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

Great. Good morning, everybody, and thank you for joining us for this next session with Gilead. On behalf of SVB Securities, I'm very pleased to host Merdad Parsey from the company to discuss the company's pipeline prospects. And so, Merdad, it would be great for you to maybe just comment very briefly, at a high level, about the position you see Gilead in today versus, obviously, where it was even just 9 to 12 months ago.

Sure. Sure. Thanks, David, and thanks for the invitation, happy to. Look, maybe I'll go back a little bit further than 9, 12 months ago. When I joined, it's been just over 3 years now, we set out on a course of really adapting our pipeline and really building Gilead into a company that was going to be -- is going to be sustainable for the long run, really building on the strength of our HIV and virology pipeline and portfolio, but really growing into oncology in particular, as well as building out our inflammation pipeline. And so over that time, I think we've moved very aggressively to build our pipeline out, as you know, with acquisitions in addition to our internal work. And that spans everything from remdesivir in neurology to Trodelvy in oncology. We're really happy with where we are right now with a lot of potential for additional growth over the near term -- over the near to midterm. And I would say we do continue to have a goal to try to build the pipeline out to be a truly sustainable pipeline for the long term. And I'd say we're midway through that journey and hope to keep building the portfolio out over time. Yes, so we can dive into whatever part of that you want to talk through.

Great. Well, let's just pivot to specific products, and it would be great to try to cover a lot of ground. So it'd be helpful for you to talk about what you see as being underappreciated about Trodelvy, including the event path ahead that could bring Wall Street views closer to Gilead's views of its prospects.

Sure. Yes, look, I think -- so Trodelvy, we're really excited about where we are with Trodelvy over the past couple of now. We've built on the initial approvals in triple-negative and the accelerated approval in bladder, which I think is underappreciated, with now the HR positive, HER2-negative approval that we have. And it really speaks to where we believe we're going to go. First of all, I think the value or the -- and by value, I mean the benefit it brings to patients, really is emphasized by the NCCN guideline update that we just got recently where we're now Category 1. I think that really speaks to the importance of Trodelvy in the treatment paradigm for people with breast cancer. I think that's a very important piece of it. The other part I think that's underappreciated is our underlying strategy from the get-go, which was very much 2 key things: one is to expand the number of indications we're in, and the second is to go into earlier lines of the indications we already have approvals. And both of those things are underway as we move into studies to look at earlier lines in triple-negative and HR-positive, HER2 negative and bladder cancer, so those are all moving along. We are also expanding into non-small cell lung cancer, probably the most important part of our expansion for Trodelvy, and I think some place where we feel very confident around where we're headed given the validation of Trop-2, I believe, in lung cancer as well as what I hope will be a differentiated profile for Trodelvy in the space. And then we are exploring additional indications. I think probably the biggest thing is, when you work with a molecule that has this sort of breadth of activity, it's clearly an active molecule that works across a number of tumor types, our obligation is to identify the broad potential for a molecule like this and really, to look for additional indications. And so we have a number of exploratory earlier studies ongoing to identify additional areas where we can expand Trodelvy. So the trajectory from a revenue standpoint in '22, we're really excited about, I mean, clearly, the uptake is going well. And we really think there's only upside at this point.

Excellent. So then let's talk about non-small cell lung cancer. So if you could compare and contrast Trodelvy with AstraZeneca's Trop-2, that would be helpful. And then also, compare and contrast EVOKE-01 versus AstraZeneca's TROPION-Lung01 trials.

