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

Okay. I think we'll get started. Hi, everyone. My name is Daina Graybosch. I'm a senior analyst here at Leerink Partners, covering largely immuno-oncology and also Gilead, which is broader than immuno-oncology. But today, I have the pleasure of talking about cancer with Cindy, who's the head of Kite. And thank you for joining us.

Thank you for the invite.

I appreciate the time.

And we are going to jump right in. I'll also leave maybe about 5 minutes at the end, if anybody in the audience has questions. So let's start with your BCMA CAR-T which Kite has partnered with Arcellx on. And I think there's multiple potentially differentiating attributes for a anito-cel, the BCMI CAR-T. And I wonder if which of those you think is going to be most impactful for commercialization as you look forward to a launch next year?

Yes. So as a reminder, the data looks really compelling. We've got 62% complete response rate, which we know is going to deepen over time. We have a 97% overall response rate. And what we're seeing from an efficacy standpoint, both in the high-risk population as well as, I'll call it, the general population with myeloma, looks very similar. So high risk doesn't seem to have an impact on the efficacy. And from a safety perspective, we do see differentiation as it relates to we have for Grade 1 and I guess no CRS events were at 86%. So a majority of the patients, at most, get a fever. And then we're also seeing differentiation on the long-term neurotoxicities where we haven't -- we have a low rate of ICANS and we haven't observed any of the long-term neurotoxicity. So I think overall, the safety and efficacy profile, we're really excited about commercially and think that that's going to make a difference. If you pair that with the relationship between Arcellx and Kite, we have brought in our global manufacturing excellence, we're bringing the vector in-house as well. And we have global manufacturing facilities today that are allowing us to reproduce the turnaround time similar to what we're seeing with our existing commercial products. So we think that's going to be really helpful. We know that with multiple myeloma today, at least in our discussions and formally with centers, they're not -- they want that rapid turnaround time that we're going to be able to bring. We also have a strong global footprint. So we're in a number of countries today, 28 countries and growing. We have 530 authorized treatment centers around the globe, and we'll continue to grow that between now and 2026 when we launch. So we would expect to have an even broader footprint at the time of launch. So I think if you couple each one of those things, the relationship with Arcellx and Kite is a really good one in bringing forward, we think it's a truly innovative product into the market most effectively.

Not that this is going to happen, but maybe we'll just do a theoretical. Let's say, as you get more patients and more follow-up, you do start to see some neurotox events. Do you still think -- how do you think you would compete on more of the Kite turnaround time and global footprint if the products ended up being more similar than different on efficacy and safety.

Yes. Maybe I'll answer that. We have today dosed 150 patients, and we know that those long-term neurotoxicity events usually occur in the first 30, frankly, by 90 days, you're seeing those. And we have 150 patients, a majority of them beyond that time frame that we haven't observed neurotoxicity. Of course, we're going to continue to watch. Patient safety is most important to us. But we do think that there is a difference, not all cars are created equal, there is a difference between the constructs. And so we'll continue to look for that. But we feel the hypothesis that we're exploring today is that we have a unique D-domain binder. And what we've observed, we've had a chance to look at our anito-cel construct, we've made the other 2 constructs. And what we see is a much faster off rate. So as the D-domain binder binds, it has effective killing of the myeloma cells, but you don't see the immunotoxicity that we're observing with the other 2. And our hypothesis is that fast off-rate matters, it mimics more physiological conditions. And it also allows us not to see the inflammation, not to see the severe immunotoxicity. So we feel pretty confident in this. Can we -- could we observe delayed neurotoxicity? We're certainly looking for that. So I don't want to pretend that we absolutely can say today, we won't, but we do think we have a differentiated binder that will make a difference as we come to market.

So you're not even going to let me have a hypothetical and say, I am trying to isolate the strength of your commercial infrastructure. I think ask a payer like how much upside you get of any product in your infrastructure.

