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

Great. So good afternoon, everyone, at least everyone that's on the East Coast. It's my pleasure to welcome Gilead's Chief Medical Officer, Dr. Merdad Parsey. Obviously, many of you know him. But just to remind you, if you don't, he's responsible for overseeing the company's global clinical development and medical affairs organizations. He supervises all the clinical trials and development activities. And along with the leadership team, he works to advance clinical development strategies and programs with the goal of changing the trajectory of disease and transforming care for patients today and tomorrow. Merdad originally joined Gilead in 2019 from Genentech, where he had served as President of Early Clinical Development. So we're fortunate to have him with us today. Thank you for taking the time, Merdad.

I thought that it would be helpful to maybe start at a very high level. And since you do interact with investors a fair amount and you may have been even drilled with some questions this morning. What do you think external observers underappreciate about Gilead's pipeline at a high level? And some of the development strategies that you're affecting for your key pipeline candidates?

Yes. Thanks, David. Thanks for having me. I'm happy to be here, and thanks for the opportunity. Yes. It's a great question. I think -- and to your point, I actually got a question about this, this morning. As you mentioned, I've been here just over 2 years now, a little over 2 years. And we've been putting a lot of energy into really building out our portfolio to be a more robust and sustainable portfolio for the long run for us at Gilead. And the approach has really been to really do a few things. The first is obviously to get into oncology. When I joined, we had a very small oncology program. And we wanted to make sure that we got into oncology with conviction, right, that we got in and we really committed to it in a way that is necessary to be successful, honestly. And so we've built that pipeline. We've also sort of reprioritized other things and stay really focused on our urology pipeline, and our HIV pipeline as well. And the goal here is to really set up, as I mentioned, a sustainable portfolio that runs from really early clinical -- late preclinical, early preclinical all the way into approved products. And I always envision that as sort of a pyramid, if you will, where you have to have a lot in the early space to allow yourself to have a sustainable pipeline that gets you into the later stages of development. And in order to jumpstart that, we've really brought in a lot of assets to really jumpstart that, in particular, Trodelvy, but also magrolimab and a number of other molecules. And so now if you look at our portfolio, it's really grown by over 50%. We have a lot more programs now than we did when I joined, and that's very intentional on our part. We really view it as an opportunity to invest in our future and our pipeline in a way that will get us to sustainable growth over the long run. The bringing in late-stage commercial assets, in particular, Trodelvy, I think, really has helped us then build in underneath it, in terms of the pipeline to not only sort of from a temporal standpoint, make sure we stay going, but very strategically around combination approaches because I think that's going to be really critical to anyone's success, in particular, ours. And so I'm really excited about the number of options that we've built into our pipeline that complement that late-stage Trodelvy program with earlier-stage programs that include the Arcus collaboration, the Pioneer collaboration,the [indiscernible] and then our internal pipeline. So what I think -- people have gotten really focused on the very late stage, really focused on TROPiCS-02, 1 study for 1 drug. The breadth of our portfolio, whether it's long-acting HIV, whether it's our early but really exciting inflammation pipeline or the breadth of the oncology pipeline that didn't exist 2 years ago. I think people need to look a little bit past where we are because we really believe we have a number of shots on goal. We have a number of opportunities to bring value and new therapeutics out. So that's -- I think that would be -- once we get past TROPiCS-02, the readout is coming up. Hopefully, people will look more broadly in our broader pipeline and how I think we're going to be able to bring a lot of really, really great medicines to patients.

That's very helpful. Thank you for that framework. So why don't we pivot to TROPiCS-02? Could you just set the stage by reminding people and I'm sure many on the call are well aware of this, but reminding people about the clinical trial, change you affected a year ago, what drove it and how it impacted the timeline for the study results?

Absolutely. Yes, happy to. And it's -- to your point, it's a very common question that we get. So as a reminder, that study was started by Immunomedics before we acquired the company. And once we did acquire the company about a year ago, when we were -- we had looked at this trial, we realized that in order to make this a registrational study, we had to effect some changes. And so among those, we're changing the primary endpoint. We changed it from ORR to progression-free survival as a primary endpoint. We also repowered the study because we knew we wanted to make sure that we powered it appropriately not only to hit the primary endpoint of PFS, but also the overall survival endpoint. And so we increased the sample size to a little over 500 subjects enrolled in the study. And then as part of the shift of the PFS from -- sorry, from ORR to PFS as a primary endpoint, we also then had external overreads of the scans in order to improve our confidence in the PFS endpoint, just to have -- in addition to the investigator reads -- have an over read for the scans. So those are all the changes we effected just a year ago, and it's gone exceedingly well and really excited to now be -- we've been within a stone's throw of being able to read out the study and see how it turns out. But those are the main changes we made. And we're really excited about seeing the data soon.

