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

Okay. Let's go ahead and start. And let's get the last tech people scurry out of the room. We don't need them. And thank you all for being here for our discussion with Gilead's CFO. And this is going to be a fairly informal discussion. And I'll encourage you to raise your hand and ask some questions. I'll try to make sure the last 5 to 10 minutes are available for you to ask your questions directly -- or you can send them to this pigeonhole application that we do. But frankly, if you're in the room, I might as well just raise your hand and ask. It's small enough of a group. I was going to cover basically 3 or 4 things. First, the main business HIV then discuss a little bit [indiscernible] just because it's kind of an interesting outset potential. Go onto oncology and then kind of ask more about the business development philosophy. And depending how far it will go, trying jumping in on. So Andrew, thank you being here.

No, thank you for having us. I'm thrilled to be here. I appreciate the invitation.

So let's start with HIV. The business is stable. The business is a huge cash flow if we Cast it counts for the entire company and then it may be some depends on how long you want to run it. There are 2 arguments being made against that. One of them is around the growth and then the other one is the risk of pricing deterioration over time as some of the earlier generation molecules take place. So first, let's discuss growth. In your models, do you have the HIV growing market growing over time in totality? And then if you can break it down to prep and patients.

Yes. No, it's a great question. I think those are the 2 questions in HIV that people are focused on. So the business is really healthy. The business is doing great. I mean despite the pandemic, you've seen growth in both the treatment and the PrEP market over the last 3 quarters in the United States. So is the business growing? Yes. Is the HIV market growing? Yes, unfortunately. Do we expect it to continue to grow? Yes. So the market grows year-over-year, about 2% to 3% on the treatment side. There's much greater room for growth on the PrEP side. As you know, I think we just started to build the PrEP market over the last 5 or 6 years with our once-daily oral first Truvada and now more recently, Descovy, you saw much more significant growth year-over-year in the first quarter in PrEP, which I think if I remember correctly, grew over 30%. I think it was 33% year-over-year and then you did in the treatment market, but the treatment market also grew again despite the impact of the pandemic in January. So will the market grow? Yes. Do we believe that our business will grow as well? Yes. And it's going to be easier to see the growth in our business now that we're through the year-over-year comparisons of the Truvada a triple patent cliff. I think over the last year, that really in some ways, made it difficult for people to see where the growth was in the HIV business. So again, if you look back at the first quarter, which is the best example, our HIV treatment business grew at over 3.5%, if I remember correctly, if you adjust for the Truvada a triple patent cliff. If you also adjust for the exchange rate changes and the currency headwinds, the treatment business on a year-over-year basis grew at over 5.6%. So the business is growing and moving in the right direction. Again, and then what gets really exciting is where we see the business going in 2025 and beyond. So as lenacapavir, which is now back in studies, we're off clinical hold, it's a very special molecule completely unique in terms of the HIV market, both for treatment and for PrEP. As those products, whether it's an individual molecule formulated as a Q6 monthly subcu for prevention or PrEP or whether it's doublets for treatment should be coming to market in that late '24, '25 time frame. And that's really where you have the potential to see our HIV business continue to transform. Again, as you know, the other thing Ronny had mentioned, I mean, Biktarvy is the gold standard for HIV treatment. It is the best and most widely used single-tablet regimen today for treatment has incredible growth of Biktarvy even recently. Again, I think we had 43% market share for Biktarvy in the first quarter, which is outstanding. And we expect Biktarvy to continue to grow through at least the end of the decade as well and beyond. We have patent protection on Biktarvy through 2033.

So nobody argues that Biktarvy is going to take share because on a great molecule. The 2 things are being discussed. One of them is we saw when Truvada went generic, there was pressure on the second-generation molecule to take price down, and you said yourself that this is now a rebated market. And the concern is that with the loss of TAF in 2025 and the entrance of the first generation in see generic in 2027 or competitor to Biktarvy. We're going to start saying, maybe you will not lose share, but could we go into a situation, I would say, in other large markets where you have like a 5% discount, 5% reduction in prices per year. And in Europe, the market share of the older product, the generic product tend to be more dominant over time.

Yes. No, it's a great question, and I understand why people are asking. I mean, as you know, this is something that people have focused on for Gilead for 15-plus years we've been expecting it. So the PrEP market was unique, and we did see that. You see less pressure today as more of a short-term as the transition from Truvada to Descovy there was a unique window where payers had pricing pressure. And again, remember, PrEP is a very different market overall in terms of what you're getting at in terms of the risk of contracting HIV versus treating patients that actually have HIV. So the benefits of Biktarvy are well known, the benefits of a single tablet regimen versus forcing patients to take 2 different pills at the same time are well known. So the risk is there. We don't see it having a significant impact on our business in terms of pricing. And again, this is something that people have debated for a long time in HIV. Is there going to be drug pricing pressure overall across the industry, Of course. Is it unique to HIV? Not necessarily. We don't see the same impact on our business that some analysts have built into their models to be clear.

