on investment assuming an investment of $100 in our common stock, the NBI Index and the S&P 500 Index on December 31, 2017, and assuming that all dividends were reinvested.
(2) Shows the cumulative return on investment assuming an investment of $100 in our common stock, the NBI Index and the S&P 500 Index on December 31, 2018, and assuming that all dividends were reinvested.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “GILD.” Holders As of February 17, 2023, we had approximately 1,452 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “GILD.” Holders As of February 16, 2024, we had approximately 1,396 stockholders of record of our common stock.
Securities Authorized For Issuance Under Equity Compensation Plans The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2022: (in millions, except per share amounts) Number of Common Shares to be Issued Upon Exercise of Outstanding Options and Rights (1) Weighted-average Exercise Price of Outstanding Options and Rights (1) Number of Common Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders: 2022 Equity Incentive Plan 39.1 $ 67.69 100.5 Employee Stock Purchase Plan (2) 3.1 Total equity compensation plans approved by security holders 39.1 $ 67.69 103.7 Equity compensation plans not approved by security holders — $ — — Total 39.1 $ 67.69 103.7 ______________________________________________________ (1) Includes 25 million restricted stock units, performance share units and phantom shares.
Securities Authorized For Issuance Under Equity Compensation Plans The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2023: (in millions, except exercise price) Number of Common Shares to be Issued Upon Exercise of Outstanding Options and Rights (1) Weighted-average Exercise Price of Outstanding Options and Rights (1) Number of Common Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders: 2022 Equity Incentive Plan 38.0 $ 69.38 82.3 Employee Stock Purchase Plan (2) 26.0 Total equity compensation plans approved by security holders 38.0 $ 69.38 108.3 Equity compensation plans not approved by security holders — $ — — Total 38.0 $ 69.38 108.3 ______________________________________________________ (1) Includes 24 million restricted stock units, performance share units and phantom shares.
Stockholders’ Equity of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Subsequent Events of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Dividends For the years ended December 31, 2022 and 2021 , we paid quarterly dividends. We expect to continue to pay quarterly dividends, although the amount and timing of any future dividends are subject to declaration by our Board of Directors. Additional information is included in Note 14.
Dividends For the years ended December 31, 2023 and 2022 , we paid quarterly dividends. We expect to continue to pay quarterly dividends, although the amount and timing of any future dividends are subject to declaration by our Board of Directors. Additional information is included in Consolidated Statements of Stockholders' Equity and in Note 17.
Issuer Purchases of Equity Securities In the first quarter of 2020, our Board of Directors authorized a new $5.0 billion stock repurchase program (“2020 Program”), with no fixed expiration. Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.
Issuer Purchases of Equity Securities In the first quarter of 2020, our Board of Directors authorized a $5.0 billion stock repurchase program (“2020 Program”), with no fixed expiration.
Comparison of Cumulative Total Return on Investment for the Past Five Years (2) ______________________________________________________ (1) This section is not “soliciting material,” is not deemed “filed” with the Securities and Exchange Commission (“SEC”) and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934 (“Exchange Act”) whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Securities and Exchange Commission and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.
The stockholder return shown on the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. Comparison of Cumulative Total Return on Investment for the Past Five Years (2) ______________________________________________________ (1) This section is not “soliciting material,” is not deemed “filed” with U.S.
Removed
The $12.0 billion stock repurchase program authorized by our Board of Directors in the first quarter of 2016 (“2016 Program”) was completed in the fourth quarter of 2022. We started repurchases under the 2020 Program in December 2022.
Added
Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions, but the program does not obligate us to repurchase any specific number of shares and may be amended, suspended or discontinued at any time.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

39 edited+52 added−39 removed10 unchanged
Biggest changeEurope Other International Total Change Product sales: HIV $ 13,820 $ 2,219 $ 1,155 $ 17,194 $ 12,828 $ 2,366 $ 1,121 $ 16,315 5 % Veklury 1,575 702 1,628 3,905 3,640 1,095 830 5,565 (30) % HCV 1,005 413 392 1,810 1,018 421 442 1,881 (4) % HBV/HDV 435 112 441 988 397 104 468 969 2 % Cell Therapy 968 430 60 1,459 542 293 36 871 68 % Trodelvy 525 143 12 680 370 10 — 380 79 % Other 388 323 235 946 381 389 257 1,027 (8) % Total product sales 18,716 4,342 3,924 26,982 19,176 4,678 3,154 27,008 — % Royalty, contract and other revenues 168 127 4 299 91 196 10 297 1 % Total revenues $ 18,884 $ 4,469 $ 3,928 $ 27,281 $ 19,267 $ 4,874 $ 3,164 $ 27,305 — % ________________________________ See Note 2.
Biggest changeEurope Other International Total Change Product sales: HIV $ 14,848 $ 2,102 $ 1,226 $ 18,175 $ 13,820 $ 2,219 $ 1,155 $ 17,194 6 % Oncology 1,833 875 224 2,932 1,494 573 73 2,139 37 % Cell Therapy 1,055 658 156 1,869 968 430 60 1,459 28 % Trodelvy 777 217 68 1,063 525 143 12 680 56 % Liver Disease 1,421 511 852 2,784 1,440 525 833 2,798 (1) % HCV (1) 1,002 378 386 1,767 1,005 413 392 1,810 (2) % HBV / HDV 418 133 466 1,017 435 112 441 988 3 % Veklury 972 408 805 2,184 1,575 702 1,628 3,905 (44) % Other 304 301 255 859 388 323 235 946 (9) % Total product sales 19,377 4,197 3,361 26,934 18,716 4,342 3,924 26,982 — % Royalty, contract and other revenues 62 114 7 182 168 127 4 299 (39) % Total revenues $ 19,438 $ 4,310 $ 3,368 $ 27,116 $ 18,884 $ 4,469 $ 3,928 $ 27,281 (1) % ________________________________ See Note 2.
