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

Thank you very much. I want to get started on the next session. I'm Michael Yee, Managing Director and Senior Biotechnology Analyst at Jefferies. I'm very happy to have with us here at Gilead Sciences, Johanna Mercier, the Chief Commercial Officer. And I thought, that would be quite perfect timing because we're coming away from ASCO. We were just talking about flying from Chicago over here to New York.

And, a lot of developments going on in oncology for Gilead as well as, obviously, I want to spend half of this talking about the developments in HIV and all the long-acting developments, which I think is getting a lot more news because some of your competitors are talking about long-acting as well, and I think that's underappreciated. So maybe, just in the first half of our discussion, we have come away from ASCO, and Gilead is obviously knee-deep in breast cancer with Trodelvy, and you had some developments there, as well as in your analyst briefing at ASCO, it was actually a whole slide deck about lung cancer. So could you just talk to the audience about how Gilead sees the commercial future in breast cancer and lung cancer in Trodelvy?

Sure. Thanks, Michael. And hi, everyone. Great to be here. Yes, so as ASCO just kind of ended, it's a great opportunity to talk about where we are with our oncology program. We've come a long way. If you think back less than 3 years ago, we didn't really have an oncology pipeline or franchise. And so, very energized coming out of ASCO to truly be competitors at the table in many different ways because of the different targets that we have playing out. Specifically to your question in breast, we launched in second-line metastatic TNBC and are now the standard of care in that setting, which is pretty incredible. We've shown incredible OS data for these women in this line of setting, which is a very aggressive disease. We also just launched in the U.S. in February in HR positive HER2 negative and also showing overall survival. So now overall survival data in 2 breast cancer indications. We also have accelerated approval in bladder in the U.S. and are awaiting for confirmatory data in Phase III trial to launch not only -- to continue the launch in the U.S., but also launch ex-U.S. for approvals there. And then, of course, the lung cancer data that we can talk a little bit more about, that we're awaiting very excitedly for. So a lot going on. I think the HR positive launch has also been very successful, and this is building on the TNBC launch. And, I have to say that the TNBC launch, this was our first foray into oncology, into breast cancer. We learned a lot, and we had a couple of bumps in the road. There's no doubt. We feel now that we've really kind of solidify our position, both from a capacity capability skill set standpoint, and very excited and energized to see the team come together and cross functionally, and really make a difference for these women in breast cancer. And we've seen a really nice uptake in HR positive, since the launch, but actually even before then, right, as we presented OS data at ESMO last fall, we and NCCN Category 1 recommendation in both indications, that's really kind of helped us play out. It's very different, when you already have a drug on the market and starting to get experience there to be able to then just continue that through into another indication, specifically in the community. But obviously, being both in breast that helps as well.

So let's talk about breast cancer. So you are obviously approved and triple negative. And now, you're just going to label in HR positive. And over the last 6 or 12 months, Wall Street was concerned that in HER2 data a year ago, you may got the label at this point in low HER2 that, that was going to be a very competitive and compelling offering. Can you talk about what you've been seeing and your confidence about your launch and HR positive in the face of -- in HER2 competition?

Sure. So first, I would say that the fact that we have OS data in both indications has played out really well for us, number one. Number two is, if you remember, right, within HER2, DESTINY-Breast04 is earlier lines of therapy in HR positive HER2 negative versus TROPiCS-02, later lines of therapy. And so, we are obviously studying it to see how do we move forward in up lines of therapy. But at this point in time, in that setting, we are definitely seeing good use in that third-line setting, fourth-line setting, and we're seeing in HER2 use a little bit earlier than that.

Can you just, like -- people looked at them like, "Oh, that's relapsed/refractory" or later-line breast cancer, your later line breast cancer, Oh my gosh, that's more compelling. Do you feel like the market is, hey, we are getting more third and later line. Don't worry, HER2 is getting used, but it may or may not be earlier than you, so it's not a direct one-for-one competition.

