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

I am very happy to have up here with us, Chief Medical Officer of Gilead, Merdad Parsey. It's great to have you with us, fresh off of 4 or 5 days of ASCO. So lots to talk about.

Maybe just opening up for Gilead, I'd love to just have your view of the world about where Gilead, sort of, R&D pipeline is today. Because I would say, to be fair, and I -- not only my reports, but others, there's been a lot of commentary around the development on oncology and some of the other acquisitions, oncology or not. And so people are wondering whether Gilead is on the right track on the R&D pipeline. Maybe just describe maybe the 2 or 3 key points that you see about it to be excited that, maybe, the Street is not seeing and to address some of that sort of criticism?

Thanks for having me. Great questions. Thanks for opening that way because I think that is very helpful. I do think that there's been a lot of chatter, and I think from our perspective, people are kind of missing, I think, the broader story, right? And for me and the way I think about it and the way I would encourage others to think about it, we are we are building a company, right? We're building a company and we're -- the core of our business remains our HIV business, has been and will continue to be for the foreseeable future. And I think our HIV pipeline, our current assets in our pipeline are best in the industry. And I think we're hitting on all cylinders there and I'm very excited about that.

Definitely no criticism on HIV. Yes.

And I think people -- that's, to me, I think, a huge part of the bigger picture. And then what I would add is then in oncology, we're growing. We're building, we're growing. Cell therapy aside, I think we're building a portfolio. And as you -- when you do so, you have some wins and losses. But overall, I think we're -- I'm very happy with the direction we're headed, and we can talk about that more in a second. And then in inflammation, we just added seladelpar, and I think that's another addition to our portfolio. Our goal has been to diversify, right, to be HIV plus. And by adding inflammation assets, adding oncology, it's a very challenging and difficult thing to do. Many have tried, and it's a difficult thing. We're about 3.5 years into our oncology journey. We're a very young oncology company with what I would describe as a very early pipeline, but I'm really proud of how much we've diversified and where our agents are. I think if you look across our oncology pipeline, I think with Trodelvy, look, we had a hazard ratio of 0.51 in triple negative. That's meaningful, and I think that's been really impactful. We are adding to the story for Trodelvy. Story is not over. We have a lot of data that we're generating in coming up. And so I think that's really great. And we have a number of things in the pipeline behind that. So I'm really happy with where we are and where we're headed.

Okay. Let's kind of break down some of those oncology areas since we did come away from ASCO. So first, obviously, the most important thing, I'd say, driver outside of cell therapy, Trodelvy. And so Trodelvy is growing, obviously in its approved indications as well, ramping in HR-positive breast cancer. But there were 2 slip-ups. One was in lung cancer which we'll talk briefly about. And then on bladder cancer, I don't want to spend too much time on that. But also in breast cancer, you have some data coming, but there's also competition. So talk about how you see Trodelvy growing over the next 5 years because Wall Street sees either that lung cancer was a slip up. So that came down. I think there was a write-down on that. And then in breast cancer, there are competitors coming in, Daiichi, Astra, et cetera, et cetera. So how do you grow over the next few years on that because people see competition?

Yes. Thanks. Yes. So I'd start by saying we are still the only Trop-2 ADC that's approved. And people are -- fortunately, competition is always good and are going to drive us, but I'm really glad we have...

It's actually true. It's not 100% that Daiichi will be approved later this year?

So I think that's key. Yes. Look, and I think what I would say has been consistent across Trodelvy is that in every study we've done, there's activity. We've seen good activity. Second-line lung is a really difficult space. When you look at our data, hazard ratio of 0.83. While it didn't hit what we were hoping to hit, there's clear benefit in a lot of patients and the tolerability profile there looks -- you look down the AE tables, and we have fewer AEs on the Trodelvy arm than in docetaxel. And if I look at the aggregate data for lung and where we're headed for lung, the frontline study, which is our EVOKE-03 study, I think we feel a lot of wind behind our sales in some ways because the EVOKE-01 data, clear activity, EVOKE-02 data, which we showed -- last year when we showed the ORR data at World Lung, the caution we gave is you combine chemo with pembro, you're going to get high ORRs. We're excited about them, but we need to see it translate into PFS and OS. And with the caveat that it's a small data set, the PFS data we showed at ASCO Monday really give us a lot of optimism in that we showed a PFS of over 13 months.

