Gilead Sciences, Inc. (NASDAQ:GILD) Baird Global Healthcare Conference September 10, 2024 10:50 PM ET
Company Participants
Johanna Mercier – Chief Commercial Officer
Conference Call Participants
Brian Skorney – Baird
Brian Skorney
[Starts abruptly] biotech analysts here. [Technical Difficulty] to have presenting with us next, Gilead Sciences. Thanks for coming today. We really appreciate it. Maybe just to kick things off, I’ll kind of ask the general question to give a broad overview of what Gilead does and what areas of development you’re focused on right now.
Johanna Mercier
Okay. Great. Hi, everyone, and thanks for having me. So Gilead Sciences historically has really been a virology organization and company, and we continue to drive leadership in virology and namely HIV and we’re diversifying at the same time. So we’re building out a little bit from an oncology portfolio standpoint as well as inflammation. So we have different pieces to it.
Just to think about HIV, in treatment, we have about 70% of the share in HIV treatment, namely Biktarvy, which is the standard-of-care and we’re building a pipeline to support that leadership position in the future as well when you think about weekly orals, monthly orals or even subcu injectables or infusions every six months. And that’s the treatment segment.
And then in prevention, you might have heard the PURPOSE 1 data, I’m sure we’ll talk about it a little bit. It’s the only questions I’ve gotten today. And the PURPOSE 1 data is showing 100% efficacy with lenacapavir looking at a really incredible molecule that is very versatile, but also a profile of twice yearly subcu, which I think can completely be transformational when you think about prevention of HIV. So that’s the HIV area.
And then in oncology, really building it out. We’re still in that build mode. We have Trodelvy in breast cancer, both in triple negative as well as HR+ and making a difference for these women in breast cancer, but also looking at moving up earlier lines of therapy in breast cancer and potentially other tumors.
We’ve shown some interesting data in lung cancer first line as well as endometrial at ASCO just this past June and kind of building through that, let alone cell therapy. I think we have a lot of work to do in cell therapy still today when you think about only two out of 10 patients getting access to cell therapy in the US, we have a great opportunity to grow market share here or class share, I should say more importantly.
And then, of course with the anito-cel in multiple myeloma just kind of starting in earlier line settings in second-line plus setting for multiple myeloma this fall in a Phase 3 program. So more to come on that. Inflammation, Livdelzi, we just launched. We got approval in mid-August. This is a molecule — small molecule for PBC and a very rare disease, but one that I think we have a product that is incredibly differentiated.
Our label is differentiated, not only showing efficacy, but also showing differentiation with pruritus as well as a safety profile that is really quite strong and hopefully making a difference for these patients in the very near future. So that’s kind of a portfolio today, let alone an earlier pipeline when you think about oncology and inflammation that’s yet to come. We’ve been building this pipeline and investing against it to make sure we can deliver.
We also felt that there was a time and place for that and now we’re kind of relooking at our OpEx management and making sure we’re disciplined so that we cannot only — we don’t only deliver on the top line, but we also deliver on the bottom line. And I think you might have seen that in our Q2 earnings call, the intent is to continue to deliver against both pieces in the future. And so we believe that we have a diversified portfolio with many shots on goal to deliver not only for patients, but for shareholders as well.
Question-and-Answer Session
Q – Brian Skorney
Great. So maybe before going into sort of the development stage assets that I think are a lot of the focus of the company right now. You obviously have pushing towards a $30 billion revenue stream driven by almost $20 billion HIV stream. Maybe we could just talk a little bit about the current state of the legacy HIV business, how Biktarvy is doing and what you see as sort of the levers to kind of increase either share or number of patients to go on treatment?
Johanna Mercier
Sure. So in treatment, the market grows about 2 points to 3 points. It’s pretty steady and we’ve seen that year-on-year. I think it’s important to look at it on an annual basis. I think with Biktarvy, we’ve also shown that it continues to grow. There’s a reason for that, right? It grows about 3 points year-on-year. We’re at about 49 plus percent share of the total HIV treatment market despite new entrants in the market, including long-actings.
And the reason for that is the profile of Biktarvy. The profile of Biktarvy is one that has an incredibly high barrier to resistance. It is one that is used for rapid starts. It is also one that we continue to generate incredible data against. And we’ve just recently gotten two approvals from a regulatory standpoint, one in a mutation, the M184 mutation as well as with pregnant women as well.