That's the way I'm looking at it, to be totally honest with you, I also think, just the fact that there are a couple of ADCs in this market really making a difference for these patients is pretty incredible. And so, I think we each have a role to play. And I think, the biggest conversation we're hearing, specifically in HR positive, HER2 negative is really sequencing of ADCs. And can you do in HER2 to Trodelvy and Trodelvy to in HER2. And what we've seen so far is a lot of physicians are very open to that. And I think, it's a couple of things. Number one is ADCs aren't all the same, right, specifically in HER2 and Trodelvy. These are different targets, number one. Number two is you're also thinking about the payloads, the linkers, et cetera, and the antibodies. And so, all of those pieces are coming into play. And so therefore, the real-world data that's going to come through on this is going to be interesting. Just one point to make, specifically to competitive dynamics in the space. In TNBC, we are still the only ones that have shown OS in this second-line setting. And despite the fact that in HER2 got a bit of a broader label, it is still -- Trodelvy still differentiates itself not only because it can be used regardless of IHC status, but also because it's showing very clear overall survival in over 500 patients in these clinical trials. And so thus far, Trodelvy has been used in over 20,000 patients around the world. So, we have really strong data to support not only the efficacy, but also the safety profile and how it's manageable.

Before I shift to lung cancer, I would just ask, how is Gilead feeling about the overall competitive landscape in breast cancer, also from TROP2? I mean, I guess we're awaiting some data from Merck as well as the fact that Astra will have some breast cancer later this year, without getting too much of the details of those, presumably, data could be positive. And how do you feel -- or how are you positioning Gilead given that Daiichi Dato-DXd could have HR positive breast cancer later this year?

Yes. I think -- listen, I think the fact that there's a couple of TROP2 ADCs in the marketplace or will be in the marketplace potentially. I think, it's exciting for TROP2 ADCs and the difference they can make. I think, the one thing I will also say is that not all ADCs are the same. And again, in the TROP2 setting, we've already seen that, right? We're seeing the safety profiles, the tox profiles of some of these ADCs as being quite different. And I think that's going to be a differentiation, let alone the fact that we're on the market today, and making a difference in getting experience with physicians and with patients. And I think that's going to make the difference. The safety profile is something with Trodelvy, with neutropenia and diarrhea being the most common side effects, are both manageable side effects that are actually very much in line with how physicians manage with chemotherapy side effects. And so, I think that's something that -- what we're seeing physicians and what we're hearing from physicians is they can manage that because they know how to. I think, if you have ADCs that come into the market with a different profile and potentially ILD on the profile, of stomatitis on the profile, I think that's a different profile, and you got to think about the risk-benefit profile for these patients.

Okay. Now let me briefly hit on lung cancer. Obviously, this is in development, not commercialized yet. But, you just -- Gilead just had a 1-hour presentation on where you guys are going in lung cancer, including with the TROP2 first-line data called EVOKE-02 data coming in the third quarter. So Wall Street should get a look at TROP2 in lung cancer in first launch with KEYTRUDA, next quarter. How confident are you that you can be a player in lung cancer? We're still waiting for Dato-DXd any day now, but that you can be competitive there as well as with TIGIT. Talk about these two things as your things, and we'll move on from there.

Yes. So we're very excited about what's to come, right? We've already shown that Trodelvy can be leveraged across tumors, whether it's breast and bladder. We're looking forward to the lung data. And obviously, everything is compelled by the science. But having said that, the EVOKE-02 is in a first-line setting. It's a Phase II trial. We just finalized patient recruitment. And so, that's exciting for us, as we think about potentially presenting it at Congress, at a Congress in Q3. We also have 2 Phase IIIs, right, that are ongoing, and that data we should see within the next 12 months or so. So, both in second-line setting and non-small cell, as well as first line. The fact that there is data from a competitive standpoint, I think all boats rise, right? I think, there's an opportunity to truly displace chemotherapies. You think about a patient that's in second line non-small cell lung cancer at this point. All they have to go to now is chemotherapy. There's nothing else. And the chemotherapy survival rates are very low. And so, there's a real opportunity to come out and make a difference for these patients. Again, I do think Trodelvy in its manageable safety profile is going to be an interesting differentiator, as we think about competition. And when, you think about competition in lung specifically, two things to remember: One is ILD and stomatitis is very different than diarrhea and neutropenia. And many lung cancer patients already have ILD or prone to ILD, let alone if you add a PD-1. And if you're going to add another compound because we're going towards doublets and triplets, I think that's where Trodelvy can really differentiate itself, because you know exactly what you're getting in.