In developing our estimates of rebates and chargebacks, we consider the following: • product sales, including product mix and pricing; • historical and estimated payer mix; • statutory discount requirements and contractual terms; • historical claims experience and processing time lags; • estimated patient population; • known market events or trends; 40 • market research; • channel inventory data obtained from our major U.S. wholesalers; and • other pertinent internal or external information.
In developing our estimates of rebates and chargebacks, we consider the following: • product sales, including product mix and pricing; • historical and estimated payer mix; • statutory discount requirements and contractual terms; • historical claims experience and processing time lags; • estimated patient population; • known market events or trends; • market research; • channel inventory data obtained from our major U.S. wholesalers; and • other pertinent internal or external information.
Results of Operations Revenues The following table summarizes the period-over-period changes in our Total revenues: Year Ended December 31, 2022 Year Ended December 31, 2021 (in millions, except percentages) U.S. Europe Other International Total U.S.
Results of Operations Revenues The following table summarizes the period-over-period changes in our Total revenues: Year Ended December 31, 2023 Year Ended December 31, 2022 (in millions, except percentages) U.S. Europe Other International Total U.S.
These inputs are subject to uncertainty due to potential changes in facts and circumstances, economic and political conditions, changes to existing tax laws and new regulations or interpretations by tax authorities. Changes in these conditions could have a material adverse impact on our results of operations and financial position. 42
These inputs are subject to uncertainty due to potential changes in facts and circumstances, economic and political conditions, changes to existing tax laws and new regulations or interpretations by tax authorities. Changes in these conditions could have a material adverse impact on our results of operations and financial position. See Note 16.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to provide material information around events and uncertainties known to management relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements and other disclosures included in this Annual Report on Form 10-K (including the disclosures under Part I, Item 1A.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to provide material information around events and uncertainties known to management that are relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the related notes thereto and other disclosures included as part of this Annual Report on Form 10-K (including the disclosures under Part I, Item 1A.
Liquidity and Capital Resources We continually evaluate our liquidity and capital resources, including our access to external capital , to ensure that we can adequately and efficiently finance our operations. Liquidity Cash, cash equivalents, and marketable debt securities were $7.6 billion and $7.8 billion as of December 31, 2022 and 2021, respectively.
Liquidity and Capital Resources We regularly evaluate our liquidity and capital resources, including our access to external capital, to ensure that we can adequately and efficiently finance our operations. Liquidity Cash, cash equivalents, and marketable debt securities were $8.4 billion and $7.6 billion as of December 31, 2023 and 2022, respectively.
Readers are encouraged to review all press releases available on our website at www.gilead.com. The content on the referenced website does not constitute a part of and is not incorporated by reference into this Annual Report on Form 10-K. Virology • In December 2022, we announced U.S.
Readers are encouraged to review all press releases available on our website at www.gilead.com. The content on the referenced website does not constitute a part of and is not incorporated by reference into this Annual Report on Form 10-K.
Income Taxes We are subject to income taxes in the U.S. and various foreign jurisdictions, including Ireland. Critical inputs in determining our provision for income taxes and related tax balances include forecasts of our future income and expenses, potential tax planning strategies and determination of the probability of certain tax positions being sustained upon examination by tax authorities.
Critical inputs in determining our provision for income taxes and related tax balances include forecasts of our future income and expenses, potential tax planning strategies and determination of the probability of certain tax positions being sustained upon examination by tax authorities.
Cash and cash equivalents increased by $74 million from December 31, 2021 to December 31, 2022.
Cash and cash equivalents increased by $673 million from December 31, 2022 to December 31, 2023.
In terms of capital resources, we continued to invest in our business and research and development (“R&D”) pipeline through acquisitions and collaborations. We also continued to provide shareholder returns in the form of dividends and share repurchases. The following highlights are taken from press releases recently issued.
In terms of capital resources, we continued to invest in our business and research and development (“R&D”) pipeline through acquisitions and collaborations. We also continued to provide shareholder returns through dividends and share repurchases. Key Business Updates The following updates are based on press releases issued since our last annual report.
The following table summarizes our cash flow activities: (in millions) 2022 2021 Net cash provided by (used in): Operating activities $ 9,072 $ 11,384 Investing activities $ (2,466) $ (3,131) Financing activities $ (6,469) $ (8,877) Effect of exchange rate changes on cash and cash equivalents $ (63) $ (35) Operating Activities Net cash provided by operating activities is derived by adjusting our net income for non-cash items and changes in operating assets and liabilities.
The following table summarizes our cash flow activities: Year Ended December 31, (in millions) 2023 2022 Net cash provided by (used in): Operating activities $ 8,006 $ 9,072 Investing activities $ (2,265) $ (2,466) Financing activities $ (5,125) $ (6,469) Effect of exchange rate changes on cash and cash equivalents $ 57 $ (63) Operating Activities Net cash provided by operating activities is derived by adjusting our net income for non-cash items and changes in operating assets and liabilities.
Acquired In-Process Research and Development Expenses Acquired in-process research and development expenses of $944 million in 2022 were primarily related to a $389 million charge associated with our acquisition of MiroBio, a $315 million charge associated with the Dragonfly collaboration, an $82 million charge associated with the Jounce collaboration and acquisition of GS-1811, and a $60 million charge associated with the MacroGenics collaboration.
Acquired in-process research and development expenses were $944 million in 2022, primarily comprised of $389 million associated with the acquisition of MiroBio Ltd, $315 million associated with the collaboration with Dragonfly Therapeutics, Inc., $82 million associated with the collaboration with Jounce Therapeutics, Inc. and acquisition of GS-1811, and $60 million associated with the collaboration with MacroGenics, Inc. See Note 6.
Collaborations and Other Arrangements, 11. Debt and Credit Facilities, 12. Leases, 13. Commitments and Contingencies and 17. Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information. We enter into certain unconditional purchase obligations, capital expenditure projects and other commitments in the normal course of business.
