Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Susan Hubbard - Vice President of Investor Relations

John F. Milligan - President and Chief Operating Officer

Robin L. Washington - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Kevin B. Young - Executive Vice President of Commercial Operations

Norbert W. Bischofberger - Chief Scientific Officer and Executive Vice President of Research & Development

John C. Martin - Chairman of the Board and Chief Executive Officer

Analysts

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Mark J. Schoenebaum - ISI Group Inc., Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Matthew Roden - UBS Investment Bank, Research Division

Yaron Werber - Citigroup Inc, Research Division

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

Brian Abrahams - Wells Fargo Securities, LLC, Research Division

Robyn Karnauskas - Deutsche Bank AG, Research Division

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Thomas Wei - Jefferies & Company, Inc., Research Division

Thomas J. Russo - Robert W. Baird & Co. Incorporated, Research Division

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Ravi Mehrotra - Crédit Suisse AG, Research Division

Philip Nadeau - Cowen and Company, LLC, Research Division

Brian Skorney - Brean Murray, Carret & Co., LLC, Research Division

Jim Birchenough - BMO Capital Markets U.S.

Gilead Sciences (GILD) Q4 2011 Earnings Call February 2, 2012 5:00 PM ET

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Gilead Sciences Fourth Quarter 2011 Earnings Conference Call. My name is Stacy, and I will be your conference moderator for today. [Operator Instructions] As a reminder, this conference call is being recorded today, February 2, 2012. I would now like to turn the call over to Ms. Susan Hubbard, Vice President of Investor Relations. Please go ahead.

Susan Hubbard

Thank you, Stacy. Good afternoon, everyone, and welcome to Gilead's Fourth Quarter 2011 Earnings Conference Call. We issued a press release this afternoon providing earnings results for the quarter and full year 2011. This press release is available on our website as are the slides that provide much more detail around the topics covered on today's call. I'm joined today by our President and Chief Operating Officer, John Milligan, who will review the key milestones and strategic initiatives from 2011; followed by our CFO, Robin Washington, who will provide additional details on our financial results and our 2012 guidance; Kevin Young, EVP of Commercial Operations will discuss our commercial performance; and then Norbert Bischofberger, EVP of R&D, will provide an R&D update and key milestones. John Martin, Chairman and CEO, will close out the prepared remarks by outlining our strategic initiatives for the year ahead.

As a reminder, during today's call, we will be making forward-looking statements regarding our financial outlook in addition to regulatory and product development plan. These statements are subject to risks and uncertainties that may cause actual results to differ from those expressed in any forward-looking statement.

A description of these risks can be found on our latest SEC disclosure documents and recent press releases. In addition, please note we undertake no duty to update or revise them. We will also use non-GAAP financial measures to help you understand our underlying business performance. The GAAP reconciliations are provided in our press release as well as on our corporate website.

I will now turn the call over to John Milligan.

John F. Milligan

Thank you, Susan. Thank you all for joining us today. Our team's hard work over the last several years resulted in many significant financial, commercial and R&D milestones in 2011. We saw record revenues for ATRIPLA, Truvada, AmBisome, Ranexa, Letairis and Cayston. We also achieved record market share for our combined HIV portfolio as well as our cardiopulmonary products. Robin and Kevin will review these outstanding financial and commercial results with you and then Norbert will describe some of our many R&D accomplishments.

Single-tablet regimens are becoming the standard of care for HIV treatment, and as you know, it is Gilead's ongoing strategy to provide HIV patients with additional options for simplified regimens. During the fourth quarter, the European Commission granted approval of the Truvada rilpivirine, single-tablet regimen for the treatment of HIV. This product, marketed in the EU as Eviplera and as Complera in the U.S., constitutes our second single-tablet regimen and began launching in 2011 in the U.S., Canada, the U.K. and Austria.

Regulatory submissions for approval were made in the U.S. and EU during 2011 for Quad, which if approved will be Gilead's third single-tablet regimen for the treatment of HIV infection. The NDA was filed less than 6 weeks after data lock. These accelerated timelines for collecting and analyzing the data and filing in both the U.S. and EU were made possible by the dedication and skill of our R&D teams.

Just 2 weeks ago, FDA approved lower strength tablets and an oral powder formulation of Viread for the treatment of HIV-1 infection in pediatric patients from ages 2 to 12. We are pleased to provide this important therapeutic option for younger HIV patients and are working to make the pediatric formulations of Viread available in the U.S. and abroad.

For a number of years, we've been collaborating with various organizations to explore the use of Truvada for pre-exposure prophylaxis or PrEP. Several studies have shown that the use of Truvada in uninfected at-risk adults can reduce HIV transmission. Based on these observations, a supplemental NDA was submitted to FDA in December for the approval of Truvada for prevention of HIV infection among uninfected high-risk adults. To get expert advice on this application, FDA is determined that an advisory committee meeting for the antiviral division will be held in the May timeframe.

We continue to believe that there's room for significant innovation in the area of HIV and during the year announced a new collaboration with Tibotec to develop the first single-tablet regimen containing a protease inhibitor. Tibotec's PI, darunavir, has now been successfully combined into a single pill with emtricitabine and our investigational agents, cobicistat and GS-7340. And we anticipate clinical studies to begin later this year. In addition, a Phase II study was initiated in the fourth quarter of 2011 for a single-tablet regimen containing emtricitabine, elvitegravir, cobicistat and GS-7340.

Last year, we entered into a licensing agreement with Boehringer Ingelheim, which allowed us to combine BI's patent estate and compounds on non-catalytic site inhibitors for HIV with our internal research programs. Integrase inhibitors working by this mechanism are not expected to be cross resistant to elvitegravir and we look forward to sharing with you future data on this exciting new class of HIV inhibitors.

On the liver disease front, 5-year data from the ongoing open label phase of our 2 Phase III clinical studies of Viread for the treatment of chronic hepatitis B represented at the key U.S. Liver Meeting, AASLD. These data showed that 5 years of Viread treatment did not just help further progression of fibrosis but actually resulted in improvement of liver fibrosis in 51% of patients and regression of cirrhosis in 74%. We continue to be enthusiastic about the prospects to help people with chronic HPV by developing finite duration treatment. With this goal in mind, an exclusive worldwide licensing and collaboration agreement with GlobeImmune was announced in October. This research is aimed at developing a therapeutic vaccine that will enhance "s" antigen conversions providing a functional cure for HPV-infected individuals. In keeping with our philosophy to develop best-in-class drugs, we acquired Pharmasset in order to bring PSI-7977 to our portfolio. We anticipate that we will be able to conduct and complete the clinical studies to allow the first approval of 7977 in combination with ribavirin by FDA during the first half of 2014. We also plan to initiate the development of alternative 7977-containing regimens, including single-tablet regimens with other candidates in our portfolio. This strategy has the potential to benefit a large number of patients and provides the opportunity for a significant revenue growth and diversification in 2014 and beyond.