And so we continue to generate data and we continue to grow market-share in this market. So Biktarvy is well established, its run-rate — annual run-rate right now is at about $13 billion and continues to grow. We also are incredibly competitive in our pipeline. I know you talked about development later, but it’s linked, right, because as we think about Biktarvy and as we think about lenacapavir, those two molecules, an INSTI and this new capsid inhibitor together are also very interested.
We have a combination of that coming through the pipeline. We also have weekly orals coming through. We have two-week different weekly orals in the not-so-distant future as well as many shots on goal when you think about monthly orals, etc., and every three months or so. So we’re making sure that not only are we leaders today in HIV treatment with about 70% total Gilead share in HIV treatment, but also continue to be leaders for tomorrow.
And that’s kind of they go hand-in-hand, right, because it’s not just a one and done, it’s really, and that’s something that Gilead is known for. It’s — what impressed me the most when I joined about five years ago is usually people think about life cycle management within a product. Gilead thinks about it, life cycle management within a disease. And so it’s really around molecule after molecule getting better and better. And now Biktarvy has basically set that standard of care for everybody else. So the next place is long-acting. And so that’s kind of what we’re focused on.
Brian Skorney
Great. The next topic we could probably spend at least the remainder of the time on certainly, all the questions I get now are on sort of the PURPOSE 1, PURPOSE 2 data in lenacapavir in PrEP. Ironically, I think probably 12 years, 13 years ago, I had John Milligan sitting here and I think at the time, they characterized PrEP as not an opportunity they were pursuing commercially and just sort of one they would launch. And it’s become an incredible success story just on the Truvada side to start with. But how does lenacapavir PrEP? What’s the opportunity here? How do you see it sort of transforming? What’s already a lucrative prep market into something potentially much bigger?
Johanna Mercier
Yeah. So the PrEP market today is about 400,000 users in the US. You think about lenacapavir and for those of you who have seen the data, for those who haven’t, the headline is 100% efficacy with lenacapavir. That’s never been seen before in any prevention trial. This was a trial with PURPOSE 1 that was done in South Africa, Uganda, with cisgender women and very clearly showed the value of lenacapavir and not just the data, but then the profile of a twice yearly subcu. Those two pieces blended together.
I think to your point, make it a transformational opportunity. So if you only think about the market today, I think you’re missing the opportunity. The market today is about 400,000 users. Most of those users are white MSMs. And that market is actually well established, continues to grow double-digit and that has — that growth is not by chance. That growth is by educating awareness, making sure people understand the value of prevention in HIV.
I think with something every two — twice a year, twice yearly, I think it can be transformational and you have to think much larger. The population for PURPOSE 2 is also very broad. It includes White, Latino, Black, transgender and so the idea is to have both PURPOSE 1 and PURPOSE 2 for regulatory approval as early as late 2025. So this is around the corner for us.
And the way we’re thinking about it is we need to compete from day one in the marketplace that’s established today and differentiate lenacapavir to make sure that not only does it penetrate the current market, the branded current market, which is about half the market, the other half is generic. So the idea is to generate and take share away from all daily orals, including Descovy, but also Truvada.
And then from there build the market. The idea is to expand to right now, we don’t have a large population. We incredibly underserve when you think about Black Latino individuals. You also have cisgender women. You also have young adults. So those are phases that we’re going to have to start in parallel, but obviously, it’s going to take a little bit more time to build the marketplace. And so think about it more like a three-to-five-year plan. But the idea is to go into geographies that we’ve never been into.
Now I’m not just talking geographies outside of the US, that is definitely going to be the case. There’s a real opportunity there. In Europe, for example, where we’ve never really had a prevention market in the past, but with lenacapavir, we think we can make a difference here. But even in the US, you have to think about it as prescribers and consumers. Remember, these aren’t patients, right? So these aren’t people that have the disease. There are people that are at risk of the disease. And so you need to think about the prescribers.
At start, most of the people today prescribing HIV PrEP are actually HIV treatment prescribers. So that’s where you start. That’s our current footprint today for Gilead. And then you expand that to people that actually not only have never prescribed an HIV prevention, but actually have consumers around them that fit the profile and that are at higher risk of incidents of HIV. And those are the targets that we need to go after from a prescriber base standpoint. So there is an expansion there.
