GSK plc (GSK) Earnings Call Transcript & Summary

So we're ready now to start the next session. It's my pleasure to be able to introduce GSK. And from GSK, we have Deborah Waterhouse, who's the CEO of ViiV, and also Kimberly Smith, who's the SVP and Head of R&D of ViiV, the HIV business. So I think probably the best thing to do here is actually if I hand over to Deborah to see if she's got any sort of opening remarks, just kind of what's the state of the nation on HIV ViiV at the moment. And then we can move into some Q&A.

Great. Thanks, Graham. So it's been a fantastic year for ViiV. We have had really strong growth, above expectation. In Q3, for example, we grew 12%. Year-to-date, we're growing 10%, and our outlook for the year has been increased to around 10%. The growth is really driven by our long-acting injectable franchise. This is really important to us, because it's a set of medicines informed by patient insights. People want to make HIV a smaller part of their life and the long-acting injectables are really delivering against that. And the reflection is therefore in the growth that we're seeing, more than 40% growth for Cabenuva and 75% growth for our long-acting injectable in PrEP Apretude. So really happy with the momentum of the long-acting injectable franchise, whilst also obviously, our orals, particularly Dovato, continue to do well. And then the other thing that's been happening is pipeline progress. Sure we're going to talk quite a lot about that today, Graham, but really happy with the way we are seeing the future of the franchise unfold, which is absolutely focused on long-acting injectables every 2 months for PrEP and treatment today, moving to every 4 months and ultimately every 6 months. And we know that as we increase the duration between administration, the population, the addressable market as it were for the medicines expand. And so that's why we're so confident that we can navigate the loss of exclusivity of dolutegravir and see ViiV come out the other end of the patent glide path rather than the cliff, as we call it, really healthy. And that into the 2030s, we will be back to significant profitable growth, which is obviously very critical to the future of GSK. So looking forward to our conversation today.

Great. Well, I might just kick actually off on sort of current business. So maybe just help break down what's driving the growth and the shift away from triple to dual to long-acting, really where is the key growth drivers now? I think it was -- Q3 was predominantly long-acting, but help us understand what that mix of business looks like at the moment?

Yes, sure. So if I look to quarter 3, which is pretty representative of the year actually, so we grew 12%, 10% was volume growth and 2% was positive pricing. The pricing has been either negative and positive, a little bit up and down through the year. But fundamentally, our growth this year is based on volume growth. And that's mainly driven by the long-acting injectables. So 75% of our growth was from the long-acting injectables. Dovato continues to grow kind of mid-20s. You've got Cabenuva growing mid-40s and Apretude 70%. So as you can see, a majority of the momentum in the business is driven by long-acting injectables. And we're super happy with the progress that we're making there.

And you upgraded the guidance for ViiV at the Q3. So what was the predominant driver of that?

Cabenuva. Honestly, Cabenuva this year has taken us by surprise. I mean we're very enthusiastic, as you would imagine us to say, about that product. And I just spent 2 days in Miami with big providers talking about the momentum of their patient base. And they say Cabenuva is the one medicine that everybody comes in and asks for, because they can see what a difference it can make to their lives. It's absolutely liberating once you're on that medicine. And the demand is significant. And actually, the thing that stops it from growing even faster, which we can talk about later, is the capacity that the clinics have for long-acting injectables, and we're seeing that expand, but they can't keep up with demand at the moment. So that's why I'm so hopeful for the future of that medicine.

Okay. And so if you break down the franchise at the moment, what proportion of the overall franchise is Cabenuva right now, or long-acting right now? And where do you see that in 5 years, or particularly by the time you get to dolutegravir LOE?

So at the moment, we are expecting this year the long-acting injectables in the U.S. to be about 30% of our overall business and 70% is oral. It's just a little bit less than that ViiV overall. But obviously, the market we focus on is the U.S., because that's where a majority of the margin and the sales are made. So you've got a 30%-70% split. By the time we get to 2028, for ViiV overall, the long-acting injectables will be about 40% of our business, and that's the year, obviously, that we lose exclusivity of Tivicay and Triumeq in the U.S. only. And so as the decade continues, you'll see our long-acting injectables become a larger and larger percent of our business. And we're hoping that by the time we get to about 2030, which is when you'll have seen the majority of the dolutegravir loss of exclusivity take place and significant growth in the long-acting injectables, we're about 80% to 90% long-acting injectables at that point.