So if you look at today in myeloma, we know about 1 out of 10 patients in that group are being treated. So the class share is at 10%. We know that there's a big opportunity to be able to treat more patients, and we know the data is profound and that physicians want to treat their patients, patients want to receive the therapy. So having the largest commercial footprint, having turnaround times that are the best in the industry, we think it's going to really make a difference as we come to launch. What we're hearing anecdotally, many of you probably speak to KOLs is that they are looking for those tighter turnaround times. They're not getting exactly that out of the existing products today, and it often means they have to bridge their patients or do a number of other things. So I know there's excitement about it coming. I can tell there's excitement just from the conversations we have, but also as we think about the iMMagine-3 study and what we're seeing for interest and enrollment in that.

Can you help us understand, you talked about the global footprint. In terms of approval, how soon could you have global approval follow the U.S. approval?

So today, we're talking about launching in 2026 in the U.S. And obviously, every country is different. We would seek EMA approval. But following that, you also have to have HTA conversations. So we're not necessarily coming to what the time frame would be around the globe. But suffice it to say, we will be filing in all of the countries that we operate in today in Europe as well as in Asia, Latin America and the Middle East.

Got it. Maybe let's talk about your current business, Yescarta and Tecartus. I think -- I wonder if you could contextualize the in-class competition and we know that you faced some headwinds from that last year. You expect to continue to face those headwinds into this year and in future years?

Yes. So what we're observing with in-class competition over the course of 2024, we saw one of the in-class competitors get 3 new indications, follicular lymphoma, mantle cell, we also see a new ALL indication. And when there's new indications in oncology, physicians are always excited to try those therapies. So we are seeing physicians interested in giving a try to the new products we have. So we have a combination of the new indications, we've also seen with one of the in-class competitors improvements in turnaround times and manufacturing reliability. Today, our reliability is at 96%. In the U.S., our turnaround time is 14 days. Outside of the U.S., it's 17 days. So we're continuing to make those improvements. But we're also seeing some of the in-class competition getting better with their manufacturing, not quite to the level we're at, but improving. And I think it's a combination of both the new indications, coupled with that and physician interest in trying these therapies.

Have you seen like an arc of like, were there physicians that tried it out earlier? Are they coming back to Yescarta. I think the worry is they really like the new products and the services around that and that will they come back?

Yes. We have. So we have seen that and we've observed it globally. I just have returned from Europe where we saw, without going into detail, a couple of the countries actually go from trying the new product to coming back. And I think when we talk to them about what is it that brought you back, I think components are the reliability of the product. They also -- there's a belief that the efficacy with Yescarta is strong. We have -- we're the only company today that's statistically significant overall survive and that's something that resonates. And in the U.S., we're observing the same. It's early days right now. So many of these constructs are being tried today, but we are seeing -- I think the word would be loyalists that come back.

Great. Let's come back to the U.S. core business, and that is the authorized treatment center capacity, which I know that you're diligently working alone, but also in industry-wide to help expand. Is the capacity we have today in the system, is that sort of a zero-sum game to you? Is there a negative impact with say on Yescarta from people wanting to use anito-cel for instance? Or how should we think about it overall?

