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

Let's talk about TIGIT in just a second, but I want to close with Trodelvy and lung and talk through kind of what reminded investors of what you guys saw recently? And then what we may see at the upcoming ASCO meeting with respect to subgroups from EVOKE-01.

Sure. So there are a number of data sets with Trodelvy that will be presented at ASCO. The 2 most important are the EVOKE-01 data set, which was a Phase III study of Trodelvy in second-line lung cancer head-to-head against Docetaxel. And what we've reported at top line, you'll see the full data set, and we can have a more robust discussion. While we didn't hit the primary endpoint in the study of showing a benefit in overall survival, we did see a very clear and significant trend in patients that did not progressed and didn't do well essentially on PD-1 therapies. So the patients that didn't respond to PD-1 or progressed from PD-1s, when you looked at them -- and this is a large set of patients. We're talking about 45% to 55% of patients in second-line lung. You see a sizable response and a meaningful benefit relative to the standard of care. So you'll see that data, and we'll be able to discuss it more openly. Obviously, we're in the process, as we've said historically, of working with regulatory bodies on discussing the data and trying to figure out whether there's a path forward. We may have to run another study in that patient population, but it's going to take a while for us to work through all the data talk to KOLs. But that's a big opportunity in the second line. And again, even if you're talking about roughly half of the second line in non-small cell lung cancer, it's a really sizable opportunity. There's not a lot for patients in that setting. As you know, I mean, once patients in non-small cell lung cancer progress through PD-1 therapies, there are not a lot of great options. And that's why we and other companies have spent so much time over the last many years working on new therapies. So you're starting to see some encouraging signs, and we'll be able to kind of talk about it more comprehensively. On the EVOKE-02 study, this is a basket study that we -- and we will have additional data in frontline non-small cell lung cancer patients. We'll also have some other tumor type data that we'll continue to look at. That's a study that is still -- has been on for years, and we'll keep going as we look at different segments of patients, including in first-line non-small cell lung cancer. So you'll see more of the cohort A data, which is, if I remember correctly, the PD-L1 high first-line non-small cell lung cancer patients. You'll see more of that data at ASCO as well that's exciting. And then we have a whole wealth of data with our partner, Arcus on the TIGIT as well.

Of course, yes. Yes. And just on TIGIT. I mean, there's only -- there's a number of them out there. But how does Gilead kind of view differentiation? I know you have a combination with the PD-1. But if, let's say, in the next several years, you have KEYTRUDA face an LOE, describe kind of Gilead's differentiation, investment in TIGIT and maybe how it could potentially be used to mix and match really no matter what the PD-1 backbone is.

Sure. Yes. We have an important partnership with a company called Arcus. It's a small mid-cap company based in the Bay Area close to us, that covers a number of molecules. One of them is a TIGIT antibody called Dom is our short form name for it. It's in a number of studies, including in lung cancer. And it's differentiated from the other late-stage TIGIT antibodies in that the Fc region of the antibody is null or not functional. The result, the theory has been, you could see better side effect profile. We believe that when you look at the wealth of TIGIT data across the late-stage companies that are working in it that TIGIT is clearly additive to PD-1 but the question -- so it's another immunotherapy that's additive to PD-1. The question that needs to be answered is how additive is it? Is it meaningful enough to be used broadly? And in what tumor types? And that's what we think will be elucidated over the coming years. There were some data recently from a competitor where they stopped the study in another tumor type, I think it was melanoma based on the side effect of their TIGIT potentially because of the Fc competent region, we'll see. But again, there are a lot of theoretical attributes and benefits of our TIGIT that we think are special and we have a lot of data coming over the next couple of years. We share all the costs of that 50-50 with Arcus roughly. So it's been a good partnership for us to develop a TIGIT and then have that opportunity on a more P&L efficient model. So -- but again, there's still risk in TIGIT and the time will tell whether there's a benefit. And if so, how big?

For Gilead, you have ADCs from the Immunomedics deal, but you now also have from years ago from the Kite acquisition, significant resources and a franchise in cell therapy. Talk a little bit about how strategically important that franchise is to Gilead from a Yescarta perspective, then we can get into kind of anito-cel and next-gen.