And right now, we have most of the patients coming from that are going into Cabenuva for the first time. So is that newly diagnosed? Is it more switches from oral? And of that, how much is GSK versus older regimens?

Yes. So obviously, the label is the switch-only. So everything is coming from switch. 75% of Cabenuva's source of business is from our competitors. 25% is from our own portfolio, and that's a mixture of Tivicay, Triumeq-containing regimens, and Dovato. But actually, a majority of the business is coming from our competitors, all the ones that you would have expected.

And then -- so the label switch, but do you see anybody going on an initiation of an oral therapy and then switching? Is that a strategy that is emerging in demand or...

That's a good point. So we don't see people going on as they've been newly diagnosed. But what we are seeing is the minute people are virally suppressed, they are then moving over. And sometimes you see people starting on Juluca, which is cabotegravir/rilpivirine once daily oral, and moving into the Cabenuva. And then there's also a study that we've done, which Kim can talk about, which shows that you can rapidly suppress on Dovato and then move on to Cabenuva, and people significantly had a preference for Cabenuva in that study.

Yes. That was the CLARITY. Yes, we shall come on to that.

We'll come on to that.

Okay, cool. And then if you look at your market research, what proportion of the existing HIV population do you think you can target with 2 monthly Cabenuva. I know you've sort of kind of done the work around this, and then we'll come on to Q4M, but like just talk through the strategy of what proportion of the market becomes accessible as you start to lengthen the treatment paradigm.

I think the right word that you have used there is accessible or addressable. This doesn't mean that the numbers I'm about to give you are what I think the share is going to be, because obviously, you have to go through the payer journey, specialty pharmacy, et cetera, et cetera. But when you have an every 2-month long-acting injectable, the addressable market is about 15%. So 15% of patients would be willing to take an every 2-month injectable. It doubles when you get to every 4 months, so you're at 30%. By the time you get up to Q6M, you're at 50%, because at that point, you've got a group of people who just don't want to have an injectable. They don't like needles. They don't want to come into the physician's office and have to have the medicine administered, but you've got half the market at that point who would be open to a long-acting injectable. And that's really why we developed the products in the first place, because we felt that strong community need for something that makes HIV a smaller part of their life, liberates them from stigma, liberates them from taking tablets every day, liberates them from forgetting to take their tablets, and adherence for some people is a real issue. So that's where we see the market evolving.

And how granular is your data and what's the barrier to taking injectable? Is it just the needle? Is it intramuscular? Is it frequency? Is it I've got to go to the physician's office? If you've got sort of more color on that?

All of the above. So every 2 months is too often for many people. They live a busy life, like everybody who's undoubtedly in the room and online today. So they just don't want to go in 6 times a year. You've got people that hate needles. So there's a proportion of people that feel strongly about that. And then there are other people who don't want to have to have the physician administering their medicine. They want the autonomy of doing that themselves at home. So there are a number of barriers. The main barrier is actually capacity, though, not in terms of wanting the medicine, but the main barrier to getting the medicine is actually capacity at the health care professional clinics. And that's why we're so excited about Q4M, because obviously, that's going to double the capacity.

Yes. One additional build on that barrier is that Cabenuva or cabotegravir/rilpivirine is an NNRTI. A lot of people have been exposed to an NNRTI previously and may have resistance. So they aren't candidates for Cabenuva.

Got it. Okay. So in terms of the Q4M, that's an interesting point you made there. So part of the 15% to 30% isn't I'd rather take it less frequently, it's just that capacity being freed up at the clinic, because you're just halving the amount of patients going all the time.

Right. They double their capacity when we double the interval, and that will make a big difference. So when we talk to providers about Q4M, they want it yesterday, because they're getting asked about Cabenuva all the time, but they don't always have enough ability to give it to all the patients who are asking for it.