Very good. Lenacapavir. So I hear you're about 6 months, it's -- that's probably the durability that you need to take material share. The question is how much you can actually take with us. If you -- if we think about other markets where there was one of those things, the most obvious one is the contraceptive market. Content market it's 20% share. And the products are fantastic. I mean, devices are really good. The efficacy is good, the safety is good. and the physicians know how to use the product, and we still see only a 20% share.

Yes.

So I hear you about the product will take share, but as we think about how far do we draw the current revenue line, do we -- we have to take 70%, 80% out in 2033 or is there an argument why 70%, 80% of the business will be retained for another decade or 2?

Yes. I think that there's a lot of arguments to be clear, and we think the contraceptive market is very different. It's a good analogy. But again, when people are thinking about the risk of getting HIV, especially for people that are at high risk, as well as the stigma associated with potentially getting HIV for a lot of people that take PrEP. There is -- and it may be the same for contraceptives, I'm not an expert in that area. But when I think about just PrEP all of our market research suggests that there will be a step function change in terms of having a once every 6-month subcutaneous injectable. Of course, we're also trying to formulate it, as you know, for once a year, which would be even another step function change above that. But I think it's fair to say that the market research that we've done suggest that it is a step function change in terms of how potential patients or people at risk of getting HIV C a long-acting versus a once-daily pill. The other difference is in efficacy. So if you look at the data from Viv's long-acting regimen, which we don't think is an ideal regimen in terms of an intramuscular injection, much more frequently, either once a month or every 2 months. The one thing that's important, though, is the data shows, especially in patients that are not adherent to taking the pill every day and high-risk patients that won't take it every day that there is much better efficacy over time with an injectable. We think you'll see the same thing with lenacapavir. So it's not just a convenience play. It's also an efficacy play that we think will have an important -- it's an important piece of the puzzle, both for potential patients or users as well as for payers over time, not only payers in the United States payers outside of the United States.

The -- I hear you about that. So in our -- in Gilead's thinking this is product may take 80% of the market, 50%? Is this kind of the range that you guys are having in your minds?

Yes, I think our expectation is it would take a very sizable piece of the PrEP market. But the second portion of it that's really important is when you think of the PrEP market, we said that we believe the prep market was 20% to maybe at most 25% penetrated in the U.S., much less than that globally. And the orals were about a $2 billion market for us when Truvada went generic. That's just -- I think the long acting not only will it be used in a very significant percentage of patients, but it should grow the overall market very substantially. So you get the benefit of both. The PrEP market should be a much greater percentage of patients at risk should be on prep. And if you give them a better, easier alternative that covers them for a longer period of time, you think you'll see that increase in the overall market as well.

Okay. Let's switch over and talk about Veklury because you probably have the most efficacious molecule out there for COVID-19. But you are not -- or it seems that you've taken a long time to get it into the nonhospital market as an oral pill. And I think you've talked about -- you've started the trials already, but the idea is that it will take quite a bit of time before we actually get to the completion of those trials. Can you why this has taken so much longer than the Merck effort or the Pfizer effort?

Yes. Well, I think that it's all about the discussions with regulators. You've -- and I'm sure you're very close to it, Novartis has recently made some statements that were really important here, too, in terms of some of their development efforts for COVID therapies in terms of the back and forth with the FDA on the trials that will be required and what the nature of the trials needs to look like and the length of the study. So without being more specific, I think we're in the middle of our Phase I studies, dose escalation studies. Those should complete in the coming months, we'll have a good sense of where we are. We're preparing to move forward with the pivotal studies later this year. And we get this question all the time, why can't you do studies in the same time frame that you did 2 years ago when you got the IV Veklury approved? And the answer is the backdrop is different. They're the case load at least until recently was lower. But more importantly, it's what are the regulators going to require in terms of studies. Are they allow you to do head-to-head studies against standard of care, do you have to do add-ons to the standard of care? That's what companies are trying to sort through in particular with the FDA. So there are questions about the size and nature of the studies that we need to resolve. So we're having those discussions with the FDA, preparing for success in the Phase I study, and we'll just have to get -- won't provide more updates over the coming months in terms of where we see that going.

I hear you. So the notion is somewhere between kind of like the 3Q report and the 4Q report. You would have a design study, and therefore, we'll have a time line for this?

Certainly, later this year. I mean, I think we want to provide an update as soon as we can. And so we get this question a lot, and it's an entirely fair question, and where are you going? So -- but again, I'd step back. The first step is we need to make sure that we get through the Phase I dose escalation studies and that we're comfortable that we have an oral nuc that will benefit patients in Phase III, and we're encouraged by what we've seen preclinically in clinically so far. So we'll see where that goes. And then we want to move forward as quickly as we can. I think the overall message is it's not necessarily as straightforward as people expect in terms of time lines and what clinical development needs to look like in the current market. That may change over time. It's such a dynamic situation. It's hard to say where the FDA or others will go.