See Notes 6. Acquisitions, 7. Collaborations and Other Arrangements, 11. Debt and Credit Facilities, 12. Leases, 13. Commitments and Contingencies and 16. Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.
Revenues of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further disaggregation of revenue by product.
Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. 41 Critical inputs to the accruals recorded and disclosures provided in relation to these matters include the probability of a certain outcome of the case, the determination as to whether an exposure is reasonably estimable and the amount of potential exposure.
Critical inputs to the accruals recorded and disclosures provided in relation to these matters include the probability of a certain outcome of the case, the determination as to whether an exposure is reasonably estimable and the amount of potential exposure.
Historically, our actual rebates and chargebacks claimed for prior periods have varied by less than 5% from our estimates.
Historically, our actual rebates and chargebacks claimed for prior years have varied by less than 5% from our estimates. However, historical results are not indicative of future results.
(“Gilead,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer.
(including its consolidated subsidiaries, referred to as “Gilead,” the “company,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people.
There have been no changes to these commitments during the year that would have a material impact on the company’s ability to meet either short-term or long-term cash requirements.
We enter into certain unconditional purchase obligations, capital expenditure projects and other commitments in the normal course of business. There have been no changes to these commitments during the year that would have a material impact on the company’s ability to meet either short-term or long-term cash requirements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) . Management Overview Strategy and Outlook Gilead Sciences, Inc.
Risk Factors). Additional information related to the comparison of our results of operations between the years 2022 and 2021 is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Form 10-K filed with U.S. Securities and Exchange Commission . Management Overview Gilead Sciences, Inc.
The following table summarizes the consolidated activities and ending balances in our rebates and chargebacks accounts, including adjustments made relating to previous years’ sales as a result of changes in estimates: (in millions) Balance at Beginning of Year Decrease/(Increase) to Product Sales Payments Balance at End of Year Year ended December 31, 2022: Activity related to 2022 sales $ — $ 13,040 $ (9,442) $ 3,598 Activity related to sales prior to 2022 3,915 (418) (3,067) 430 Total $ 3,915 $ 12,622 $ (12,509) $ 4,028 Year ended December 31, 2021: Activity related to 2021 sales $ — $ 13,211 $ (9,714) $ 3,497 Activity related to sales prior to 2021 4,012 (617) (2,977) 418 Total $ 4,012 $ 12,594 $ (12,691) $ 3,915 Our net product sales in 2022 include the impact of $418 million for changes in rebate and chargeback estimates related to sales prior to 2022.
The following table summarizes the consolidated activities and ending balances in our rebates and chargebacks accounts, including adjustments made relating to previous years’ sales as a result of changes in estimates: 44 (in millions) Balance at Beginning of Year Decrease/(Increase) to Product Sales Payments Balance at End of Year Year ended December 31, 2023: Activity related to 2023 sales $ — $ 14,577 $ (10,389) $ 4,187 Activity related to sales prior to 2023 4,028 (302) (3,421) 306 Total $ 4,028 $ 14,275 $ (13,810) $ 4,493 Year ended December 31, 2022: Activity related to 2022 sales $ — $ 13,040 $ (9,442) $ 3,598 Activity related to sales prior to 2022 3,915 (418) (3,067) 430 Total $ 3,915 $ 12,622 $ (12,509) $ 4,028 We assess and update our estimates each reporting period to reflect actual claims and other current information.
As of December 31, 2022, our material cash requirements consisted primarily of the repayment of outstanding borrowings, income tax payments, including the remaining obligations for the one-time repatriation transition tax from the Tax Cuts and Jobs Act, purchases of inventory, operating lease obligations, capital expenditures and milestone and other payments related to our collaborative agreements. See Notes 6. Acquisitions, 10.
Capital Resources We believe our existing capital resources, including cash and cash equivalents, marketable debt securities and our revolving credit facility, supplemented by cash flows generated from our operations, will be adequate to satisfy our capital needs for the foreseeable future. 43 As of December 31, 2023, our material cash requirements consisted primarily of the repayment of outstanding borrowings, income tax payments, including the remaining obligations for the one-time repatriation transition tax from the Tax Cuts and Jobs Act, purchases of inventory, operating lease obligations, capital expenditures and milestone and other payments related to our collaborative agreements.
The decrease was primarily due to lower net purchases of marketable debt and equity securities, partially offset by higher capital expenditures and other acquisitions. 39 Financing Activities Net cash used in financing activities was $6.5 billion in 2022, compared to $8.9 billion in 2021.
Investing Activities Net cash used in investing activities was $2.3 billion in 2023, compared to $2.5 billion in 2022. The change was primarily due to a decrease in acquisition spend, including acquired IPR&D, and capital expenditures, partially offset by higher net purchases of marketable debt and equity securities.
We believe the following reflect the critical accounting estimates used in the preparation of our Consolidated Financial Statements. Rebates and Chargebacks Rebates and chargebacks are determined using a complex estimation process and are subject to uncertainty in part due to the lag between the date of the product sales and the date the related rebates or chargeback claims are settled.
Rebates and Chargebacks Rebates and chargebacks are determined using a complex estimation process which requires significant judgment by management in part due to the lag between the date of the product sales and the date the related rebates or chargeback claims are settled.
In 2022, we utilized cash for $1.5 billion of debt repayments, $3.7 billion of dividend payments and $1.4 billion of common stock repurchases. In 2021, we utilized cash for $4.75 billion of debt repayments, $3.6 billion of dividend payments, and $546 million of common stock repurchases.
Financing Activities Net cash used in financing activities was $5.1 billion in 2023, compared to $6.5 billion in 2022. In 2023, we utilized cash of $2.3 billion for debt repayments, $3.8 billion for dividend payments and $1.0 billion for common stock repurchases.
We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures. Of our total product sales, 31% and 29% were generated outside the U.S. in 2022 and 2021, respectively.
