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

All right. Well, good afternoon, everyone, and thank you for joining me on this afternoon's session here today at the 2021 Jefferies Global Healthcare Conference. I'm really grateful to have with me Gilead, the Chairman of the Board and CEO, Dan O'Day; as well as the Chief Commercial Officer, Johanna Mercier. And there's plenty to talk about at Gilead.

And so first, I would just love to maybe just start high level with Dan and maybe talk about a question and a topic that investors have on their mind, which is the word growth. And I think it seems to me that people struggle with whether Gilead is a growth company or how growthy and the different levers, I think, people are, I think, perplexed by. So maybe you could just make a comment about, excluding perhaps Veklury, is Gilead going to grow this year and in '22 and '23? And maybe just what are the key levers that will do that? So I'd hear that from you guys.

Sure, Michael. Thanks for having us. Delighted to be here with Johanna. And appreciate all of Jefferies' support for the conference here. Yes. I mean, as we've articulated, and we'll reiterate again, we -- we're firmly into the next chapter of Gilead, which is a growth story in the short, medium and long term. Yes, we have to look at Veklury slightly separately to that. I'm talking about the underlying business here. The key components of the growth in the short term are really our base business, our HIV business, and our oncology business. Mid to longer term, we -- we're building an inflammation portfolio. But we have in our hands today what we need to be successful over the near term to grow. And I think that largely rests, of course, with Biktarvy and our HIV business. As you know, this particular year, we're offsetting patent expiry. Johanna can speak to that a bit more on our HIV business, which won't repeat itself, if you like, in future years. And we have the beginning of what is really an important growth driver for us in our oncology business of Trodelvy. We were extremely excited about the FDA approval, the full approval in triple-negative breast cancer into the second line of therapy, which was -- which is important, more patients than third line and beyond, bigger patient impact and bigger potential for growth; as well as our accelerated approval for bladder. And that's just the beginning of Trodelvy as a pipeline in a product and our other oncology assets. And we have cell therapy that's also now growing as well and opportunities to look into that in the second-line setting. So in addition to what we have in our hands today, the data we have in our hands today, Michael, we've also got a data-rich second quarter and second half to this year that underlies continued growth drivers for us.

Absolutely. Okay. So maybe a quick question then for Johanna. Those growth drivers, HIV, Trodelvy is -- are, I think, were some of the big ones, for sure. Can you make a comment on the Trodelvy launch trajectory? I feel like maybe people had some more robust metrics and maybe it's COVID, maybe it's just a transition, of course, as you guys take everything over. Do you have a comment on that? And maybe we just have to align expectations, but it's been a question that's been asked.

No. That's a great question. Listen, I think it's meeting our expectations despite being in a pandemic, it's the way I would position this. I think more importantly, we're really excited. As of the April time frame, we've got a couple of really important milestones that will really then define the future of Trodelvy, specifically in triple-negative breast cancer. And that includes: of course, the label -- the full approval for both second and third line in metastatic triple-negative breast cancer that Dan referred to as well as the fact that it got published in the New England Journal of Medicine, the ASCENT data; and then, of course, if you add on to that latter, our indication in third-line bladder as well is an important piece of the puzzle, not just because of bladder and the unmet clinical patient need there, but obviously proving also that Trodelvy is not only efficacious and safe in the population of triple-negative breast cancer, but also beyond that. And that goes back to Dan's comment about pipeline within a product. So I think that's super exciting. So I think the next 90 to 120 days are really quite critical for Trodelvy. I do think that the oncology clinics, communities have been quite touched by the pandemic. And they're just starting to open up. So access has been a challenge, and I'm sure you've heard that from many of the other oncology companies. And so we have to find innovative ways. But with the data that we have with the ASCENT data, the overall survival that is crystal clear, it's just under 12 months additional survival, that's very powerful data that actually physicians want to hear about for their patients, and patients want their physicians to hear about it. So I think that's the play that is critical for Trodelvy over the next couple of months, let alone additional data towards the end of the year with HR positives.

Okay. So the label expansion, the publication, all of that should get it going and just hit, and maybe we were just too eager for things pre-label.

Well, one of the challenges, without that label, we couldn't discuss the overall survival data that was presented as ESMO, right? So that's the disconnect over the last few months. Until April, we weren't able to do that. Now we can and really educate physicians as why they should be basically leveraging Trodelvy in light of -- the other choices are really palliative care. So it's just an incredible opportunity for patients.