No, I hear you. It's just that having 1 drug want mechanism of action in the marketplace when resistance is going to appear any day of the week, you kind of said that and go, it kind of makes sense that there will be an acceleration of probably your MOA.

Yes, you're absolutely right. We share that view. You can rest assured we're -- as we talk to regulatory authorities, we're sharing our perspective that the data for remdesivir and Veklury IV speaks for itself, continues to demonstrate that it's an incredibly important therapeutic for patients. And we think the same thing could be true for the oral. We just need to make sure that we align with the FDA on the development plan.

Okay. So moving on to the oncology effort. So you have a pretty decent product there that is now entering second line. It's clearly taking off. I guess the question is, how big can this molecule actually get? It's unlikely it will be first line. I mean, there's still they're probably the proper drug in the first line. But you're probably in the line of therapy where you need to be in and where we go with this?

Yes. I absolutely agree. We have a terrific set of cell therapy products in Yescarta and Tecartus. The business is really taking off which is great. The clinical data has been outstanding. Again, the ZUMA-7 data and second line that led to the recent approval showed at 2.5x improvement in progression for -- or I'm sorry, event-free survival over the long-standing standard of care for stem cell transplant. And we all recognize that this market is developing slowly over time and changing physician habits will take time. So we haven't provided specific guidance in terms of where the business goes. But we said when we acquired the company 5 years ago that we expected this to be a large business that would grow over time. And we're already at well over $1 billion run rate. You see where the business is going. I think a lot of analysts expect the business to be at least a $2 billion plus business, which is not unreasonable. We see potential from there as well. So we're really excited about where the cell therapy market is going. With respect to DLBCL or LBCL second-line approval is really important. There are opportunities in the first line. It's not, to your point, wide open in the first line with the existing therapies that are there. But there are patients that are high-risk patients in the first line that makes sense for cell therapy. We're already doing a study. I think we actually reported out, and if I remember, Phase II data in December for Zuma, I think it was ZUMA-12 and high-risk first-line patients that was great data again, and we will continue to pursue moving it forward in lines of therapy and then also into other heme malignancies.

So I've got $2.6 billion. So I'm with you on the 2 more. but the -- but it's a word $2.6 billion, which is -- I'm not worried about you against the current set of players. I think that's fine. I'm worried about the possibility of an allo product coming in of the stent care changing. You guys are chasing this quite closely. I think 1 of your peers did a deal as of today, trying to accelerate their movement into allo therapy. Where do you expect allogeneic therapy to come in? How far are we from having them?

Yes, it's a great question. So maybe I'll just back up. When we did the Kite deal, we believe that this is going to be an incredibly dynamic market that would grow over the next 20 to 30 years. And every thing that we've seen over the last 5 years suggests that that's entirely where it's going. There are hundreds and hundreds if not thousands of cell therapy companies globally that are innovating. We've always known that a lot of the innovation will come from the leaders, including Gilead Kite but that a big portion of innovation like any therapeutic area for other modalities will come from outside of our walls. We watch it closely, and we'll continue. So then with respect to your question on allogeneic, we've always modeled different scenarios. We believe from the beginning that we will get allogeneic therapies at some point but we believe it would take longer to get there than people expected and that people were underappreciating how good the autologous therapies were going to be by the time you get to allogeneic. So we are working on our own allogeneic therapies. As you know, we signed a partnership with Sangamo for gene editing from the outset 5 years ago. We've done 2 deals recently with companies called Shoreline and Apia. One is Shoreline, if I remember correctly, is an iPSC NK cell therapy company. and Apia's healthy donor iNKT cell therapy company. We're developing allogeneic cell therapies with them that we're excited about. It's going to take a while. When we look at the allogeneic space and we followed the recent data, including some of the data in the last couple of months that people were excited about. It's early days, right, just like it was for the autologous therapies years ago. So do we think the allogeneics will develop? Yes. Is it going to take a while? Yes. And by the time they get there, we believe that Yescarta in particular, Tecartus will be -- the data will just continue to mature, manufacturing times will strength. We're currently in the U.S., 16 days, vein-to-vein for manufacturing, we see that shrinking significantly over the next 4 or 5 years as we continue to make process improvements, we open a new cell therapy manufacturing plant in Maryland, which is our third that as part of the manufacturing. A large part of the manufacturing process is automated, that automation will continue. So you're going to see as much innovation in autologous cell therapies, as you see in allogeneic over the coming years, and the bar just keeps getting higher and higher from our perspective.

Okay. TRODELVY. I guess a question about TRODELVY is did Daiichi beat you? I guess that's the first question. So there is a group of analysts that buys at a particularly argue that, look, it's all about the linker. Trodelvy is a linker, the Daiichi technology is a different linker. Their linker is better that will always be the better product every way you go. And therefore, Trodelvy really does not have a significant future.

Yes. We absolutely believe it has a very significant future, as you know, to be clear, and we think the data supports that. And distinct solid tumor types already. And of course, there's the big data drop this weekend at ASCO with the TROPICS data.

That's the next question.