Sure. Yes. No, it's a great point. I mean the cell therapy business is really important to us. So we acquired a company called Kite in Los Angeles now 6 years ago. They were 1 of the 2 or 3 companies that was pioneering CAR T therapies in hematology. We are clearly -- Kite is clearly the world's leader in cell therapy today. We have $2 billion of sales and growing. CAR T is really just starting to be used broadly outside of the United States. It's a pioneering therapy with incredible clinical data. I mean, again, just for those of you that aren't familiar with it, this is taking a patient -- so if a patient has a type of lymphoma, taking their T cells, separating them, putting a new gene in that expresses a receptor that identifies the cancer. When you -- you grow up these cells, you reinfuse them. They attack the cancer. And after 5 years, 43% of patients in this late-stage lymphoma that were almost certain to die within weeks or months before they got this therapy appear to be cured. I mean it's remarkable clinical data. And it helps explain why there's so much excitement for cell therapy, not only in oncology and especially hematology but also in areas like I&I today. There's been a lot of -- so I mean the business is doing great. We have 3 global manufacturing centers, which I think really differentiates us, Geoff, as you know. We have a 14-day turnaround time in our manufacturing from when we take a patient's cells and we deliver it back to the patient for reinfusion. We have excess capacity in our manufacturing centers. That's been a real bottleneck for the other competitors in the space. It's not only being able to manufacture it, but when we do it in 14 to 17 days, depending on how you're calculating it, many of our competitors are doing and are trying to do it in 35, 40, 45 days. And remember, many of these patients can't wait that long. They oftentimes have explosive disease when they're at that point. So the Kite team has done an incredible job of executing. Again, it's $2 billion in sales and growing. The gross margin has improved significantly over the last 6 years since we acquired Kite, and we have a great manufacturing team that is always working on improving -- streamlining the manufacturing process, shortening it, taking costs out of the system, we expect that, that will continue over time. And then on top of it, we have this partnership with another Bay Area company called Arcellx on anito-cel, which is a BCMA CAR T that has some really extraordinary Phase I/II data in multiple myeloma. We'll have the final readout of that data or an updated much bigger data set of data on that from that iMMagine-1 study later this year. We're already working with them and they just announced last week that the Phase III design for the iMMagine-3 study in multiple myeloma. So that's a really exciting opportunity because the data today to date for anito-cel suggest that you not only see the efficacy that you see in the currently approved leading BCMA CAR T, we're not seeing any of the side effects that you see from that therapy. So from that therapy, 8, 10-plus percent of patients appear to have significant neurological side effects like [ Parkinsonsism ] type disease, that seems to be lasting, and we're not seeing any of that in our studies yet. So if that holds through, it's a pretty exciting development for us, for Arcellx and for patients.

And Andy, can you speak to the manufacturing as a strategic asset? When you think about anito-cel and the potential to pretty rapidly, you already started Phase III as where you're going to, but then looking beyond that commercially.

Yes. So really, it's a great question. I should have mentioned that. Part of what we also announced last week is that we finished the tech transfer with Arcellx of anito-cel from their prior manufacturing platform to ours, which is great for both companies because it really accelerates. As I said, we have world-leading manufacturing centers. These are large centers in 3 major global markets, L.A., Maryland on the East Coast and the Netherlands that could serve the global market. We purposely built them up to have excess space to build out an excess capacity that we can very capital efficiently expand into overtime. And that's exactly what we're doing with Arcellx. So it's a huge benefit for ourselves because many of the companies trying to operate in this market manufacturing is by far the biggest challenge in terms of both the capital required to build it out, which we've already have done and the technical know-how in terms of doing it. So it's something that we really bring to the table. And so maybe, Geoff, where you're going is when we acquired Kite, part of the plan and the thesis was that we could become the partner of choice for other cell therapy companies, and that's exactly what we're seeing today. So we can add other partners over time when we see therapies that we think like anito-cel are really differentiated and best-in-class add them and create a win-win situation for our partner and Gilead and patients with our incredible manufacturing know-how and technologies.

Well, in myeloma as well, I mean it's one of the larger liquid tumors that very intensely competitive. You have a competitor who is capacity constrained, so that underscores kind of the value for Gilead. But what does success look like, Andy, when you think about the end of the year and the refractory data, how do you think in myeloma, you mentioned tolerability is one point of differentiation, but that's not the only.