Well, let me ask a question to both of you then. I'm sticking with Trodelvy, which is an important growth driver. And that is, maybe, Johanna, you can make a comment about where HR positive indication, if that is positive, what that would do relative to your current label? Is that a double or a tripling type of thing to the indication? I -- my financial analyst model has a couple of billion. So maybe talk to how important that is. And to Dan, your confidence level that, that study will read out positive. Because I think initially, when you did the acquisition, it was like, "Oh my god, this is a no-brainer. It's going to work based on triple-negative data." And now there just seems to be uncertainty. But maybe you 2 can talk to that.

Sure. Well, let me start with the patient size, and I'll turn over to Dan on his thoughts on the data. The -- from a sizing standpoint, so if you think about third line, second line total, you're looking at about just over 10,000 patients, and it's probably about double that if -- more than double just for HR positive. So about 17,000 to 20,000 patients in HR positive. So huge opportunity to really expand in breast cancer. And that's why we're very excited about the data readouts towards the end of this year. Dan?

Okay. So Dan, is that -- are we going to expand another 17,000?

Yes. I mean look, we continue to remain very confident and bullish on Trodelvy as a pan-tumor medicine. I think the fact that it has demonstrated a benefit in bladder cancer as well as triple-negative breast cancer, I think, demonstrates that this Trop-2 expression and the benefits that it can provide across tumor types is very important. Now within breast cancer, as we look for the hormone-receptor positive data, of course, we have to see the data readout, but we're encouraged. We've been encouraged by the patients that were in the Phase I extension trial. And obviously, we need to see it. I think this study is well powered to show an effect of PFS, you know we slightly increased that as well, and OS. And as with everything, you have to wait to see the data. And so we'll wait to see that. But we're not stopping with hormone-receptor positive, of course. As you know, we're accelerating now our efforts in non-small cell lung cancer. We'll look at small-cell lung cancer. There are other types of indications we're exploring with Trodelvy, both alone and in combination.

Okay. Walking through that, just my question is, to me, the idea about where some people are nervous on the HR positive study has to do with this publication. But I agree that with small numbers and possibly these patients having got it recently perhaps as a kind of a last -- a clinical trial type drug that would have been late in their life. And that was what would have driven a small PFS, meaning they got a CDK4/6 recently. So do you think that's probably a good rationale? Or that it's just small n? And have you looked at that and saw that those patients CDK4/6 late in their life, and that would explain a small PFS there?

I think the fundamental issue is it's a small number of patients, I wouldn't overinterpret that, number one. And number two, remember that in now the Phase III trial, the same predisposition to CDK4/6 will be in the placebo arm as it is in the active arm. So if you like, we're comparing apples-to-apples there. And again, given the effect that we've seen in patients with triple-negative breast cancer, some of which were hormone-receptor positive prior and then progressed to triple-negative breast cancer as the cancer mutated. I continue to be optimistic. I think the study is well designed. The study is well designed.

Exactly. Exactly. Okay. Let me ask about another, I would say, large potential growth driver. And that's one of your BD deals with Arcus. Now Dan, you did a deal with Arcus. You punted up more money there. I think you're really excited about that pipeline, and it's more than just TIGIT. But Wall Street seems to be unclear about how competitive you'll be in TIGIT. And if this is not the one, there's a backup. Maybe you could just frame that for us because if you have a lung cancer combination regimen, that would be very exciting. But we're not sure.

Right. Well, I guess just to make sure we set the table here a little bit, I think it's important to understand that -- I know there's been a lot of discussion around the ARC-7 data from Arcus and Gilead. First and foremost, nobody has seen the data. We're blinded to the data. Arcus is blinded to the data. And we're excited about the data. We're excited about the possibility that it might hold for patients alone and in combination. So we're going to get that data soon. We'll be looking at overall response rate in the second quarter on an interim analysis. We'd like to see the response north of 50%. I feel confident moving ahead with the program and obviously, a separation in the study arms as well. And we'll just have to see how many patients we have to assess in the second quarter versus later this year in terms of making a decision around opt-in and move ahead. To the broader point, we really appreciate our collaboration with Arcus, not only for the number of programs they have, both in TIGIT with both an Fc-active, but also their 2 adenosine programs and more, but also because of the quality of the science and the people. And so we have a very close and strong relationship there that we value that I think gives a lot of optionality for us in our broader oncology portfolio, their PD-1, combining that potentially with Trodelvy and looking at combinations potentially with magrolimab. I really like the way that the totality of our portfolio is coming together, Gilead and also the importance that Arcus provides to that.

That's right. So yes, I would impress on folks that whatever happens, there is other stuff that you particularly liked there that we will continue to see data on. Now I think Andy had also made a comment last week, but it sounds like you're echoing it, which is, is there like some window? It's not like when they put out the interim and you guys put it out, you have to make a decision. Now the data could be good. It could be great, but you may not opt in. And just to be clear, there's a period where we would hear next steps, regardless of what they show. And I guess that the data is really, really good, it's kind of obvious, but you have the right and reserve to see further data.