Foreign Currency Exchange Impact We generally face exposure to movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures. Approximately 26% and 29% of our product sales were denominated in foreign currencies during 2023 and 2022, respectively.
Key Financial Results (in millions, except percentages and per share amounts) 2022 2021 Change Total revenues $ 27,281 $ 27,305 — % Net income attributable to Gilead $ 4,592 $ 6,225 (26) % Diluted earnings per share attributable to Gilead $ 3.64 $ 4.93 (26) % Total revenues were $27.3 billion in 2022 and remained relatively flat compared to 2021, primarily due to increased sales in HIV, cell therapy and Trodelvy, offset by lower sales of Veklury.
Key Financial Results Year Ended December 31, (in millions, except percentages and per share amounts) 2023 2022 Change Total revenues $ 27,116 $ 27,281 (1) % Net income attributable to Gilead $ 5,665 $ 4,592 23 % Diluted earnings per share attributable to Gilead $ 4.50 $ 3.64 24 % Total revenues decreased 1% to $27.1 billion in 2023, compared to 2022, driven by lower Veklury sales, largely offset by higher HIV and Oncology sales. 38 Net income attributable to Gilead was $5.7 billion and diluted earnings per share attributable to Gilead was $4.50 in 2023, compared to $4.6 billion and $3.64 diluted earnings per share attributable to Gilead in 2022.
HCV HCV product sales decreased by 4% to $1.8 billion in 2022, compared to 2021, primarily due to unfavorable foreign currency exchange impact, fewer patient starts and unfavorable pricing dynamics.
Liver Disease Liver Disease product sales decreased 1% to $2.8 billion in 2023, compared to 2022, primarily due to unfavorable HCV pricing dynamics and foreign exchange rates, partially offset by higher demand across HCV, HDV and HBV products.
We periodically reassess these matters when additional information becomes available and adjust our estimates and assumptions when facts and circumstances indicate the need for any changes. For example, in the fourth quarter of 2021, we recorded an accrual of $1.25 billion in Other current liabilities on our Consolidated Balance Sheets for the settlement related to bictegravir litigation.
We periodically reassess these matters when additional information becomes available and adjust our estimates and assumptions when facts and circumstances indicate the need for any changes.
Acquired in-process research and development expenses of $939 million in 2021 were primarily related to a $625 million charge associated with an option exercised under the Arcus collaboration. See Note 6. Acquisitions and Note 10. Collaborations and Other Arrangements of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.
See Note 7. Collaborations and Other Arrangements of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information. (2) Includes Atripla, Emtriva, Sunlenca and Tybost.
Cell Therapy Cell therapy product sales, which include Yescarta and Tecartus, increased by 68% to $1.5 billion in 2022, compared to 2021, primarily due to higher demand for Yescarta in R/R LBCL in the U.S. and Europe, as well as for Tecartus in R/R ALL and mantle cell lymphoma.
Also, Descovy sales increased primarily driven by favorable channel inventory dynamics and higher demand. 39 Oncology Cell Therapy Cell Therapy product sales increased 28% to $1.9 billion in 2023, compared to 2022, primarily due to increased Yescarta demand for the treatment of R/R LBCL and increased Tecartus demand for the treatment of R/R adult acute lymphoblastic leukemia and R/R mantle cell lymphoma.
Interest Expense and Other Income (Expense), Net The following table summarizes the period-over-period changes in our Interest expense and Other income (expense), net: (in millions, except percentages) 2022 2021 Change Interest expense $ (935) $ (1,001) (7) % Other income (expense), net $ (581) $ (639) (9) % Interest expense decreased by $66 million in 2022 compared to 2021, primarily due to lower outstanding debt balances.
Interest Expense and Other Income (Expense), Net The following table summarizes the period-over-period changes in Interest expense and Other income (expense), net: Year Ended December 31, (in millions, except percentages) 2023 2022 Change Interest expense $ (944) $ (935) 1 % Other income (expense), net $ 198 $ (581) NM _______________________________ NM - Not Meaningful Interest expense remained relatively flat in 2023 compared to 2022.
Other • In February 2023, we announced that FDA has approved Trodelvy for the treatment of adult patients with unresectable locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting. • In January 2023, we announced that EMA has validated a Type II variation of the Marketing Authorization Application for Trodelvy for the treatment of adult patients unresectable or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting. • In December 2022, we acquired the remaining rights to GS-1811, an anti-CCR8 antibody developed by Jounce Therapeutics, Inc.
This includes an “armored” CAR T technology platform that has the potential to be applied to a variety of CAR Ts to enhance anti-tumor activity, as well as rapid manufacturing processes. • Received FDA approval of Trodelvy for the treatment of adult patients with unresectable locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.
Investing Activities Net cash used in investing activities was $2.5 billion in 2022, compared to $3.1 billion in 2021.
Net cash provided by operating activities was $8.0 billion in 2023, compared to $9.1 billion in 2022.
Income Taxes The following table summarizes the period-over-period changes in our Income tax expense: (in millions, except percentages) 2022 2021 Change Income before income taxes $ 5,814 $ 8,278 $ (2,464) Income tax expense $ (1,248) $ (2,077) $ 829 Effective tax rate 21.5 % 25.1 % (3.6) % Our effective tax rate decreased in 2022, compared to 2021, primarily due to a beneficial change in jurisdictional mix of income and lower state taxes.
Other income (expense), net in 2022 included $657 million of net unrealized losses on equity investments, partially offset by $106 million of interest income. 42 Income Taxes The following table summarizes the period-over-period changes in Income tax expense: Year Ended December 31, (in millions, except percentages) 2023 2022 Change Income before income taxes $ 6,859 $ 5,814 $ 1,045 Income tax expense $ (1,247) $ (1,248) $ 2 Effective tax rate 18.2 % 21.5 % (3.3) % Our effective tax rate decreased in 2023, compared to 2022, primarily due to a decrease in unrecognized tax benefits as a result of reaching agreement with a tax authority on certain tax positions in 2023.
