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

Specifically to Trodelvy. Yes. Yes, look, I think we have -- not only based on Roche, but also with the Daiichi data as that's evolved on the Trop-2 -- utility of the Trop-2 antibody in non-small cell. We are moving forward pretty aggressively there in non-small cell lung cancer. Obviously, we continue to collect data both in our open-label study. And we've elected to go forward at risk with doing a Phase III trial. So we're -- I think we're looking at the data as they emerge and we're seeing good responsiveness for patients and still in later-line lung cancer to the Trop-2 agents. And so we're pretty confident. Now the question becomes, at what line of therapy are you going to intervene? I think we're going to start in later lines, but the emphasis there is on start. And as we start to learn more, especially with our label trial, we will -- our hope is that we'll start to march upstream in all the tumor types that we're talking about, right, I mean, I think all the tumors. And our big ones are breast, bladder, lung, right? Those are the big ones right now for us. And the hope is that we can move up in lines of therapy over time. It's obviously very different based on each tumor.

Absolutely. And do you have the tool right now to do patient selection in those trials? Or is this too early for that?

Again, too early, but we are -- so there, I think -- right there, I think it's going to be -- it's a much more interesting question of heterogeneity in lung cancer, for example. So that there, I think, if I had to rank them, I think heterogeneity and lung cancer probably is more -- a more relevant issue than what we've seen so far in breast.

All right. So we got -- talked about 2 programs. I'm going to jump to the end and ask about the third program, which is the Arcus effort or the [ effort together ] with Arcus. One thing that I'm kind of scratching my head there is now there's a lot of discussion about the value of those programs, and every time you throw a rock, you seem to be hitting an new PD-1 coming to market. And I guess, the question for you is how do you build differentiation of this? I mean you guys being the seventh PD-1 and third or fourth TIGIT, doesn't really add much. I think you got the adenosine molecule, but it does not seem that the program depends on the success of that particular molecule as the linchpin. So it seems that you are thinking about those assets as things that you need to bring in and participate in as a primary company. What is the logic there?

Yes. So I mean, I think you're absolutely right. Look, the relationship with Arcus is driven by the entirety of the pipeline and what's coming, so what might be coming. And as you know, the adenosine programs are looking interesting, right, both in CPRC and through etruma and in pancreatic with 680. So I think there's some interesting signals there. So we're excited about following that along and seeing what goes -- comes along. For Zimberelimab, I think differentiation is probably not the point for us for Zimberelimab, right? I think that we believe that having Zimberelimab or a PD-1 inhibitor that allows us to do drug development in combinations, that gives us flexibility relative to having to necessarily get KEYTRUDA for every trial or nivo for every trial, right? We don't want to be necessarily tied to that. We do think we can get approvals for Zimberelimab. As you know, Arcus has ongoing studies that we should be able to get to approval, so it should be an approved PD-1. But we -- and remember that I think the key thing for going forward is going to be combinations. And if you're really looking at a PD-1 and let's say, a TIGIT combination, co-formulating those drugs is probably going to be the future. So if we're competing against an atezo TIGIT or a pembro TIGIT that might be co-formulated, it really becomes important for us to have our own PD-1 as well, so that if that becomes the way to go forward, then we can have a formula. So it gives us a lot of flexibility in those areas. Sorry, just to finish on the differentiation bit. On TIGIT, specifically, look, I think we are -- I don't know. And we -- the data will tell us whether having Fc-no-TIGIT is going to differentiate positively or not. I think that's an open question. As you know, the preclinical data point you in both directions. We'll have to see what the clinical data show us. So I think that's an opportunity for differentiation. And we are also really focused on moving as quickly as we can so that we're not third or fourth. We are hoping that we can get to launch a lot closer to -- we're anticipating that Roche will be the first launch. We're trying to close that gap as much as we can. So I think our ability to execute with our partner at Arcus, I think it's going to be a big variable and are trying to make up time.

I also think there's a differentiation not only with the combinations, right, with that, but also potentially in the tumors that we study. So I think there's different ways of differentiating, I guess.

So in that perspective, one interesting side question is the importance of China. I mean we have seen some companies in China being able to move very quickly because of the availability of patients. You picked a California partner, [ an easier ride ] over. But in terms of the need to build global trials, you don't really -- you're a little bit disadvantaged by being 2 American companies as opposed to leveraging a Chinese partner for this. Any thoughts about this? Is this a real problem? I mean [ you have diagnosing -- a lot of experience in ] international trials, so...

