GSK plc (GSK) Earnings Call Transcript & Summary

Sorry, I was muted there. Welcome, everybody. My name is Emily Field. I am the European Pharmaceuticals Analyst here at Barclays. And we are delighted to be hosting, from GSK, the CEO of ViiV Healthcare, Deborah Waterhouse. And Deborah will provide a few opening remarks before we get into a Q&A fireside chat style. So Deborah, over to you.

Thanks, Emily. Thanks for inviting me to do this fireside chat today. So just a few opening comments. So 2020 was a strong year for ViiV Healthcare in terms of innovation, performance and our trust objectives. We delivered 1% growth in the year, and that was accelerated in quarter 4 to 2% top line growth. We have just been through 2 years of the business being broadly flat. And I'm delighted to be able to say that we're now moving back to progressive acceleration in growth, and that's really underpinned by the continued expansion of our 2-drug regimen portfolio, particularly Dovato, and then the launch of Cabenuva, which is for the treatment of HIV, and [ ricovio ], who that's for on highly treatment-experienced patients. And then finally, we've got cabotegravir for the prevention of HIV on the horizon. So very exciting. So far this year, in terms as I look forward to 2021, so we see our oral 2-drug regimens, particularly Cab, particularly Dovato driving growth and more than offsetting any decline into the PK and Triumeq. We've just launched Cabenuva in the U.S. It was approved on the 21st of Jan, and we launched a few days later. So that is underway and going well. In the U.S., our license, just to remind everybody, is for administration every 4 weeks. We've just submitted an sNDA for every 8-weekly administration. And the approval in Europe was for every 4 and 8 weeks. So we're just starting the reimbursement process in Europe. The next thing we're really focused on is Cab for HIV prevention. So we'll be submitting our file to the FDA in the first half of this year, and we will be launching in quarter 1 2022 if we get approval, as we are expecting to do. And that medicine, we can talk about more in our fireside chat. But basically, we have got 2 large studies, both of which demonstrated superiority versus standard of care, which is Truvada. So really excited about that. And then last, but by no means least, we see fostemsavir, a much smaller niche product for highly treatment-experienced people living with HIV, but it is adding growth to our portfolio and the uptake of that medicine has been really, really positive. And then last, but by no means least, we're looking forward this year to progressing our early development pipeline, particularly our reformulation of cabotegravir into cabotegravir 400. So we should be having some data readouts on that towards the end of the year. So exciting year in ViiV Healthcare.

Yes. Great. That's a great introduction. And so I guess, obviously, you're going to focus a lot of the discussion on cabotegravir. And so I mean you mentioned that was kind of in full swing in the U.S. Just maybe if you could give an update on the progress so far. Any early indicators that you're watching in terms of how that's progressing relative to expectations?

Yes. So for those of you who know this product, you start with an oral lead-in. So it's in switch-only, so it's for switch patients. You start with an oral lead-in and then you move on to the injectable. So at the moment, we are seeing physicians starting patients on the oral lead-in. So you won't see prescription data for quite a while actually because we are starting them on the oral, which we provide free of charge to patients. And then you go on to the injectable. So the demand so far is in line with our expectations. We can tell from our sort of share of voice and sort of physician-tracking data that interest is high. There's a lot of excitement about this opportunity, and there are many patients who are waiting to have the opportunity to switch. The downside is COVID is really suppressing the switch market, both in the U.S. and Europe actually, as guidelines are currently recommending that people living with HIV aren't switched unless the physician feels it's really necessary. So the good news is that the uptake and the demand and the expectation, acceptance, et cetera, is in line if not slightly ahead of our expectations. But as we expected, the switch market is slightly suppressed on the basis of COVID just not encouraging people to switch medications at the moment.

Okay. Yes, that's a good point on COVID. And so are you doing a virtual launch at the moment? And kind of -- and if so, when do you expect to have face-to-face promotion? And is that something that's important for a new launch in this space?

So we've done a full launch. We've done a launch as if it was a normal world that we were living in. However, many of the interactions with physicians were obviously virtual, not face-to-face. Although actually in some states of the U.S., we are doing face-to-face promotion. So our sales force is still delivering significant numbers of calls. I think for most of the back end of last year, we were at 70% of the activity that you would have seen in pre-COVID times. There's still a lot of customer interaction. We're getting a lot of requests, particularly from the big health care systems, to present Cabenuva to them so they can understand where it fits into their treatment pathway, particularly of implementation science data, which demonstrates what they would have to do to successfully implement this medicine. And then the demand for our medical staff actually is higher today than it was pre-COVID. So we are seeing significant interaction with all of our medical teams and the duration of those quarters also increased. So I think activity hasn't really been impacted that much. We're at high levels of interest, and we're able to connect with our customers on something they're very interested in. So it's a full-on launch of the 4-weekly in the U.S. at the moment.