And just a follow-on on that. So when the study changes were effected, what were the baseline assumptions for PFS and OS for the arms? And do you have any concern about potentially the control arm performing better than expected on either PFS or OS?

Well, yes. So I think -- so a couple of thoughts there. First, to your point, I think we always are cautious and really try to be careful about how we plan for our studies to make sure that as we go forward, we're trying to keep up with where the standard of care is today, right? And because you don't want to power your study for how things used to be as standard of care in the field but to where things are going. We've been really reassured about some of the external data that's come in late last year that is consistent with our assumptions around PFS and OS in terms of how things are going. So we really think that the ballpark of between 3 and 4 months of PFS for the standard of care arm is about right, and that's how we've powered it. And we are looking for, obviously, an improvement on top of that of anywhere -- better than 1.5 to 2 months, that's sort of where we're powered. Because we powered for OS, we're a little overpowered for PFS. So I think we should be able to detect a smaller difference. And I think a common question we get is around clinical significance. And my feeling has always been that it's always hard to get consensus out there. But somewhere around that 2-month benefit standpoint, we think is clinically significant. Of course, just to expand on the question a little bit, for the primary endpoint of PFS, we also believe that support from OS is going to be important. And right now, always for the standard of care is somewhere around the 12-month standpoint, we hope to do better than that. And obviously, to increase OS. And we think at the initial read, the trend in OS is going to be important. We don't believe we need to have statistical significance for OS at the first read. As we've mentioned, it's a time of our first interim analysis that's collapsed down with our PFS look. So we'll have a chance to do -- to look at both the primary endpoint and the final primary endpoint of PFS and the first interim analysis of OS.

Got it. And so obviously, you've had to deal with too many questions about TROPiCS-02, including mine that I just asked. But just stepping back to a high level. Wall Street has become more pessimistic in the wake of the readout delays and just debate on the Street. But could you comment on your level of confidence in a successful outcome in March?

We're very confident, I'm very confident. I do think people have probably over overreacted in some ways to the delays. To me, an event-driven trial is an event-driven trial and it's always difficult, especially during the pandemic and not only assessing -- and with all the changes we made, not only assessing when patients come in and get enrolled, but when you can get the scans in and have them over read. So I think there are a lot of just tactical issues that have been involved as well as just getting the data in and cleaned up after making all the changes that we made to the protocol. So my confidence has not been shaken at all. We are -- we really believe that HR-positive breast cancer has every reason to be positive here based on how strong our data in triple negative has been in the biological rationale. So we remain very confident about the outcome. And I'm thrilled to be able to come back after we read out the data and talk about it. So I can't wait.

Great. That is very helpful color. So we have a number of questions that came in on the web. One of them is, shouldn't OS and PFS converging, as you noted on your earnings call be a concern?

No, it really isn't a concern. These are events that happen. We have a different count that we're looking for, for PFS and OS. They're an OS interim analysis is one milestone that happens when those events happen. And the final PFS analysis happens at a different time point. So no, I really don't think there should be a reason to be concerned in terms of the timing here.

Got it. And I know that you're not in charge of the commercial operations. I'm just hoping to gain some perspective on the opportunity. So assuming a trial success, what are the prospects for this opportunity? And if TROPiCS-02 disappoints, how should investors think about Trodelvy's long-term potential?

Sure. Yes. So for HR-positive breast cancer, the addressable market in the U.S. alone is about [ 17,000 ] patients. And it's important to remember that this is a population that isn't very well served right now after the frontline early treatments for metastatic breast cancer. The outcomes are not great. About 1/3 of patients become metastatic and about -- only about 1/3 of those survive 5 years. That's not -- those aren't great numbers, not a great outcome. Right now, when patients become resistant to endocrine therapy, chemotherapy is their best approved option right now. And so that OS, as I mentioned, is about 12 months. And so I really think the need is there. And if we can show a benefit in progression and/or OS, I think that really will be important for that 17,000 patient population just in the U.S. So -- and in the hypothetical, not -- my optimism notwithstanding, we do believe in the potential of Trodelvy across a number of indications. Probably the top of that list is non-small cell lung cancer. We think that there's a major opportunity there. You've seen other TROPiCS-02 agents in non-small cell lung cancer show efficacy there and that drives our optimism and our aggressive approach to developing in non-small cell. And obviously, taking this broad approach, including the partnership with Merck, where they're -- I think, I would say they probably share our optimism in what I think is a fairly unusual move for them to actually want to conduct that trial in combination with KEYTRUDA in lung cancer. So I think that's a big opportunity, and we've been -- we've decided to be aggressive there because we think that's a great opportunity. And then lastly, as I mentioned, I really think that the potential for us to combine across our portfolio in a variety of tumors is going to be really important. We haven't touched on it. But I think people tend to think about TIGIT and CD73 or adenosine in general, as somewhat separate in the ARCUS frame. But part of the reason we wanted to opt in on that was to really start looking at combinations, not just within the ARCUS portfolio, but between the ARCUS portfolio and the Gilead portfolio. And so you could imagine that in lung cancer, where a PD-1 plus a TIGIT could become standard of care, the opportunity to differentiate either by adding in an adenosine inhibitor and/or combining with Trodelvy could become really interesting areas where we could get to both broader patient populations responding to therapy, but also deeper responses to get to better outcomes for patients. So we're really excited about all of those possibilities. Not to -- I mean, I could go on, but I think we think we're at the beginning of the start with Trodelvy, not the end with HR-positive breast.

