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

All right. Well, thank you, everyone, and welcome to another great session here at the 2022 Jefferies in person. At Global Healthcare Conference, we're commenting at how great it is to see so many -- some friends and clients and everyone in person. I'm very happy to have up with me here on the stage, the Chief Medical Officer of Gilead Sciences, Merdad Parsey. Long time no see. Since I just saw you at ASCO and obviously, a lot of exciting things going on in oncology for you as well. And so we're going to go through some of that as well as hopefully some other things.

But maybe I would just take a step back and offer you the opportunity, since I think most people got the key highlights out of TRODELVY and ASCO, sort of a big picture question about how you feel about coming out of ASCO, your product profile for TRODELVY, how you guys feel about where we're going with that. Just make some comments coming out of ASCO about how do you feel about things?

Sure. Yes, thanks, and thanks for having me in it. It is great to be here. I -- probably my primary emotion is relief. Finally being able to show everyone the TROPiCS-02 data and be able to speak to it, I think it's been really great and being able to show the overall context. I think probably the biggest things for us have been that with TRODELVY now, we've run essentially 3 major experiments, right? And we -- they've all been positive, right? We have our approvals in bladder cancer. We have our approval in triple negative, and this study in addition to ASCENT, now this study in the HR-positive setting has also been positive. And I think that just keeps us really excited about being this TROPiCS-02-directed antibody drug conjugate for TRODELVY. I think that was really big. And then also being able to speak about magrolimab and coming off of the clinical hold and getting our momentum back there for magrolimab and building on that.

Okay. Good. So let's dig into that a little bit. So you feel confident, obviously, I mean, you technically had a positive study. You are pushing forward -- we were talking about earlier at ASCO about pushing forward in other indications. But before we get into all of that, I mean, people are trying to understand the opportunity for you in HR-positive breast cancer given the results and in part, obviously, relative to a competitor now what I'd like to say is, first, it's got to be approved before we talk about competition. So let's take that in 2 steps. One is given what we saw at ASCO, what are the discussions and what are the things that need to happen with FDA? Have you met with FDA? Are you going to meet with FDA? And how do you think that meeting goes in terms of filing? As I understand, the write-down that previously occurred already assumed a no filing in the write-downs. So I don't know if that's just conservative accounting or maybe a read-through, but what -- are you confident that you can file?

Well, yes, I think this will be the essential issue. As you know, because we hit on PFS and because this is such a high unmet need area and we showed such a hazard ratio, a great hazard ratio, great benefit in these patients...

0.66.

Yes, 0.66 and the landmark analysis, in particular, were really, I think because these patients really have no other option other than chemotherapy, sequential chemotherapy, right? They've all seen 3 prior lines in addition to failing endocrine therapy. That -- the unmet need is dramatic in these patients. And so that will be the basis of our discussion. I think the main issue will be to what extent the OS maturing data maturing will be necessary for the regulators will be the question at hand. And as you know, we expect in the EU that, for example, OS will be necessary. In the U.S., it will be a discussion with the regulators. And -- but as we've disclosed, we have additional interim analyses in the final analysis for OS coming back.

Are there any precedents for -- that are a good examples of filing on PFS while OS is still going on in breast cancer or lung cancer because I'm told the lung cancer it's about...

Yes. lung cancer, I think, it's harder. I think lung cancer, especially now our assumption, and I think you've seen it play out. We believe that OS is going to be generally necessary for filings in lung cancer. I don't want to make a blanket statement...

But for breast cancer?

For breast cancer, I think in the past, there has certainly been accelerated approvals based on PFS with a commitment to come back with the OS data. And so there -- the accelerated approval can be taken away. I think the -- it's going to be interesting to see how that -- I think the agency's approach to accelerated approvals has been evolving. And so it will be interesting to see -- interesting to see where they are...

Evolving more positively or?

I think you've seen them ask for some of the accelerated approvals that have not completed their confirmatory trials, for example, to be pulled, right? So I think our situation is different because it's an ongoing study and the OS data will be forthcoming in short order that could give us a little bit more...

Well look, the positive is -- and I did appreciate that more coming out of ASCO. I appreciate that expectations are fairly well on Wall Street is the landmark analysis, which showed that at 6 and 12 months. And I guess that there is a significant difference. The hazard ratio is significant. That is a benefit and clinical benefit for those patients. And it's in a really sick population that's not comparable in HER2. So these patients do not really have a lot of options.

That's exactly right.

That's the unmet need.

Yes. No, I think that's exactly right. I mean the -- I tell people now that we can show folks the -- has the Kaplan–Meier curves, right? You can see the steep drop-off in the PFS that happened through...