Yes. I mean I think success -- look, when we did the deal with a partnership with Arcellx, success to us at a minimum looks like being as good as the market-leading BCMA cell therapy today. And we certainly see both from efficacy and safety that we're on track towards that. Obviously, we need the Phase III data to read out. We do with -- the data that's reading out later this year, we have the potential and the expectation for an accelerated approval in late line, fourth line plus multiple myeloma. So you have the potential for an early approval and you have the new study iMMagine-3 that would be in the earlier line patients that we would work through as quickly as possible, and we expect we'll enroll pretty quickly, given how much excitement there is for the program. But what success looks like as being at least as good if not better. And if you're better, the opportunity is even bigger. But again, you said it. I mean the competitors cannot satisfy the demand from the market today. We don't expect that to change over time. And when you add our manufacturing know-how with this great product, we think it could substantially lift the revenues over time. Maybe the other way to think about it is multiple myeloma is almost twice as big as our approved indications in terms of market potential. So you think about our $2 billion market today that's still growing and has a long way to go in lymphoma, multiple myeloma is a much bigger opportunity for CAR T. And then you start thinking about things like the autoimmune conditions for CAR T over time, it's a pretty exciting space to be a leader in.

And so on the topic in lymphoma, when you think about the success of Yescarta and it likely will apply to myeloma. The -- I guess, the commercial kind of piece, the unmet need still in some of these markets, not just manufacturing, but just the awareness. And so I think one of the things we recently went to your manufacturing tour in Maryland. And you talked a lot about the Tennessee Oncology and the onboarding in the community setting of using cell therapies more broadly, walk through that and how that could be a model going forward with other and other community settings for commercial cell therapy.

Yes. The treatment market for these hematological cancers is roughly split 80-20. 80% of the patients are in the community, 20% are in the large academic centers, large city hospitals that are currently using CAR T. So when you -- again, when you think about our $2 billion a year in sales today that is growing, that's really limited almost exclusively to these large academic centers and large city hospitals. The key for patients and for CAR T overall is getting CAR T to the patients that need it in the community over time. And it's harder to do that. Many of the community oncology practices, even the larger ones don't have a, research centers. They're not used to the reimbursement model here. So we've started and the team -- the Kite team has done a great job of working a number of these large community centers, but Tennessee Oncology was really the first, where we worked with them to create a blueprint on how to bring CAR T to the community that then we can learn from revise as needed and move more broadly. And so we're making progress. It's not going to happen overnight. It's going to take some time, but it's critically important for these patients that would really benefit from CAR T and for the business over time. The other thing to say is when we acquired Kite, we expected that this would be a business that would grow steadily for decades as physicians and the market became used to kind of CAR T and adopted it more broadly, and that's exactly what we're seeing. So the learning curve, so to speak, and kind of the build-out phase is long, but so is the product life cycle. It's very hard to envision, as you know, having biosimilars of these cell therapies given how incredibly difficult they are to design and manufacture. So we have a long way to kind of invest in this community build out and get these therapies to the patients that need them in the community. But good progress. And again, a lot of lessons learned from that first build-out that we can now apply to the next set of large community treatment groups that we'll work with.

Yes. And then in the final minute, we talked about HIV. We talked about heme/onc. So moving to liver disease and with the CymaBay deal, talk a little bit about that in the context of the next leg of growth for -- another leg of growth for Gilead and then maybe just BD and how you think about that going forward?

Sure. We acquired a company earlier this year called CymaBay, which has a product that has been filed for approval in the U.S. and Europe for PBC, which is a liver condition. It's really an inflammatory condition. So this will be a significant inflammation I&I product for us that happens to be in liver disease, where we already are the world's leader in terms of commercializing our viral hepatitis products. So we serve -- we cover 80% of the physicians that would treat these patients. This is a large orphan disease. So I think of it like pulmonary hypertension about 130,000 patients in the U.S. with PBC, 125,000 in Europe and a really strong clinical data. So the -- and the drug showed not only a benefit on all the markers of kind of liver injury that you use in these studies, but also on pruritus, which is this incredible itching that these patients get is like life changing. They can't sleep at night. It causes significant mental distress to these patients because they want to itch uncontrollably. This drug was the first to really show a significant benefit in itch. So we expect that to be kind of part of the label. So the PDUFA date in the United States is August. This is something that should be breakeven to our EPS next year slightly dilutive this year and then significantly accretive in '26 and beyond. And to your question on BD, it gives you pretty good insight on kind of how we think about BD going forward. This is a little over a $4 billion purchase price for a late-stage asset with significant both revenue growth and EPS accretion. We expect to do deals like this every 2 to 3 years on average. And we'll continue to do ordinary course BD licensing, but this gives you a really good sense of kind of where we are and where we're focused. Very excited about the approval and the launch of that product.

Perfect. Well, thank you, Andy, for conversation...

Thank you for having us. Appreciate it.