Gilead's liver disease team enrolled more than 1,400 HCV-infected patients in various clinical studies during 2011, demonstrating their capacity to work towards these accelerated timelines.

In summary, 2011 was a very productive year for Gilead and I'm very proud of the individual and collective efforts of all our employees. I will now turn the call over to Rob as he discuss in more detail our financial results. Robin?

Robin L. Washington

Thanks, John. Good afternoon, everyone, and thank you for joining us. As John mentioned, we made exciting advances in our products and pipeline programs, and our continued commercial execution delivered solid financial performance in spite of a challenging macroeconomic environment. For the fourth quarter, product sales were $2.1 billion, an increase of 11% year-over-year. We completed the year with total product sales at the upper end of our guidance at $8.1 billion, an increase of 10% over the prior year. At $8.1 billion, we now have a worldwide business that is 6x the size we were in 2004 when we first launched Truvada in the United States. North America product sales for 2011 were close to $5 billion in total and Europe approached the notable milestone of $3 billion. Gilead generated product revenues above $200 million in 7 countries and today have commercial operational capabilities in the U.S., Canada, Europe, Australia with a growing presence in South Korea, Hong Kong, Taiwan and Singapore. Our fiscal year 2011 non-GAAP product gross margin decreased slightly to 74.8% from 75.8% in fiscal year 2010 primarily due to an annual selling price adjustment for the percentage share of ATRIPLA that is paid to our partner. This adjustment occurred late in Q4. Compared to Q4 of the prior year, this selling price adjustment had an unfavorable impact of approximately 2% on our product gross margin.

Non-GAAP R&D expenses for 2011 were $1.1 billion, approximately $19 million above the upper end of our guidance. This was primarily due to the milestone payment associated with our accelerated registrational filings for Quad in the U.S. and Europe. In addition to the investments we made in our internal programs over the course of the year, we augmented these efforts through strategic investments and acquisitions and licensing opportunities and collaborations, which in totality resulted in additional R&D expenses for the fourth quarter and full year of approximately $60 million and $100 million, respectively.

Our 2011 non-GAAP SG&A expenses were $1.1 billion, in line with our guidance. When compared to the prior year, non-GAAP SG&A increased primarily due to expenses associated with the ongoing growth of our business, the U.S. pharmaceutical excise tax expense and bad debt provision due to slower collections in certain southern European countries.

Turning to cash flows. For the full year 2011, we generated $3.6 billion of operating cash flow, of which approximately $1 billion was generated in the fourth quarter. Our track record of generating strong operational cash flows enabled us to raise a total of $5.9 billion in debt to partially fund our acquisition of Pharmasset while maintaining our investment-grade credit rating.

The last financial highlight that I would like to share is our full year 2012 guidance, which is detailed on Slide 23 in the earnings call deck available on our corporate website. Please note that this guidance is inclusive of the Pharmasset acquisition, which closed in January. For full year 2012, we are projecting product sales of $8.6 billion to $8.8 billion, reflecting a 6% to 9% increase over 2011 product sales. This range includes the U.S. launch of Quad in the second half of 2012; the growth of Complera and Eviplera in the U.S. and Europe, respectively; the continued gains from our non-HIV products tempered by the ongoing economic uncertainties in Europe and the potential for a continued volatility in foreign currency exchange rates. For example, we estimate that a 10% fluctuation in rates or hedged currencies could have $150 million to $200 million impact on our product sales. Please note that the non-GAAP product gross margin and operating expense guidance provided to you include the impact of acquisition, restructuring and stock-based compensation related expenses where applicable.

Our non-GAAP product gross margin for the full year 2012 is expected to be in the range of 73% to 75%. We expect non-GAAP R&D expenses for the full year 2012 to be in the range of $1.325 billion to $1.4 billion. This range includes the full year operating expense impact of all our recent acquisitions, including Calistoga, Arresto, Oceanside and, most recently, Pharmasset.

We expect non-GAAP SG&A expenses for the full year 2012 to be in the range of $1.225 billion to $1.3 billion, which includes the anticipated impact of Quad launch and a higher U.S. pharmaceutical excise tax expense. Our effective tax rate for the full year 2012 is expected to be in the range of 26% to 28% due primarily to the expiration of the federal R&D tax credit and the increase in the U.S. pharmaceutical excise tax, which is nondeductible.

As detailed on Slide 24, we are anticipating a full year 2012 diluted EPS impact of acquisition, restructuring and stock-based compensation related expenses to be in the range of $0.31 to $0.34 per share. And finally, we anticipate the net interest impact associated with the Pharmasset transaction to be approximately $230 million for 2012, which is detailed on Slide 25.

I'll now turn the call over to Kevin to share more review regarding our 2011 commercial performance and our outlook for 2012.

Kevin B. Young

Thank you, Robin. I am very proud of the many accomplishments achieved by our commercial organization in 2011 and our results in Q4 bode well for a successful 2012. Especially encouraging were the U.S. Truvada and ATRIPLA Q4 year-on-year growth rates of 9% and 11%, respectively. These results reflect the final release of 2011 ADAP federal funds and the resultant 50% reduction in patient waitlists from that peak. HIV product revenues were unaffected by large wholesale inventory levels and non-retail purchasing was healthy yet in line with patient demand.

The key patient drivers of HIV growth also looked very encouraging for Q3 2011, our latest data point. In the U.S., the moving annual total number of anti-retroviral-treated patient remained strong at 9% and the median CD4 count at treatment initiation hit an all-time high of 347. We have also been pleased with the uptick of Complera since its U.S. approval and launch in August of last year. Our goal of bringing the combination product of Truvada and rilpivirine to market was to provide additional options to physicians and expand the total number of HIV patients receiving a single-tablet regimen. With this in mind, I'm delighted to say that since the launch of Complera, we are seeing a 37% growth in the number of prescriptions for patients starting on a single-tablet regimen. We hope to reproduce this performance in Europe as we roll out Eviplera during 2012. To date, we have begun supplying Eviplera in the U.K., Austria and Germany.

Over and above our exceptional performance in HIV in 2011, I'm pleased to say that we have a growing business outside our core antiviral franchise. 13% of net product revenues or over $1 billion came from AmBisome, Ranexa, Letairis and Cayston in 2011. Importantly, Letairis and Ranexa had year-on-year growth rates of 22% and 33%, respectively. As I think about 2012, the underlying drivers of HIV commercial growth continue to look robust. The scientific arguments in HIV to diagnose more patients and treat them earlier have never been stronger. Moreover, the reasons to be using single-tablet regimens are compelling both medically and practically.