We don't necessarily see it that way. So I'm going to break it down into a couple of things. So we have the authorized treatment center footprint that we have today that we continue to grow. We also are looking at -- we've shared bringing community practices up and being able to either -- if you're in a smaller community practice that you would be encouraged to do referrals, we have a whole education component around that, and there's a lot happening at an industry level around that education as well. But we also have for the large integrated community practices, a chance for those practices to actually deliver CAR-T and I think a year ago, I was hopeful that this would happen quite quickly. What we found out, maybe I can break down the dynamics there is many of these large integrated practices are located within a hospital, next to a hospital. So they already have a hospital relationship, but what it requires to deliver CARs that they formalize that relationship and part of that is sharing the economics. And so the conversation between the community practice and the hospital working through that sharing of economics didn't go as quickly as I had hoped, and it takes a little bit of time for them to establish that relationship. I think the second component that goes along with that is FACT accreditation. So today, some of our national payers tie reimbursement to FACT accreditation. In fact, was started as -- it's a very important accreditation that is linked to transplant. And as we know, CAR-T is not transplant necessarily. And if you're sitting in a community practice, we had 1 of the large practices say to us, we want to leapfrog transplant. We think transplant isn't going to be here 10 years from now and that CAR could replace it and we want to become a CAR-T center, not a transplant center. And today, the way FACT is set up, you're both the way the accreditation runs. So we have a great relationship with FACT. We're working at an industry level, between the Community Oncology Alliance and FACT, to really create a modular accreditation for CAR-T and that's something that will be piloted hopefully the second half of this year across 3 large practices. And once that's piloted, it can be refined and then rolled out more broadly. But that FACT accreditation becomes really important. In parallel, we're not waiting for that. We're having conversations with national payers to really educate them on the difference between CAR-T and transplant and why FACT accreditation shouldn't necessarily be the only link that they're drawing as to why they would reimburse. So those are the components that we're working on. There's a number of other things with making community practices successful that we are working at either as Kite or at an industry level to make that happen, but I'm highlighting kind of the big 3 things that we're looking at. Now let's talk about what we can do. So part of part of the pieces that we're thinking about at Kite is how do we create constructs that enable outpatient delivery and that goes to the bed question or are we at capacity. And so whether you're in a community center or an academic center, how do we make these therapies outpatient? What does outpatient mean in CAR? It's very different than kind of how I would define it prior to working in CAR-T. Outpatient means that the therapy can be delivered and then the patient can go home. And if the patient has a CRS event or an ICANS event, they can come back into the center for a couple of days while that resolves or just to be observed -- and if it's fever, they may be observed for 8 or 10 hours and then sent back home. But it's getting the patient closer to home, right? No patient wants to travel 3 hours for delivery. So we're working at each level to say, how do we create constructs that have that safety profile. And if I give you examples today with Yescarta and Tecartus, we're seeing about 35% of patients -- of centers being -- using it in the outpatient setting. We know with anito-cel because of the onset being at 4 days, it's ideally situated to be an outpatient therapy. We studied that in iMMagine-1, in about 10% of the population. We are studying that in an even broader population, including community practices in iMMagine-3. So really looking at how could anito-cel be delivered in the outpatient and then all of the constructs that we're coming forward with is next-generation constructs or new approaches, let's say, in autoimmune or solid tumors, we are thinking about that outpatient mindset, how do we create the level of efficacy we want to see with autologous better than the products we have today but also have that safety profile that it can be delivered in the outpatient. And it's each one of those pieces that are going to help us unlock the community and unlock these therapies being delivered closer to home. The last piece is the regulatory components of it. So as you know, some of these products have REMS, Others are now being approved without REMS. So how do we approach the REMS piece and how do we approach the 30-day follow up of the patient. So what you've seen is changing care at least in the last 6 months, is now patients who are treated can actually move not 30 minutes or an hour from the center, but they can be further away from the center and actually receive care at their home practice. And so we're working through some of the logistics on that from a care model.

Wait. So that actually changed regulatory-wise?

So regulatory-wise, you can now be a little bit further away, and they still believe you can make it back to the center in time or you can be at an approved authorized treatment center closer to your home.

And are those the same ATCs like FACT accredited or is that a different type of approved centers?

So let's say you end up receiving your care in New York City, but there's a FACT accredited center in Central New Jersey, you could actually get a portion of your care at the FACT accredited center. We want to get to a place where we have more centers that have this modular FACT accreditation, and it's not just transplant units.

Got it. And then people can go back and sort of mix up ...

Correct, they can receive their therapy close to home.

Close to home. You said it really quickly. You said anito-cel has the ideal outpatient with the onset. And I wonder both from anito-cel perspective and as you're designing new construct, what is the sort of target threshold on safety to really enable outpatient. What are the elements?