We're excited that people will actually be able to see the data and we can talk about it openly because it's hard to talk about it without sharing the specific data. But back to your question, look, the linkers are different. I mean, when we acquired Immunomedics, we believed as many people did, and they think still believe that the hydrolyzable linker, that's part of the TRODELVY construct, where the chemotherapeutic agent has released more readily in the tumor and the tumor microenvironment is actually part of the secret sauce and the benefit. Let's see how that plays out over time. I mean, obviously, if you just look at the triple-negative data or the bladder cancer data, it suggests that this is an incredibly active molecule that provides a huge benefit to patients. And remember, in the triple negative second line plus, we had a 0.34 hazard ratio, which is almost unheard of in clinical studies. So there's a lot to suggest now in 3 separate major studies, 3 separate tumor types that TRODELVY is a special molecule. It doesn't mean that there's not room for other molecules. So whether it's in other ADC -- ADCs directed against Trop-2, whether it's HER2 ADCs. There's a number of molecules out there in bladder cancer. We have another ADC that's a competitor. They're all slightly different, and they will have different side effect profiles. So it's not a zero-sum game from our perspective. I mean if I step back, Ronny, I think the biggest difference is we look at TRODELVY over multiple solid tumor types, multiple lines of therapy and in many, many combinations as a very big opportunity for us and a very big benefit for patients. And sometimes I think the market focuses myopically too much on single studies and not recognizing the bigger picture and the bigger potential.

So I'm going to be [ open ] for a second. Wouldn't the HR-positive trial topics do suggest that the initial view that this is a drug with a huge benefit kind of is negated. Essentially, you have one trial suggesting you've got a great set of data. You've got one that's suggest you get a modest benefits out of there.

Yes. I don't think so is the answer. And the reason is the patient population is different. And we recognize this when we acquired Immunomedics has the patient population in the hormone cytoplasm have HER2-negative study tropics that you'll see this weekend was a very late, very advanced patient population. And with that comes risk, it's very hard to show a benefit. I mean most of these patients that had progressive metastatic disease for many, many, many years. So you'll see the difference in -- you'll see the demographics, patient demographics this weekend and then we can talk about it more openly. So when we look at the data, remember, we had to show a 30% or greater improvement in progression-free survival in these incredibly sick, incredibly late-stage patients that had no other options, and we showed a greater than 30% improvement in progression fee survival. That said, we acknowledge that while this was in the range of outcomes that we had modeled when we did the deal, it wasn't at the point that we assumed kind of in the midpoint of our model for purposes -- for accounting purposes. Do we think it's still important for patients? Absolutely. Do we still think it's going to get approved? And do we have a high probability of hitting on overall survival? Absolutely. So to your question, we step back and look at it as this is another proof point for TRODELVY in a very difficult, very heavily pretreated, very advanced patient set. And as you move earlier, which we're planning to in triple-negative breast cancer as well as into lung cancer and combinations, you're going to see additional and longer benefit.

You kind of said something that I want to make sure we get right because said we think we're going to get approval. Do we know yet is the conversation with the FDA at the point where you actually believe that you'll be able to submit based on the topics to data? Or is it.

No it's too early. We're still in that process. So are we going to make the arguments that we should submit and that the data justifies approval? Absolutely because we believe that. But we've been very clear to be fair that we can't say that the FDA will necessarily agree with us, and we need to see and have the discussion. So all the briefing materials have been prepared, whether they've been submitted or not, honestly, I don't know what point, we will have our discussions with the FDA and other regulatory authorities in the coming months, and then we'll have a sense of where we go. So when I talk about approval, I mean, ultimately, you'll see a very clear trend on overall survival as well. And again, you'll see the data and can make a determination on your own. Do we believe that this gets approved at some point, weather with the PFS data, which the argument that we will make, and we believe is appropriate for these very late advanced patients or whether we have to wait for the overall survival, I think there's a high probability of getting approved in this indication. And then on top of that, you think about moving into earlier lines, where it's easier to show the benefit thinking of combinations.

Okay. So let's talk a little bit about magrolimab because that's the asset that that's kind of the sleeper asset. You got it for not to expand not too much, so it went on clinical hold. And it seems to kind of like being -- there's a lot of efforts to try this category in. So we're yet to see a huge success. What is the kind of horizon here for us seeing some data that proves this mechanism action actually add something in MDS.

Yes. I mean you're going to see additional data at ASCO this week on the Phase I study, the full data set and some of the other data sets in AML. So I would encourage you, I want to take a look at those posters and the data, recognizing, of course, their uncontrolled data sets, but you'll see very significant responses in these patients that are above what you would have expected from historic trials and current standard of care, whether that plays out in a head-to-head study is always the question, and that's why we're running those head-to-head studies. They're starting them. Those will all play out in the '23, '24 time frame. So it's going to take another couple of years, which is exactly what we expected. But we still have the same confidence in magrolimab that we did when we acquired the company a couple of years ago. We knew that it was going to take a couple of years to play it out that there was the possibility but not the overwhelming probability that you could get approved on the Phase I data.