During 2012, we will continue to rollout Complera around the world and, subject to FDA approval, will bring our third single-tablet regimen to individuals in the U.S. living with HIV. We feel confident that the Quad will become an important treatment option for HIV patients initiating therapy and will ultimately be positioned as a preferred therapy in U.S. and international treatment guidelines. Like the rest of the pharmaceutical industry, we will undoubtedly continue to see some headwinds in European markets. Nevertheless, the specialist [ph] nature of Gilead products and the strength of the pharmacoeconomic arguments to treat HIV place us in a strong position for future growth. We will look for opportunities to open up new operating affiliates as we have done successfully in recent years in Austria, Switzerland and Poland where we see sustainable and profitable businesses and healthcare systems that support breakthrough medicines.

Finally, like the rest of my colleagues, I strongly believe that the acquisition of Pharmasset is a transformational milestone for Gilead. The worldwide potential for all oral antiviral pan-genotypic HCV cure is sizable with over 12 million infected individuals in commercial markets alone. We are already in high gear preparing global launch plans that will bring GS-7977 expeditiously to patients around the world. Our established relationships with the hepatologist and gastroenterologist via Viread HPV, our knowledge of liver disease payers and policy makers and the exciting potential of leveraging our HIV resources to expand HCV-provided capacity is a galvanizing prospect. And I am confident the Gilead commercial organization will rise to the occasion.

I will now hand the call over to Norbert Bischofberger. Norbert?

Norbert W. Bischofberger

Thank you, Kevin. For HIV, in the fall of last year, we provided positive top line results from the 2 pivotal Phase III studies comparing Quad with 2 current standard-of-care regimens, ATRIPLA in Study 102 and atazanavir boosted by ritonavir with Truvada in Study 103. In both cases, at 48 weeks, Quad proved to be non-inferior to the standard-of-care regimens. The 90% response rate observed on the Quad arm in Study 103 is the highest response rate seen in any large, blinded, randomized study of HIV patients. The 48-week results for both pivotal studies were accepted for presentation at the Conference on Retroviruses and Opportunistic Infections or CROI taking place in Seattle, March 5 through 8. Study 102 will be the subject of an oral presentation and Study 103 of a poster.

Across all our HIV programs, there will be at least 45 presentations at CROI, highlighting the important role of Gilead products in the treatment of HIV infection. In the U.S., the NDA application for Quad has been accepted by FDA for standard review with a PDUFA date of August 27. In addition, FDA indicated that a panel will be convened in the May timeframe to provide expert advice on the application. In Europe, we anticipate that EMEA will complete their review by the end of this year.

To further define the profile of the Quad, we have initiated 3, 48-week Phase IIIb studies to reevaluate switching of biologically suppressed patients from ATRIPLA to Quad in one study from Truvada plus a protease inhibitor to Quad and the other and from raltegravir plus Truvada to Quad in the third study. We expect data from all 3 studies to be available by late 2013. The Quad filing will be followed by regulatory filings this year for the single agent of elvitegravir and cobicistat. The filing for elvitegravir will be supported by Study 145 comparing elvitegravir to raltegravir in treatment-experienced patients. 96-week data indicating non-inferiority of the 2 arms were released in 2011.

The cobicistat filing will be supported by study 114, a Phase III study comparing cobicistat to ritonavir, both in combination with atazanavir and Truvada. We have released top line results from this study, which also met its 48-week primary objective of non-inferiority.

Last week, we announced the initiation of a Phase II clinical trial evaluating GS-7340 for the treatment of HIV infection in treatment-naïve adults. This 150-patient Phase II study will evaluate GS-7340 as a part of a once-daily, co-formulated, single-tablet regimen that will also contain cobicistat, elvitegravir and emtricitabine and will be compared to our Quad single-tablet regimen.

Moving to cardiovascular. Ranexa appears unique among anti-angina agents, because in addition to reducing ischemia in angina, there's evidence that it also lowers Hb1c, the biomarker for type 2 diabetes. 30% to 40% of coronary artery disease patients also have type 2 diabetes. Hence, these patients could potentially derive a dual benefit from Ranexa. In order to further define this potential benefit, we've initiated a Phase III program that includes 3 studies involving approximately 400 patients each to determine the effect of Ranexa alone or in combination with other antidiabetic therapies in lowering Hb1c and plasma glucose after 24 weeks of treatment. Confirmation of the antidiabetic effect of ranolazine in these studies could lead to a new indication of ranolazine for the treatment of type 2 diabetes.

Another opportunity for Ranexa is its use in conjunction with percutaneous coronary intervention or PCI to prevent subsequent major adverse outcomes. A subgroup analysis of MERLIN, a 7,000-patient study of Ranexa in acute coronary syndrome indicated that Ranexa treatment resulted in a reduction of major adverse cardiovascular events in patients with a history of angina undergoing PCI. A Phase III study has started to further define the potential benefit of Ranexa post-PCI. In this trial, 2,600 patient with the history of angina undergoing PCI with incomplete revascularization will be randomized to Ranexa or placebo with the end point of major adverse cardiovascular events.

On the oncology front, in further strengthening of R&D management, Roy Baynes has joined the Gilead team as Senior Vice President, Oncology Therapeutics. Roy joins us from Amgen where he served as Vice President, Global Development and Therapeutic Area Head for Hematology Oncology. Throughout his tenure there over the last decade, he helped the Clinical Development and Medical Affairs teams responsible for the approval and launch of numerous hematology and oncology products.

Gilead has acquired promising oncology assets over the last couple of years and voice leadership will be important in bringing these novel candidates to market. GS-1101 went into Phase III development this quarter with studies in chronic lymphocytic leukemia. In addition, patients are being involved in 3 Phase II studies of the monoclonal antibody, GS-6624. These Phase II studies are evaluating the efficacy and safety of 2 different doses of GS-6624 in myelofibrosis, pancreatic and colorectal cancers. The pancreatic and colorectal cancer studies are both randomized, blinded studies comparing 6624 versus placebo when added to the standard of care in second line metastatic disease. In addition, 6624 is also being evaluated in a Phase Ib study in IPF and in a Phase II study for liver fibrosis and HCV-infected patients.

And finally, turning to liver disease. John, Robin and Kevin have all mentioned the important acquisition of Pharmasset. We are proceeding with the Pharmasset Phase III development plan for GS-7977 in genotype 2 and 3 patients. This program consists of 2 studies, 1 in treatment-naïve patients with patent interferon ribavirin as the control arm, the second in interferon intolerant ineligible patients with placebo as the control arm. I'm pleased to report that the treatment-naïve study was initiated in mid-December, and since then, we have screened 145 patients. This trial is the rate-limiting study for filing because of the 24-week duration standard-of-care arm. Due to the great interest and fast enrollment, we anticipate that these 2 Phase III studies will reach target enrollment in the United States before we will be able to activate sites in other geographies.