And then you have a consumer expansion that I’ve just described earlier. So the opportunities are clear. For us, it’s about market growth, right, as I just described it. So you can’t just think about the 400,000 users, you need to really exponentially grow that. You have market share growth with Descovy and lenacapavir, so it’s a Gilead total share opportunity. And then the third piece is adherence.
And I know this one sounds really simple, but just let me share with you, take a moment to share. Your adherence on a PrEP HIV daily oral is probably anywhere between 50% and 60% if that. Remember, these are people that either forget to take it, they’re not sick, they take it a couple of days a week and or they take it sporadically when they feel they might need it. And so there’s a real mix when it comes to adherence. But if you take a subcu every six months, if you get one injection, you are now compliant and adherent for six months at 100%.
And so that 100% now is comparable to the 50% on a daily oral. And so that’s how you need to think about it because that also is incredible for efficacy and outcomes, right? And that’s why you saw in PURPOSE 1, the 100% efficacy in HIV prevention, but it also from a top-line standpoint has a direct impact as well. And so those are the pieces that we’re thinking about as we think about this branded PrEP market for the future.
Brian Skorney
Right. That was going to be my next question on the adherence. There’s almost an argument that you can double the size of the commercial market just on half adherence rather than the dropout rate.
Johanna Mercier
Especially, usually HIV treatment adherence is pretty high in the ’80s, but in prevention, it’s totally different. And so what we’ve seen with Descovy or even Truvada is sometimes less than 50%. So I think that differential is actually really powerful. And then if you take the PURPOSE 1 data and again, I want to caution, this is cisgender women in South Africa in Uganda, which have been shown to have a very low adherence to prevention drugs.
I think they’re much more concerned about pregnancies than HIV in these countries. And we saw about with Descovy, I think it was in the 20% range in PURPOSE 1. Truvada was in single-digit and lenacapavir was over 90%. And so that’s the differential that you’re seeing in those countries. I think in first world countries, the differential is going to be a little bit less than that, but still quite substantial.
Brian Skorney
Right. Makes sense. Maybe moving on sort of about the halfway mark. Since it’s really relevant, you mentioned that Livdelzi for PBC was approved under accelerated approval last month. Maybe it’d be good to kind of level set expectations of what Gilead thinks of as the perceived market opportunity here versus the current treatment landscape out there for PBC.
Johanna Mercier
Yeah. So we’re really excited about Livdelzi. It’s a differentiated product. It’s one that fits, it’s a plug-and-play for Gilead, right? Think about it, as we acquired CymaBay, we had been looking at this organization for quite some time. We’re very impressed with kind of how they were moving forward and of course, with their data. And we have a liver team that’s incredibly well established. We have a very stable liver business now. I know there’s been ups and downs in the past, but we’ve stabilized that business.
We continue to grow share despite less patients, less patient starts because this is a cure in liver. So I can tell you my liver team was more than excited to get a product like Livdelzi to add in to their portfolio. And so we launched mid-August just less than a month ago now and already have seen really nice inroads. This is a population of prescribers that we know well, probably 80% of the prescribers we were already covering.
So that’s why it was such an easy kind of a — kind of transition from CymaBay to Gilead. The — what we’re seeing thus far is, listen, this market is a rare disease market. You think about the US, it’s about 130,000, 140,000 patients with PBC. It’s the second-line treatment with seladelpar with Livdelzi and it’s about 30,000, 40,000 patients or so in the US, right?
There’s about a 40% non-response rate from first line. And so the opportunity really is there. So every patient matters, and we think we can really make a difference with the profile of this drug, not only in the ALP normalization, but also specifically because of the differentiation with pruritus. Pruritus is really incredibly horrible itching symptom that comes from the disease. It can also unfortunately come from some of the drugs that are being used in this marketplace and it really impacts mental health and sleep deprivation.
And so this is the only drug that has shown statistically significant improvement in pruritus and has it in the label so that we can promote against it. And that is a key differentiator, let alone the warnings and precaution section is a much cleaner version versus other products on the market. So we feel it’s differentiated. It is a market that we know well. It is one that prescribers are very excited to have Gilead on board with this journey with them.
We’re adding gastroenterologists because that’s another population that we had not necessarily targeted in the past that do prescribe for PBC. So we’ve added those pieces together. We believe in ’24, it will be modest, right, revenues just because of the way rare diseases work. As you think about step edits, medical exceptions, it takes a little while to get going.
