Gilead Sciences, Inc. (GILD) Earnings Call Transcript & Summary

Good afternoon, and welcome once again to Cowen and Company's Second Annual Oncology Innovation Summit. I'm Phil Nadeau, one of the biotech analysts here at Cowen, and it's my pleasure to moderate a fireside chat with Gilead Sciences. We're really happy to have with us today, Merdad Parsey, the Chief Medical Officer of Gilead. Merdad, thanks so much for joining us. I'm sure these are incredibly busy times for you.

I really appreciate the invite, Phil. Good to see you. Thanks.

I think we'll focus today's discussion specifically on your oncology pipeline in light of ASCO and EHA coming up. Maybe first, we'll start with Trodelvy. There's a vigorous debate on the Street about Trodelvy's TROPiCS-02 trial and ER-positive HER2-negative breast cancer. Can you summarize what gives you and Gilead confidence that's likely to work? And maybe throw into that, what is the powering of TROPiCS-02 and what data support those assumptions.

Sure. You can imagine there's a bigger discussion about it at Gilead too. So it's obviously an area of focus for us as well. Look, I think for us, we're -- our confidence really comes from the fact that we believe that the Trop-2 biology is going to read through in the HR-positive population. We have redesigned the study. And as you recall, we made some changes to the trial after we brought it in to both get rid of the ORR interim and to power the study appropriately so that we have an OS endpoint. Our first readout will be this fall and it is a PFS endpoint. That's the primary for the study. As we've said before, we've powered that with a hazard ratio of about 0.7 for PFS. And that gives us -- that's based on a difference of about 5.7 months in PFS versus -- I'm sorry, 5.3 months versus 3.7 months. And we also are powered in OS at 0.73. Obviously, that will take longer to read out, and those data will not be available this year. But as the OS reads out over time, that's how we powered the trial. We're -- I think we have -- when you ask about my confidence, I've been doing this for a long time. You always -- you're never 100% confident of anything. If you are, you're probably kidding yourself. But as I said, we're, I think, confident because I think it's a well-designed study, the biology makes sense. And importantly, I think from what I just said from the powering, I think we've been somewhat conservative in terms of how we've powered the trial given the historical data we have in the TNBC population with a much bigger PFS benefit and a much lower hazard ratio. We wanted to make sure that we are able to get to, for sure, statistical significance. The issue we will always -- in HR-positive that is so different from triple-negative is the clinically meaningful PFS end point versus OS and what that is. It's got to be, I think, a little bit different in that patient population. And then what the regulators want to see from a PFS versus OS. And that will be the -- I think that will be the question in a sense as we see the data evolve. And as you know, the PFS data at an initial cutoff may look different over time as -- because you're taking an early look and those patients who continue to survive will open that -- will continue to affect your PFS over time. So those are the variables we have in front of us, but I think in terms of overall confidence, we feel pretty confident about that trial.

There were a number of abstracts published this week based on subgroup analyses of the ASCENT study or new analysis of the ASCENT study. Anything there that you'd care to highlight as new or notable?

No. I mean, as you know, I think we took a couple of looks at those data and wanted to share some of the cuts post some of the data that had already been made public. I think people have noticed and talked about the 65 and over subgroup, which is a relatively small subgroup. But it also tends to be a subgroup with a lot of unmet need, and we're happy that we have, I would say, really consistent data in that patient subset. And I think that really speaks to the strength of the data for the overall patient population.

Perfect. Trodelvy is also in development in lung cancer. I noted that Gilead's planning kind of at risk, "a Phase III trial in lung cancer". What results must Trodelvy produce in the ongoing Phase II in order for that Phase III to be kicked off? And when could that go, no-go decision be made?