As you know, results from the ELECTRON study were presented by Pharmasset at AASLD last October where GS-7977 and ribavirin for 12 weeks resulted in 10 out of 10 cures in genotype 2/3 patients. We're awaiting data from multiple studies in genotype 1 patients specifically from the ELECTRON study, which involve genotype 1, both treatment-naïve and nonresponders, as well as from the QUANTUM study, which involve genotype 1 treatment-naïve patients. We received news this week that our late breaker abstract has been accepted to CROI for 2 cohorts of genotype 1 HCV-infected patients from the ELECTRON study nonresponders and treatment naïve patients. In both cohorts of that study, all patients treated with GS-7977 and ribavirin achieved undetectable viral load at 4 weeks on treatment, also known as rapid biological response or RVR.

By the time we present those results, we will have 4 weeks of Sustained Virologic Response data or SVR4 from the nonresponder patients. Many of you noticed, but it's important to reiterate that RVR reflects biological response on treatment. However, the important measure of response and the accepted Phase III endpoint is SVR12, which is the sustained virological response 12 weeks after end of treatment. SVR4 data are a reasonable proxy for SVR12 as most patients that rebound after treatment discontinuation do so in the first 4 weeks.

We also anticipate that we will have a significant presence at the European Liver Conference taking place in Barcelona in April with over 17 submitted abstracts from our HCV effort alone. As Gilead has pioneered in HIV, we expect to bring forward next generation genotype [ph] regimens for the treatment of hepatitis C also. To that end, drug interactions will be carried out with 7977 and GS-5885 and other internal candidates, which will be followed by Phase II clinical studies.

In closing, the investments we're making today, both in our broad and promising internal R&D efforts we have embarked upon, will continue to drive the success of our business in the future. I would now turn over the call to John Martin. John?

John C. Martin

Thank you, Norbert. As you have heard, we met a number of important milestones in 2011 that were achieved as a result of all the hard work of Gilead employees over the last several years. This momentum is continuing into 2012. For HIV, we will continue to benefit from the evolution of the U.S., European and international guidelines that support earlier diagnosis and treatment as well as the growing appreciation for the benefits provided by single-tablet regimens. In 2006, the Centers for Disease Control and Prevention suggested HIV testing as part of routine medical care in order to decrease the incidence of new infections. This benefit has now been quantified in study HPTN 052, demonstrating that HIV treatment results in 96% reduction of HIV transmissions in serodiscordant couples. The publication of this work in the New England Journal of Medicine was recognized in December as the Breakthrough of the Year by Science Magazine. The high efficacy demonstrated in HPTN 052 has ended the debate on the value of treatment as prevention.

In summary, we look forward to adding to the strength of our HIV business with our growing pipeline in cardiopulmonary, oncology and liver disease. As we enter our 25th year, I believe that the health of our company has never been stronger with prospects for exceptional growth for many years to come.

At this time, we will open the call up to Q&A. Stacy?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Geoff Meacham with JPMorgan.

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Financial one, and then a clinical one. So for your 2012 guidance, can you let us know if you assume top line or margin impact from the Quad launch and then your currency assumptions in 2012 guidance? And then for Norbert, just a question here on strategy in genotype 1. And congrats on the data that you told us today, but what changes would you guys make in genotype 1 to the original Pharmasset strategy, registration strategy? Would you increase the number of patients? Would you increase the -- or change the comparative group? Just to help us out with that.

Robin L. Washington

Geoff, it's Robin, I'll answer the financial part of your question. Yes, we did include the Quad launch as well as the contingent uptick of Complera from a product gross margin in our overall guidance. I mean, from an operating margin standpoint, some of that is tempered by the R&D investments that we're making associated with Pharmasset and the rest of our therapeutic areas. You also asked about currency. As I mentioned in the guidance section, the FX assumption is included in that plus or minus 10%. We believe that our current revenue base is about $150 million to $200 million.

Norbert W. Bischofberger

Yes, just on the clinical side, of course, we are -- we've been thinking about the whole different number of scenarios and many of these depend on what the emerging data look like. And that will all become much clearer in the next month or 2 or 3. And the other thing is we still have to have conversations with regulatory authorities. But something I can tell you, we've been thinking about this to further accelerate the program. It's entirely conceivable that you would actually -- the studies that will get to approval would be 2 or 3 placebo-controlled studies. So you take the placebo-controlled study in genotype 2/3 that Pharmasset has announced already at AASLD and you add to that 1 or 2 placebo-controlled studies in genotype 1 with 7977 and ribavirin. That would probably be an attractive thing for us to do. But again, of course, it depends on the data and the genotype 1 patients and secondly whether regulatory authorities would agree to that. And both of those things are being discussed internally and we have a meeting scheduled with regulatory authorities to discuss this.

Operator

Your next question comes from the line of Mark Schoenebaum with ISI Group.

Mark J. Schoenebaum - ISI Group Inc., Research Division

I'm going to ask one really boring gross margin question and then one on HIV franchise. On the gross margins, if my math is right, it looks like you guys are actually guiding to -- I think you're non-GAAP gross margin in 2011 was about 74.5%. Your guidance is 73% to 75% for 2012. But Complera is obviously a higher-margin product and ATRIPLA is a higher-margin product. So can you help me understand why there wouldn't be more gross margin expansion? And then Merck today on their call said that Isentress has 14% patient share. But when asked about the impact of the Quad, they seem to minimize it because they said that the booster will keep people away from the Quad. Do you think you can take the 14% patient share away from Merck as low-hanging fruit in a refractory setting?

Robin L. Washington

So, Mark, I'll take the first part. So the margin to your point is higher for Complera. But Complera and the launch of the Quad, which wouldn't happen until the second half of 2012, are still relatively small relative to ATRIPLA. So while we keep some overall uptick because the variation in the mix of the single-tablet regimen doesn't start to make a huge difference until the out-years of the Quad upticks and Complera upticks. And you'll see more of that in 2013 and 2014.

Kevin B. Young

Mark, it's Kevin on HIV. We think we've got very attractive potentials for Quad. The results that was referred to by Norbert, I can tell you, the awareness of Quad is incredibly high, particularly in the U.S. where we did the majority of our 102 and 103 studies. And I just think there is such a high and growing demand now for single-tablet regimens. On Slide 36, we begged a snapshot of Synovate Q4. The IPSOS [ph] healthcare database is actually Synovate, they were bought out. And so we begged to have a very early look -- particularly for Complera. But you can see already, just in the first quarter, our Gilead single-tablet regimen share has gone up to almost 60% in the naïve patients. And I think that shows you the preference for a single-tablet, so I think having our quote on the market will only help that. I do want to point out that, of course, our label will be in the naïve-treatment setting as opposed to treatment-experienced patients for the Quad. But nevertheless, I think the Quad is, in my mind, going to do very, very well in HIV.