That's very helpful. So just to follow on, with respect to non-small cell lung cancer, could you provide a framework for the timeline for key readouts in non-small cell lung cancer?

Yes. We're earlier there, right? And because we've decided to go a bit more aggressively, we're taking -- we're moving into more Phase III trials. So those studies, some of them, we expect some FPIs this year. And then others, we'll get them initiated and we'll try to get FPIs this year, but they may come into next year. So those readouts will probably take a little bit longer to come back to us. Of course, we will be doing -- we'll look at other data sets, including internal data sets and, of course, things like futility analyses and those sorts of things to ensure that we're on the right track. The other complexity here that is important is I just mentioned all these novel combinations. And one of the challenges -- as excited as I am by that opportunity, one of the challenges in those combinations is, from a regulatory standpoint, establishing both tolerability of combinations, but also the contribution of the components. And so there does need to be a bit of a thoughtful, staged approach to doing these combinations so that you can be comfortable that a given therapy is adding something and that you understand the safety profile when you add a third or fourth agent together. So they will be sort of staged a little bit as we go forward. So as we have mentioned, we will be showing some data this year in collaboration with ARCUS on the TIGIT CD73 zimbrorolumab combination. So there will be a lot of data that will be coming out this year to complement what we've already shown.

Got it. Okay. Pivoting to magrolimab, what are you expecting for a potential timeline for FDA to provide an update?

Yes. It's -- I try not to predict FDA time lines, honestly. It's really difficult to know. We are really confident. I'm very pleased with how things are going thus far. We're having those productive discussions. They've asked us for very specific things, and we're putting all those things together. Really just to be explicit, it's really around providing a broad look at what the adverse event profile is to them. As folks know, there were a couple of unexpected adverse events. And so the task has been to take this pause and look more broadly at what the safety profile looks like. They'll be looking at it in an unblinded way, along with our data monitoring committee, will remain blinded. We've obviously blinded -- we look at all the safety events, of course, but we remain blinded to the allocation of that safety. So they'll be looking at that. And we remain optimistic that we'll be able to -- once we've shared those data with them, look through -- work through whatever issues they may have at that point and proceed on. So we're optimistic. The time frame is much more difficult to predict just because of some -- the back and forth and how they react to the data they see. So we'll clarify that as it comes -- as it -- as those conversations progress.

Got it. And then just so I understand, so -- are you providing the exact same data to the DSMBs? Or I mean, how does this data sharing work relative to the 2 entities?

Yes, sure. The data are the data. And basically, we've had a DMC for this study from the beginning. They've been looking at the safety data as we go along. And so what we will do is as a study is going on, you're constantly getting adverse events in and you're constantly cleaning them up and you provide those data in an unblinded way to the DMC. That's basically how that works. Because of this request from the agency, we will do a separate sort of look there and we'll share those data, both with the DMC and with the FDA, they'll see the same data. So -- and we'll proceed from there.

And when will that data sharing be complete? Or when will this be done?

It's happening right now. We haven't really talked about timelines, but that's -- it's fairly in the near term here. So we should be doing that pretty soon. And then hopefully getting responses and the back and forth is happening now essentially in real time so.

Okay. Great. And then just a separate but related question. Do you see the FDA's bar for accelerated approvals changing? Or was FDA not supportive of an accelerated approval filing for magrolimab in MDS, due to the safety uncertainty?

Well, I think there are 2 different questions. I think the bar on accelerated approval, in general, our impression is that, that has been changing somewhat on the part of the agency, partly as the unmet need evolves in different indications, right? I think that's -- the accelerated approval was never meant to be the default approval pathway. It's really for getting therapies out there when there is the unmet need and you have something that brings substantial value. And so that's always a moving target. For magrolimab, I think the -- getting accelerated approval for magrolimab really is really related much more to what the background response rates to azacitidine are in real life. So the way I would think about it is we had hoped with a single-arm study that we would go in with our response rates and the comparison will be made to historical response rates to a society and standard of care. What we all saw at ASH back in December was the data from Takeda, which showed that the response rate stays, [ the citing ] were higher than what folks had considered were the background rates. Now it's still lower than what we've already shared publicly with magrolimab, but it just introduces a level of uncertainty in terms of what the actual background rate of azacitidine response rates are. And so I think that's the primary driver that the agency is going to want to see randomized data to be able to compare what that azacitidine lone therapy response rate looks like when compared to azacitidine plus magrolimab. So I think that's the -- that is the primary driver of why that accelerated approval is not viable.