And what would you expect for PD-1 alone or chemo combo?

Yes. And that's a great question. I think the PD-1 alone in this area and PD-1 with chemo combo, the PFSs are in the 8-to 9-month range.

Okay, and what number you're at?

And were 13-month plus, right? We're a bit over 13 months. And I think this issue about chemo combos in frontline lung is an interesting one in that it is part of the practice pattern to use either pembro monotherapy or pembro plus chemo appropriately. I think a lot of folks use that. And what you see is when you add chemo to pembro in the front line, you do get better response rates early, but you don't seem to get much of a PFS or OS.

That is fair. So number one is you believe that the opportunity for Trodelvy in lung cancer is greater than expected because you will work on Trodelvy plus PD-1 and you should beat PD-1 alone in the EVOKE-03 study?

I'm not sure greater than expected because I don't know what your expectations are.

Well, expectations on Wall Street are pretty [indiscernible]. And so you feel you are confident that that's going to?

Yes. We are. We think we're on the right track, right, is what I...

Based on the EVOKE-02 study data at ASCO.

That's right.

Showed 60-something percent response rate.

That's right.

Higher than chemo combo.

Exactly.

PFS 13 months, higher than in chemo combo. And actually, your point was that the response rates are higher than chemo combo already, but their response rates are higher than monotherapy, but that did not lead to a PFS benefit despite the fact that doctors insist on using chemo combo, which is my view. I know you guys sort of say, no, people do use monotherapy.

It's a mix.

Your point is you think you're better than chemo combo anyway. So...

I think if we can show -- what I hope we can show as an improvement in PFS and OS. That's the bar. I think that has a lot of potential for us in the long run.

Okay. And when would that data, EVOKE-03 first-line lung cancer read out?

Yes, the study is enrolling really well. We've pointed to 2025 plus for that. It will probably be a little bit later than '25, but it all depends on enrollment. It's going very well.

PFS endpoint?

OS endpoint.

OS endpoint.

And that is the study we're doing together with Merck in combination with pembro. They're actually running the study. And so -- and they're doing an amazing job, executing it.

I am going to ask of it. The only wildcard there then is what I would see is that PFS and OS in lung cancer don't always perfectly translate from ORR, certainly in breast cancer as well and we know that. And so despite the fact that you have higher ORR and you just pointed to me that chemo combo did not show higher PFS at all than just monotherapy. And so the same thing what applied [indiscernible] magic science that?

I don't believe in magic science.

That Trodelvy will add a PFS benefit?

Yes. We're -- so I think -- let me tease that apart a little bit. I think you're absolutely right in breast cancer that PFS ends up being the endpoint precisely because it's difficult to translate into OS. Because in breast cancer, the survival times tend to be longer, and there's a lot more crossover post study.

Okay. Many different drug options.

So what you see in general in early line breast cancers, in particular, is a focus on PFS an end point. And PFS does not always predict OS usually because there's more noise in the OS signal. By contrast in lung cancer, the PFS does predict the OS better, and so there is a bit of a dichotomy there in terms of those two.

And so we will lean on a better durability of the response, higher responses, better durability and the PFS data you have shown and will continue to follow.

Yes. We think all those things support our Phase III trial in...

And to be clear for those because this is the same debate with TIGIT that the magnitude of the result will also be better cross-trial comparison than KEYNOTE-189 because everyone just says, everybody uses chemo combo for that. So even though you're saying you're being PD-1 and chemo combo is not the control arm, you're going to be better than that cross trial?

We recognize that we need to demonstrate a better PFS...

For commercial uptake in those types of...

Well, for patients, right? I think we need to make sure we're bringing something for...