Okay. Fourth immunology asset. 4 oncology as a dumb. So your TIGIT. The required question is, how do we read into the Roche digit? And yes, I know we need to see the data received this week. I know that there's going to be differences between the molecules and eventually [ what they ] mine. But how do you change your thinking changed once you saw that the initial pretty good data set road shows in Phase II has not been replicated?

Yes. It doesn't change our thinking at all, to be honest. I mean we want to see the data, of course. So we need to see the data like everyone else. What really informs our thinking is what we're seeing in our data set, right? So Arcus has provided an update, although it's qualitative, not quantitative update in the third -- from the third interim analysis a month ago. I mean, we continue to see the differentiated response rate in the doublet and the triplet and the ARC-7 study relative to the PD-1 monotherapy, and they said, and we believe that the PD-1 monotherapy is performing like you'd expect the KEYTRUDA and OPDIVO to perform, which may be a little bit different than the PD-L1 from Roche Genentech. So we can't -- until we see the data, we can't really speak to it. It's a -- the other thing that's telling, Ronny, that I think is really important is Roche very clearly committed to the TIGIT space into the studies and I think recognize that their full speed ahead was kind of the tenor of the communications from our perspective, and that's not surprising to us. So it may actually provide a little bit of an opening for us as they're working through this to continue to catch up. But it doesn't change our enthusiasm here based both on external data as well as our internal data.

But your internal -- the internal level, you were supposed to be at the point where you make the decision of going to go this molecule already. And what we -- the way I'm hearing it from Arcus is not yet, not yet, positive direction, separations, added benefit, but not quite to the point where the decision that you're quite willing to make the decision to pull?

Well we're starting a lot of trials at risk, right? I mean this is where I think that we -- the key is we -- when we entered into the agreement with Arcus, we purposely had them expand the size of the ARC-7 study significantly. So I believe it's a 150-patient trial now. There were some delays in enrollment with the pandemic that everyone saw nothing that was a result of what they or we did. The study has gone really well. We're going to have a pretty robust data set later this year. So what we've said is we want to make sure that we have a big enough data set that really informs and justifies kind of moving forward aggressively with a broad development plan, which is already underway, and we'll continue to check that. Everything that we're seeing to date suggests that we should be moving forward and continue to take on forward, at least in a doublet, if not a doublet and triplet. So we'll get more data later this year. We will provide a top line or expect to provide, I should say, top line data release later this year, which they said and then a full presentation of the ARC-7 data at scientific conference in 2023. So more to come.

Okay, which kind of brings me to 1 or 2 more. Can you talk a little bit about the drug and fly in the other reasoning?

Sure. We've always been interested in bispecifics. Again, we're modality agnostic. I think when we did the Kite deal, there was always a belief that Gilead's only investing in cell therapy and maybe small molecules and monoclonal antibodies. Of course, we already had some bispecific programs. We had a bispecific program with, I believe, genmab and HIV. We had a collaboration with MacroGenics at 1 point. We followed Dragon fight closely over the last couple of years. Our Head of Research, Flavia Smart, who came from Amgen, knew the company well, knew their scientific leadership team well. I think it's a great company with really interesting, potentially differentiated bispecific constructs and we're excited. It's a partnership that covers 4 programs. Only 1 of them was announced at the time of the deal. There are 3 other programs against different targets that weren't announced. So we're excited to kind of move those forward over the coming years. So I think the key there is great technology, great scientists, exciting company. They have a number of other partnerships, as you know. We like the targets that we have assigned with them or agreed upon as part of the partnership, and we'll see where it goes. It just kind of underscores our commitment to continuing to invest in developing a broader high-quality pipeline, both internally and with great partners.

So you have a lot of those small deals over the past years. I would actually argue that that's probably underappreciated, how hard your team have worked to make those deals. But you had yet 3 larger deals since this management came to power, Galapagos, the CD47 bio, magrolimab, Immunomedics.

47. Yes.

Yes. And the success of those, at least in the eyes of the market, has been checkered -- and the question is, gee, we've got a capital allocation strategy here, which is very -- which is very heavy on BD, and we are not seeing...

The pull-through.

The pull through.