Operator

Your next question comes from the line of Rachel McMinn with Bank of America Merrill Lynch.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Norbert, I just wanted to follow up on the comments you made with regards to the ELECTRON data at CROI. Is that 10 patient data sufficient to discuss the Phase III design with regulators? Or do you need additional data beyond that? I assume you do. And just as a corollary on the R&D budget, just want to get a better sense for this. Do you -- you have lots of, I assume, increased HCV expenses. Are you assuming any discontinuation from other kind of pipeline studies? Or is that something that could impact R&D numbers later after you do a portfolio review?

Norbert W. Bischofberger

Yes, Rachel, so I'll answer the first question. So the data that we will have by CROI or we'll be presenting at CROI is enough to schedule the meeting with the FDA. So that's the data that we're going to send in to get a meeting date. And when the meeting is actually scheduled, which is typically 3, 4 weeks later, then we'll have more data. And that will absolutely suffice to discuss the strategy that we're going to pursue in Phase III and genotype 1 patients.

Robin L. Washington

So Rachel, it's Robin. Relative to our R&D guidance specific year of investment for us, there, to your point there, our incremental investments in liver disease, there will be some rationalization of the portfolio. But again, given the transaction's quote less than a month ago, we're still going through that process. So that's basically taking our liver disease program and their program. And we'll do some rationalization, but that won't have an impact until the latter half of the year. There's also the ongoing investment in oncology and inflammation. And you have to keep in mind that our study progressions, we have a lot more in Phase II and Phase III trials versus prior year. So not only in 2012 but also in 2013, you'll see R&D expenses a bit higher.

Norbert W. Bischofberger

Rachel, maybe to follow up on that, we started a large number of Phase II studies last year that looked at relevant questions then, they are not as relevant anymore now. So we will, of course, discontinue those studies, but it takes a while to close them out. So as Robin said, the real benefit of closing them out will not be seen in the first half of this year, more a bit later.

Operator

Your next question comes from the line of Matt Roden with UBS.

Matthew Roden - UBS Investment Bank, Research Division

Also a follow-up on hepatitis C. Nice to hear that you're going to have the SVR4 data from electronic CROI. Should we presume that we're going to see SVR12 data at another medical meeting later this year, perhaps at EASL? And similarly, are we going to see a QUANTUM data presented at EASL? Or is that simply a top line press release? Secondly, just on the financial guidance here, you referred to economic uncertainties in Europe as one of the factors you considered in product sales guidance here. So can you talk about what you're seeing in terms of budgetary constraints to access the pricing receivables so that we can sort of reflect that in our models as well?

Norbert W. Bischofberger

So, Matt, I'll answer your first question. It is our intent that, as these data mature, that we will make them public and communicate them because we have to do that. We also owe it to the investigators and the patients, that they know and that helps involvement in nonclinical studies. But we have not made a decision yet what exactly we're going to present at what meeting. It depends on really how the data evolves and what are we going to have at what point in time when the abstract deadline is due. So we'll decide that when -- on more short notice.

Robin L. Washington

Matt, just a further clarity on Europe, right, we mentioned just the ongoing uncertainties. There is an assumption of about a 2% to 3% income -- impact from overall price reductions, which is mostly just part of the ongoing process that happens over there and there was a small amount of incremental austerity measures in the latter half of 2011 where we'll see the full year impact. Relative to collection, we continue to build up our reserves. That wouldn't impact revenue, but we baked an increase in bad debt associated with southern Europe into our SG&A guidance as well. But primarily, if things continue to deteriorate, a lot could happen as well as to have them relative to the valuation of the euro. So we factored that in also.

Operator

Your next question comes from the line of Yaron Werber with Citi.

Yaron Werber - Citigroup Inc, Research Division

So Norbert, just for you, 2 questions. One, I mean, the data is looking like it's going to be very good from ELECTRON, both in null and experience. So what are your -- I'm sorry, naives, what -- does that mean that you would consider doing one? You said maybe 1 to 2 studies. Are we talking about maybe a combination naives and nulls? Or would you actually potentially split it up to a naive and a null study separately? And then if you don't mind, just secondly, just on genotype 2/3, I mean, congrats, I mean, it looks like the U.S. sites are going to enroll the patients. Would you consider doing a study for the rest of the world and for genotype 2/3 as well? Or is that going to be sufficient for global registration?

Norbert W. Bischofberger

Yaron, so 3 comments, 3 answers to your questions. So first of all, I would like to remind you again. I know you know this, but the RVR data is necessary but not sufficient. I want to remind you, in the ELECTRON genotype 2/3, they had 100% RVR rates with 7977 by itself but only 60% SVR rate. So we really have to wait for the SVR data, that's the meaningful thing. Then the other thing, we're just thinking about -- I mean, that this is all a dialogue internally. We get to a study in naive patients, in Phase III and genotype 1 and another study in previous treatment failures or rebound, also nonresponders, that will be kind of the treatment-naïve and treatment-experienced. And then the other question, yes, absolutely, we are acutely aware of the fact that we have to do studies in other geographies. It's just the fact that these studies are going to enroll very, very quickly and they will be enrolled way before we have the first site up and running. But what we are thinking about is doing, for instance, there's another special population studies that we're going to do in parallel and those are, for instance, transplant, HIV co-infection [indiscernible] telaprevir failures, those are just 4 samples. And those we would look to focus more on outside the United States to give people, particularly in Europe, experience with the drug and some comfort to use it so that they are comfortable once it gets approved.

John F. Milligan

We don't need it for registration.

Norbert W. Bischofberger

Yes, but it's not needed for registration, so we can absolutely register the drug in the U.S. and probably also in Europe. We still have to have that conversation with European regulatory agencies with the U.S. studies.

Operator

Your next question comes from the line of Sapna Srivastava with Goldman Sachs.

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

I have at least 2 quick questions. One is do you have any end-of-treatment data or SVR12 individual data for patients that we may expect at CROI? Are we going to see it all together? And the second question is just what do you do with the rest of your HCV portfolio? If 7977 stayed out early, it does live up to the potential at maturity.

Norbert W. Bischofberger

Sapna, so the end-of-treatment data, we have now and they were included at the abstract, so these are the SVR, the RVR data. But we don't have any SVR data yet. And those will be presented at CROI and it will SVR4s. That's all we're going to have. But as I said in my script, SVR4s are a reasonable proxy for SVR12 because they have been at least qualitatively very predictive. And secondly, what are we going to do with the rest of our HCV portfolio? Well, 7977 and ribavirin is not going to be our last drug that we're going to get approved in hepatitis C, but we're really aiming for a pan-genotypic single-tablet all once-daily regimen. And that, I think, is much closer than we thought a year ago. And we have all the compounds internally in place so we can pursue that. The first one will obviously be 5885 or 7977. That will probably be genotype 1 specific, but we have other things coming behind it that has pan-genotypic potential.