Yes. It's -- look, I think it's a reality of the world, especially as you think about the different tumor types, right? I think depending on some tumor types, you really probably need to be in China. So that's an area where I think we are very aware of that, I would say, and working hard to make sure that we don't end up at a disadvantage there. So I think we -- you should expect us to be having more activity in China as we go forward.

So let's switch over and talk about HIV. And given that we have not asked Johanna too many questions for now, why don't we start with the commercial outline and think a little bit about the PrEP market. I guess what are we seeing in terms of the PrEP market? Are we close to saturation with the existing oral compounds? Are we seeing a rebound coming out of the distancing period in the demand? Is there a need to reengage patients who might not be looking forward to just having a discussion with their health care, but about their habits? Where are we standing in terms of that market, of that segment of the market?

Sure. So your first question was around have we maxed out, the answer is absolutely not. If we think about the numbers from the CDC and the actual share penetration that we've seen both with Descovy as well as with Truvada, the 2 only agents approved in prevention, you're looking at about 20%, 25% of the total market. So there's a huge opportunity still to uncover. And as we think about ending this epidemic of HIV, that's the way to do it, right? It's not just about treatment and education, you really need the prevention piece into it. The -- from a market standpoint, the market was growing double digits, so anywhere between 15% and 20% prior to the pandemic. You can appreciate that the market went to a complete standstill over the last 12 months. And we started seeing a pickup ever since February, March time frame, where the market is coming back. And I think that now it's completely or directly proportional to what's going on from an isolation standpoint in how it's opening up again in the U.S. and slowly but surely. And so we are seeing that market pick back up. So those are the dynamics right now, but I think there's still huge opportunity in prevention to really make a difference. And a lot of that has to do with education, but also it has to do with physicians having those conversations with their patients. And those are more challenging conversations maybe than we would all like. So I think that's definitely one of the barriers as well.

I completely understand. So when you said the market contracted, you mean that the market stayed where it was, or did the market actually literally contract because people were not going out and needing the drug?

It literally contracted. It was growing anywhere between 15% and 20%, and then it was in the negative by end of last year.

Okay. So if we look at like the levels you're seeing now when we were sitting down in June versus June of, call it, 2019, before the epidemic started, where are we? Are we still negative territory or are back or are we...

No, that's what I was saying. It's coming back up. So we're in the mid-single digits, so it's positive. And so we're seeing that kind of play out, and we've seen actually, despite the fact that Truvada was genericized last October, Descovy's holding share at about 45% or so. So we do think that this summer, which is usually the season where the market is at its peak, we do believe that, that growth will come back up. You're not going to go back and get the patients you lost. It's not like HIV switches or HIV-naive patients. But in prevention, I think you should see that pickup come back.

What segment of that market is occasional use? People using it everyday versus people are saying, "I'm single now, I'm out of a relationship, I'm going to start using this, and I'm going to use it for 3 months. And I'm going to stop using this when I'm back in a relationship."

There's a big percentage of the market that's the latter of what you just described, where they come in and out. And then you have obviously stable, where it's their lifestyle and it, from a safety standpoint, it just makes a lot of sense. So it's a real mix between the 2. From an actual percentage, I think it would be tough to tell you. From the research that we've done, we do believe that there's probably at least 30% to 40% of the folks that are in line with kind of intermittent, come in and out of the system. And so we've seen that kind of play out. And that's why we also think that long-actings will clear -- the right long-acting, if we can get it to the right flexible dosing, such as something like lenacapavir every 6 months, for example, if that was to show efficacy as a single agent in prevention, that 6-month would be a perfect thing, even 12 months would be ideal, right, where you don't have to think about it anymore and you're protected. That's kind of the ideal scenario. And that's why we think that long-actings will actually grow the market in prevention, very different for treatment in that long-acting second -- thought process. I don't think it will grow the HIV treatment market per se. But I think the long-acting, I think there's a real opportunity. If we've only penetrated 20% to 25%, that might make a big difference for people living at risk.