We determined the revised estimated fair value was below the carrying value of the asset and, as a result, we recognized a partial impairment charge of $2.7 billion in In-process research and development impairment on our Consolidated Statements of Income during the three months ended March 31, 2022.
To the extent that the estimated fair value is less than the carrying value of the asset, we will be required to record an impairment charge on our Consolidated Statements of Income during the three months ended March 31, 2024.
Net cash provided by operating activities was $9.1 billion in 2022, compared to $11.4 billion in 2021. The decrease was primarily due to the $1.25 billion payment made in the first quarter of 2022 in connection with the legal settlement related to bictegravir litigation as well as higher income tax payments made and higher operating expenses in 2022.
The change was primarily due to higher income tax payments and higher inventory and operating spend, which includes HIV antitrust litigation settlement payments, in 2023, reduced by the effect of a non-recurring payment of a $1.25 billion settlement related to bictegravir litigation in 2022 and higher collections in 2023.
No other IPR&D impairment charges were recorded in 2022 or 2021. 38 Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $427 million in 2022 compared to 2021, primarily due to a $406 million charge associated with the termination of the Trodelvy license collaboration agreement with Everest, which had provided Everest with broad commercialization and development rights to Trodelvy in certain Asia territories.
Selling, general and administrative expenses increased $417 million in 2023, compared to 2022, primarily due to a $525 million litigation expense for settlements with certain plaintiffs in the HIV antitrust litigation in the second quarter of 2023 and increased commercial activities in oncology and HIV, partially offset by a $406 million non-recurring charge in 2022 associated with the termination of the Trodelvy license collaboration agreement with Everest Medicines.
The transaction closed in February 2023. • In December 2022, we entered into a strategic collaboration with Arcellx, Inc. (“Arcellx”) to co-develop and co-commercialize CART-ddBCMA, a late-stage clinical asset in development for the treatment of multiple myeloma.
(“Arcellx”) to co-develop and co-commercialize CART-ddBCMA, a late-stage clinical asset in development for the treatment of patients with relapsed or refractory multiple myeloma, and later announced expansion of the Arcellx collaboration to include exercising an option for the ARC-SparX ACLX-001 program in multiple myeloma, expanding the scope of the existing anito-cel collaboration to include lymphomas, and a further equity investment. • Announced an exclusive license agreement with Compugen Ltd.
We also continued to broaden therapies available in oncology, receiving approvals for additional indications of Yescarta and Tecartus, and the 2023 approval of Trodelvy for the treatment of adult patients with unresectable locally advanced or metastatic hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.
(“Tentarix”) to discover and develop novel therapies across oncology and inflammation, using Tentarix’s proprietary Tentacles platform. • Received EC approval for Trodelvy as monotherapy for the treatment of adult patients with unresectable or metastatic hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer who have received endocrine-based therapy, and at least two additional systemic therapies in the advanced setting. • Announced, through Fosun Kite Biotechnology Co., Ltd., a joint venture between us and Shanghai Fosun Pharmaceutical (Group) Co., Ltd., the approval of axicabtagene ciloleucel (under the trade name Yikaida ® ) by the China National Medical Products Administration for the treatment of adult patients with R/R LBCL who failed first-line immunochemotherapy or relapsed within 12 months after first-line immunochemotherapy. • Completed the transfer of Yescarta’s marketing authorization in Japan from Daiichi Sankyo Co., Ltd. to Gilead Sciences K.K. • Announced the acquisition of XinThera, Inc.
Removed
Risk Factors) where other material events and uncertainties not otherwise discussed below are disclosed. Certain amounts and percentages herein may not sum or recalculate due to rounding. Additional information related to the comparison of our results of operations between the years 2021 and 2020 is included in Item 7.
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We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, coronavirus disease 2019 (“COVID-19”) and cancer. We operate in more than 35 countries worldwide, with headquarters in Foster City, California. During 2023, we continued to advance our portfolio and broaden available therapies while delivering continued growth in our HIV and Oncology product sales.
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We operate in more than 35 countries worldwide, with headquarters in Foster City, California. Since 2019, our strategic ambitions have been to (i) bring 10+ transformative therapies to patients by 2030; (ii) be the biotech employer and partner of choice; and (iii) deliver shareholder value in a sustainable and responsible manner.
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Virology • Announced that the Phase 3 OAKTREE trial of obeldesivir in non-hospitalized participants without risk factors for developing severe COVID-19 did not meet its primary endpoint of improvement in time to symptom alleviation. Obeldesivir was well-tolerated in this large study population. • Received U.S.
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Our strategic priorities for 2023 and beyond, reflecting how we plan to deliver those ambitions, are: (i) maximize near-term revenue growth; (ii) maximize impact of long-active HIV; (iii) expand and deliver on oncology programs; (iv) champion an environment of inclusion and employee growth; and (v) remove barriers to speed in execution.
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Food and Drug Administration (“FDA”) and European Commission (“EC”) approval to extend the use of Veklury to treat COVID-19 in appropriate patients with mild to severe hepatic impairment as well as people with severe renal impairment, including those on dialysis. • Announced a collaboration with Assembly Biosciences, Inc.
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We plan to provide consistent execution on a portfolio with quality, depth and breadth, including continued growth in our leading HIV portfolio, which is poised to shape the long-acting market following our first lenacapavir approvals, as well as strong commercial performance and clinical momentum for our fast-growing oncology business.
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(“Assembly”) to advance the research and development of novel antiviral therapies, including for herpesviruses, chronic hepatitis B virus (“HBV”) and chronic hepatitis delta virus (“HDV”). • Received full marketing authorization from EC for Hepcludex (bulevirtide) for the treatment of adults with HDV and compensated liver disease. Hepcludex was initially granted conditional marketing authorization in July 2020.