So that's one, is lung cancer. Other competitors are going there, too, but you're running that study, and that's up. What about in breast cancer, one of the things that has come up is that in HR-positive breast cancer, you see Trodelvy growing, but Daiichi says, hey, we have ultra low HER2 now coming out of ASCO this weekend, and that's -- I saw their slide expanding more across all. They had one of the discussions like why do we even need to test for HER2, just use in everybody. I would be interested in your response there, because that would be impinging on your market. And then 2 is that Daiichi-Astra are also running a Trop-2 first-line triple negative. Your results are coming. We actually got a lot of questions from clients this week about when that data is coming because they're also reporting. So HR-positive, where they're coming in on ultra low and also triple negative.

So let's separate the 2. So for HR-positive, look, I think Enhertu is a great drug. It's bringing a lot of -- tremendous value to women with breast -- men and women with breast cancer and it's showing something great. And I think it's important to recognize that we're different targets, right? We're going after Trop-2, they're going after HER2. And while there is overlap between those populations, there is also -- there are also places where there is no overlap. And I think in triple negative, in particular, where we talked about, I think those patients are going to benefit from Trodelvy and that's where we believe we're bringing a huge amount of benefit. And in HR positive, it's difficult to suggest that patients wouldn't be better served by getting Trodelvy when they're HR -- when they're HER2...

Zero -- certainly zero. Yes.

It certainly seems that that's the case. And I think it's challenging for us to know how to translate the ultra low into practice today. And I think you heard that from the discussion as well. And so look, at the end of the day, these both are going to bring benefit to patients. And I think in the HR low population, I certainly have more confidence that Trodelvy will bring that back.

I would say that and certainly getting reflective of what there's already represented in the stock and evaluation is that Enhertu will be a commonly used drug in that setting. Yes, It may or may not be used in front of Trodelvy, but it's a different target. It's not the same target. So go ahead and use Enhertu. Trodelvy could be your next option anyways. One of the questions come up is whether there is going to be, and I'm sure someone is looking at this, evidence to look at whether there is impact on Trop-2 use and efficacy, not only with yours, but also with Daiichi, and I can't remember if the mechanism is exact same, but people talk about cross resistance off of Enhertu. So because of the chemo that's on and the toxin of Enhertu, just following that then with Trop-2 because of the toxin have some overlap in terms of the mechanism as it relates to the way you've heard about this.

Yes. It's -- yes, it's a hypothetical. I think it's difficult to know. I don't think there are any data -- clinical data. And certainly, we've seen that with -- because SN38 is a different payload than what either Daiichi brings or in either case, I think we feel comfortable. And we're seeing a lot of sequential use and we're studying. So I think it's -- right now, I'm not sure there's a -- it's something to think about, but I don't think there's any data to worry about that.

I want to talk about triple negative. So triple negative, Phase III first-line data coming possibly later this year. Apparently in the recent last earnings call, you said you could file it or whatever, but talk about when first-line triple-negative data is coming. And do you expect to be better or how do I compare and contrast that because AstraZeneca will also have a Phase III data. Same study?

Yes. So look, I think, yes, to your point, ASCENT-03 is our front line -- we have 2 frontline studies going on. One is in the PD-L1 low population and the other -- and ASCENT-03 and ASCENT-04 is in the PD-L1 high population. ASCENT-03 will be done, we think, late this year, maybe early next year or late this year or the next year. Again, it all depends on...

This is in combo with a PD-1 and PD-1 high?

Yes. So this is the PD-L1 low population, is ASCENT-03. And the ASCENT-04 is our PD-L1 high population, that will be coming later. That's going to take a little bit longer. Partly because remember, we were just talking about PFSs are longer. So it will take longer for PD-L1 study to read out.

But in ASCENT-03...