Okay. That's helpful. And then I guess kind of maybe taking a step back and thinking about the opportunity for a long-acting therapy. I mean how big of a problem is compliance with daily oral kind of at this point? And then also, I know that you cited -- you guys often cite the high patient satisfaction from the patients surveyed who were in the clinical trial. So I guess I was just kind of wondering, for patients who have been on oral therapy forever, for sometimes many years, kind of what do you anticipate being a point to potential patient resistance? Is it needle-phobia or injection site reactions? And sort of how you're hoping to uncover those? So a couple of questions.

Okay. So let's talk about who this medicine is for. So there are people who are living with HIV who struggled to adhere, people living -- who are living with HIV who really find it very difficult to take a tablet every day. It just reminds them that they're HIV positive and the stigma that is related to HIV is problematic for those people. We know that there are some people who just live in fear of disclosure of those around them finding out that they're HIV positive because they have hidden their status. And then we know there are other people who don't live a 9 to 5 life actually. They live a life that's kind of less predictable. And again, they find it very difficult to take a tablet at the same time every single day. Just think of yourself if you were an air steward or a pilot going around the world in airplanes, time zone changes, et cetera, really hard to get your tablets taken at exactly the right moment. So there is a group of people living with HIV who we know have a strong preference for a long-acting regimen. Now if I were to sort of forecast the split, I'd say 80% of people are absolutely fine taking a once-daily tablet. That works well for them. But there's probably about 20% of people living with HIV who do struggle. Now a lot more people than that would like to take a long-acting. But I'm kind of honing in on a population who I think are most likely to be prescribed, by a physician, a long-acting medicine. In terms of reasons why you might not want to take a long-acting, so this medicine, as you pointed out, Emily, is an intramuscular shot. So if you hate needles, this is not going to be the product for you. But actually, in the clinical trials, both in terms of the PrEP prevention studies and the treatment studies, was people did have injection site reactions which were in the main resolved in a very short period of time. Very few patients dropped out. In fact, the one -- the study that stands out to me the most is 3,500 women in sub-Saharan Africa who received, over a number of years, an every 8-week injection with cabotegravir. We had not one single dropout for -- from -- due to an injection site reaction. So this is something that resolves. This is something that's tolerated. If you hate needles, this is not for you. But actually, a majority of people who want this medication are absolutely fine with the injection.

Okay. That's great. And then just thinking about the 2-month versus the 1-month formulation, I know you mentioned that -- the full [indiscernible] with the 1-month formulation. But after the 2-month is approved, do you expect that that's going to be the regimen that is used by most patients?

Yes, I do. So what we know from our kind of work with people living with HIV is, for most patients, the longer the distance between the kind of the treatments, the better. Three-monthly is actually the optimal. So people would like an every 3 month injection because that means they can time it with the time that they would go back and see their physician anyway. So there's no additional visits. Or they'd like a once-monthly that they can administer at home. Every 8 weeks, however, is better than a shot in a doctor's office every 4 weeks. So we think that a majority of our business will stick in the every 8 weeks. Now some physicians, particularly where you've got people living with HIV who struggle to adhere, some physicians want to administer directly observed therapy, so they want people to come into the office every month and have their shot. So there will be a subset of individuals who will still stick to the every 4 weeks. In the main, our business will be in the every 8-week, both in Europe and in the U.S.

Okay. Great. So maybe we can transition to talk about Cab for PrEP. Just getting -- brushing up ahead of our meeting today, it just seems like every player in the market, one of the things they talk about first is just how underpenetrated the PrEP market is. So I mean is that simply just -- I mean is that -- what do you think is really driving that? And then how, I guess, do you think Cab is going to be positioned then to perhaps increase the penetration rates there?