Anecdotally, we’ve heard some great — great positive stories of basically physicians warehousing a little bit their patients to wait for seladelpar, for Livdelzi and — but I do think what you should expect is to see a little bit more of that revenue growth come through and see it really in 2025, and then, of course, accretive by 2026. So we think this is a really nice market opportunity and one that makes total sense for Gilead and more importantly for patients.
Brian Skorney
Great. You mentioned sort of some of the label advantages that you have over other assets out there. I guess the two that are sort of in the second-line setting are Ocaliva and, [indiscernible] which is of the same mechanism. Maybe you could talk a little bit about how you kind of perceive the commercial advantage that you have for the label versus Ocaliva, which has been on the market for a while and [indiscernible], which has a little bit of a lead time with the similar mechanism?
Johanna Mercier
Yeah. I think that as we compare, we feel that for, for Livdelzi versus both competitors. Pruritus is the biggest comparator, right? I think [indiscernible] is also very strong and differentiated, but the biggest differentiator is truly pruritus. And people dismiss it and we need to educate physicians to ask about it because a lot of people are living with it and thinking that’s the only way to live.
And I think we really need to make sure we increase awareness around this because not only do we have a product that doesn’t cause it, which unfortunately others do, not all, but some and, but we also reduce it. And so I think that’s a really important piece of the puzzle. The other piece is the safety piece. I think you have to think about this drug as a chronic drug long term, right?
And so if you’re going to add safety issues or concerns to it, I think that’s a differentiator automatically. And I think that’s where it is. What we’ve heard so far despite a competitor launching a couple of months before us, I don’t think that couple of months is going to make much of a difference because a lot of people are kind of, we’re very much expecting this is a small community, very much expecting seladelpar launch and waiting for it.
And so I think there is both at the payer level, I don’t think there’s differentiation as well as the physician level, I think they’re differentiating the drugs right now and I think the pruritus is the key to what’s going on there. And a lot of that has to do with the label that supports it.
Brian Skorney
Yeah. Since sort of the 2015 peak with hepatitis C. the company’s primary BD focus — largest efforts to expand has really been on oncology. I guess the most significant asset, I would say the company has in house right now is Trodelvy. Maybe you can talk a little bit about how you see expanding the opportunity in breast cancer that where you’re already at as well as other tumors and maybe a little bit about how the upcoming read — readout of the ASCENT-03 data could translate.
Johanna Mercier
Sure. Yes. So with Trodelvy in breast, I think we’re well established in breast cancer. I think that if you think about our first launch, which was second-line metastatic triple-negative breast cancer, we’ve shown overall survival data in this setting that is incredibly powerful, is the only drug that has shown OS in this setting. Our biggest competitor, to be honest with you, is chemotherapies. It’s — we have the number one share in this setting for triple negative breast cancer. So we are the standard of care.
Having said that, there’s still about two-thirds, a little less than two-thirds of the patients that are on different chemotherapies and that have not shown overall survival in these women. And so, and there’s mixed reasons for that, right? I think we still have an opportunity. It’s a slow climb, but it’s a lot of that is education. If you think about triple negative breast cancer is about 10% of total breast cancer.
And so it’s a little bit more rare, people don’t see it. So general oncologist will not see it on a regular basis. They might have a handful of patients a year and they unfortunately treat it the way they’ve always treated it before. And so we really need to make sure we increase the education and the awareness on that front. And we are doing that. So we have a ways to go.
I think to your point about ASCENT-03, which is data in triple negative, but in the first-line setting PDL negative expected towards the end of this year only helps further support and educate around the need for Trodelvy in this setting and moving up earlier lines of therapy. So I think that’s ASCENT-03 and then ASCENT-04 hopefully soon after that, that would also play in the PD-L1 positive setting for triple-negative. In HR+/HER2-, we are indicated in later lines of therapy, and we have shown inroads there as well. We have competition here that’s a little bit heftier and in earlier line settings in their study designs.
And so automatically, they get used earlier, which makes sense. What we have seen much more frequently than probably originally expected even six months ago is ADC sequencing. I think physicians are incredibly comfortable to sequence ADCs if the ADCs are somewhat different and that’s what we’ve been seeing. So we are seeing continued growth in HR+, but definitely, there’s a little bit more competitive headwind there. And so therefore, our ASCENT-07 data, which is studying it in earlier lines of therapy can only help move us in earlier lines because as you can appreciate, the populations are larger as you move up.