Yes. I think we feel confident about non-small cell based on both the data we've seen in our Phase I studies as well as the Trop-2 data that's emerging. And so our confidence is such that we will -- we are planning for a Phase III trial in non-small cell at-risk, and we'll probably kick that off while the data from the ongoing basket study continue to read out. So those data will -- we're enrolling patients in that trial again -- the basket trial and we'll update on those data as they become available. We'll provide updates on those data. But we're pretty confident on non-small cell, and we'll be moving forward pretty aggressively. I think you'll see us do that.

Another topic of conversation on Wall Street is the competition or potential competition in regards to Daiichi in the Trop-2 space. We did see some results last week in triple negative breast cancer from Daiichi's Trop-2. I'd like to include like a 43% response rate and a low rate of grade 3 AEs with interestingly no interstitial lung disease. Any opinion on how that compound could compare to Trodelvy? And how Gilead views the potential for long-term competition in the Trop-2 ADC space?

Yes. Great question. Well, look, I think for one thing, it's important because I think it validates the Trop-2 biology, right? And I think that's a huge part for us. We're already approved in second and third line, triple negative. And I think that puts us, I think, at a great advantage. And the Daiichi data, while I think are promising and early, I think they had 21 evaluable patients, right? So it will be interesting to see how those data play out. Remember that ILD incidents and even in their larger trials is about a single-digit percentage range. So I think we need to see more data. We have over 10x as many patients that have been treated with triple negative, with OS data and PFS data. So we remain really confident around where we are. And of course, we'll keep watching those data as they evolve. But I think our lead there is pretty substantial.

Perfect. Maybe moving on to Yescarta and Tecartus. We expect to see results from Yescarta ZUMA-7 trial in the second line DLBCL sometime this quarter. Can you remind us of the powering assumptions for that trial? And how would you frame what's good data versus somewhat disappointing?

Yes. Well, I'll start by saying is I think that those -- that study is, I think, a really important one for us in regards to the utility of Yescarta in that earlier line because I think the real -- the thing you remember around that patient population in second line is really curative intent and transplant, right? And if we can provide a meaningful option there for patients that get secured of intent and event-free survival, those things, I think that's going to be really great. We haven't really talked about our powering assumptions on that study. But we are looking at that event-free survival as the primary endpoint. We're powered to look at that as the primary endpoint. And it's really the standard of care that we're comparing to. And I would say the other thing that's unique for us in that study in contrast with a lot of other -- our competition is we have a secondary endpoint of overall survival. And I think that really speaks to both the size of the trial as well as our confidence in Yescarta. And so we'll be able to see both of those. Certainly, the event-free survival at the earlier time point and then over time, the overall survival. So we're pretty -- I don't want to say confident. Again, I'm always nervous about doing that, but not for any specific reason, but I think we're really well situated in those data. It's right around the corner. So we're excited to see that evolve.

What data do you think needs to be produced to drive adoption in the second line? I guess, in terms of the current lines of therapy, the uptake has been strong, but there's still a large percentage of patients that never see a CAR-T despite having a terminal disease. What could drive uptick in second line?

Yes. I think it's what we were just chatting about. I think that the third-line patients, if you think about these are -- those are patients who've already been through, usually, stem cell transplant. There is a lot of -- it's palliative in many cases, unfortunately. When you move up in line, I think because the option is really the curative intent with a transplant. And I think it will be the strength of the data in terms of how we compare there. And that's a patient population where we're really trying to go after curing with Yescarta. I think our data have been so strong in the third line. We believe that, that will be a big thing. Clearly, safety will play a part in terms of getting people to be comfortable around recommending treatment with the CAR-T over stem cell transplant. But I think it's really going to be that balance of safety and efficacy and the -- truly the curative intent that we think will be the drivers of adoption in second line. Maybe just to add to that, maybe just to be a little bit more explicit, right? These are patients who -- the intensity of a stem cell transplant is fairly high. And if you have that as a comparison to getting a CAR-T therapy, that gives you a little bit more choice in terms of what you can offer to someone if the efficacy and the safety play out the way we're hoping it does.

Do you have an opinion on the potential for competition from anti-CD19 antibodies or antibody drug conjugates or bispecifics or from allogeneic CAR-T? It seems like there's some interesting data at ASCO this year, particularly on the allogeneics.