So the elements are, you want patients to be able to receive the therapy and have a little bit slower onset. So as you think about the rapid expansion of the cells, how do you have the expansion but not so rapid that it has a punch right upfront, but that you still get to those peak levels you're looking for. And that's what we see with anito-cel. So by day 4, that's when you start to observe CRS events or ICAN events. If you think about the 86% of the patients that have Grade 1 CRS or no CRS at all, they would go in and be monitored for their fever and probably sent home, never admitted to the hospital, but rather sent home after the fever subsides. We have some hospital systems that are using watches that essentially monitor your fever and they can tell you when to come in or not, and you've got triage units. So that's a component of the care, you have 4 days where the patient can go home, return to regular life and then come back in. And part of that is getting a second DRG code, if you think about the U.S., what they're looking for, and that's how they're defining kind of that outpatient setting. So ideally, the patient will be able to go home for some period of time, and they would have low grade 1, let's say, CRS events as a majority of what their challenges are. When you're saying, what's the ideal profile and obviously low ICANS.

And so when you design new constructs, how do you design for that kind of ....

Yes. So I'd love to talk about our bicistronic because we thought a lot about that in the bicistronic design. So we have essentially one arm of it is a CD19 with CD28, so Yescarta essentially. The second is a CD20 with 4-1BB and what it allows you to do is have fairly rapid expansion so you get that, what I call, a punch, if that makes sense to your tumor. But then you have the persistence from the 4-1BB. And so what we're seeing in the Phase I studies, and we'll share that data later this year on those bicistronic constructs is exactly that, we have 2. We have one that has a traditional manufacturing of 6 days. And then we have a second one that has 3-day manufacturing. So we have more juvenile cells, and we can dose at 1/10th or 1/20th the dose of Yescarta today, but still see the levels of efficacy we want to see with a much improved safety profile. So those are the types of things we're looking at.

Is the more juvenile cell, do you also you get that slower expansion up if they're juvenile on lower dose.

You do get a slower expansion, but you also have a much lower dose. So I won't say slower expansion. You get a little bit slower expansion, not a lot slower, but you also are dosing at such a 1/10th or 1/20th of the dose. So that's held too, but still seeing the same level of efficacy. So those are very active.

I'm going to ask on -- I want to come back to bicistronic. Next question, I'm going to go back one more thing on the FACT accreditation. What are they looking for in these pilots that would validate that this is a process.

Yes. So I think part of it is they're designing it in a modular fashion that really goes to the institution and what they want to deliver. So if I'm an academic institution, I can take the whole thing. Does that make sense? I want to do stem cell transplant. I want to do Allo and I want to do CAR-T. So can I do the whole bucket? And then if you look at a center that's a community practice, they may only want to deliver CAR-T, so they may not need the same level of infrastructure, does that makes sense? Even down to freezers that you would need on those various delivery models. So it really is taking into account your infrastructure and your care model.

And so the pilot is to say, okay, this site has less infrastructure and then making sure ...

That they can successfully deliver it to patients.

Got it. Okay. Let's go back to the bicistronic and your -- the CD19/C20. A couple of questions. Just one, when will we see the data and what kind of outcomes are you looking for to make a decision between the constructs.

We've called it, I think, a bake-off, a horse race. We have 3 constructs. We have the 2 bicistronics I described. We also have Yescarta in a 3-day manufacturing, which again, at 1/10th or 1/20th at the dose. And so what we're looking for is, obviously, improvements in efficacy as well as improvements in safety so that we can enable that outpatient profile. If you can imagine, we kind of have an idea now of what the other CAR-Ts in this space look like, and we want to be better in both aspects.

How do your constructs compared to the other sort of leading bispecific? I think J&J has one that's had a lot of data they licensed from AbelZeta for instance?

You're talking about the bispecifics?

Bispecifics that's not necessarily bicistronic.

So the difference is -- and I probably should have started with this. The piece about CAR-T and the reason I joined Kite is it the curative potential. Look, we haven't seen in lymphomas and R-CHOP cure rates at this level. So although 60% of patients with lymphoma. We'll get R-CHOP in the front line and have a great response and potentially be cured. Another 40% are not. We know with Yescarta today that we can cure over half of those patients. And so with the bispecifics, we're not seeing that same curative potential today. And so to me, that's why I separate why I think autologous is a much better approach.