ASCENT-03, PD-L1 high. So as we've said, that we expect late this year, maybe into next year, but we think this year. And then it's hard to predict head to head what I can't predict. What I can do is say, based on what we've seen so far, I like that our tolerability profile in breast cancer has been strong. We see diarrhea and neutropenia. Those are well managed. We do not see grade 3 stomatitis. We do not see ILD at that extent, at the extent that others have seen. So we think that if we can bring something that brings the efficacy that we're anticipating and is tolerated...

Better tolerability.

And is tolerated well.

Don't really have stomatitis, right?

We do not see the extent, neither the severity nor the frequency. So I think those are -- again, we'll have to let the data read out. And once we both have data, it will be -- we can do more of a compare and contrast, but we like our chances there.

Should I pivot anywhere else on Trodelvy or should I move to a different program. Those are the 2 big ones, I think...

Yes.

EVOKE-03 lung cancer next year, that's positive, that would move you into a first-line setting, you said later on '25?

'25-plus.

'25-plus. Okay. '25-plus.

We need to fully enroll for it to be...

And then first-line triple-negative end of this year or early next year and you could file on that data?

We believe so. So Phase III registrational trial.

Okay. And then secondarily, maybe what would you point me to? I'd pivot to TIGIT, but then I think it's like the same thing and people say, well, oncology because this is supposed to be your most important growth driver. So TIGIT was one of those oncology ones.

Yes. So in oncology, and so just to move then to TIGIT, that is the next, I would say, most mature program we have coming through in Phase III for both lung and as we showed our EDGE-Gastric data at ASCO. We are encouraged by the data that we're seeing there in combination in gastric CA. And that's also in Phase III. That stays enrolling incredibly well. And so we think that study will be -- the potential for that one, if it reads out the way we hope it will, will be ahead of the competition in terms of being able to file. So we should be first in class if gastric works out, okay? The other thing I'd say about TIGIT is what we're seeing evolve is part of our hypothesis for why we took an [indiscernible] molecule into the clinic was that we believed we would get better tolerability. And I think as you see the data come out, we are really happy with what the tolerability profile looks to be with TIGIT. Our hypothesis always been that in order to get TIGIT approved, not only do you need the efficacy, you need the tolerability and the tolerability critically for us within -- for combinations within the portfolio is really critical. If you have a drug that's well tolerated when added on to a PD-1, it gives you flexibility to think about...

Is there a TIGIT-Trodelvy?

We are -- there are some early studies that we're doing to look at that combination to see if there is -- if we can get even better activity.

Okay. One last question, if I may, because it was reminded to me that on your Trodelvy lung cancer study, just one last question, that obviously, you presented the data, and you highlight this big subgroup of prior nonresponders to PD-1, which is 2/3 of the study. Most people don't get a great response from PD-1 and that you kind of leave it open that your discussion with FDA. Is that like a legitimate we would like to try and file that or what?

We would definitely like to try to file that. I think it's -- as I think it's true for all of us when you take a study where the primary endpoint wasn't met, it raises the bar. And it's -- while this was a predefined subgroup, because of the primary endpoint, it makes it more challenging. And is the patient population with a huge unmet need. They don't really have great options. We're showing, in particular, in that subset, evidence of efficacy and good tolerability. So we think it's worthy of having a discussion to see if we can do something...

When could we hear an update on whether that's yes or no?

I think it will be some time this year, later this year.

Sometime this year. Okay. All right. Let me pivot to 2 other things. One is I would like to talk about HIV because there are 2 important drivers. One is the fact that you have Phase III PrEP data coming. And the other is the fact that I believe that if you could tell Wall Street, you did have a long-acting regimen for the treatment of HIV like once every 6 months, I think everybody would agree that, that would be a very great opportunity for people and that would extend your HIV business further. People believe you could do this because you guys crush it in HIV. So...

We believe we can as well.

Okay. So tell me when 6-month type data, where are you at 6-month injections?

Yes. So I'll remind that we will have Phase II data for every 6-month lenacapavir plus bNAbs...

Lenacapavir plus bNAbs...

Which is an every 6-month regimen and that will be this year. So it will be -- it's early. I want to always caution this early Phase II data, yes. But I think that will be very directionally important for us. So that's our -- I think that's a starting point.