So today I'll just talk about the U.S. because that's where the biggest challenge sits in the kind of the government-funded sort of developed market. So least developed countries is a very different story. We will have, we believe, rollout of Cab PrEP in those countries. But let me just focus today on the U.S. So there are 38,000 new infections every year in the U.S. It's a fragmented health care system, and there is a desire to end the epidemic in the United States and the Biden administration is committed to doing that. So the question is, why do we still have so many new infections when you've got PrEP treatment available today? I think oral PrEP has some downsides. And I think adherence is one, disclosure is another. So we know that in our data in the HBTN-083 and 084 studies, we were able to demonstrate superiority of 66% in men and 89% in women. So really strong data for cabotegravir. So we believe that this will allow people to have their every 8-weekly shot away from their own kind of home or environment, and that really tackles both adherence and stigma issues at the same time. Most of the new infections in the U.S. or about half of them are in the Black -- African-American or Hispanic population. Those have traditionally not been reached by PrEP so far. So what we need to do is to find, in those kind of 48 counties where most of the new infections are taking place, we need to really work in partnership with local organizations, health care professionals and other groups to make sure that we're able to really work with the system to ensure that Cab is not just available, but actually it's broadly used to prevent the acquisition of HIV. So I think there's a number of complex reasons, but I think cabotegravir helps you bridge into much broader usage. I think today, about 20% of those who are eligible for PrEPs take it, and we would like to see that significantly improved, and we believe cabotegravir every 8 weeks injected will allow that to happen.

Okay. That's helpful. And then I guess kind of one concern would be whether there would be -- it would be challenging from a formulary perspective, given generic Truvada, and obviously, one would expect a significant price differential. Do you expect that to be a significant hurdle?

I think -- I mean you've seen that, I think 43% or 44%, the last time I looked at Truvada, has already been moved into Descovy. So in a sense, we've already seen with a noninferior data a shift to a patented medicine and that medicine has been covered by payers. We believe that if you bring innovation to market in the form of cabotegravir and obviously, as you said yourself, there are follow-on medicines in the PrEP space coming from our competitors that actually payers, if you can generate the right data, payers will be willing to pay. 38,000 new infections per year and over 1 million people living with HIV in the U.S. is hugely burdensome on the health care system. And so I think in order to end the epidemic in the U.S., you need a number of different options available which meet the needs of those who are at risk of HIV. So for me, I think if you have the right data and the right value proposition, then I think the payers will actually be willing to support the reimbursement of those medicines.

Okay. Great. And I know that the company has guided for Cab and long-acting treatment and in PrEP to both the blockbusters. I guess of those -- of the 2, which you think is likely probably the bigger commercial opportunity?

So the bigger commercial opportunity will be Cabenuva, or Vocabria-Rekambys, as it called outside the U.S., because basically, the treatment market is GBP 30 billion market value, and the PrEP market is currently really in the main U.S. and it's a GBP 2 billion market. So for me, the size of the market is so much larger in treatment. Even though PrEP is more underserved, actually the opportunity is larger in treatment. So I think treatment will be larger than PrEP, but we believe we've got really strong value to offer in both of those markets.

Okay. Great. And so I guess maybe transitioning to talk about kind of more of the base business. I know you mentioned COVID still having impact on the switching market in the U.S. Going back through the full year result slides, it kind of did show some solid, steady gains for Dovato. So maybe if you could just talk about kind of dynamics in the switching market right now and just how clinical acceptance is going for the 2-drug regimen versus the 3?

So let's start with the U.S. and then I'll just touch briefly on Europe. So at the moment, 2-drug regimens -- oral 2-drug regimens, Juluca and Dovato together, they generated about $1 billion of value last year. Share, as we sit here today, TRx-wise, it's 6%. In terms of NBRx share, it's around 10%. And in terms of share of switch -- so share of the switch market, it's around 17% to 18%. So actually, you can see that if you believe that the NBRx will eventually turn into TRx, we've seen an uplift in our NBRx since we broadened the label in the U.S. in the middle of last year, and added switch to the naive label. You can see that actually our position in the U.S. is strengthening. So we are -- I think we've always said it will be a slow kind of uplift and acceptance because we're changing a treatment paradigm and the U.S. is a conservative market. So on that basis, we're happy with our progress and we will continue to absolutely focus on Dovato in the U.S. In Europe, our share actually of Dovato -- or rather cabotegravir has increased 2 percentage points over the last 12 months. We're now at a 29% share. We are growing our business fast, and Dovato has really taken off very, very rapidly. So dominating switch in many markets and the share overall is going up rapidly. So we always knew Europe would accept 2-drug regimens quicker than the U.S. because 2-drug regimens, really we used that for a long time before we got our license. So we just need to work hard to get the U.S. to catch up with Europe.

Okay. That's helpful. And I guess I kind of also have to ask kind of the requisite question on pricing, particularly in the U.S., kind of what you're expecting for this year. And then also, if you're anticipating any changes to the market, whether it be from competition or if there's anything you can see from a policy standpoint that could potentially be impacting the pricing dynamics here?

