Gilead Sciences Inc. (NASDAQ:GILD)
2014 UBS Healthcare Conference Transcript
May 20, 2014 10:00 AM ET
Robin Washington - Executive Vice President and CFO
Patrick O'Brien - VP, Investor Relations
Matt Roden - UBS
Matt Roden - UBS
Hi. Good afternoon, everybody. I am Matt Roden, Biotech Analyst here at UBS. And we are pleased to move on to our next, pardon me, corporate presentation. It’s Gilead Sciences. Speaking on behalf of Gilead is Executive Vice President and Chief Financial Officer, Robin Washington.
Robin joined Gilead in 2008. Prior was Chief Financial Officer, Hyperion Solutions. So she really has a tech background before coming into to Gilead. She has brought a new perspective for investors. After the presentation, there is going to be a breakout session across the hall in Carnegie West.
And with that, I will pass it over to Robin. Robin?
Thanks, Matt, for the introduction, and good morning, everyone. I did want to introduce to other individuals that have come out here with me and are here to answer questions. First, our VP of Investor Relations, Patrick O'Brien, who I think many of you all know, as well as new addition to our Investor Relations team, [Sang Lee] (ph). So we look forward to seeing you in the hallways and being able to help you understand more about Gilead.
I am very pleased to present on behalf of Gilead this morning, but before I start, I have to give you the standard caveat relative to forward-looking statement that I will be making and there are risk associated with those, you can see our latest 10-Q filing, as well as others by going to the SEC website if you have further questions or inquiries.
So to begin with, I am going to start with an overview of our commercial portfolio. A lot focus of Gilead today in HIV, as well as in liver disease. We currently have eight commercial products in the area of HIV with lot of focus on the light gradient of gray there, our single tablet regimen.
There are currently three products on the market today for Gilead and I will talk a little bit more about the benefit, but this is something that Gilead is well-known for relative to our ability to bring innovation to a very -- used to be a very deadly disease that is now taking care via chronic care.
We have also made great progress in liver disease, I will start with Viread there, unfortunately, the pills aren’t showing up on the slide there. But Viread is also co-indicated for the treatment of hepatitis B which is chronic today.
We will talk a little bit later about some options we have in development to hopefully turn that from a chronic to potentially cure disease. Of course a lot of excitement about Sovaldi, which was launched in December of last year, I mean, that was for the treatment of chronic hepatitis C.
So relative to our -- the rest of our commercial portfolio, we also have products in the area of cardiovascular, as well as respiratory disease, several products listed there. Letairis for the use in pulmonary arterial hypertension, as well as Ranexa for chronic angina, and then we also have a product for cystic fibrosis and that’s Cayston there, you see kind of in the middle row there.
Overall, 18 commercial products currently on the market today with the HIV, as well as HCV representing the majority of our revenues, we actually in 2013 had about a billion dollars in revenue from several products here listed on this page in the cardiopulmonary area.
Lots of excitement at Gilead not only around the launch of Sovaldi, but quite frankly, related to our pipeline. We are very productive. There is a lot of innovation. We've never had more clinical trials going on at the company any point in time than we do today and we are currently in various stages of clinical trials across about 22 disease areas today.
I am not going to highlight all of these because I’ll talk about them later in the presentation, but I did want to specifically, as I mentioned earlier, talk about some of the early programs that we have in HBV focused on a cure, you see GS-4774, as well as GS-9620, it’s a TLR-7 agonist that currently a very early stage but we are very excited again the options there.
There are over 400 million people in the world that are diagnosed with hepatitis B and if we could move some of those from chronic to cure it would be great for patients, as well as the overall health system.
Turning to other areas of our portfolio, we will talk a little bit on oncology and inflammation as well later on in the presentation, but we continue to advance several molecules in the clinic there.
Cardiovascular also making progress, I will mentioned, one early Phase 1 trial in specific, there was a press release that we issued last week around GS-6615 in the indication of LQT-3 Syndrome, a lot of excitement that we plan to advance forward to a Phase 2 trial later this year.