For the treatment of HIV?

For the treatment of HIV.

Now just to remind everybody, in the treatment of HIV with just bNAbs, it was basically positive.

Yes. We had the -- it was lenacapavir plus bNabs.

There's lenacapavir plus bNAbs...

Lenacapavir plus bNAbs...

Yes, okay.

In the treatment study, and we saw 18 to 20 patients who did...

And that was like a monthly?

No, every 6 months.

That was every 6 months? Okay.

Yes. Because the bNAbs are there for 6 months, right? And the lenacapavir we already know is going to be there for 6 months. So we're very encouraged by that. We need to build more data. I think there's a lot more work to be done. So I want to make sure we're...

What would we learn in this data coming up?

Well, I think this would be sort of broadening the number of patients in the trial, getting us more confidence, that was 20 patients. This will be a larger sample size. So getting us confidence and then helping define patient populations that we would go into potentially for registrational trials. If we go that path, and I just want to -- there's a big if there, so we...

What would be the if? The only caveat for Wall Street is that it's basically for half the population who have that antigen...

Towards the bNAbs.

Towards bNAbs, but 50% of the market is nice. So why would you not go for it?

I want to see the data first. So once we see the data, we'll make that decision. So...

So that's one.

So that's one. So I think -- just I want to make sure I answered that 6-month question directly. And to your point, I think very importantly, the lenacapavir every 6-month PrEP studies, purpose 1 and 2, we will be reading out. Purpose 1 later this year and Purpose 2 potentially this year, maybe early next year. Those are the 2 studies we need for registration for PrEP. They're both very large studies, just under 6,000 and just under 4,000 people in those 2 trials. And we're very encouraged by those data. And I think we believe it will be a real sea change for PrEP, right? These are -- every 6-month injections would be a far cry from daily pills.

What percent of people do you think currently on [indiscernible] would swap to this? And what percent of people do you think out of 100 people would start this because they don't want to take daily pills?

I think that's the exact right question, Michael, is that...

I haven't done my survey yet.

Yes. I think we believe the availability of an every 6-month injection not only allows those who would rather not take one every day or a noncompliant would take that one every day to go, but we also believe that it will expand the lens of who -- remember, again, it's healthy people, right? These are people without an infection. There will be a lot more people willing to take PrEP if they know that they're going to be protected for 6 months and come in, get an injection 6 months and are covered for 6 months. So we do think there's both the transition of some people...

And also growing the market.

And then growing the market. And I think that potential for the market growth, given what the recommendations are from even the CDC for PrEP in people who have 2 sexual partners or more, those sorts of things. It's...

Even 10% of the market or 1 out of 10 of people were not, but technically at risk, I think is material, but we need to do some more survey work. And I was hoping you'd maybe share your survey work?

We think it's going to make an impact, and we're really looking forward to that. So I think that's -- when you think about underappreciated, I think that may be one area where...

How about this, can PrEP ever be reimbursed in a monetizable revenue situation outside the United States?

Well, I would definitely say that we believe there's a possibility that, that will happen. And we believe the reason for that is we will be able to -- part of what we're aiming to show is that the ability to cover someone for 6 months to have compliance, guarantees for 6 months will lead to better outcomes for people. Right? And that, that should be something that is -- brings more value to healthcare systems.

To help someone who is taking pills and may not be on it. So they could get infected and therefore, the value is not [indiscernible].

So we think there's -- I mean, we believe that for public health, I mean that -- the ability to really prevent infections in a much more impactful way.

So once we get the data, again, this is a longer-term thing, but you would like a lot of that because I understand GSK does have approval or their PrEP long-acting monthly and yet they've told us it's still a struggle for them.

It is challenging. I mean I think that there's no argument that in Europe, this is a more challenging.

Thank you very much, we've ran out of time. Thank you very much for that. We'll be in touch with you and thank you for your time today.

My pleasure. Thanks, Michael. Thanks for having me.