Right. Yes. I think it's a fair question, to be honest. And I'll kind of tackle it. These things take years to play out in our sector, as you know. It's always easy to be on the sidelines and to provide commentary. And I'll use Kite as a great example, right? If we were -- if I was sitting in this chair 2 years ago, as I was here people always say, we don't believe in Kite. Now a lot of our investors see what we see. They believe in CAR-T, they believe in the durability and growth of the business, the value that it's going to deliver and they see the strategic and financial benefit of being 1 of the leaders -- the leader in this space as it continues to evolve over not just the coming years, but the coming decades. So Kite, I think people are growing to appreciate it and recognize it as something that is truly accretive to us as an enterprise over time and a special group of people and a unique set of assets. I think people will get there on the other deals as well. Trodelvy is a little bit easier. It's already approved for 2 indications. The data is incredible. I mean we'll have the TROPICS 2 data that we can debate. I think we have a lot of execution ahead of us to prove that Trodelvy is a pipeline and a product, a multibillion-dollar opportunity that will be 1 of the largest oncology products in the market over time. We have a very clear plan that we've laid out. Now we just need to execute. But I think Trodelvy, it's a fair question, and we can't really answer it fairly until we're 2, 3, 4 years down the road, and we pulled through additional trials in earlier lines in lung cancer and in combination. We have complete confidence in it. The other deals magrolimab was we knew that -- I still think magrolimab and it's going to be a great asset. It's a higher risk asset, right? It was in kind of Phase I/II study. We knew that it was a very competitive process. CD47 has blown up in terms of research interest. It's a great target. We think we'll get there, and we think that AML and MDS are just the beginning but it's higher risk by definition and not all of our higher risk things are going to play out. I think that 1 will, but we'll see. And then Galapagos is one that clearly has not played out the way that we expected it. And we structured it in a way where we still have a chance to really create value for our shareholders over a long period of time. So great deal structuring doesn't save deals, as you know, but it can give you a chance to get something out of it. So we have another 10 years as a 13-year partnership. We have another 10 years roughly, everything that Galapagos does for the most part, we have an option on outside of the EU. We helped Dan O'Day and Linda Higgins, our Head of 1 of our external innovation. One of our senior R&D team members are on the board. We helped recruit pulse offs to the company. We are absolutely committed to creating value out of that for our shareholders. And we think that actually the current macro setup is actually a great setup for Paul and his team to acquire assets and use the $5 billion plus of capital that they have to go out and license and acquire assets and it's going to take years for that to play out, as you know. So we still have a lot of respect for the Galapagos team, and we think we can create value there. It's going to take longer. And the assets that were there in clinical development when we did the deal did not play out the way that we expected.

Where are the NASH effort right now?

That's a good question. The NASH effort is still moving forward. We have a series of studies. So for those, again, we have 2 primary NASH assets. We have an ACC inhibitor, and we have got restricted FXR agonist, if I remember correctly, that are in combination studies for NASH. We are doing studies with Novo, Nordisk, together with their GLP-1. So our view is that GLP-1s will become backbone therapy for NASH treatment over time and that you need to show additive benefit on top of those. Those studies are underway. I don't remember, honestly, off the top of my head when we report out some of the data from those. And then we'll figure out where we go in NASH from there. So ...

There was on bringing it up. This is another program where you made significant effort. I think it's been 6, 7 years of clinical trials, and we're yet to see a convincing Phase II.

Yes. Well, we ran a lot of other studies. And again, when you think about Gilead historically, when I joined the company 5.5 years ago, there were really 2 primary pipeline programs, filgotinib from the partnership with Galapagos, the first partnership with Galapagos, and then the NASH programs, including Selonsertib, which I'm forgetting the mechanism of action, which didn't work out of NASH. So we were very heavily weighted towards NASH and filgotinib. And obviously, those are very, very small pieces of the puzzle today. Filgotinib is really not part of the puzzle at all for us. And the NASH programs are a small piece of the puzzle. If the data suggests that our NASH compounds are additive to the GLP-1, we'll figure out where we go with it. We have a lot of strategic flexibility there to move forward. But I would kind of just circle back, our primary areas of focus now our virology expanding our portfolio, of course, HIV and long-acting oncology. And then we're completely committed to inflammation and building and inflammation, but that's going to take longer in its earlier stage set of programs.

Very good. We're reaching kind of like the 10-minute mark, and I want to see if anybody in the audience has something they want to throw in the mix? It's Thursday, 4 p.m., 5 p.m., 4 p.m. You got in the room, you must have something on your mind. If you do not, go out there and having a drink of wine. Come on. Nobody? All right, I'll throw a couple more and let you guys think through a couple of additional ones. So 1 of the things that are kind of interesting for me is that hospitals are a big consumer of fewer products. They used a lot, especially on the oncology side. And we've seen them raising prices materially in the assets that you're buying. And he's been more cautious than some of your other peers in terms of their actions in that perspective. Why is that?

Well, I think we always want to find the right balance between making sure that our access is a primary -- is 1 of our primary areas of focus, right? We develop world-class breakthrough medicines that provide a huge benefit to patients, and we want to make sure that we're providing broad access globally and the U.S. part of that -- and globally, of course, pricing and what we do. We have an entire access program for the third on countries where we license our drugs to Indian generic companies. As you know, so we're always like , I think we're appropriately cautious in terms of price increases. I mean, I think that there's -- we are leaning into building out the company, investing in additional research and development. As you know, this is an incredibly risky area, and we need to get a proper return on the therapies that we develop, and we want to make sure that we're recognized the drug pricing environment in the United States and that we're being...

I'm asking almost a reverse question.

Oh, I'm sorry.