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Key Business Updates During 2022, we continued to advance our portfolio, receiving approvals across various therapeutic areas, indications and geographies. We ended the year with Sunlenca receiving its first approval in the U.S. for heavily-treatment experienced individuals, following the first European market approval by the European Commission (“EC”). This is the first twice-yearly, subcutaneous HIV medicine to be approved.
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Bulevirtide remains the only approved treatment for HDV in the European Union (“EU”) and is not approved in the U.S.
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Food and Drug Administration (“FDA”) approval of Sunlenca, in combination with other antiretroviral(s), for the treatment of HIV-1 infection in heavily treatment-experienced adults with multi-drug resistant HIV-1 infection. • In November 2022, we announced the EC authorized an extended indication and line extension for a low-dosage tablet form of Biktarvy for the treatment of HIV in virologically suppressed children who are at least 2 years of age and weigh at least 14 kg. • In November 2022, we announced FDA approval of Vemlidy for the treatment of chronic hepatitis B virus (“HBV”) infection in pediatric patients 12 years and older with compensated liver disease. • In October 2022, we announced that Merck & Co., Inc.
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Oncology • Announced a full clinical hold placed by FDA on all magrolimab studies in myelodysplastic syndromes and acute myeloid leukemia, and that we will not pursue further development of magrolimab in hematologic cancers. • Announced that the Phase 3 EVOKE-01 study of Trodelvy versus docetaxel in previously treated metastatic non-small cell lung cancer did not meet its primary endpoint of overall survival.
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(“Merck”) and Gilead plan to resume their Phase 2 study under an amended protocol.
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While not statistically powered, we observed an encouraging trend in a subgroup of patients non-responsive to prior anti-PD-(L)1 immunotherapy, that we may potentially explore further. • Received FDA approval of Yescarta’s label update to include overall survival data from the Phase 3 ZUMA-7 study, which showed a statistically significant overall survival improvement for Yescarta in second-line relapsed or refractory (“R/R”) large B-cell lymphoma (“LBCL”) versus standard of care. • Received FDA approval of a manufacturing process change resulting in reduced median turnaround time for Yescarta in the U.S. to an anticipated 14 days (from 16 days previously). 37 • Entered into a strategic collaboration with Arcellx, Inc.
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The study will evaluate an investigational once-weekly oral combination treatment regimen of Merck’s islatravir at a lower weekly dose and Gilead’s lenacapavir. 34 • In August 2022, we announced that EC has granted marketing authorization for Sunlenca (lenacapavir) for the treatment of HIV infection, in combination with other antiretroviral(s), in adults with multi-drug resistant HIV infection for whom it is otherwise not possible to construct a suppressive antiviral regimen. • In July 2022, we received a positive opinion from European Medicines Agency’s (“EMA”) Committee for Medicinal Products for Human Use (“CHMP”) for Veklury to be granted full marketing authorization for the treatment of coronavirus disease 2019 (“COVID-19”) in adults and adolescents with pneumonia requiring supplemental oxygen and adults who do not require supplemental oxygen and are at increased risk of developing severe COVID-19. • In May 2022, we announced FDA lifted the clinical hold placed on the Investigational New Drug Application to evaluate injectable lenacapavir for HIV treatment and pre-exposure prophylaxis following the agency’s review of the storage and compatibility data of lenacapavir injection with an alternate vial made from aluminosilicate glass. • In April 2022, FDA approved a supplemental new drug application for Veklury for the treatment of pediatric patients under 12 years of age for the treatment of COVID-19.
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(“Compugen”) for later-stage development and commercialization of novel pre-clinical anti-IL18 binding protein antibodies, including COM503, that have the potential to treat various tumor types. • Announced a collaboration with Tentarix Biotherapeutics Inc.
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Oncology Cell Therapy • In December 2022, we entered into an agreement to acquire Tmunity Therapeutics Inc.
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(“XinThera”), adding additional pipeline assets including rights to a portfolio of small molecule inhibitors targeting PARP1 for oncology as well as MK2 for inflammatory diseases. • Completed the acquisition of Tmunity Therapeutics, Inc. (“Tmunity”), a clinical stage private biotech company, which provides preclinical and clinical programs.
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(“Tmunity”), a clinical stage private biotech company, which will provide us with preclinical and clinical programs, including an “armored” CAR T technology platform that has the potential to be applied to a variety of CAR Ts to enhance anti-tumor activity, as well as rapid manufacturing processes.
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Inflammation • Announced that we entered into a definitive agreement to acquire all of the outstanding common stock of CymaBay Therapeutics, Inc. (“CymaBay”) and its lead product candidate, seladelpar, which is an investigational treatment for primary biliary cholangitis. • Announced an amendment expanding the collaboration agreement with Arcus Biosciences, Inc.
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The transaction closed in January 2023. • In December 2022, we announced the transfer of the marketing authorization for Yescarta in Japan from Daiichi Sankyo Co., Ltd. to Gilead K.K. in 2023. • In December 2022, we received approval from the Ministry of Health, Labour and Welfare in Japan for Yescarta for the initial treatment of relapsed or refractory (“R/R”) large B-cell lymphoma (“LBCL”). • In October 2022, we received European marketing authorization for Yescarta use in adults with second-line diffuse LBCL.
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(“Arcus”), including research programs in inflammatory diseases, an update to the domvanalimab collaboration program, and an additional equity investment. • Exercised an option to license investigational targeted protein degrader molecule NX‑0479 (“GS-6791”) from Nurix Therapeutics, Inc. GS-6791 is a potent, selective, oral IRAK4 degrader with potential applications in the treatment of rheumatoid arthritis and other inflammatory diseases.