Got it. Okay. And then in terms of Q4M and how often patients would normally see their physician, I think I had it in my head that it was maybe every 6 months, but I think you made a comment more recently that every 4 months is also actually a fairly normal schedule.

Yes, 4 to 6 months is about right. I mean, so individuals that have been stable for a very long time, you'll see them twice a year. Even occasionally, you'll see them once a year. They're really, really reliable. So anywhere from every 4 months to every 6 months or every year. And certainly, talking to providers over the last week, you forget people come in and have to have their viral loads taken a certain amount of times a year. But actually, there's a real focus on STI testing. So obviously, there are outbreaks, so sexually transmitted infections, and those are at a higher level than ever before. Particularly these days, you see a lot of gonorrhea, a lot of syphilis, a lot of hepatitis. And so that testing is also driving people in more frequently as well, both in the PrEP market, but also in the treatment market as well.

Got it. Okay. And then commercially, just on Apretude at the moment. Obviously, there's a competitor in the market now with lenacapavir or Yeztugo. So have you seen any impact on Apretude from that launch so far? And what's the sort of feedback you're getting from the prescribing community on the launch and how it compares to Apretude?

So we haven't seen any impact on Apretude. It grew 75% in Q3. The NBRx and the TRx remain on the same trajectory. As we think about the PrEP market, I mean, it's a market that's very underdeveloped. 1.2 million people could benefit from PrEP and currently only 400,000 people are on PrEP. My view of this market is it's going to continue to grow. You're going to see more and more people coming into this market, because actually they will be driven in by the option of a long-acting injectable. Long-acting injectables are superior to orals. And so you're going to see the volume of the market grow. You've got 2 companies pushing their advertising, doing all the things that we do commercially. And you've also got a market that's in part branded, in part generic in terms of the orals. So there's also a value upgrade for people who go from, let's say, you're on a Truvada generic today, to Apretude or our competitor. That actually means the value per patient goes up. So I think that market is going to grow. I think we can be very successful in that market. And I think having a competitor actually is something that we think is going to benefit the market as it grows and evolves. And both of us will find our place. You've got obviously less frequent administration with our competitor, but you've got challenges with drug-drug interactions and nodules. You've got more frequent administration with Apretude, but you don't have the drug-drug interactions or the nodules. So it's going to come down to patient choice, I think.

Got it. Yes. And overall market growth, how penetrated do you think the market is at the moment between generic oral Apretude and then obviously, lenacapavir coming in as well? And where do you think that can get to over time?

So today, it's 5% long-acting injectables, which is almost all of it is Apretude currently, but obviously, Yeztugo is entering. Then you've got the rest of the market split between Descovy, which is about another 42%, and then the rest of it is generics. Over time, we believe that by the time we get to the end of the decade, about 80% of the market value is going to be in long-acting injectables. And then the remainder will be the orals.

And what about penetration? And if you look at the addressable pool, how...

So we think that you can get to 1 million patients, 1 million people who would benefit from PrEP. I mean today, the CDC is saying 1.2 million people would benefit from PrEP. There is actually other evidence out there from kind of some members of the CDC and also some significant Es, who are saying the addressable population for PrEP could actually be as high as 2.2 million. So I think our view is, by the end of the decade, you'll be somewhere between 800,000 and 1 million people on PrEP, because the PrEP that we're bringing to market from a long-acting injectable perspective is really, really effective, because you don't have to remember to take tablets. You know you're covered. Whatever you decide to do on the weekend or the week nights, you just don't need to worry about HIV acquisition as something that's a cloud over your head. So I think it's going to be a really significant breakthrough involving the epidemic.

So 1 million patients. How much is it at the moment, though?

So we're currently at 400,000-odd at the moment. So we're halfway there.

Got it. But that's 400,000 across everything, including all generics?

Everything, yes.

And then talking to lenacapavir, I think you published some data, healthy volunteers data comparing contrast maybe clinical...