Actually, I didn't ask that. I meant the bispecific CARs, like how your bicistronic is differentiated from the competing bispecific CARs?

I think the differentiation is really, we spend a lot of time on the design looking at not just having dual targeting but also having dual co-stimulatory domains and how we design it. And so what we've noticed is the dual co-stimulatory domains really play an important role as you think about safety and efficacy. And so we believe that you need the CD28 have that impact on efficacy rapidly, but we also recognize the 4-1BB is something that's super important to persistence. And so you'll see the data you had asked when we'll share the data. We'll be sharing the data at congresses this year. Our 363 construct study is fully enrolled in 753 and 197. We're continuing to enroll. So you'll see data throughout the year. We're excited to share it. So please make time to see it. I'm super excited.

You've also announced, I think it's 363 as a product you're going to take forward in autoimmune? And I think until you announced that it was still ambiguous whether you would bring an internal product or you'd license and something. So why did you decide to do this internally and why that construct in autoimmune.

We took our time in autoimmune because I wanted to make sure we understood the space and what would be the appropriate approach. So obviously, the [indiscernible] data is super compelling. Anybody who saw that and saw what they could do for lupus and lupus nephritis patients. It's a game changer. And many of these patients were hospitalized, bedridden, and they've gotten their life back, and many of them in their 20s, right? And that's really hard to see patients. If you think about autoimmune disease. This is a chronic disease. These patients are going to live with their disease for 30, 40, 50 years. And so the piece that autologous approaches give you is these patients are on therapy for 50 years of their life, 50 years of your life. Can you imagine every day from when you're 25 until you pass away, you were on therapy for your chronic disease. And the piece that the autologous constructs offer is a disease-free, treatment-free period -- I won't say disease-free, I'll say treatment-free period. My hope is that we get to a point where we see these is actually something that can offer potentially cure and shift -- shift your immune system so that, that can be the case. But that isn't the data we have today and we'll keep studying it. But you could imagine even 2 years, 5 years with no treatment is a game changer for these patients. So CD19 data looks great, right? We've all seen the data, we were super excited about it as well. But we also know in some of these diseases, CD20 plays a role in B-cell inhibition. And we know that because there's antibodies that are approved in that space. So OCREVUS in multiple sclerosis, as an example, can be very effective therapy. So being able to hit CD19 and CD20 and some of these diseases, we think, is going to be really important. But we also need to think about safety because in the autoimmune space, these patients because they have chronic disease are 90% of the time seen in a community setting, right? They're going to their local physicians. They're not going to academic centers until they get absolutely refractory from the therapies that are available and so how we create something that can be delivered in the community is the other piece that we have been paying a lot of attention to. So we're excited to advance 363. We're really looking forward to what we saw in our Phase I studies and the data we'll share later this year in oncology looks like this is a great profile for an autoimmune therapy, particularly because we don't know how deep a response you need. We know in oncology, you need a really deep response to be able to see curative potential. And we think in autoimmune that as long as it's getting into the tissue, it may not need to be as deeper response, and that's why the 363, the traditional manufacturing made a lot of sense for us to move there. We Continue to keep looking at the external space. We're not going to lose sight of that.

We have 5 minutes. I want to put it out to the audience. If anybody has a question and then I'll move on. For the -- as you think about autoimmune, is there particular indications that you're most excited about for your internal.

There are. So we're studying -- we just filed an IND for a basket study where we're going to be looking at lupus and lupus nephritis, myositis and scleroderma. We'll be coming forward later this year with a basket study in neurology, where we'll also be looking at MS and myasthenia gravis, so we're excited about the possibility. And again, feel like for some of those indications having that CD19 and CD20 will be really impactful.

Maybe one more business question. We had dinner last night, and I thought some of the most interesting comments, discussion you have were about this the long-term business of CAR-T and sort of the barriers to entry. And I wonder if you could talk about how you're currently thinking about the durability of this business for Gilead and what the barriers are that might keep this a pretty small focus that accompanies in the future?