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Additionally, EC granted marketing authorization for Tecartus for the treatment of adult R/R B-cell precursor acute lymphoblastic leukemia (“ALL”), and in Canada, we received conditional marketing authorization for Yescarta for R/R follicular lymphoma (“FL”) after two or more lines of systemic therapy. • In July 2022, we received a positive opinion from EMA’s CHMP for Tecartus for the treatment of adult patients 26 years of age and above with R/R B-cell precursor ALL. • In June 2022, EC approved Yescarta for the treatment of adult patients with R/R FL after three or more lines of systemic therapy. • In April 2022, FDA approved commercial production at our new CAR T-cell therapy manufacturing facility in Frederick, Maryland. • In April 2022, FDA granted approval to Yescarta as initial treatment for adults with LBCL that is refractory to or relapses within 12 months of first-line chemoimmunotherapy.
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Other • Issued $2.0 billion aggregate principal amount of senior unsecured notes in a registered offering, comprised of $1.0 billion principal amount of 5.25% senior notes due in 2033 and $1.0 billion principal amount of 5.55% senior notes due in 2053, and repaid debt of $2.25 billion.
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(“Jounce”) for the treatment of solid tumors. • In October 2022, we announced a strategic collaboration with MacroGenics, Inc. (“MacroGenics”) to develop bispecific antibodies to treat various cancers.
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The increase was primarily due to lower in-process research and development (“IPR&D”) impairment expenses, lower net unrealized losses on equity investments and higher interest income, partially offset by higher costs of goods sold and operating expenses, and lower revenues.
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The agreement includes an upfront payment by us of $60 million to MacroGenics and an exclusive option granted to us on MGD024, an investigational CD123 and CD3 bispecific. • In August 2022, we announced an agreement with Everest Medicines (“Everest”) to transfer all development and commercialization rights to Gilead for Trodelvy in Greater China, South Korea, and other Asian markets. 35 • In April 2022, we entered into a strategic research collaboration agreement with Dragonfly Therapeutics, Inc.
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Revenues of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further disaggregation of revenue by product. (1) Chronic hepatitis C virus (“HCV”) HIV The following table summarizes the period-over-period changes in our HIV product sales: Year Ended December 31, 2023 Year Ended December 31, 2022 (in millions, except percentages) U.S.
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(“Dragonfly”) to develop natural killer cell engager-based immunotherapies for oncology and inflammation indications. • In March 2022, we announced results from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with HR+/HER2- mBC who received prior endocrine therapy, cyclin-dependent kinase (“CDK”) 4/6 inhibitors and two to four lines of chemotherapy.
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Europe Other International Total Change Biktarvy $ 9,692 $ 1,253 $ 905 $ 11,850 $ 8,510 $ 1,103 $ 777 $ 10,390 14 % Complera/Eviplera 47 70 12 129 74 113 13 200 (35) % Descovy 1,771 100 114 1,985 1,631 118 123 1,872 6 % Genvoya 1,752 205 103 2,060 1,983 284 136 2,404 (14) % Odefsey 1,012 294 44 1,350 1,058 364 47 1,469 (8) % Stribild 72 21 8 101 88 29 10 127 (20) % Truvada 82 13 19 114 113 15 18 147 (22) % Revenue share - Symtuza (1) 382 133 13 529 348 168 14 530 — % Other HIV (2) 37 12 7 56 15 24 17 57 (1) % Total HIV $ 14,848 $ 2,102 $ 1,226 $ 18,175 $ 13,820 $ 2,219 $ 1,155 $ 17,194 6 % _______________________________ (1) Represents our revenue from cobicistat (“C”), emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland Unlimited Company (“Janssen”).
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Inflammation • In January 2023, we announced a collaboration and licensing agreement with EVOQ Therapeutics, Inc. (“EVOQ”) to advance EVOQ’s proprietary NanoDisc technology for the treatment of rheumatoid arthritis and lupus. • In September 2022, we completed the acquisition of MiroBio Ltd. (“MiroBio”) for $414 million in cash.
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HIV product sales increased 6% to $18.2 billion in 2023, compared to 2022, primarily due to higher demand across treatment and prevention, in addition to higher average realized price and favorable channel inventory dynamics. In particular, Biktarvy sales increased primarily reflecting higher demand, including patients switching from other Gilead HIV products, as well as higher average realized price.
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MiroBio is a U.K.-based biotechnology company focused on restoring immune balance with agonists targeting immune inhibitory receptors.
Added
Trodelvy Trodelvy product sales increased 56% to $1.1 billion in 2023, compared to 2022, primarily due to higher demand in new and existing geographies.
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Net income attributable to Gilead was $4.6 billion or $3.64 diluted earnings per share attributable to Gilead in 2022, compared to $6.2 billion or $4.93 diluted earnings per share attributable to Gilead in 2021.
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Veklury Veklury product sales decreased 44% to $2.2 billion in 2023, compared to 2022, primarily due to lower demand driven by lower rates of COVID-19 related hospitalizations in all regions. Other Other product sales decreased 9% to $859 million in 2023, compared to 2022, primarily due to loss of exclusivity for Letairis.
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The decrease was primarily due to the following items net of their related tax effect: a partial in-process research and development (“IPR&D”) impairment charge of $2.7 billion during the three months ended March 31, 2022 related to assets we acquired from Immunomedics, Inc.
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Gross-to-Net Deductions A substantial portion of our product sales is subject to significant discounts from list price, including government and commercial rebates and chargebacks, as well as other deductions, including patient co-pay assistance, cash discounts for prompt payment, distributor fees, and sales return provisions.
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(“Immunomedics”) in 2020, a $406 million charge related to the termination of the Trodelvy collaboration agreement with Everest and higher R&D expenses, partially offset by a $1.25 billion charge for a settlement related to bictegravir litigation in the fourth quarter of 2021 that did not repeat in 2022.
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These deductions to product sales are generally referred to as gross-to-net deductions and are primarily a function of product sales volume, product mix, contractual or statutory discounts and estimated payer mix. Rebates and chargebacks are based on contractual arrangements or statutory requirements and include amounts due to payers and healthcare providers under various programs.