Okay. So we are talking kind of like physician-administered once a year with -- you need a good margin of safety around that drug, right? So if the patient comes after 9 months, you can still give them a shot and not get to a toxic level. And on the other hand, if he shows up to year 3, you're not getting to a position that if your patient misses by 3 months, we're going to get a secondary HIV epidemic here.

I totally agree. And I just want to be clear, 12 months is an ambition for Gilead. 6-month is reality, right? So I just -- because I'm sure Merdad is going to jump in. But basically, the lenacapavir 6-month, we've already shown that that's possible. And now, obviously, we're just starting the clinical trials in prevention to show efficacy and safety of lenacapavir. Assuming that's positive, that would be an incredible development for prevention and -- in the United States and maybe beyond, right? I think that should be -- that could be incredibly exciting. I think that forgiveness piece, that you just touched on, is a really important piece of the puzzle, not only in prevention, but actually in treatment as well. And that's something that lenacapavir offers, and Merdad could speak to that better than I could, but that's something that we really like about lenacapavir. And that's why the Merck collaboration that we just signed a few months ago is also super interesting because of that combination between lenacapavir and islatravir and offering that piece of the puzzle for patients in HIV treatment. Merdad, did you want to add to that? Sorry, Ronny.

You used the term I was going to use, which is forgiveness, right? I think it's a term of ART within the -- in the HIV field, both in terms of treatment and prevention, which is exactly the point you raised, Ronny. What happens if they come in, in month 13 instead of month 12, right, for their next injection? And so far, with what we've done in the clinic in the HCV population, we're really happy with the forgiveness profile of lenacapavir, and I think that's going to lend itself to avoiding some of these issues. So...

So let me ask since we're discussing, let me press on 2 additional points. So first, Johanna, you are going to be marketing a combination with the NRTI from Merck, and you'll be competing with it. How do you swing that? I mean I guess [ compared and just ] equally asked to Merck, but why is -- how do you argue, this is really important in treatment, but for [ provision really ], you should just use our agent. How does that work?

Yes. I think it actually works quite well, to be honest with you. The way I see it is, in treatment, you need -- you can't have a single agent. You really need, from a resistance standpoint, from an efficacy standpoint, and that's why the combination is important. That's why Biktarvy has done -- it's kind of set the bar for everyone. And this is a triple combination. I don't think it matters if it's triple or double, it's really about more the components and having the right components to make sure that we offer that efficacy safety for patients with HIV. In the prevention setting, if we could only use one single agent, then you should use a single agent, and that's why we believe lenacapavir has the right profile to potentially be that agent. So it would be different. We would be -- it would be prevention versus treatment which are, first of all, different teams, but different -- even different physician groups often. There's a lot of overlap, but definitely different physicians when you're thinking about prevention. It's much more general in prevention than it is for HIV treatment. And then the last thing I would say is, specifically to HIV treatment, is there is -- just from a long-acting standpoint, there are some patients that will still want the daily oral. And we've gotten that very clearly, probably more than half will continue to want the daily oral. They want to know they're taking something for their HIV, and they want to know that they're protected. I think there are some that don't want to be reminded that they have HIV and would love to kind of have something every few months. And I think what we've seen is every 3 to 6 months would be an ideal scenario. We also heard from them around patient convenience, so weekly oral would be something else that they would be interested in. And so we're looking at all of those options, and we actually have a -- we're picking up a trial in second half, which is islatravir and lenacapavir, weekly oral, and I think we're super excited about that, and obviously, moving to injectables as well every 3 months and hopefully beyond that as well. But I think it's just a different patient population that we're trying to target and making sure we address all unmet need. And to be honest with you, the only unmet need left in HIV is long-acting. What patients have been telling us is dosing flexibility is what they're looking for. That's the last thing they're looking for. So that's what we're trying to answer.

So I hear about the dosing flexibility and it makes sense. But if you look at the near analogous market, which is contraceptives, 70-odd percent of the market, even with very flexible IUD and subcutaneous dosing, prefers the orals and not even the most recent orals, some of those patients on orals that are there from the '60s and '70s and quite happy with them. So realistically, I guess, question number one, realistically, on the PrEP market or prevention market, why -- is this kind of the realistic range? Or is there is a strong argument why, in the HIV market, a lot more will want to go to subcutaneous?