Yes. You said it just right. I think we -- there's been some really interesting data coming out on the allogeneics. We think based on those data, what we've seen and I think the other modalities that you mentioned, we think with our ability to do vein-to-vein in 17 days, our ability, our -- the track record that -- people have seen the experience. People have -- and the ability to cure in a way that I don't think has really been shown for some of those other modalities especially as you move to earlier lines of therapy where you have the potential of curing people. We feel pretty comfortable and confident around where we are and what our data provide. I think we really have a pretty compelling alternative to some of those other therapies right now. So we'll have to see how those data matures. But right now, I don't think those data are providing, I don't think, a real clear path for people to do something other than using Yescarta.

What is the status of the Kite allogeneic anti-CD19? I believe it's KITE-037. Has Gilead provided guidance when that could enter the clinic?

We haven't. Yes, we haven't really provided guidance right now. So I think we'll -- I'll let Christi and her team sort of decide when to say more about that, but we haven't really provided a lot of guidance on that yet.

Perfect. Maybe turning to the Arcus collaboration. One of the biggest events this quarter is going to be the interim results from domvanalimab.

Yes. I can't say that either. So don't feel bad. We have articulation classes where we practice to see if we can say it, right? Domvanalimab is sort of what we've landed on. So yes. Just call it dom. It's okay. We just call it dom.

Love it. Dom's Phase II data in lung cancer. So what must it produce broadly for Gilead to opt into the program? What's Gilead's idea of positive results for an anti-TIGIT versus non-encouraging?

Yes. Maybe I think it's important, maybe, to start by -- I think there are a lot of misconceptions around sort of the data and the interim. I just want to make a couple of things really clear. The first is that we hear this, and I just want to be really clear. Neither we nor the team at Arcus have seen the data. These are -- these remain blinded to us, and we're waiting to see those data when they get unblinded. The second thing is that this is really an early opt-in time point and an early interim for us. We -- I think what we've said consistently is once we see data that are convincing to us that dom is performing the way we are hoping it will perform, we'll opt-in. That may be this first interim look, we certainly hope so. We want to be aggressive with this, but it may be that we might need the data to mature a little bit more. I don't think that will take us beyond -- it won't be outside of 2021. We'll see much more -- a lot more data over the course of the year. But I just want to make sure people will have the right expectations and don't misinterpret what might happen in an early interim analysis. And the reason for that is that we've, I think, again, tried to be really clear that what we're looking for is both an overall response rate that is high. I think we need to be north of 50%, and this is the important part, a clear separation from the zimberelimab monotherapy arm. And it's really that clarity of separation with a relatively small number of people in the trial that we'll be looking at and will be the basis of sort of looking at those things. So as we all hope that we'll have that clarity in the next couple of months. But it's also possible that we might want to see some data mature a little bit more, second scan. So a few more patients, things like that before we, both us and Arcus, are comfortable enough to dive in, all in. We don't want it to come off as this is the one bite at the apple because it's not, right? We -- that's not the nature of the collaboration. And we want to work really closely with Arcus. We have a great relationship with them, and we're both committed to moving this forward as aggressively as possible with the right data in hand.

Can you remind us how dom's differentiated from the other anti-TIGITs in development?

Yes, yes, absolutely. So it's the double-edged sword. I mean, it's -- as you know, most of the other -- well, I shouldn't say most, the Roche antibody, the Merck antibody, have an active FC region. Whereas dom has a silent FC. And there's a deliberate reason for that, and that is the thinking that we'll get more relevant activity of dom in the tumor while sparing T-reg cells and potentially get to better efficacy. Now there's preclinical data that says that, that might be the case. There's preclinical data that says that you need to be active FC. And so that's part of the reason why this interim becomes important for us to look at those data to see where reality is, where the human data are going to guide us because this will be the first real readout of that. Very importantly, and something that I don't want people to forget is that Arcus has moved their FC active TIGIT molecule 304 forward very aggressively. And they are already in combination trials with zimberelimab with that molecule as well. So we do have that as an option for us to consider as well. So I think there's a lot of optionality here, couple of shots on goal, and we'll just have to see how the science plays out.