Yes. Look, I think -- I know there's a debate going on there. I think the most important thing to articulate is that Arcus and Gilead are well aligned that we want to move with speed based upon the data, right? So we're not going to let anything get in the way of moving fast as soon as we see data that's compelling to move fast. And we're preparing, of course, for the scenario to move fast, so we're just waiting for that data. So whether that occurs at the second quarter, look at the data or later this year will all be dependent upon the number of patients, how strong the signal is. But as soon as -- and I think we'll be well aligned here, Arcus and Gilead. As soon as we see substantial data to indicate that we have the right response rate, that we're seeing the separation of the arms with sufficient number of patients, I mean, we're all prepared to trigger and to move. So it will be before the end of this year, and we'll be data-driven as we see it.

Okay. Let me ask -- going back to Trodelvy. It's also a competitive question and commercial question about lung cancer where, you're right, Trodelvy, now you have said you want to go full force into Phase III already, albeit -- and what's surprising, without necessarily a full data set. Just to be clear, does that mean you're planning and ready to go forward with that? And you're just confident that the updated data will be competitive? And how does that think about the position versus a competitor, which also have breast cancer data, and so people are paying close attention to that? And maybe you're just farther ahead. Maybe just make a comment on the competitive position in lung cancer.

Yes. Johanna, I think I'm going to let you speak to that, please.

Sure. No problem. Yes. So obviously, we were ahead -- if you compare other ADCs, we were ahead in breast cancer and maybe a little bit behind in lung. And so we're -- important for us to speed up a little bit there. We have the basket study. We're not going straight into Phase III. I think we're going to wait for the data and again, data-driven, right? We're going to go as fast as we possibly can, but we need to make sure the data supports it for patients and then move as quickly as possible. We also believe that from a competitive standpoint, despite the fact that we might not be first in lung, we do believe our safety profile might actually be quite differentiated in light of some of the safety issues that might have popped up with others and so -- that we don't seem to see with Trodelvy. And so the ILD piece of the puzzle is probably something that we feel is differentiated in lung, specifically in that indication of all indications. And therefore, we believe that we need to move forward with Trodelvy as quickly as we possibly can, but of course, always data-driven.

Okay. So to reemphasize, we would want to get a clear picture of all that data. So barring -- although they're barring some big difference from the prior data set, you're obviously confident though -- in the past, you've certainly said you want to move forward.

Yes. So Michael, let's be clear, we're planning for success.

Yes. Yes. Yes.

Got it. Okay. Let me ask another important commercial update, which was the HIV partnership. So another lever, certainly, over the next 10 years is durability of the base business and where that could take you. Now you did a deal with Merck earlier this year. I think that's really exciting for both patients and certainly for people who thought you guys should get together, and I was one of those. So I'd like to say maybe we rooted you on to do it. But your initial plan is to do a weekly, a pill, versus their, at least for now, intramuscular, maybe subcu monthly. Is -- how do you compare and contrast those regimens? How do you think about those in terms of market share? How do you think about what an oral weekly could do for patients?

Johanna, please?

So we're really excited about the Merck collaboration. And I think a lot of people were looking forward to this fund, Michael, including investors, including KOLs in the field. And I really do want to say, I think, both from a Merck and Gilead standpoint, if I may, it's really around patient-centered innovation. Because if you think about kind of the bar that was set, and I think Biktarvy set that bar from an efficacy and safety standpoint, the only underlying piece of the puzzle when patients were asked, "What else do you need in HIV," was that, that flexibility piece around dosing. And so really, this Merck-Gilead collaboration around lenacapavir, islatravir is an exciting combination potentially not only that accelerates our path to long-acting as well as potentially Merck's, but it adds to the sustainability, to your point, of the HIV franchise overall and gives optionality to the leadership that we have with Gilead in HIV. From a patient standpoint, listen, we're trying to move as quickly as possible. What we've heard is the weekly oral has benefits. It's not for everybody again. I think you're still going to have the daily orals that are going to hold a large part, a large component of the total market. But there are some that don't want to be reminded every single day that they have HIV. And that's -- the weekly oral is one way of getting us there. And of course, potentially monthly, every 3 months, potentially every 6 months is kind of what we're thinking. That's kind of the ambition of what we're trying to set forth. Because ideally, we'd love to get to twice a year. We think we might be able to get there with lenacapavir in prevention if it's single-agent advocacy. In treatment, our aim right now is monthly to every 3 months, which would be pretty incredible if we can get there, but our ambition is actually longer as well.

How do you get to monthly or longer with that? Because I'm only familiar obviously with the work you have with the current weekly. Is there -- [indiscernible] you've got some other interesting stuff going on there.