And that impacts the median.

And that affects the median, exactly right. So that's where the landmark analysis become really important. And you see clear separation that persists throughout.

When are you meeting with FDA? When did these discussions happen?

Yes, we haven't talked about it yet, but we're having -- we're in the midst of having those sorts of discussions right now. So we should have some clarity.

By the end of the Q2 results, I guess September, July, is that fair?

I don't know.

Okay. Let me also ask another important question that Wall Street is sort of debating. And again, I probably read a lot of notes about this about the -- HER2 data and the ramifications or even if you were approved, does the market opportunity change for you because of how good the results are. Now what I took away a bit, and I think you've tried to emphasize that there are different lines of therapy within HR positive, it's not so much a zero-sum game, right? And that there are other options. So what is your takeaway from that result? Do you agree that that's a very strong result and that's going to be used earlier in HR-positive and you're looking to be used later so that, that's not so much a market opportunity issue?

Well, I think right now that's where the data are. I mean, we believe that we should be able to move up into earlier lines of therapy as well. We are targeting a different antigen, right? I think if you step back and think about TRODELVY in general -- TRODELVY -- the opportunity for TRODELVY is much broader than breast cancer, right? As I mentioned, approved in bladder, approved in triple negative and looking in lung and other tumor types. And we're targeting different -- we're not a HER2-targeting agent or a Trop-2 targeting agent. And so the opportunity is not going to completely overlap. There will be certainly areas where there would be some overlap. The other key thing is in the HER2 data, they looked at only 1 plus HER2 expression and above. And I think that's an important detail that may not have been appreciated by everyone. So from our perspective, I think, look, on the triple negative side, we have a large Phase III study that -- and we're approved, to your point, right? We're approved for use in triple negative, independent of HER2 expression. I think that's really important. We're there now. We're having great uptake and physicians see it as a really great opportunity. In HR-positive in earlier lines, we now have to move ourselves, and that's always been our plan to move from the later lines of therapy to earlier lines. So yes, I think in HER2 we'll have applicability in earlier lines. The data looks fantastic. And I think that's great for patients, and we will continue to march ourselves.

Well, no doubt about it, as people do more testing with IHC, obviously, an IHC HER2 0 would not get that product.

That's right.

So that's an opportunity. But more broadly, you have the opportunity to move upstream. So is there still and will there be an opportunity to -- I don't say, redo the study, but to move upstream and people who have not failed 3 prior chemotherapies, so you could show a better benefit and have an opportunity to be a little more on par?

Yes, that's exactly right. And so those are -- that's exactly where we're planning and we'll be designing those trials and looking at going into earlier lines of therapy in the HER positive.

The other area, since again, we will get an update from FG regulatory if we can file that's great move forward. Market opportunity-wise, everybody can figure it out, and there's still an opportunity there and particularly sequentially because the people are going to move fast in HER2.

I think there's going to be sequential potentially in both directions, right.

Right. So that's a positive. And then obviously, I don't think people have really done sort of any real meaningful value work around lung cancer. Now obviously, it's one like, well, first of all, what's the broad rate of success. Second of all, there is another player there as well, and so those are 2 dynamics. So you have to take those into consideration. But you have started a Phase III study in lung cancer. A competitor is already running it. Do you expect that they -- that Trop-2 will work in second-line lung cancer? You will show a clear benefit over docetaxel, and that you're just slightly behind, but you have a better product profile, safety? Comment on that.

I couldn't say it better myself, Michael. I think that's exactly where we are. I think we think the probability of success is reasonably good in the sense that with our own data and to your point, with the competitor data, I think there's a derisking of lung cancer overall. And from our standpoint, I do think that we would expect that our efficacy will be in the right range. And so far, fortunately, with TRODELVY, we have not seen ILD -- And I think that's going to be important and potentially more important in lung than in other tumor types as well.

How confident are you there? I will tell you that, again, because we go back to probably the success and surveyed people what they think among the bar of 50-50. But that whenever you take single-arm open-label studies and you look at response rates and small results, and then I don't want to do cross-talking persons with editor, but then you start getting into that. But look, you just need to have really huge studies that are very well powered and then it comes down to a magnitude effect too. So maybe the right question is, will it work, but is it more of a question of the clinical benefit. Like do you think it's going to work, but it's a question clinical.

Absolutely. I think, as is always the case in these studies, it's always going to be a matter of magnitude, and I do I think we have to see how the data play out. But I think given what we've seen so far, and again, I think the hazard ratios that we've seen in every tumor type that we studied so far, we've shown clear benefit. And I think, to your point, there will always be variability tumor to tumor. But I do believe that given where we are right now and the consistency of what we've seen, we're kind of confident in our lung cancer.