One of the interesting things, again, for the audience to take away from lung cancer is, again: A, first line is a big market, a much bigger market. There's different dynamics there. There's also different subgroups, PD-1 positive, PD-1 [indiscernible], and you are adding on to PD-1 with EVOKE 2 in a first-line setting, that data is in this third quarter. And also others, including yourself, are running first-line studies with PD-1 and in combinations with chemo and I haven't go to the details of -- with chemo combo added on to that or replacing the chemo with TROP2 could be huge. Those are -- that's a big opportunity and probably not well reflected for your TROP2 at this point.

I think the idea is -- the opportunity, I should say, and the vision is to replace chemotherapies in the frontline settings. And not just in lung cancer, but broader.

This is why I think this data in the third quarter is new and underappreciated from this whole ASCO thing is that the first early sets of that data we're getting in the third quarter.

I think that's going to be critical, because I think -- you can have read-throughs not only to first-line data in Phase III, but also readthrough-s to your second line as well.

Exactly. Okay, so let's talk about HIV. So, through all of this all year long. Everyone is talking about oncology. But yet, your Biktarvy numbers crushed the first quarter, and you've had great numbers there. And obviously, you have a long-acting strategy over the next year. I think, the Phase III PrEP capsid data is next year, that could totally expand the PrEP market. So talk about maybe the 2 or 3 things you think are you're excited about in HIV that maybe we're not appreciating?

Sure, happy to. I think, one of the first thing you said, Michael, around where we are today in the HIV growth and what we've done with Biktarvy as really setting it, as a standard of care around the world. And this is -- as you think about in the U.S. market as well as in Europe, we've grown about 3 points market share in the last year. This is growing to a 46% market share in the U.S. market, so 3% on a very strong base. So, that really has to do with the differentiated profile that it offers HIV patients. So that would be one thing that we would...

So swapping -- is that taking more share? Is that new patient growth? Just all of that.

All of the above. I think, that what we're seeing is, obviously, it is the first treatment of choice in the naive-patient population, so it's getting most of the naive, probably 6 out of 10 easy.

6 out of 10, easy, yes.

Yes. And then from a switch market, obviously, if you've started on the product, it's harder to switch to the same product, right? So it's -- but we're still seeing about a 40% share in the switch market as well from older legacy products coming in. So, Biktarvy is definitely one of those in the daily oral market. If you think about treatment only, and then we'll get to prevention to your question, if you think about treatment, the future is in the long acting. There's a real opportunity to go from daily oral to longer acting. There are some first-generation long-actings in the market today, and I think that's the first stepping stone. I do think, there's a real opportunity to come to either cu- weekly orals every couple of months, sub-qs. And we think lenacapavir is the foundational agent for that. And the reason we believe that is because lenacapavir's flexibility is just so incredible, right? You can use it daily oral, you can go up to every 6 month sub-q. So that's why, we think in the treatment setting, with the market probably split out about 50-50 by the end of this decade between daily oral. So Biktarvy will still have a very important role to play. And looking at a variability of the long acting, whether it's a weekly long-acting or a couple of months.

I mean, you think by the end of this decade, this is a bigger number? Usually, I was thinking like people -- or Gilead, 30% of the market could be amenable to a long-acting. And what I think, Gilead has been sort of saying is that because we're going to make the long acting more compelling, possibly more than just once a month injection, possibly once every 3 or 6, but tell me -- actually the bNAbs are once every 6 -- like that's way more compelling, and that's why more of the market could be a long-acting than people are even appreciated, because it's not a month. We're talking once every 3, once every 6 months in a sub-q. Or it's an IV, but it's a sub-q.

The bNAbs are IV, but lenacapavir is a sub-q or oral or IM, so you can really leverage it across the board depending on what you're partnering with it. And, the only other thing I would say is when we do the market research and with the patient population, generally speaking, over 50% to 60% want something every couple of months in a sub-q formulation.

50% to 60% want something, yes.

So, I think it's the right kind of profile. And the simplicity of it, it adds privacy to the treatment for some. But just remember, not everybody likes an injection. And so that's where the daily oral is important as well. So we're playing out both and making sure we can address patient needs. And that's in the treatment market.

So what are the options like in the top 2 or 3 options? And, when would we get that data, one of those has bNAbs?

Yes. So, one of those bNAbs adds because we've just shown data in Phase I.