Are you -- or is Gilead convinced of a role for anti-TIGITs in immuno-oncology? Or do you think that's still somewhat up in the air?

We're pretty convinced. I was at Genentech in gRED with the Roche molecule and I know this data pretty well. And so we think there's a real signal there. And so we're -- that's one of the reasons we're as excited as we are. We really think those data from Roche have shown the path forward here for what I would describe as one of the probably first generation of sort of the second generation of I-O agents. What I love about it is it seems not to have any adverse events that come along for the ride, which gives us a lot of optionality in terms of combinations then.

Arcus' pipeline also includes an adenosine receptor antagonist and an anti-CD73 small molecule. What's Gilead's opinion of those? How interested are you in those programs?

Yes. Those data -- I mean, both of those molecules look really interesting. The adenosine receptor inhibitor with the prostate data that they just discussed and will be shown at ASCO. And the anti-CD73, sort of the other -- the bookends of the axis in pancreatic. We're really -- it's early days for both of those, right? And I think we, like the rest of the world, we're really intrigued by those data. We're really encouraged by them. We're definitely interested in both of those. And we need to see those data play out. Those data are even less mature than the TIGIT data, right? So I think we need some time for those data to mature out. But as they do, I mean, we are really intrigued and excited about where that's headed.

Before we move on to magrolimab, we do have a question in the chat asking about the ZUMA-8 study of Yescarta and CLL. Any update there? And any plans to look at Yescarta or X19 in the outpatient setting for CLL?

I don't have any updates to provide right now on that. And we are looking. I would say, I think that the safety profile is something that we're really focused on for Yescarta and something that we will push on. Right now, we're not -- we don't have anything actively in the outpatient setting. But I do think that, that, obviously, a safety of Yescarta overall and -- is people have a lot of experience with now and are getting much more and more comfortable with and we're seeing that in terms of the utilization as well.

Perfect. Moving to magrolimab. What results must the Phase I be produced in order to support an FDA filing based on a single-arm data? And I guess, can you give us some perspective at how confident Gilead is that single-arm results could support FDA approval?

Well, it's -- I think it's appropriate. It's a really good question because it's the right question, right? I think single-arm data are always a bit of the challenge with the agency. The opportunity here is because the experience with azacitidine as monotherapy is fairly well established that we know what the response rates from monotherapy should be as what I would describe as a historical control, right? And so that's our hope. The -- so the answer ends up becoming it really, it will depend on how good the response rates are in the single-arm study and what those data look like and how convincing they are for us and the agency vis-a-vis the historical controls as well as other data that we can provide to bolster the background response rates. So that we see it. So I think it really is going to be a data-driven decision around how we approach that. And you know that we've already started the randomized trial, the ENHANCE study that is ongoing for MDS. And so we're executing on that as well. That will be -- that will either get us to full approval post accelerated approval or in the event that PFS -- I'm sorry, in the event that the initial readout is not -- that we don't have enough separation from the historical controls for whatever reason that, that gives us a backstop against that. But this is going to be a really data-driven discussion with the agency once we see the data.

Can you remind us of the time lines for the ENHANCE Phase III? Have you disclosed and Gilead expects...

We haven't. We have not. It's early days for that. I think we need to see how enrollment goes, and we'll share that as we get a little bit farther into the trials.

Got it. And should magrolimab be approved based on the Phase Ib data, can you quantify what the likely market opportunity is for that? What proportion of intermediate and very high-risk patients would be appropriate for therapy? How many [indiscernible] are there?