Operator

Your next question comes from the line of Brian Abrahams with Wells Fargo Securities.

Brian Abrahams - Wells Fargo Securities, LLC, Research Division

Another question on 7977 along those same lines. A kind of a commercial question, what's your sense as to the SVR rate relative to the current standard of care that you think would support a go-forward path for 7977 plus riba in the broadest genotype 1 population? And if you did opt to conduct a pivotal study with 7977 plus 5885 in this broader population, what would be some of the rate-limiting steps to getting to the point of running a pivotal study? And how far behind would that be versus the genotype 2/3 program?

Norbert W. Bischofberger

Yes, Brian, I would like to -- Kevin wants to chime in, please do. So Brian, you said, what is the -- what kind of SVR rates do we need to consider a broad genotype 1 development programs. I want to remind you, there a lot of people that are interferon-ineligible/intolerant. And so even with a not optimal SVR rate, this would absolutely be a very successful product because -- let's just pick something, 30% SVRs. If there is no downside, you try it for 3 months, and afterwards, you may have a 30% chance of being cured. That's a huge step forward from where we are today. So that's how we're thinking about it. And the other question you had, can't remember now.

Robin L. Washington

It is what kind of combo studies.

Norbert W. Bischofberger

What's the rate in these steps, so we are currently pursuing a drug interaction study 7977, 5885 that will then be followed by a fairly small Phase II study to simply show that you can use together, the 2 together that you get reasonable SVR rates. And that will then lead to a Phase III study, and it's probably about 6 months to 8 months behind 7977 by itself.

Kevin B. Young

I wouldn't have much, Brian. We're very close now to CROI, so in a little over a month, we're going to see that data. So I think that's going to be very informative. So I wouldn't really add much to Norbert's comments.

Operator

Your next question comes from the line of Robyn Karnauskas with Deutsche Bank.

Robyn Karnauskas - Deutsche Bank AG, Research Division

I guess some expense questions. So you talked about SG&A being up in 2012. Maybe you can give us a little sense of what's behind that. Is HCV the key driver? Or maybe what programs or an education might you be adding ahead of going into hep C? And then second, maybe a little bit more color on the R&D spend.

Robin L. Washington

Sure. Robyn, it's Robin. On the SG&A side, there was a small uptick -- and I'll let Kevin go in a little bit more detail as we prepare for the Quad. But the biggest impact on SG&A is the excise tax. So in 2012, we guided to about $50 million and that's pretty much where it came in. But going forward in -- I'm sorry, for 2011. But in 2012, we expect it to be in the range of $80 million to $100 million and that's really driven by about 3 factors. One is just our overall growth as -- or our overall revenue growth in the government sector. Also, the denominator in the calculation is getting smaller, a result of a decline in the overall pool of pharmaceutical sales used in the calculation as more products go generic. And then the overall fee is increasing. So Gilead is getting a bigger component of that tax. It's a fairly significant increase. So that's one of the primary drivers, but I'll turn it over to Kevin to talk about the Quad investment that we're making.

Kevin B. Young

Yes, Robyn, it really isn't HCV. HCV is mostly in 2012 around market assessment and building our launch plans. We are increasing our investments in HIV for the U.S. for the Quad. Again, that will be very efficient. We do have a plan, I think, for a high impact launch and we're certainly not going to leave anything on the table when it comes to the launch of the Quad. I should also add that we're very carefully establishing our Asian organization. We hope by the middle of 2012 that we'll have the pricing approval for Viread for HPV in Korea. And Korea is a very substantial market for hepatitis B. Entecavir is actually the biggest product of any pharmaceutical in the Korean market and we'd like to be successful there. So we're being selective and we're being very focused, but we think they're good investments to make around the world.

Robin L. Washington

And Robyn, relative to the color around the R&D expense, as I mentioned earlier, Pharmasset is a component of it. We've pretty much taken their budget. The investment in oncology and inflammation is also increasing. And as also mentioned, it's really a function of more Phase II and III as we continue to progress our overall pipeline that's driving the increased R&D expense.

Operator

Your next question comes from the line of Ian Somaiya with Piper Jaffray.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

So it's really [ph] my slide, you have -- Slide 7, which gives us timelines for the HIV products, I was hoping you could maybe take a shot, Norbert, at the -- on the hepatitis C side. I think you have given us some framework for the genotype 2/3. Can you just comment further on genotype 1 beyond the ribavirin combo and also the 5855 (sic) E?

Norbert W. Bischofberger

Yes, Ian, certainly. I'm actually just looking at Slide 7 I don't think I've ever -- so more -- you want more color on which one?

Robin L. Washington

On HCV type.

Norbert W. Bischofberger

So genotype 2/3, Ian, as we said, it's kind of on its merry way, so the first study is enrolling. And as I said, I think, in my conference call, the study was started on December 19 and really not much happened in December because of the holidays. But nevertheless, we screened, as of this morning, 145 patients. That's pretty remarkable. And that's the less attractive study of the 2. We're actually intentionally waiting with the second study so the first gets a little bit underway. So the study will enroll very quickly. It's a 6-month total study duration, 3 months frequent, 3-month follow-up. We will be able to assemble and analyze the data fairly quickly and then submit it to the FDA. And then you can kind of do the math. It's going to be a very accelerated timeframe. And genotype 1, if we get -- if the data look good, we will initiate that, at the same time, the second genotype 2/3 study gets up and rolling. And genotype 1 will be even faster because there are more patients around. So I think it's just going to be a very rapid development.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

And the 5855 (sic) E combo?

Norbert W. Bischofberger

So we are doing a drug interaction. We'll do a Phase II, a small Phase II study, similar to what a 12-week 7977, 5885 plus, minus ribavirin, something of that sort. And once we have SVR4 data, I would feel comfortable making a decision to go to Phase III with SVR12 data emerging during that process. So we were thinking it would be maybe 6 to 8 months behind the 797 (sic)  ribavirin program.

Operator

Your next question comes from the line of Geoff Porges with Sanford Bernstein.

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

A couple of quick questions. One, Norbert, you mentioned the 7977 monotherapy arm and the fact that there was 4 patients who relapsed in that arm at 4 weeks. Could you tell us now that you've got 12-week follow-up, how that looked? And then just, Robin, could you give us a sense of where we should be thinking about share count going by the end of the year given all the sort of capital use that you have during the year?