Yes, the CLARITY study was really designed to help providers to understand the injection experience with the 2 products. And so it basically took healthy volunteers, and they gave a dose of Apretude, which is a single IM injection, and they gave a dose of Yeztugo, which is 2 subcutaneous injections. And it basically just described what their experience was. And what we found was there was a high preference actually for the Apretude because of the discomfort that was associated with Yeztugo. And so part of why we thought it was important to do this is that while Yeztugo is a subcutaneous delivered product, it's not what people would think of as a typical subcutaneous dose, because it's a relatively high-volume subcutaneous, those 1.5 milliliters x2 doses. And the product itself is quite viscous and a bit sort of oily. And so it requires a relatively difficult pressure in order to inject it. And that causes more pain than you typically would think of with a subcutaneous injection. And that's really what we saw in the CLARITY study, which ended up leading to basically about 90% of the individuals, the healthy volunteers preferring the IM to the subcu. And actually 6 out of 7 of the HCPs preferred delivering the IM to the subcutaneous, which is particularly unusual, because you think about subcutaneous dosing being easy in general. But the reason for that is that because of that higher pressure, it causes pain. And providers never like to do anything that causes pain if we can avoid it.

And that study, was that just the single administration?

Single administration.

It doesn't account for the fact that you're doing less frequently...

Absolutely. It doesn't address the whole experience of being on Apretude or on being on Yeztugo. It really gives providers and potential individuals who might want to go on PrEP an idea about what that injection experience is like.

Okay. I might shift gears on to just reimbursement and pricing at the moment as well. So I think if you go back to Part D redesign, you flagged I think it was GBP 150 million, GBP 200 million headwind in 2025 from redesign. So just perhaps talk through how that panned out, if that panned out as expected through the course of the year?

Yes. So I think GSK gave a number of exposure between GBP 400 million and GBP 500 million exposure from the Part D redesign, and they have said that they're at the bottom end of that range, and we would say that we are at the bottom end of our range. So we're actually in line with what we've said as a kind of a broader GSK.

Got it. And have you seen any sort of channel mix changes through the year? I know you saw some flip flopping between Q1 and Q3. Just perhaps run through the dynamics of that, what drives that channel mix change, because it looks like it's sort of the gross to net flying around, but maybe just help people to understand that.

Yes. I mean, during the year, we've seen kind of more shifts at one point into the higher discounted channels, ADAP and Medicaid. And then we've seen, in the kind of the last quarter, a move much more back into commercially insured. It's not unusual to see those shifts over time actually. And we think it broadly nets out to a relatively stable picture for us. So we haven't seen anything that's driving a change in the market. But at the moment, we are a little more skewed towards the commercially insured patients than we normally are.

So actually, what would be the split if you break it down at the moment between the channels, so Medicare, Medicaid, ADAP, commercial?

So if you look at the whole market, so not necessarily just our business, but let's look at the whole of the HIV market, about 20% in Medicaid, 20% in Medicare, depending on the time period, 10% to 12% in ADAP, and then you've got 5% to 7% in things like the VA and Indian Health Services and all of that. And then the remainder is in the commercially insured. So that's broadly how our mix runs as a sort of an HIV therapy area.

Okay. So it's quite high Medicaid, ADAP exposure still. And then what we're seeing obviously in the kind of broader landscape at the moment is lots of MFN deals around Medicaid pricing. So does the fact that HIV is protected relatively high price and quite high exposure make that a little bit more difficult for an MFN-type negotiation for GSK and ViiV with the White House?

I mean, GSK is currently in the negotiation with White House. I'm not going to comment on kind of the particulars of that. I mean, what I'll say is that you've got obviously a very clear policy with the IRA, so you can forecast exactly what's going to happen to your business over what period. But the situation at the moment with MFN is each company is going to have their own individual deal, and GSK is in the middle of that dialogue. What we want is to make sure that access is maximized and the American patients get the best possible price. So we're going to continue with that dialogue, and we'll come back on that.

Just dynamically speaking, is it a fair assumption that the gross to net is smaller -- difference is smaller in HIV than it would be across perhaps other classes in the market.