I don't think we've estimated that for folks externally yet. But as you know, that population right now really has only azacitidine. As you know, there's also some competitor data that is traveling in line with a very different mechanism of action. But we are -- I believe that this should get -- we should get a fairly broad adoption in that patient space as we -- once the data become available. So I don't think we've estimated what the revenues will be yet. External, yes. I know we're running out of time. So I'll try to talk faster.

No, no worries. We still have a few more minutes. You've been very busy over the last few years, actually maybe a broader question. You've been very busy rebuilding Gilead's pipeline. We're curious to hear what your assessment of the current pipeline is, what are the strengths? Are there weaknesses? Are there other areas Gilead would like to add oncology assets?

Sure. Yes. I mean, it's been a very busy year or so, Phil. I think when I joined, our oncology portfolio was small and obviously, with Kite as the lead there, we're thrilled about where we are. I mean, we did, I think, 18 deals last year and some very notable ones with magro and Trodelvy. Obviously, I think we've really tried hard to build a pipeline that's not only in -- serve those nearer term, but also can feed the pipeline over the long term. You've seen a lot of those deals and a lot of option deals that we've put into place for earlier-stage assets with the idea of really having a sustainable pipeline over the long haul for oncology. Our focus, I think, now is in large part around execution. We really have to execute on what's on our plate right now. We're building our teams. We're -- those are all really -- probably where our primary focus is right now. And we'll continue to look. We're pretty agnostic as to modality. We're not looking at thinking we're going to be in the next ADC company. We're agnostic, I think, right now to modality, and we're really looking at the pipeline towards having really deliberate investment at this point to be really strategic around how that pipeline evolves over time with a focus on -- given how much Phase III activity we're going to have in the near term, making sure that we can execute there while we're building the earlier-stage pipeline to keep optionality coming.

And what about the cell therapy efforts in particular? Gilead's got a bit of a unique structure where the cell therapy efforts are kind of cordoned off in Kite still. What are the goals for cell therapy? Do you feel like your critical mass there? Or maybe...

Yes. So I mean, I think it's been very deliberate thinking about how to make that work. As you can imagine, the work in cell therapy is really -- is pretty unique. And we've really tried hard to have that team leverage what Gilead can bring, but also really focus on cell therapy and what's unique there. The Kite team has really -- they've gone through a strategic portfolio review. They've looked at it. And with everything on their plate, really decided to focus on hematology. And so that's really the focus now at Kite and really focusing on making sure we do that. Our manufacturing, getting our vein-to-vein time, as I said earlier, 17 days and being best in the industry and also expanding our footprint from a manufacturing standpoint so that we have manufacturing facilities in Amsterdam and Maryland that are opening up really to supply Europe and other places. So that's our focus right now as the data roll out. And I think it's a good strategic move for us to really be -- to win there and we'll go from there.

In the last couple of minutes, I asked you about a number of programs that are high profile here in Wall Street. Are there other programs that I should have asked you about that maybe don't get as much attention as they should? Any other darlings or gems that we should perhaps pay more attention to than we do?

Well, yes, it's a really good question. I would say, I think we hit on many of them. And in particular, I think the ones that are -- that you mentioned CD73 and etruma coming out of Arcus. We're also -- we also really like our internal portfolio. We have the FLT3. We have a couple of other molecules coming from our interim portfolio. And remember, we have, for example, the CCR8 that is coming hopefully coming into our portfolio in the really near term. I think what -- the way we're thinking about it is these assets really start to complement each other and provides a lot of optionality for internal combinations. And I also -- things in our portfolio is probably underappreciated in terms of the flexibility it provides us in terms of some of those combination approaches, zimberelimab, sorry. So yes, I mean those are the ones that come to mind. I would say the CCR8 is probably because it's so close and we can taste it. So...

That's great. Looks like we are actually out of time. Merdad, thanks so much for a very interesting discussion. And again, congratulations on all the progress that you've had over the last year.

Thanks, Phil. It was good to see you again. And maybe next year, we'll do it in person. I really appreciate it. Thanks a lot for the words. I appreciate it.

Thank you.