No. I think [ in the study who ] use contraception, we've actually looked at that model to kind of better understand it. So I can relate to what you're saying. I would say you really got to split out treatment and prevention. I think it's a different population, right? HIV treatment, these are patients that have HIV. Prevention, these are people at risk. They -- right, they're not sick. And so a very different mindset, and I think there's some parallels to what you just described. In HIV treatment, what I said is, and I really feel strongly about this, there's going to be continued market for daily oral and that's why we believe Biktarvy has a very long runway. And targets kind of set the bar for folks in HIV treatment. So anything that comes after Biktarvy needs to ensure that it is bringing something different to the table, like the flexible dosing, if that's something the patient is looking for. So I do think there's a percentage of the population that might go to that if it's the right combination, if it's -- if the scheduling works for them. But I don't think the whole market is going to shift over. I really don't. And I think that's why it was so important for us to make sure that we track that closely, but that we also understand that Biktarvy has a very long runway. In prevention, I think it's a little different because these are people at risk, and you don't want to think about it, right? You don't want to think a week before that you're going out over the weekend and trying to map it out, or the next 3 weeks are going to be busy weeks socially. Whatever that is, right, it's just the dynamics. So if you can get something potentially even every 6 months or beyond, I think that might actually potentially grow your market and -- but do I think that 100% will switch over? No. I still think there are folks that don't like injections and really want that daily protection and know that they're taking something. So I think it's -- you need to have a mix.

On the treatment side, I guess the question is at what point does the weight gain with Biktarvy begins to play? I mean I saw some of the recent data. I mean it's there. I mean it's not large. But it's a few pounds. And is this eventually as new therapies come to market, as Merck begins to market this, will this become a challenge for Biktarvy, especially if you think about an oral -- alternative oral medication that might come out to compete with it in first-line treatment?

Yes. I think some of the noise level around the weight gain, and we've done a lot of data and research, and Merdad can take this as well as I can, around this to really understand it and make sure that we knew what was going on. A lot of it has to do from the switch from TDF to TAF agents. And what we've seen is if you look at the label for Truvada or TDF agents, you're going to see in the label that actually it's weight reduction. So what people were used to is that they actually lost a few pounds on TDF agents. As you move to TAF, there's no weight reduction. And therefore, what you're seeing is there is some weight gain when you're switching to those newer agents, such as Biktarvy. And so -- but that rate gain is in line with average weight gain over an annual period for all of us. And so that's kind of the differential. As you think about newer agents, that would be the bar, is kind of there's no additional weight. Merdad, anything to add that I might have missed on that?

No. I think you hit all the points. That's exactly right.

So in your eyes, you're not seeing a weight gain associated with the treatment of Biktarvy. This is more of an artificial issue of moving from a toxic agent to...

It's the switching, right, it's the switching from older agents to newer agents.

Okay. And last, on this, what is the opportunity in Europe and the rest of the world? I mean this has been a very U.S.-centric market. And we are -- we do see Europe and obviously, rest of the world was being much more cost-sensitive. Is this a market that you can penetrate with the next generation of drugs? Or should we [ space ] -- if you think about this remaining at 80% U.S. market in the long run, and we'll be pretty happy if it remains 80%, if it doesn't go higher kind of thing?

Are you talking about prevention specifically?

I'm talking about the overall market. So if you think about the next -- both from Biktarvy, islatravir, your compound combinations, is the rest of the world going to grow as a percent? In oncology, a lot of times, the international market is 1/3 to 1/2 of the market depending on the agent, right? And here, we saw a situation where, in the last 5 years, we've seen a U.S. dominance in those markets. Are the next generation of agents good enough in terms of their value-added versus where the drugs currently used in Europe to actually allow you to drive a step-forward in terms of penetration of those therapies?

Yes. So I would just take a step back and just say that Biktarvy has actually penetrated those markets quite well already. So Biktarvy has actually, in treatment, obviously, has done quite well in Europe. Across Europe, it's #1, has done well in Asia markets, including Japan, South Korea, Taiwan, where it's all #1, Canada, Australia, et cetera. So it has gone beyond the borders of the U.S. And Biktarvy -- and it's had similar launch trajectories, which is quite interesting and exciting for Biktarvy. You're right to say that the price points are different and that, obviously, in some markets like Europe, generics sometimes or tenders kind of play out and generics get favored, which is unfortunate for patients because there's been such an incredible evolution scientifically. I think the question for me is more around prevention and can we do something different outside of the U.S. in prevention because I think there's an incredible opportunity. And many markets today don't reimburse it, don't reimburse prevention. And so there's an education and there's some work that we need to do and hoping that the data also supports it further to advance this. And so that's work that we need to do in preparation for something like lenacapavir in prevention as well. So more to come on that one. But I do think, absolutely, there are opportunities. We are currently assuming lenacapavir and islatravir for launches in Europe and beyond.