Norbert W. Bischofberger

Yes, Geoff, so the ELECTRON, the arm with 7977 by itself, still looks the same. This is not data we have disclosed, but that's one reason why we feel SVR4 is a pretty good proxy for SVR12.

Robin L. Washington

And, Geoff, relative to your share count, as we talked about with the acquisition, we did moderate and pretty much suspend our share repurchases after October of 2011. We will do moderate share repurchases in the near term to offset option dilution primarily, but our real focus of cash in the near term is going to be on debt repayment, which we expect to be back in our target. That's at the top by mid-2013. So to your question on share count, we don't expect it necessarily to go down significantly. We were just going to try to manage the current balance as much as we can.

Operator

Your next question comes from the line of Thomas Wei with Jefferies.

Thomas Wei - Jefferies & Company, Inc., Research Division

I had a question on 7977 and HPV. So I guess especially now that you've seen 100% RVR rates in genotype 1, we've seen some of what Pharmasset's valuation assumptions were in their regulatory filings. What perspective can you share with us or what details are you willing to disclose on the ways in which your own valuation assumptions were similar or different from Pharmasset's?

John F. Milligan

I guess it's a combined question in there, Thomas. It's John Milligan. So a couple things. Changing a valuation at this point in time wouldn't be prudent because, of course, we don't want to know what the SVR rates are for genotype 1 or null responders. And also, I think the only thing I could say with regard to our valuation process that it was very different than the Pharmasset valuation in terms of how they saw the patient flows and the time of the patients. So we think it will be a longer timeframe to capture patients than Pharmasset had suggested in their disclosure. Also, I would say that we think there's a lot of patients that can be captured both in the United States, Europe and other territories, which could provide for very long and sustained revenue and cash flow stream for Gilead, but we haven't put out anything more than that. So that's as much as I can say.

Operator

Your next question comes from the line of Tom Russo with Robert W. Baird.

Thomas J. Russo - Robert W. Baird & Co. Incorporated, Research Division

I just had a really quick follow-up. Can you give us a little bit more color on what you have coming down the pike that's pan-genotypic

[Audio Gap]

in addition to 7977 and also plans down the road for any combinations with those agents?

Norbert W. Bischofberger

Yes, Tom, we have not disclosed this in any way, but we have a number of backup nucleosides that we, Gilead, has been working on. And of course Pharmasset had a number of other nucleosides that are further back. None of this is clinical yet so it's still preclinical, but that's what we're looking at.

Operator

Your next question comes from the line of Michael Yee with RBC Capital Markets.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

You've talked a lot about different combination and a lot of different studies on 547 and 48. I guess I was wondering, when you think about long-term maybe even for 7977's launch, have you thought about studies with shorter duration regimens or ribavirin-sparing regimens?

Norbert W. Bischofberger

Yes. So Mike, absolutely. We have not only thought about it, but some of these cohorts are already ongoing to look at even shorter duration than 12 weeks to see what the response rates are there and to also look at other combination. I want to remind you, we have 2 important studies ongoing, one with BMS in combination with their NS5A inhibitor with or without ribavirin and one with Tibotec with TMC435. Both of those look at combinations of 7977 with other agents and we'll provide important information about how to use the drug ultimately. And by the way, both of those studies, the BMS study, as you can see. It also explores ribavirin-sparing because the arms, are 7977 plus the BMS NS5A, plus or minus ribavirin, so it has both 2 drugs and 3 drugs. And that's what you...

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Can you comment when you think we could see data from that?

Norbert W. Bischofberger

No, really not because that study is conducted by BMS and they have control over the data assembly and release.

Operator

Your next question comes from the line of Ravi Mehrotra with Crédit Suisse.

Ravi Mehrotra - Crédit Suisse AG, Research Division

A question for Kevin. Kevin, could you give us any color on the proportion of treatment naive patients versus treated patients for Complera and how that's changed over these very early phase of launch? And a second part to that question, you cited the protease inhibitor -- I'm sorry, the PI study is due, the 420 patients that you too reported on Q2, how quickly can you get that into label?

Kevin B. Young

Yes, so we can give you a little bit. And obviously, it's only 4 months of data. So it's really very, very early for Complera. If you break down where the patients are coming from for Complera, about 30% are naïve and about 70% are switch. And of the switch, about 1/3 were switches from ATRIPLA and 2/3 were switches from other regimens. And I think you can see that's sort of gone out a little bit in the slide I referred to earlier, which is the very nice early snapshot of Q4 because you can see that actually Truvada has dropped down a little where you see Complera coming in. But obviously, when you total, both ATRIPLA and Complera, you get up to that 59%. So a little bit of a tradeoff was obviously being Truvada plus something else, but we're okay with that because we won't have patients onto the single-tablet regimens. In terms of the inclusion of the data, Norbert, how long would it be typically for us to look for some sort of label change if we submitted data?

Norbert W. Bischofberger

Yes, the study is fully enrolled. I don't have the last patient's last visit here. But normally, internally, we look at 3 to 6 months to collect, analyze, write up the data, submit them and this will probably be a 6-month review efficacy supplement. So you're looking at maybe a year after completion of the 48-week end-point.

Operator

Your next question comes from the line of Phil Nadeau with Cowen & Company.

Philip Nadeau - Cowen and Company, LLC, Research Division

Norbert, back to you. I was just wondering if you could put a finer point on a couple things you said. So first, on the FISSION trial, it sounds like in a month, you've enrolled maybe a little bit less than 1/3 of that study. If I assume that, that enrollment is going to actually increase with time, that means that trial can actually be enrolled by the end of this quarter. It's 36-week study. So is it reasonable to expect data from that possibly year end this year or very early in 2013?

Norbert W. Bischofberger

Well, so if you were -- calculation is correct, then yes, it's reasonable to expect that. The other -- I just want to point out 2 things. Actually, we haven't enrolled 145, we screened 145. There will be a certain screen failure rate, although we don't expect that to be high. The other thing is, also, there aren't a lot of the sites up and running yet. We were thinking about having a large number of sites. With only 19 sites open, in this short period of time, we have 145 screened. So enrollment will be very quick. I do not really want to predict how quick, but assume they're out. 6 months afterwards -- 9 months afterwards is the end of this study. Remember the control arm is peg/riba 24 weeks, so it's a 9-month observation period. And after that, yes, you could submit certainly an abstract to a meeting.

Philip Nadeau - Cowen and Company, LLC, Research Division

Okay. And then second, on your comments on starting the genotype 1 trial in the answers to 2 separate questions. At one point, you said even like a 30% SVR would be perhaps meaningful for patients. And then in the answer to another question, you said if the data looked good, we're going to start a genotype 1 study kind of at the same time as positron [ph]. Can we take from that basically if there's any SVRs that come out of electronic QUANTUM and genotype 1 patients, the genotype 1 study is going to start? It sounds like the bar to starting that genotype 1 trial is actually quite low. Is that fair?