I'm basically saying, look, you've got good medicine. You develop them, you spend in storing developing them and so forth. Then you give them to the hospital, the hospital double or triple the price of the drug, okay? Now some of your peers have now taken a step back and said, okay, well, the hospitals can do that internally. But if they go externally and they start licensing out their rights to buy products were cheap, we're going to block this. To some extent, we are going to make an effort.

Are you talking about 340B pricing specifically we're using?

340 brand frankly, the markup of, for example, the -- for 1 CAR-T course, hospitals charge $0.5 million on top of what you charge. And the question is, what is the right balance there?

Yes. No, I think we're very comfortable with kind of pricing and where we're at. And now I understand your question. I think 340B continues to be a challenge for the entire industry as it grows. And as you see the unintended consequences of the growth of 340B and how some hospital systems or clinics are using 340B to finance the business. I don't think what's happening at the hospital in terms of how they're pricing cell therapy is a primary area of concern for us. Kristi could speak to it more thoughtfully. But no, they're I think the pricing that we've obtained in cell therapy as it rewards us for the innovation that we're bringing to the table. And I think...

So another aspect of something that we're noticing this is the news of the week has been in D.C. where a third commission of the FTC has been appointed. And without any delays, the FTC is now starting a process to look at how they regulate drug pricing?

Sure.

So what do we know about the -- what's on the agenda there? I guess this question is the first question here?

I mean I think we're working through that now as the rest of the industry. Obviously, this has been a big topic the last couple of days. I'm not sure that it's that different than what was on the table 6 months or 9 months ago from what we can tell. So we'll get a better sense as we move into the reconciliation process over the coming months. And I think that the general sense is people are still looking at either capping patient out-of-pocket expense or limiting price increases or having mandatory negotiated prices, which are really mandated prices starting after a year, I believe, 9 for small molecules...

Is this going to -- this is going to pass?

I think that there's -- no, we don't assume that it's going to pass, but we take it seriously like everyone else. And I think that this is -- it's a -- this is 1 issue that I think people from both sides of the aisle agree that this is an issue that has to be resolved over time. And going back to my comments on 340B, we and other manufacturers believe a couple of things. One, that we all have a responsibility to lower out-of-pocket burden on patients in the United States to the extent that we can. But that has to be shared by all stakeholders across the entire industry, not just the biopharmaceutical companies. And the system needs to be set up to reward innovation and encourage innovation, right? We don't want there to be unintended consequences of drug pricing legislation that discourage innovation or discourage, for instance, companies developing small molecules because they're treated differently than large molecules. So we worry as the rest of our companies in our industry worry that there will be unintended consequences of the legislation, depending on what it looks like at the end of the day, just like there have been a lot of unintended consequences of 340B. But it's early days. We'll see where it goes, and we'll be active in making sure that our voice is heard in D.C.

Okay. And the last question for me, and then I'll encourage the audience to come up with a couple of around is, look, the management team of Gilead has been essentially put together over the last 3 years, okay? What are you guys able to do now that you were not able to do it 3 years ago?

Well, I think we -- I mean, that's a great question. We have a much deeper level of experience in oncology than when I joined the company 5.5 years. I mean it's companies completely transformed. So -- and we also have a very clear strategy. I think the very first thing that Dan when he joined as we went into a long strategic planning process. and within 9 months, had a strategy that we completely agreed to from the Board all the way down to the management team, and then that allowed all of us in the company, myself included, to go then execute against the strategy. And you see that in terms of the progress that we've made over the last couple of years. So I think it's an incredible transformation to the company over the last 3 years. And then you'll see the pull-through of that over the next 3 or 4 years from my perspective. So -- and we have a lot of execution ahead of us, both commercially and clinically. But I think the setup for Gilead is completely different today than it was when Dan joined 3 years ago. It's really encouraged about where we are and where I think we're going.

And with that audience, anybody wants to throw something in? Please.

[indiscernible] I think if like R&D capital -- I think like cumulative R&D has been spent relative to your market cap is really high, how would you evaluate the returns that you got under R&D? And how should investors think about all this being spent and then I'm trying to -- is it just -- some of the questions I'm asking for aren't over specific growth, but is it just kind of filled spend? Or is there volume still there that you could potentially get in the future?

Yes. The question for people on the webcast is R&D productivity and the level of R&D spend versus the market cap today. It's a great question. It all depends on the time frame that you're looking at, right? So people used to use Gilead as an example of the exact opposite in terms of relatively modest spend for an extraordinary amount of value creation for shareholders. It's a little bit different for Gilead because a big piece of the value creation came in cure for hepatitis C, where you saw the sales go from $10 billion to north of $30 billion and then back down to $22 billion, $23 billion, and then we've been growing again from there. So I do think from the recent spend, if that's what you're asking, Ben, if you look at the recent spend, including our M&A deals, the value creation is coming. And we've been very clear that we expect -- and just to put it in concrete terms, we expect our growth, our revenue growth, especially starting in '25, to be top quartile, if not industry leading. So when you look at what Eli Lilly and AstraZeneca did to rebuild their business as a result of patent cliffs, that's exactly what we believe we've done and that we have everything internally that we need to do that today and that there's additional icing on the cake. So -- and it's not going to happen overnight to your point. But again, so I'm guessing that your question is more recently because if you look at it over a long period of time, Gilead underspent on R&D and yet developed game-changing products that had massive revenue over time and was always the poster child, so to speak, for incredible R&D productivity. More recently, we have had to lean into corporate development, in particular, and increasing our internal R&D to make sure that we have a sustainable engine. And of course, I think you're going to see the fruit of that over the coming years. But it's a great question. Yes. Okay. One more question.