Got it. Okay. So why don't we transition to the HIV franchise? You continue to generate very encouraging updates on lenacapavir as indicated by release you issued, I think, in the last half an hour or so. But the key question remains in the event that islatravir does not move forward, what are some potential alternatives for combination? And how quickly could you advance an alternative combo?

Yes. So as we've said, I think the availability of islatravir really helped us accelerate our plans for long-acting because of lenacapavir, which I think is just one of those really great molecules that you really only have the chance to work within your career, once or twice in your career and lenacapavir is definitely one of those. Where the islatravir story is evolving as Merck continues to work through understanding the signal there. For us, the marriage of lenacapavir and islatravir was always about the fastest way to get to market in a long-acting combination, but not the only way. And to your point, we have a number of earlier shots on goal for combinations for lenacapavir in the treatment space. And as a reminder, we have a virology deep dive tomorrow that we'll be going through that in a little bit more detail. But a number of molecules that we hope can partner up with lenacapavir to get us to our goals. Important to draw the distinction between PrEP, where we think lenacapavir alone is going to be sufficient for PrEP. And in therapy in treatment, we are looking at therapies with the goal of getting really to every 3-month treatment. We think that's where patients want to be is Q -- 3 months or less frequent dosing. And so that's really our bar for moving forward. So as we look because lenacapavir has so much flexibility, we're really looking for another agent that can get us to that every 3-month dosing subcutaneously, if we can get there. So that's the bar for us as we move forward.

Got it. Very helpful. And then with respect to the oral remdesivir opportunity, I know that you've commented on it, but could you just provide a framework for the timeline?

Sure. We're in Phase I right now. And of course, I want to make sure I don't call it an oral remdesivir. I think that's what people like to call it for shorthand. It is a novel molecule that we're working on with the same MOA, but same mechanism, same therapeutic potential. The molecule is going through Phase I. We hope that it gets through Phase I with flying colors, and we determine the dose. And the biggest timeline impact for us on the development of that molecule is going to be how we can do Phase II and Phase III. The world has changed significantly since last year with both the availability of other therapeutics. And with waning of cases, fortunately, which I think we're all happy about. But those 2 factors will really play into. One, what the study design for a novel oral will need to be. It probably -- it will be difficult for it to be a placebo-controlled trial globally. And so that's a work in progress. Obviously, there's a window there where that may still be a possibility. And then -- in addition to that, then thinking through the case count. If the case count remains relatively low, that will impact our ability to recruit patients over time. So those are the 2 variables we'll be looking at. And so we'll select it by our timelines as we get closer to starting our late-stage trials.

Great. That's very helpful. But we're almost out of time here, but I did want to ask about the earlier stage pipeline and kind of turn it to you to comment on what you see as some of the most exciting early-stage projects? And what the timelines might be for some of the key proof of concepts?

Yes. It's a very long list, which I'm really thrilled about. So I'll try to hit just some of the highlights. I think in our oncology pipeline, have mentioned the ARCUS assets, which I think are going to be really important, and we'll see data from some of those this year, we'll share data from some of those this year, and we've talked about some of those combinations. We do have as well the CCR8 partnership that we're looking at and as well as [ HALG ], a number of those very early things that we're really excited about. Those will come out, we'll see -- we'll start to see data from those in the next year or so. And then on the virology side, I think we'll get into more depth in those tomorrow around some of our earlier long-acting agents for HIV as well as our efforts to continue an HBV cure. And then finally, in inflammation -- I'm sorry, an HIV cure I should have mentioned. And then finally, in inflammation. We have a number of molecules that are making that transition from Phase I to Phase II, where we're looking to see proof of concept in Phase II coming up in the next year or 2 depending on the indication. It's -- I'm trying to generalize because there are so many molecules in there that we're looking at. We'll provide more data at the virology deep dive tomorrow, and then [indiscernible], there's an oncology deep dive in April that we'll go through, both of those portfolios in a little bit more detail and be able to share a little bit more information for folks in terms of -- so they can get a sense of what to look forward to.

Perfect. Well, that's a great way to wrap up there. I want to keep us on time. So thank you so much for joining us, Merdad. We really appreciate it, and hope you have a great rest of the week.

My pleasure. Thanks for the invitation. I hope that was useful. Take care, David.

Yes. Thank you again.

Bye-bye.