Norbert W. Bischofberger

Well, at one point, of course, if you get to very low numbers, you kind of you know then we wouldn't be doing it because we don't need to go there. We have 5885 and 7977 that's about 6 months afterwards. And that if 7977 and ribavirin is not enough in genotype 1 by itself, then adding 5885 would certainly greatly increase those response rates. And we then just have to gauge what is the loss and time and the risk and the expenses associated with it.

Matthew Roden - UBS Investment Bank, Research Division

Could give us some idea what the bar is? Is it 30%, 50%, 80%? Like, what would be the go, no-go point in your mind?

Norbert W. Bischofberger

We really don't see it that way that we say, below 30%, we don't do it; above 30%, we do; with 50%, we do. We have to really look at the totality of the data. Another thing, of course, is also we would have to look at resistance. Those that don't respond, the rebounders or null responders, if there are any, well, there aren't any right now, but if there were, those people develop resistance. And if the answer is no, then you could say there was really no downside to treating somebody. The only downside practically is cost. It's safe, well-tolerated. It's only for 3 months, that overall, it's convenient. And you know why? If you win 30% response rate, that seems to be why wouldn't patient accept that as a reasonable alternative to what's currently available.

Operator

Your next question comes from line of Brian Skorney with Brean Murray.

Brian Skorney - Brean Murray, Carret & Co., LLC, Research Division

Just real quick couple of questions. First one, on Slide 45, on the ELECTRON cohorts, you have all of the cohorts listed as having in end of '10, but on the last Pharmasset slide set in Dr. Dean's [ph] ELECTRON presentation, there were 25 patients supposed to be enrolled in the treatment-naïve cohort and the 2/3 experienced cohort. Has this protocol changed?

Norbert W. Bischofberger

No. Actually, Brian, that -- until seeing the slide right now, that is not correct. There were 2 -- those 2 cohorts at 25 patients target enrollment. That's...

Robin L. Washington

Yes, Brian, that's actually a really good catch, we missed that.

Brian Skorney - Brean Murray, Carret & Co., LLC, Research Division

Okay, fair enough. And then the second question is, just moving on to the Quad, I wonder if you guys have any thoughts on the AdCom. I mean, it just seems that the FDA has less frequently used advisory committees or there wasn't really controversy around whether or not to approve. I just wonder, have the FDA communicated any rationale for why they're going to have an AdCom for the Quad specifically?

Norbert W. Bischofberger

Yes, absolutely, Brian. We actually had a conversation with them when they informed us of their intent to do an AdCom. We said why do we need one? And they referred us to a guidance document that's available on the FDA website. And they clearly said FDA advisory committee meetings can be convened or should be convened if it's a first-in-class molecule. And the FDA felt fairly strongly that cobicistat, in particular, was something that's first-in-class, one-of-its-kind and that's why they wanted to do it. But they also communicated to us that there's no safety or efficacy concern with the Quad that will make them feel like they need an advisory committee. So it's more of a policy thing that has to do with first-in-class, one-of-its-kind molecules in cobicistat that is the one that's in the Quad.

Operator

Your next question comes from the line of Jim Birchenough with BMO Capital Markets.

Jim Birchenough - BMO Capital Markets U.S.

A couple of maintenance questions. Just on the R&D spend. It seems like we get a spike every fourth quarter at least for the last couple of years. Can you remind us why that is? And should we expect the same distribution in 2012? And then just on the Quad as it's part of your guidance, are you assuming a similar launch trajectory as what we've seen for Complera? And would something better than that be upside the guidance? Or I'm just trying to get a sense of how you're thinking about Quad out of the gate compared to what we've seen from Complera.

Kevin B. Young

Jim, it's Kevin. I'll take the second part first in terms of the kind of possible uptake of Quad. Just a step back, if you think about Complera, now Complera was never going to be ATRIPLA. There are just really no existing patients who has newer conversion market like we had with ATRIPLA. ATRIPLA had 80,000 patients on the components when we came out the gates. And obviously, that gave it an incredible ramp-up. We never have that -- never said we would have that with Complera. So in some ways, Complera is almost like a third agent launch. And that's why on Slide 35 I referred to our volume being above Prezista as a sort of a third agent comparator, which we're pretty pleased with. I think at this stage, I would probably peg the launch of the Quad somewhere between an ATRIPLA and a Complera. As I said earlier, there's a high expectation for Quad, very high knowledge of it and a very strong investigative base. So we believe that there is a high expectation. And I think we believe that we would get to preferred listing, a preferred ranking for Quad based on 102 and 103 data. We never expected to be a preferred regimen in treatment guidelines with Complera, but we are hopeful that that would happen fairly quickly with Quad. And obviously, that's a big market driver.

Robin L. Washington

And, Jim, to the first part of your question, the spikes that you referred to are really just driven by a milestone payments or in the case of 2011 was primarily related to some of the M&A and the collaboration activity that we did in Q4 to the tune of $60 million, is what I called out in our script. And that included the Boehringer Ingelheim agreement as well as Global Immune (sic) [GlobeImmune] and then the other piece related to the timing of the Quad filing. So again, that's what the driver was. Those aren't always predictable when you think about 2012. And the way we plan it is it's pretty much straight line, but those milestones can occur from time to time.

Operator

Our next question is our final question coming from the line of Mark Schoenebaum with ISI Group.

Mark J. Schoenebaum - ISI Group Inc., Research Division

Just to follow-up to Brian's question, I just want to be really clear. So 25 patients in the ELECTRON cohorts, but 10 -- you reported today RVR data on 10 of them. Is that correct? Or yes or no? And then just to make sure we're all clear. And then will you have data on all 25 patients at CROI, some kind of data for all 25 patients, perhaps RVR data for the ones that you don't have SVR data for?

Norbert W. Bischofberger

Yes, so Mark, to be clear, the abstract was submitted with all available RVR data, which comes from both cohorts the treatment-naïve and null responders from ELECTRON. But at the time of the CROI presentation, we will only have SVR4 data on the null responders. That's the total of 10. There won't be any other SVR data, which is those patients are still just aren't as long -- as far along at that point in time. So that's what we're going to have.

Operator

Ms. Hubbard, at this point, we have run out of time for additional questions.

Susan Hubbard

Great. Thank you, Stacy, and thank you all very much for joining us today. We very much appreciate your continued interest in the company, and we look forward to providing you with updates on our exciting milestones as we head through 2012.

Operator

We thank you for your participation in today's conference. This does conclude your presentation. You may now disconnect, and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Gilead Sciences' CEO Discusses Q4 2011 Results - Earnings Call Transcript
This Transcript
All Transcripts