And your study is running, and it's up and rolling. I don't know how far behind it is, but...

Second line...

It is up and running?

Yes.

Okay. All right. So that's lung cancer. That's obviously an opportunity again for TRODELVY. That will come into view over the next year or 2. And let me ask also later this year in terms of oncology and relevant because of ASCO is TIGIT. And so with TIGIT, and we'll get on, with TIGIT there was a surprise result out of Roche. I mean, we could debate positive negative statistical alpha and all of this detail. But at the end of the day, there is still a question about whether TIGIT will have a statistically and clinically meaningful results in lung cancer. And so where you're trying to differentiate is both with a different compound, but also with the potential for being a triplet. So I feel like some of that is not clear, but maybe talk about your confidence in TIGIT because you have data that will come out later this year, what should the street expect? And how should we interpret it?

Yes. I think what we've already announced is that we do see separation between -- when we add TIGIT to zimberelimab, and so we do see a benefit over the PD-1 alone. And I think that's what gives us a lot of confidence in terms of going forward with the TIGIT. And for me, I think you have to look at the totality of the data. I think you look at the Roche data and we look at our own data, where we see that clear differentiation...

And Merck, too, but yes.

And Merck and others, right, and that we do see clear evidence that the biology is valid. I agree with you. I think that there's been a reaction to the small cell failure. And I think that was a very high bar in a tumor we're not going to pursue. And then the non-small cell I think, to your point, that is mostly a design issue. As we were saying earlier, approval in lung will require OS. So if you were to design a lung study, you're going to design it with OS as your primary endpoint and you're not going to spend a lot of alpha on PFS. And so that's probably very deliberate on their part. And I don't interpret that PFS miss is -- as an indictment of the biology.

Okay. So in your results that will come out, I'm sure people will try and stack cross-trial comparison, your response rates with your doublet to the others, but also what's important is duration of response in PFS and then also comparing to the triplet. Can you just please explain, do you think that your doublets are on par? Do you think it better? Or do the triplets is an opportunity because we want differentiation?

Yes. I think in particular, doing cross-trial comparisons for an ongoing study that's still enrolling is really difficult to do, Michael. What I would say is we are -- what we're seeing, we're excited about, we're interested in, and it's looking good. It's certainly given us enough confidence to design our subsequent trials. We are going to be looking -- for example, we've announced the STAR 121 study that we'll be looking where we'll be looking at zim chemo, pembro chemo and zim chemo dom, as a great evidence of our confidence and where we really want to go with that to...

Yes. So to be clear because not everyone listened to the oncology, a deep dive date, but you have gone forward with plans to run a large Phase III with TIGIT in your PD-1 -- their PD-1, and you're going to go about that. And assuming some major shocker like the Roche data shows nothing that you would obviously go forward?

That's right. Yes. Yes. So we're -- yes, we're committed. We're going to be running that, we're going to be starting that study. And, yes.

Should we have lowered expectations for the triplet at this point.

I think it's early to say. Again, I think the data needs to continue to mature. And the way I think about it is that one of the challenges for doing IO trials, and in particular, early IO trials is that when you're looking at a triplet in particular, you're looking -- you need to figure out the contribution of components. And ORR is probably not the only thing -- so we need to allow the data to mature. We need to see what the PFS looks like, what the OS looks like, all those things is it mature before we can conclude where we are.

Are you committed to putting out the data later this year at a medical conference?

We've committed to sharing the data later this year. I don't think we've said exactly where, but I would expect that it would be more of a press release for the data disclosure later this year. and then we'll plan on showing the details of the data in the medical conference.

And at that point, you would probably -- it wouldn't be like, oh, we're still studying the triplet. You feel like at that point, you'd have enough to make a decision on it?

Yes, I don't want to predict because we haven't seen the data. So I think -- I don't want to predict what we're going to say quite yet.

Okay. So TRODELVY, we talked about that. TIGIT, we talked about what's coming and how to think about that. And you guys are still very excited. I think Roche obviously is pushed forward and people think about it can still hedge survival. And then on magrolimab. So let me just -- a couple of questions on that. Was on clinical holds, come off of clinical hold. Just to be clear, you have a huge Phase III study reading out in the first half of '23. You've reiterated that that's going to happen. And what is your confidence that that is going to be a positive result? Yes, let's be frank, this was the data originally that drove the acquisition.