Once every 6-month infusion is what we're talking about here? Yes.

Yes. Yes. And again, bNAbs is not the ideal, right, because it's still only 50% of the population potentially, and it's infusing the patients. So -- but I still think there's opportunities. It's proof of concept.

There's a proportion of people who would do that?

Totally, yes. But there's an opportunity for us to continue. And we have about 8 -- actually with the bNAbs, 10. But 8 other programs that are looking at other partners, so integrase inhibitors, et cetera, to look at different combinations, including with the Merck collaboration with [indiscernible].

You have a long-acting integrase -- long, I'll call it a long-acting integrase..

It's very early Phase I trial...

In a Phase 1?

Yes.

Once a month?

We are looking at a couple of months, actually.

Once every 3 months.

We're looking at cu weekly and then a couple of months. And just remember, in virology it's different than oncology, right? Oncology, can get all the way up to Phase III and you don't know still, if you have a drug or not.

It's still debating, what these TROP2 usually are going to show.

Versus in virology, once you get your Ib data, you're pretty clear you have a drug or you don't. And that's where, we're trying to move as quickly as possible. And I know this is not clearly commercial, had nothing to do with the name of this. But at Gilead, what we've decided to do, we were very clear that we were running every single option. And so that's why we have 8 different programs in addition to the bNAbs. And, we have a project called Speed, I know, not original. But the whole concept is we're not going to do this the same way we've done it all the time. We want to make sure we get Speed to patients. And how we do that is basically making sure we're not working through different approval processes to get to Phase Ia to b to II, it's really -- it's a continuous and everything in parallel. So we're doing this very differently than other programs.

So the bNAbs and the long-acting bictegravir, you've got the Speed program behind it. You're definitely internally at Gilead really trying to...

Long acting lenacapavir.

Long acting lenacapavir. Yes, working on it.

Okay. Yes, absolutely.

So talk about, I think literally in 12 months, you're going to have a Phase III capsid PrEP once every 6 month injection.

Yes. We're assuming approval. If all goes well, right, in positive data, we're assuming approval in the HIV prevention market for lenacapavir subcutaneously every 6 months in the '25 time frame approval. So you're right on the data.

The data's next year.

Yes. And we're super excited about that. We think this could be transformational. And the reason for that really has to do with the fact that if you think about Truvada generic now, but Descovy as well, we've only captured about 25% of the CDC market definition of HIV-preventable disease in the U.S.

For the audience, what is Descovy doing right now in PrEP? Sales?

Sales, I want to say it was just about $1 billion.

$1 billion. So $1 billion right now with branded Descovy once every day PrEP pill.

PrEP pill.

And you think that's only doing 25% of the potential market?

I think there's two opportunities. One is yes, I think we have an opportunity to double the market. These are patients, right? These are people that are at risk of HIV. So they don't want to necessarily take a pill every day. I mean, it's tough enough to take 5 days of antibiotics. And so, these are really people that don't want to be reminded. A sub-q every 6 months matches up perfectly with physician visits. These are people that go to the physician's office for STD testing on a regular basis. And so, it matches up perfectly and would be an opportunity for us to really be transforming the HIV prevention market in the future, not only in the U.S., but hopefully much beyond that. The idea is a global launch to really make a difference for these communities. And so, more to come on that. But we think, we can more than double the market, let alone the definition of the market we think is wrong.

You probably -- the simple market research. You have a once every 6-month what perso -- and hopefully, there won't be any cannibalization of the $1 billion of the daily Descovy pills. But there's a lot of people who don't want to do daily pills. What percent of those people, the other 75%, would do once every 6 months?

We think the market will split probably 70%-30%. 70% long-acting, 30% oral. And think about it. The oral market today, Descovy itself, I mean, we have a lot of data to support this. It's not something that's used 365 days a year. They just don't because of what I was just explaining earlier. And so, what happens is they almost do it on demand, which is not ideal. So from a compliance standpoint, let alone a market transformation, you're looking at definitely a huge opportunity in the prevention market to really make a difference.

Actually, some of the market research we looked at, actually, if you go look at your Descovy numbers, yes, there's a compliance factor, too, right? Like the point is, oh, you think that these people are taking daily pills for prevention, but in many cases, the compliance, I think, I heard Gilead said might be more like 80%.