So we really see cell therapy business as a long-term growth driver for Gilead. And you probably heard that from Andy and others and if I think about the business today with Yescarta and Tecartus in lymphoma, this is a really important business for us. So we believe in 2034, we think that lymphoma market will be somewhere between $10 billion and $12 billion. So we know that there'll be growth there. And part of that is the pieces I talked about earlier on how do we unlock the use of autologous CAR-T more into community and getting patients closer to home. And so the work that we're going to do there, super important. If you think about multiple myeloma, we see that in 2034 as a $15 billion to $20 billion business. So why the difference? In lymphoma, patients are cured, as I said, 60% are cured with R-CHOP. So you really only have 40% of those patients progressing into second line and third -- and fewer into third line. In multiple myeloma, there is not necessarily curative options upfront or very few options, some patients on transplant will have a really good response. You have a majority of those patients advancing to second line, third line, fourth line. And for myeloma, we know those patients can go through 9 or 10 lines of therapy and live for many years over a decade with their disease. And so even entering in -- with anito-cel in the fourth line, we still see that as a really great opportunity for the company and a chance -- to start off with anito-cel with our global footprint and our manufacturing and the great construct that it is to really grow that, but we'll come behind it really quickly with second line. Our second-line study, iMMagine-3 and then we're also designing a study to go into the front line. So we see again, anito-cel is another opportunity for growth. We see that market being $15 billion to $20 billion. So all the work we're going to do in lymphoma today matters because we won't see the success in myeloma and autoimmune unless we're able to unlock some of the things we talked about. And then autoimmune, as you think about expanding starting similar to how you approach in oncology in that refractory setting and how do we continue to expand into earlier lines is something that market shaping is going to matter what we do in oncology and will be directly applicable to what we see there. We have a number of -- we did an acquisition of a company called TMunity, which was looking in the solid tumor space. So we have studies ongoing there in GBM and neuroblastoma also looking at other solid tumors. We think that solid tumors are tricky. This takes a lot of work. It's going to require 2 or 3 targets. We're looking at armoring and decoys. And we have an opportunity to advance some solid tumor programs, 2 in the clinic today, as I noted, from TMunity, but more coming in the future. That's autologous. But then we also know that there's other approaches in this space, whether it is Allo, in vivo. There's a lot of exciting things heating up right now. So we continue to keep our eye on that as well. We either have some that we're doing through collaborations, some we're doing in our own internal research as well as just being an eye on the external landscape. So we see this again as a long-term growth driver for Gilead and see the ability to move beyond just blood cancers, which is if you -- I will say that I was a skeptic 5 or 6 years ago, and it's super great to be Kite. I was wondering myself, wasn't going to have the curative potential where you going to be able to do this beyond blood cancers, and it's great to see the data we see today in autoimmune and solid tumors.

So the infrastructure you build in the community, these are in oncology, those are oncology practices. Would that apply to rheum or it's more about that model replicating it for rheum or neurology?

It's about in the long term replicating the model. In the near term, what we found is that entertaining centers that have strong relationships between oncologists and the rheumatologists or their neurologists or those are CAR-T treaters who are have enough foresight to say, this looks really great in lupus. And I'm going to go down the hall and introduce myself to the rheumatology practice is really important. So as we get our clinical trials up in the existing authorized treatment centers, what we're finding is we want the centers that have that report that are willing to just say, I'm not an oncology treater only, I'm going to establish a relationship with the neurology unit, with the rheumatology unit. But long term, these patients are seen in the community and being able to replicate what we learn in oncology to those practices will be important. And the therapies have to get safer, right? safer and safer. So you don't have lymphodepletion down the road and you have an opportunity to truly deliver these in a community setting.

Do you have anything on the horizon on not using lymphodepletion or using reduced lymphodepletion?

We have efforts -- we have ongoing efforts from a research perspective in that space.

Awesome. So we went a minute over time. Thank you so much. Thank you. It was a great conversation. Thank you for everybody's attention.

Thank you.