Brian Skorney
Great. And any thoughts on just expanding beyond breast implants (ph).
Johanna Mercier
Yeah, absolutely. Disappointed in the second-line data that we shared data at ASCO in lung cancer, although we did see some sparks, right, and some activity in the fast progressors. The EVOKE-02 data that was shown also at ASCO, which is in a first line setting in non-small cell lung cancer, I think it looks really good. And so that’s what EVOKE-03 which is our first line setting for non-small cell lung cancer is working through and built on. And that’s why we’re confident at this point in time with the EVOKE-03 data and what it can read out.
And I think you have to think about these patients very differently. I think these are very heavily medicated experienced patients when you go into second-line setting. And it’s really unfortunate that even data that came out yesterday from competitors, unfortunately, we’re not seeing the benefits because they’ve been on multiple chemos, PD-1, etc., and probably the biology of the disease is changing.
And I think it’s just unfortunate that we’re not seeing anything play out in second-line because there’s a huge need in second-line non-small cell lung cancer. But I do think there’s a real opportunity still today in first-line and hopefully EVOKE-03, has an opportunity to show that. We also show data in endometrial cancer in at ASCO and in Phase 2 and we’re working through the Phase 3 for endometrial as well. So we are looking to expand. We do think Trodelvy as a TROP-2 ADC has a really interesting profile from a safety standpoint and can make not only a difference in breast cancer patients, but beyond.
Brian Skorney
Great. And then Gilead certainly seems to have one of the more active BD efforts on the street. There — you do acquisitions, you do partnerships in licensing. I get the question all the time, what’s the next thing that you’re planning to do. In your role, I guess where — what areas are you spending the most time in terms of BD efforts?
Johanna Mercier
Yeah. Sure. So listen, a couple of years back, a little bit different strategy than where we are today, right? A couple of years back, we were really intent on ensuring that we set up to diversify our portfolio and that was our goal. And I think we’ve set up a lot of good partnerships, collaborations, acquisitions to set that up, specifically diversifying in oncology and inflammation.
As you think about the future, people ask me if we’d ever do something in virology. Sure, we would if there was something that we felt was interesting to us. But I’ll be honest with you, I feel like the group that we have in-house from a chemistry standpoint, research and development standpoint are second to none. And so thus far, we feel that we have the right pipeline in HIV and beyond in virology.
When you think about oncology, we are building out that earlier inorganic pipeline, but we’re also looking at it inorganically across oncology and inflam. And we’ll continue to do that. We’re not looking at major big deals like we’ve done in the past like Immunomedics, but we are looking at bolt-on deals kind of like CymaBay, and what we’ve done with that and it worked.
It was in an area we knew incredibly well. We felt confident that what we could really make a difference and bring that. And so that’s kind of the same kind of strategy as we think about BD for the future. We feel we have what we need internally and the pipeline that’s kind of building out diversify — in a diversified way, but we’re always looking at what might be out there of interest and, but it’s going to be more of the like of CymaBay-type deals.
Brian Skorney
Got it. Thanks. Maybe within the last couple of minutes here, I’ll just see if there’s any questions from the audience. Anyone? Shy crowd this morning. Well, with that, I think if there’s anything else you’d love to just relay to investors that I didn’t, I mean, there’s so many things I didn’t ask.
Johanna Mercier
No, it’s all good. Thanks for Brian, for having me. I would just say, listen, I think more importantly, we are at a point right now from a diversification of our company that is really quite critical. I think lenacapavir because I’ve been getting all the questions on Len is transformational. And I think if you don’t think differently about the opportunity here, I think we’re missing — I think you’re missing what Gilead is all about.
I think Gilead has shown time and time again what we can do in treatment leadership and as well in prevention leadership. And the intent is not only to do that again, but with a profile like lenacapavir is to really transform HIV prevention as we know it today. And so that’s one piece of the puzzle, let alone continue to advance our oncology pipeline and build out inflammation. So a lot more to come, really exciting times and it’s around the corner. So more to come.
Brian Skorney
Great. Thank you so much.
Johanna Mercier
Appreciate it. Thanks, everyone.
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