Sure. Well, I think it's a great point where I think that it's very important to talk about the similarity in the sense of, look, ADCs in the treatment of oncology have been -- had struggled outside of the initial first few ADCs. We've all worked on ADCs for a long time. And I think with the AZ molecule and ours, I think we're really seeing a new emphasis on the potential for ADCs. And they are different, right? They are different in that there are 3 pieces to each ADC. There's the antibody. And over time, we've all gotten used to talking about the differences between, say, PD-1 inhibitors or antibodies directed against TNFs and the subtle differences between them. But here now, you have to add the complexity of the linker and the payload. Now the linker is different between ours and the competition. We have a hydrolyzable linker, and theirs is more of a protease-dependent linker. And we believe that, that fact of the hydrolyzable linker and having the payload available is part of what gives us that sort of zonal effect of tumor killing. And I think that might be important in the long run. And then our payload is what I would describe as a more moderately toxic payload. It's an irinotecan derivative as opposed to an exatecan derivative, which can be more potent. And so I would expect that we will see, as you see in other therapeutics, a bit of difference in terms of our overall efficacy and safety profile over time. Where we think -- where we're excited, as I mentioned earlier, about the lung approach, we are excited in that, in lung, our data so far -- we have not seen, for example, on the safety side, a lot of ILD, any ILD at this point. And I think that could become important, especially in patients with lung cancer who may have irradiation to the chest, they've had lobectomies. And that could be one of those differences in the constructs of the antibody drug conjugates that could play out in the long run in terms of nuance differences. From a side effect profile, that's another place where you see a bit of a difference. Ours -- I mentioned ILD, and then ours are really neutropenia and diarrhea. And those are better -- more typical adverse events that oncologists are pretty used to managing. They're fairly predictable and manageable with things like dose reductions or things like that. Whereas ILD can be a bit more challenging given the sporadic nature of the ILD, and it's something that folks aren't really used to tracking. So I think those are potential differences that we'll have to watch over time as our data evolve in multiple tumor types and especially in lung cancer. And then I think you asked, just to follow up on then the differences in our trials. There are a lot of similarities in our trials. Both of our trials are -- we're roughly the same size in terms of sample size. They are essentially very comparable patient populations. We do have some differences in terms of the patient population, in terms of how we think about it. Similarities, we both are looking at comparisons with docetaxel in the second-line plus population, and we are looking at people who are -- who have had platinum and PD-1 inhibitors in the past. So those are some similarities. But in terms of differences, we are looking at Stage 4 only, and theirs are looking at 3b/4 patients. And then the other, I would say, difference is that they're excluding patients with a history of ILD and pneumonitis, and we don't exclude those. Both trials are ongoing. And so we'll just have to see how the data play out. But I think we're on the right track there.

Got it. Okay. That's very helpful context. Great. So then pivoting to TIGIT. So there's obviously a lot of debate in the market about TIGIT given questions about how much efficacy it can really add and how helpful it can be in combination. So could you just comment on that and just highlight your combo development plans and next cards to turn over?

Sure. Yes. Look, we're really excited. The data we presented at the ASCO plenary, and we're looking forward to updating at ASCO in May -- ASCO 2023 in May, I think really answer the key question that we asked in the design of that trial, which is does TIGIT add to a PD-1 inhibitor in patients with non-small cell lung cancer. And what we see there is that the PFS improvement with a hazard ratio of about 0.55 to 0.6 depending on which cohort you're looking as well as the absolute PFS itself of 10 to 12 months PFS in an ongoing data set where we expect those numbers to mature over time, really, I think, answer the question that TIGIT does really add to a PD-1 inhibitor. That's consistent with the public data so far. It's also the biggest data set that's been made public by anyone to date. So we have a lot of confidence based on our own data and watching these data mature over time and -- about the ability of TIGIT to really be an important next-generation immuno-oncology agent. Obviously, there are other data pieces that have to come together. There's going to be additional readouts. I do think that people haven't -- have paid attention to the Roche announcements in a way that I think, from my perspective, probably a bit of an overreaction to them not stopping the study or not announcing their data. As with most Phase III trials, we all build in interim analysis in our studies for two reasons: for safety, but also to see if you have a much larger effect on your -- treatment effect than you had initially planned for. But you really only power the study for the end point at the final analysis, the overall survival at the end of the analysis. That's how our study is going to be designed, and that's how we design all of our studies, and that's how Roche designs their studies. So it would have taken an outsized impact for them to be able to stop the study and announce positive data. They're not going to spend a lot of alpha on an interim analysis, nor should they; nor will we or nor should we. We power to make the study as large enough to get to a statistically significant outcome at the end of the trial and no bigger because we want to go as fast as we can. And so those interim analyses can be helpful, but I don't read too much into them when the studies continue.

Excellent. That's very helpful. So then turning to the pipeline for cell therapy, could you talk about the steps you're taking to retain your leadership position, particularly as new technologies will be entering, such as Galapagos' program.