So we're not expecting significant change this year. Obviously, there will continue to be price pressure in the U.S. If I were to pick on 2 things which I'm kind of keeping my eye on, #1 is protecting classes. So about 18 months ago, we fought a battle in the HIV community against [ step ] addicts and other limitations in Medicare Part D to which medicines HIV physicians could choose for people who are living with HIV who are covered by Medicare. This is a very guideline-driven therapy area. You need choice because as you become resistant to one set of medicines, you need to have others to move on to. And so it needs to be left to the physician and the guidelines to work out what medicines should be used at what point. So anything that undermines that choice is really challenging and is challenged by the community. So the decision was made not to make any changes to HIV, protected class status, no step edits, no prior rules put in, it was kept as it was. There's now a proposal which was put on the table in the last 60 days of the Trump administration, where there is going to be a pilot to look at protected classes. Again, whether or not the Biden administration will choose to go forward with this or not still remains to be seen. But for me, protected class of HIV is still something that we should fight very hard for because in order to ensure that people living with HIV get the medication they need, they need to have choice. And so to me, a change in protected class is one challenge. The other is we watch very carefully Medicaid because 20% of our volume sits in Medicaid. And there's been some kind of proposals on the table around Medicaid caps and the like. That wouldn't affect us in the short-term because we are nowhere near the caps that would cause your discount rates to kind of go up in Medicaid. But obviously, over time, we'll be keeping an eye on that to see if that moves forward and would be able to, at that point, calculate what impact it would have on ViiV. But in the short to medium term, that impact will be limited even if that did go through because, as I say, we're nowhere near the caps in terms of the discounts that would have to be given. So I'm watching it. Pricing pressure in the U.S. is a massive issue, hugely complicated, lots of different threads. But for me, protected classes is the thing that I spend most of my time focusing on.

Okay. Excellent. And before kind of wrapping up with a couple of pipeline questions, I did have one incoming question from an investor who was just curious of and why you quantify the Cabenuva opportunity of likely 20% of the market potentially. Do you have a sense of, if you could quantify that in PrEP also, in terms of whether that -- it would be a conversion to -- from fully to injectable of 20% or is more of the market you're going for is the currently untreated market?

So we think PrEP would be higher. But when you think about -- so if I think about, I call it, the addressable market, where I say 20%, so if you think about people who would be willing to take an injectable where the payer would be covering for that injectable, we believe, actually, 80% of the market is fairly satisfied; 20% would be willing to go into a clinic every month or every 2 months to have their shot. What we know is if we can evolve our portfolio, and you said you were going to come on to pipeline in a minute, so I might just frame that. So if we are able to either lengthen the amount of time between shots, so let's say it was every 3 months, the addressable market grows. If you could deliver a medication that was every month administered subcutaneous at home, so you did it yourself, like in a diabetes pen, then the market expands again. But what I'm referring to today is those people who are willing to take an intramuscular shot, 2 of them, in their buttocks, in order to receive Cabenuva. It's an amazing medicine, but not everybody would be willing to do that. So that's why I'm talking about that of the addressable market. But over time, we know that if you lengthen the time between shots or you have a different delivery mechanism, we know the market -- the addressable market will expand. So that's where I am on that one.

Okay. Great. And probably just have time for one last question. A lot of refocusing on vaccines with the success of mRNA vaccines, I know that Moderna announced kind of 2 mRNA candidates for HIV in their vaccine portfolio. And on your kind of chart, you talk about still looking for a cure. So any thoughts on the renewed interest in HIV vaccines or just updated thoughts on that front?

So HIV vaccines has been elusive for 30 years despite many, many companies, including GSK, pursuing it. We think a vaccine in a conventional sense, where you would be vaccinated and you would never become HIV positive, is less likely. What we are seeing is therapeutic vaccines and therapeutic treatments which would potentially create a remission-type situation. So you would flush the remaining HIV virus out of the reservoirs and then you would find a way of destroying those -- the virus that came out of those reservoirs. And we believe that we could actually put, therefore, a person's HIV into remission as opposed to a vaccine that means you would never become infected. So that's the avenue that we're traveling down. We have a big cure effort in partnership with University of North Carolina and it's called Qura. I know that our competitors are also looking at cure. And the cure that they're looking at is in a similar zone. It's called different things, but it's basically flushing the HIV virus out of the reservoirs and destroying the virus that emerges so that you put somebody into more of a remission situation. So I think that is the next sort of scientific avenue that we're all traveling down. And we hope one day that, that cure or remission, as it should probably be called, it becomes a reality.

Excellent. And unfortunately, we're struck on time. So we're going to have to end it there. But thank you so much, and I hope you have a great rest of the conference.

Thanks, Emily.