It's much lower than HIV treatment compliance, just because -- and depending on the country as well, some countries are doing some really interesting things, like a weekend Descovy. Not something, I would support. But the data doesn't support it either, but that's definitely being done. And so, it's really kind of matching up their Descovy with their lifestyle.

Is there any plausibility that PrEP can be reimbursed, paid for, expanded, beyond just sort of really the U.S.? You mentioned some other countries, but they're probably smaller commercial.

Yes. So we've been working on this already. I think, there's a huge opportunity to market shape a little bit. And so, we've had conversations in countries like Japan, Italy, France and the U.K. And we think those are probably the markets, where we can first have inroads outside of the U.S. Now I'm not telling you it's going to be easy. And our current projections actually only include the U.S. because we believe that we're being...

The infrastructure, the reimbursement...

It's all set up.

[indiscernible] is here for it.

Right? So huge opportunity in the U.S. But, we actually do think that certain other markets are very open and we have -- I've had conversations with health ministers from these countries, where I think we can make a real difference and I think they could own it. And honestly, you have to think about low-income markets as well. So, we can't just do it in the first world countries. We have to go beyond that. And so, our position is lenacapavir for PrEP would be something that we are thinking as a global launch, not just the U.S. launch.

You would think the particularly long acting too, in some of these [indiscernible].

That's the point, yes.

These are not the compliance [indiscernible] they can get you out of generic today.

And they can get you out of generic today. So that's not the issue. The issue is actually, how do you make sure compliance is there for these companies.

Is PrEP getting used outside the U.S., but it's just with the generic? I'm thinking that's actually the problem.

That's -- so there's a mix of issues. One is stigma still to this day. But in Europe, Truvada generic is now approved across all the different markets. So it's pennies a day. And...

And there's reasonable...

There is in the markets that I was referring to, Specifically.

Let's -- unless I'm missing something, I want to obviously hit on CAR T, which is billions of dollars now, right, for Yescarta in second line. And one of the things the biotech market has been now chasing is the post-CD19 market. So you're asking me -- what is the kind of the interesting things, and there's some IPOs and stuff that people are looking at post-CD19, is how Yescarta has sort of moved upstream and not going to do more than $2 billion. But talk about the developments there. How is that shaping up? You did obviously a myeloma BCMA deal as well with Arcellx. So what do you look what do you predict over the next couple of years for your CAR T business because not just CD19, also BCMA.

BCMA. Well, let's start with Yescarta. So at ASCO this year, we just presented our second-line OS data. So, we haven't -- nobody has shown overall survival data in this LBCL setting for the last 30 years. So, we're very excited about the fact that we're moving up lines of therapy and making a difference. And as soon as we got the second-line indication prior to the OS data, we already saw kind of moving up into third line, it had impact not only in second, but also in third, right, giving more confidence to physicians to move it up lines of therapy. I think, the OS data is just another element to add to the confidence of using it earlier versus later. So at Kite, it's been very clear since the beginning that despite the fact that everybody thought it was science fiction, we believed we could win, and we decided to play to win. And, that had a lot to do with some decisions we took around manufacturing capacity, et cetera. The reason I mentioned this is not only does that make us today and I believe for tomorrow as well, leaders in cell therapy for LBCL, but it also makes us incredible partners, and that's where the Arcellx deal got..

So now you're able to add the myeloma...

Exactly.

Business on top of your infrastructure. I don't get two details like is going to out the same factory, but you're basically preparing to launch BCMA, over the next couple of years.

Because we have that expertise, right? And I think the BCMA market, I mean, the data that was presented is also very promising. The -- but we believe with the Arcellx, with the manufacturing capacity with our commercial excellence that's been established in the marketplace, we have a real opportunity to help these patients as well. And the market is large enough for to have more...

Two players?

Yes. Yes.

They're moving upstream, CAR T is moving upstream. Yes, at least over the next few years, there will be a second option for you as well out there. So that's also another opportunity. I think, the Arcellx deal, the pivotal study has started or starting Gilead is basically going to run that. And so that's also another late-stage program. So with that, we're out of time, but thank you very much for talking about all of those opportunities and appreciate it, and we'll continue to track the progress.

Thanks, Michael. We're super excited about where we're going. So more to come. Thank you.

Thanks.