Sure. I think I like where you started. We really feel that Kite has really demonstrated that it's the leader in cell therapy. The ability to provide treatment to patients 96% of the time, the ability to manufacture reliably and the durable responses that have been shown time and again, now over 5 years after treatment, I think really established that primary position, if you will, in terms of where we are as an organization with cell therapy. And I remember a year or 2 ago, I think the question was always, well, what are you going to do about ALL, and unfortunately, for patients, I think we have not seen that area develop the way people initially thought. I think it's going to be harder than people thought. And so I think providing the treatment approach that we have now with the CAR-T technology that Kite has and really working to optimize the delivery time, both in terms of reliability and in terms of being able to get the cells back to patients as quickly as possible, reduce the need, if you will, of off-the-shelf. If you can turn around and -- apherese and then treat a patient quickly with what I'll call standard CAR-T therapies right now, the value of being able to get to allogeneic is reduced -- not eliminated, but reduced. Now of course, we are really focused on what's going to come in cell therapy. And we believe that, given our position, a lot of people seek out and work with us, and we have a lot of partnerships and we keep a very close eye on where things are headed in cell therapy. And so we are constantly looking at that next generation of work. As you know -- as you mentioned, a good example is Galapagos. That is, Galapagos remains a partner of ours. We continue to have options on the programs that come out of Galapagos. So we will stay close to the Galapagos team. And as that evolves, if that becomes something that we believe will bring value to patients, it will definitely be something that we will bring into our armamentarium to help with cell therapy. So -- and in the meantime, with the deals you've seen Kite made more recently with the BCMA agent as well as the armored CARs, I think all of those things are evidence, I think, that we continue to work to innovate in the space and look for new opportunities to bring our expertise, our manufacturing prowess and expertise, to the evolving landscape in cell therapy. We're really excited about where we're headed there.

Excellent. Thank you for all that color. So let me just glance at the time here. I want to make sure we cover as much ground as possible. So -- but why don't I just ask you to touch on magrolimab quickly. So I mean, obviously, the data at ASCO last year was encouraging in terms of efficacy. But obviously, the toxicity needs to continue to be managed carefully. Could you just discuss how you see magrolimab with respect to its opportunity, news flow ahead? And then how you see it potentially being positioned longer term versus next-generation CD47 bispecifics?

Sure. Yes. Look, I think magro remains one of those areas where it's one of those pipeline products that we acquired in the past few years and are looking for its maturation and hopefully, contribution. I always think of CD47 in 2 buckets: solid tumors and heme. Heme, obviously, we're far out ahead and those Phase III trials are ongoing. We'll look forward to the readouts of those studies as they mature over time. And as you know, we have another interim coming up this year that, as we were talking about earlier, we'd have to see a big signal into -- to unblind, and we are on pace to get to our event-driven outcome next year. So I think the potential in MDS and in AML remain sort of the cornerstone. And we're far out in front there. I think we are leading the pack there. In this business, I think competition is the name of the game. The days of being the only player are far behind us, but we think we're really happy with where we are from a timing standpoint in terms of the maturation of those studies and our ability to get to that answer before anyone else. And then in terms of solid tumors, we have 4 ongoing Phase II trials that are fairly far along. And there, I think -- as you mentioned, there are a number of folks who are dabbling in the solid tumor space as well with CD47. I think we're all looking to see proof of concept there, us included. We're really happy with how far ahead we are and the breadth of our programs there to really suss out things like which combinations could potentially be the best and which tumor types we expect to see that efficacy most likely. So I think we are far ahead. It's too soon, honestly, with other agents to -- especially the bispecifics to really see how they're going to play out. But we certainly think we have. We're very far ahead. And then in terms of safety, I think it's a great point to hit on and remember, that we actually -- the company Forty Seven actually patented the dosing approach that we take. We believe that the anemia that you get with the CD47 really has to do with those senescent red blood cells, and it's an on-target effect. And so we have our dosing paradigm built in a way to minimize that adverse event with an initial low dose, and then we're able to escalate our doses over time to get to better tolerability. And I think that's going to be key to finding the right therapeutic index, if you will, the right window of treatment, to mitigate the effect, the on-target effect, for the red blood cells while getting to maximum efficacy. So we're really excited about where we are.

Excellent. Okay. Great. So let's do a little bit more of a sort of rapid fire on some of your other key programs. So with respect to your oral COVID treatment, Pfizer has claimed that no other company will be able to compete with PAXLOVID's label because they were able to show high efficacy during the peak pandemic period. Could you discuss your strategy to demonstrate compelling efficacy and comment on Pfizer's statement?