Question is just your view on the industry's appetite for M&A. [indiscernible].

Sure. Yes. The question is the view on the industry's appetite for M&A and what's going to happen with M&A in the industry? The appetite across the industry, I'm set aside Gilead has increased, and a couple of large companies have been very specific and clear that they expect to increase the amount of deals that they do over the coming years, Pfizer being 1 example. The headwind, of course, is the regulatory environment in the United States, the Federal Trade Commission. Department of Justice, especially for bigger deals similar to the deals that we saw over the last 5 years using Allergan, AbbVie, as an example. I think you're going to see an increase in M&A with the market correction for smaller companies. I don't think you're going to see an increase in large M&A. In fact, I don't see -- I think you'll see a lot of large M&A in our sector unless there's a change in administration that leads to a change in terms of the antitrust enforcement. But I do think you'll see an uptick in deals. The other thing I'd say is for Gilead specifically, with the macro backdrop with smaller companies now and Ronny is going to see this at Novartis, is we don't -- we prefer to do partnerships. We prefer to do Arcus like partnerships and share risk. So as companies as the market is corrected, companies are much more open to partnerships and smaller deals today, which is great for us. We can share risk with those companies. So that's a little bit of an offset for us in terms of we would prefer to do a partnership or an Arcus deal we'll do small acquisitions or other things if we need to because of the competitive dynamic or if it's in our best interest because we want to bring the asset in-house. But for us, even though I think you'll see an uptick in M&A, not big M&A, but M&A across the industry for us. It's going to be more partnerships. Hopefully, that helps.

So to be clear, you're talking here to the professor of the industry when it comes to structuring M&A deals. So like you do have Andy with us. I'm going to actually ask you quick follow-up on the -- you kind of said the point that pharma actually prefers to partner is a way of reducing the risk and willing to pay more milestones. And that has been a trend. And we are seeing that absolutely with a lot of the recent trends innovation, whether they are targeted put into gradations or the AI companies or oncology asset companies we're seeing in a. I guess the question for you is how much of this is actually the preference of the boards of those small companies, which basically assume that they have an access to the capital markets, and therefore, they'll already stay dependent until further in the validation process as opposed to sell?

I mean my experience is that most of the Boards of those companies would prefer to sell if they can get the right price and not share risk going forward, especially when their portfolio returns are being challenged overall in this environment. So they would rather take money off the table, if it's at the right price, recognizing they're not going to get back to their 52-week high in most cases or premium to their 52-week eye. So there's general rules, right? We would rather partner and share risk. But there are times when we see an asset that we think we can create greater value by bringing it in-house. So we do a small acquisition or a structured acquisition. The big thing for us is there are limits to what we can do internally. So if we find smart companies with great people, I'll use Arcus as an example, they can really continue to move programs forward. It expands our ability to do programs and to move things forward. We use our balance sheet -- we have scientific input, but we allow partners to move things forward. That's a great setup for us. We can always bring those assets in-house down the road, either through the existing terms or we can be creative in terms of how we work with those companies down the road. So I don't want to -- I could generalize there are circumstances with earlier stage assets that we might want to buy. But generally, you'd rather partner and share risk and allow them to do things because they're nimble, they're agile. They have smart people. As long as you're aligned in the clinical development plans, it's a great path forward.

So it led that where you are today. How many proof of concept, so the point of validation biopharma we get with the value it gets incurred to the larger company, use the proof of concept. Until proof of concept, we don't care what you guys have in development, we don't give it in credit. Once you showed 1 good trial, which has strong data that we know there's a high chance that this will not make it to the market, we start putting numbers into our models. In the next 2 years, from all those partnerships, how many molecules will reach proof of concept?

I mean, I'm guessing -- again, my proof of concept may be a little bit different than yours, but...

Which you know you will see externally that you can tell me that this will have...

I mean, certainly 5 or 6 major programs. And again, if you look at Trodelvy and some of the combinations, it's probably urologist Yes, that's probably 5 or 6 I was a key program Yes. At least and then there's dozens and dozens of programs behind that, as you'd expect, that we'll continue to provide proof of concept over the coming years, which is very different than the way good was historically. So yes, more to come, but it's pretty exciting with the portfolio that we have together. We're going to see it development.

And with that, I thank you all for being here on our first afternoon. I appreciate the questions. For most of you ask Fred. Andy, thank you very much for being here today.

Thank you.