So launches, but you're quite willing to say that the revenue share of HIV in Europe will grow versus where it is today as a percentage of the total business.

I think that's the intent, right, to continue to grow overall, but U.S. will always dominate for obvious reasons that you just touched on, right? So I agree with what you're saying, but I think the intent is to balance it out a little bit more than it's been in the past, with a clear focus on ex-U.S. markets, not just Europe, but ex-U.S. markets, including China, by the way. And that would include Biktarvy, for example, or even prevention, where they actually have a very high risk number there as well. So more to come on that one, but I think that's an interesting piece of the puzzle that we haven't looked at in the past.

And I'll close with an HIV question for Merdad, just to kind of [ back up with the next. So in Bokado ], so we are -- that is a question from the audience. We are potentially going to start seeing, if we are all lucky, a little bit better technology coming in for the vaccination market. Some of the data we're getting from the effectiveness of RNA vaccines for COVID suggest that those vaccines are quite effective, and some of those new combination of protein and adenovirus vaccine might be -- do a little bit better than the past. If you can describe the pictures for us in terms of where does the vaccination effort in HIV stand, and to the extent they do come to market, would you get something which is, call it, 80% efficacious, somewhere in the next 5 years or 10 years, what does that do to the HIV market in terms of demand, in terms of the opportunity for Gilead to participate?

Well, look, first of all, it would be a great thing, right? I think it's -- and as you know, we have our own HIV cure approach that we're working on. So I think it will be fantastic. It would be a great thing. And part of our approach for our cure approach is vaccines. And so we are following the story, but also, it's part of our work that we're doing. So we would love to be part of that solution. We would love to be able to get to a cure. I think the probability of a cure or a truly effective vaccine is not that high. I wish it were higher. But I agree with you. Over time, we should get there. But remember, we've been trying to do a vaccine since as long as this virus has been around and unfortunately, with very little success. So I do hope that some of the positive signs that people are seeing are going to get us in the right direction. The last thing I'll say is the question is the degree of efficacy that you see, right? If you get a vaccine that is 20% effective, how much is that going to get used versus 80% effective or 90% effective? And how do you know, right, how do you figure that out? So that's a -- I think it's still a bit of a slog to try to get there. But I don't want to opine on what I'll do in the HIV market. I mean, obviously, we can do better in preventing disease just as we're trying to do with PrEP. The treatment market should go away. And we've always said, we're all about, not go away completely, just to answer your -- the look on your face, Ronny. As you know, with any vaccine, any therapeutic, there's always a need for -- with any vaccine, there's always a need for a therapeutic, right? So I think it changes the market. I don't know how much. That's Johanna's job. But I do know how much it will change the market. But what I was going to say is I think that -- I think it will take us a while to get to a point where there's a vaccine that materially impacts that background rate. We're all after ending the epidemic, and our hope is a combination of PrEP and treatment right now is our best shot at it. If there are additional modalities that come in, we would love to be part of that. And Johanna, do you want to add anything there?

Yes. I was just going to say, the market has been growing pretty much year-on-year by 3, 4 points. Last year was an exception, where it just kind of went to a standstill, but it's been growing 3, 4 points a year. And so I would assume that if a vaccine came up, that's what would be impacted in the marketplace, is your, actually, growth, but your treatment market would still kind of play on. So your dynamic market of your switches would still play on. And so I just wanted to add that to...

And I meant in the long, long run, if you can get there...

Yes, in the long run, I would agree...

I'm thinking many, many...

Yes. That is the face I made because I didn't expect the treatment market to go away so quickly.

Yes. Thank you.

Not in my lifetime. Yes.

All right. Johanna, Merdad, I really appreciate your time here. Have a great rest of the evening. And thank you all who joined us today. Bye-bye.

Thank you.

Thanks. Thanks for having us. Take care.