Yes, absolutely. So look, I think we have consistently shown and what you saw, what we also showed at ASCO we're sort of the final data from the Ib study, where the CR rates continue to look great. We are seeing efficacy in both -- in the TP53 mutants as well. So I think those data continue to be really strong. And I think that buoys our confidence in terms of the Phase III readout. I'll remind you that it's actually an interim analysis of the Phase III study that we'll be seeing next year. And so it won't be the final analysis.

An interim from the standpoint that it's an interim looking at overall complete response rates.

Complete response rates in the first several hundred patients that are enrolled. Those are the patients who were enrolled, and that's the plan for that because of the clinical hold. The final analysis will be delayed because we have to restart enrollment. But we're -- so -- but I think we're confident in that interim analysis next...

So we had gone in clinical trials like [indiscernible] increased from like 150 to 540. I'm going to show some numbers that are on clinical trials. The interim is based on like 150 or 300 or -- and it is CR rates is the primary input.

It's an interim analysis. So we're looking at a number of endpoints, but CR is one of the key endpoints we'll be looking at. And yes, that will be off of the patients that were enrolled before the clinical hold. So...

Before the clinical hold. Okay. One final question on that or maybe 2. First, on the MDS, you feel very good about it, but I got to tell you that with the CR rates that are still good, but have come down. You still feel good about it, but it has come down a bit. And then the control arm, there's an outlier study that's come out and everyone knows about that. But we just had another CD47 company over there, and they feel like that was just an outlier. So we got to see the results, but do you think that there's anything in that study that is somehow just -- outlier is an outliers, but it's older. It's a 2021 study. I mean it just came out.

That's right. I mean I think you have to -- look, we take it seriously. It's an outlier study. It's -- and it's a contemporary study. And I think the field would be surprised if the true CR rates have gone from 15% to 30%, doubled. So -- and when we talk to KOLs and the folks who are involved. I think most people feel that there's a -- that would be an unusual result. So...

I would love to just wrap up in the last few minutes with a really important question for you. And it's also for Gilead, which is strategic. So you guys have embarked on this huge effort to go about oncology. You've guided to 1/3 of, I think, 20, 30 or 1/3 of long-term revenues to be from oncology. You haven't changed that guidance despite things that have come out. When you sit here today, coming out of ASCO, do you feel like, look, we have the assets. We're still looking at BD. I think there's a comment at ASCO like we've been as busy as ever because every small biotech is going to come to us, and needs cash, but also has great stuff. So are you embarking on the playbook? Look, we're going to keep doing BD. We're going to keep looking at assets. We want to bring in more stuff. Where -- what is the message about the cancer portfolio and wanting to do more? And whether or not you have any little bit more of a hesitancy because things have come out, they're not the way so trigger shy?

No, I wouldn't say trigger shy. I think we -- what we've said is, and we continue to guide to is that we continue to look for opportunities for bolt-on type acquisitions that will add to our portfolio. I think we've been very deliberate and strategic about how we've done those. We have partnerships, for example, where we can risk share as we build the portfolio up. Our goal has been when we're not very aggressive was to build up the late portfolio, which we've done with TRODELVY, magro and TIGIT to a certain extent, and also to build up the early portfolio with a number of deals there Pionyr to Zona, other agents that we've got. And then some of our internal assets as well. And you saw at the oncology deep dive, the scope of our portfolio. We're always going to be looking to strengthen that portfolio. So BD, I think, will be part of our approach, not only in oncology, but across our therapeutic areas to complement our internal portfolio. We will always be opportunistic, but we don't have plans. We're not going out targeting a major acquisition, but we'll always be opportunistic for the right thing that will allow us to get to our goals of building our...

So to be clear, like you don't feel you need more late-stage stuff. If certain valuations come down, you'd be opportunistic? But if you and Andy and the team are like, look, it's not a near-term thing. We want to go out and continue to go up for earlier stuff because it's a long-term game. I don't know.

Yes. We have a lot to work on, right? I think as you said, we've built a tremendous portfolio. We have a lot of investment going into TRODELVY, magro, TIGIT. Those alone are going to take a lot of work. We will always look for other things that will complement that portfolio. So you should expect to see normal course BD from us and that we don't -- for bolt on...

For bolt on which is -- Help me, what does bolt-on mean?

I think what we're talking about is things that will add to the portfolio, that will not come with an enormous price tag, that will be moderately accretive to what we're doing. Yes.

Good. Well, look, a huge amount of stuff that came out of ASCO. We're excited obviously about a lot of stuff that's still coming. And obviously, you're continuing to be busy across all of that because there is a lot to look at there in oncology, I look forward to it. So thank you very much, Merdad, for being here with us.

My pleasure. Thanks, Michael. Thanks for the invitation.

Good. Thank you.