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HIV HIV product sales increased by 5% to $17.2 billion in 2022, compared to 2021, primarily due to continued higher demand for Biktarvy worldwide and favorable pricing dynamics, partially offset by the impact of the loss of exclusivity for Truvada in the U.S., channel inventory dynamics and unfavorable foreign currency exchange impact.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+5 added−3 removed8 unchanged
Biggest changeIn addition to the senior unsecured fixed rate notes, we have a $2.5 billion five-year revolving credit facility that matures in June 2025. There were no amounts outstanding under the five-year revolving credit facility as of December 31, 2022. See Note 11.
Biggest changeThe fair value will decrease as interest rates increase. The fair value will increase as interest rates decrease. Additionally, we have a $2.5 billion five-year revolving credit facility that matures in June 2025.
A hypothetical 10% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2022 and 2021 would have resulted in a reduction in fair value of these contracts of approximately $299 million and $333 million, respectively, and if realized, would have negatively affected earnings over the remaining life of the contracts.
A hypothetical 10% adverse movement in foreign currency exchange rates compared with the U.S. dollar relative to exchange rates as of December 31, 2023 and 2022 would have resulted in a reduction in fair value of these contracts of approximately $328 million and $299 million, respectively, and if realized, would have negatively affected earnings over the remaining life of the contracts.
Conversely, when the U.S. dollar weakens against these currencies, the relative value of such sales increases. Overall, we are a net receiver of foreign currencies and, therefore, we benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar. Approximately 29% of our product sales were denominated in foreign currencies during 2022.
Conversely, when the U.S. dollar weakens against these currencies, the relative value of such sales increases. Overall, we are a net receiver of foreign currencies and, therefore, we benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar. Approximately 26% of our product sales were denominated in foreign currencies during 2023.
As of December 31, 2022 and 2021, we had open foreign currency forward contracts with notional amounts of $3.0 billion and $2.9 billion, respectively.
As of December 31, 2023 and 2022, we had open foreign currency forward contracts with notional amounts of $2.5 billion and $3.0 billion, respectively.
A hypothetical 20% increase or decrease in the stock prices of these equity securities would have increased or decreased their fair value as of December 31, 2022 and 2021 by approximately $239 million and $364 million, respectively. 44
A hypothetical 20% increase or decrease in the stock prices of these equity securities would have increased or decreased their fair value as of December 31, 2023 and 2022 by approximately $292 million and $239 million, respectively. 48
The analysis does not consider the impact that hypothetical changes in foreign currency exchange rates would have on anticipated transactions that these foreign currency sensitive instruments were designed to offset. Interest Rate and Credit Risk Our portfolio of available-for-sale debt securities and our senior unsecured notes create an exposure to interest rate and credit risk.
The analysis does not consider the impact that hypothetical changes in foreign currency exchange rates would have on anticipated transactions that these foreign currency sensitive instruments were designed to offset. Interest Rate and Credit Risk Our portfolio of available-for-sale debt securities and our long-term borrowings are exposed to interest rate and credit risk.
Changes in fair value of these equity securities are impacted by the volatility of the stock market and changes in general economic conditions, among other factors.
The fair value of these equity securities was approximately $1.5 billion and $1.2 billion as of December 31, 2023 and 2022, respectively. Changes in fair value of these equity securities are impacted by the volatility of the stock market and changes in general economic conditions, among other factors.
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The following table summarizes the expected maturities and average interest rates of our interest-generating assets and interest-bearing liabilities as of December 31, 2022: Expected Maturity Total Fair Value (in millions, except percentages) 2023 2024 2025 2026 2027 Thereafter Total Assets Available-for-sale debt securities $ 1,048 $ 830 $ 382 $ 19 $ 4 $ 9 $ 2,293 $ 2,293 Average interest rate 2.55 % 3.41 % 3.83 % 5.09 % 2.42 % 2.07 % Liabilities Senior unsecured fixed rate notes, including current portion (1) $ 2,250 $ 1,750 $ 1,750 $ 2,750 $ 2,000 $ 13,750 $ 24,250 $ 21,872 Average interest rate 1.33 % 3.70 % 3.50 % 3.65 % 2.29 % 4.07 % _______________________________ (1) Amounts represent principal balances.
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The fair value of our available-for-sale debt securities is subject to change as a result of potential changes in market interest rates. The fair value of our portfolio of available-for-sale debt securities would not be significantly affected by either a 10% increase or decrease in interest rates primarily due to the short-term nature of the portfolio.
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Debt and Credit Facilities of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information. 43 Equity Price Risk We hold shares of common stock of certain publicly traded biotechnology companies primarily in connection with license and collaboration agreements.
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We do not believe that the future market risks related to our securities will have a material adverse impact on our financial position, results of operations, or liquidity. Our senior unsecured notes have fixed interest rates. As such, there is no financial interest rate exposure.
Removed
These equity securities are measured at fair value with any changes in fair value recognized in earnings. The fair value of these equity securities was approximately $1.2 billion and $1.8 billion as of December 31, 2022 and 2021, respectively.
Added
The fair value of these senior unsecured notes and our liability related to future royalties as part of our 2020 acquisition of Immunomedics, Inc. are exposed to fluctuations in interest rates. The current fair value of our debt portfolio and liability related to future royalties are $22.6 billion and $1.2 billion, respectively.
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Loans under our revolving credit facility bear interest at either (i) the Term Secured Overnight Financing Rate plus the Applicable Percentage, or (ii) the Base Rate plus the Applicable Percentage, each as defined in the revolving credit facility agreement. There were no amounts outstanding under the revolving credit facility as of December 31, 2023.
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As such, there is currently no financial interest rate exposure. 47 Equity Price Risk We hold shares of common stock of certain publicly traded biotechnology companies primarily in connection with license and collaboration agreements. These equity securities are measured at fair value with any changes in fair value recognized in earnings.

Other GILD 10-K year-over-year comparisons