So now I want to quickly talk about the dynamics of hepatitis C, as well as give you some indication of our future indication and a little on the overall results of the patients we -- that we have been treating in this area since launched.
We are very proud of the fact we’ve had access to date and again this is just starting our six-month into launch. There are over 30,000 patients in the U.S. that have currently been treated with Sovaldi for hepatitis C. And I have to say that that level of treatment, as well as the revenues associated with that has exceeded all of our internal projections of what we expected to happen this early in the launch.
The usage has been pretty much in line with what you would expect relative to the genotype, patients with hepatitis C in the U.S., about 70% of the usage in genotype 1 and we have seen the majority of usage for those patients being with pegylated interferon and ribavirin.
The EU Commission also approved Sovaldi earlier this year in January. Sales primarily have been in Germany and France. As you know in the European market there is a gap between when something approve and when we are able to get pricing and reimbursement, we are currently selling in about four or five other countries, very small countries and we continue to rollout in those discussions with the various regulatory agencies.
There has also been a lot of discussion in articles written around the price of hepatitis CKR and one of the things I want to be sure to get on record today is the fact that when we price Sovaldi, we never thought about it in terms of the price propel or a price per bottle. We really think about the cost of the regimen as well as the cost of the QR. And what we are really outlining here in the slide is you take a look at a current regimen that was recently introduced as well as, what was standard of care to ribavirin with pegylated interferon and riba.
Both of those are blended in terms of usage of those two drugs of about 36-weeks. We actually priced Sovaldi at discount to those because it only requires usage of peg/riba for a 12-week period. So as you can see, we are really on par with the current regimen today that is outlined here. We are having higher cure rates, shorter treatment duration and some medications in the treatment or better tolerated by patients.
This slide really outlines some of the HCV dynamics related to hepatitis C. Right now, we estimate that about 4.1 million patients in the U.S. are affected with hepatitis C, 1.7 million of those are diagnosed and little under 400,000 are currently in treatment today. The 40,000 really represents the level of treatment prior to Sovaldi and really what we’ve seen over the past several years is new medications have been expected and anticipated to come to market but the actual level of treatment had dropped.
And that’s again as we discussed the level of treatment or the type of treatments before had several side effects with it. Some such that people choose not to go on treatment and suffer with the disease without treatment, just given the side effects associated with what was the current standard of care. As I mentioned earlier, we are really starting to see that change with only, with already 30,000 patients in treatment after, again, only five months into launch.
I quickly want to also cover the EASL guidelines. The EASL is a liver disease conference that happens in Europe every year. Just this past April, it was in London and Sofosbuvir was included in the recommendations across all HCV genotypes. You can also see that it’s included in the recommendations for difficult to treat groups several that are mentioned here on the slide.
Another market that we are focused on with Sovaldi is Japan. Japan’s population of HCV patients that are bit older, about 10-years older actually than the U.S. patient. The U.S. patient is typically about 50-years old. In Japan, it looks like the blood supplies were tented, probably about a decade earlier and so the average patient there is 60-years old.
Several of them have co-morbidities such as they cannot tolerate interferon at all, or they have tried and actually failed therapy. So with the introduction of Sofosbuvir, for some is an only treatment available today, or it’s not actually available today, will be available today.
We currently based on some results of Phase 3 trials that we announced in April, we are going to be able to file midyear, a submission to the Japanese regulatory authority for the treatment of genotype 2 patient for that prior waterfall slide that I showed about a quarter of those patients have genotype 2, the rest are genotype 1b. So they are about 200,000 patients out there that could be treated, once we go to the approval process.
As you can see from the slide, the results for SVR12 were very good, about 97% overall SVR rate and in treatment experienced patients, you can see also very high SVR of 95%. I think it’s important on the slide to highlight that we haven’t started -- stopped innovation with Sovaldi as it exists today and we will talk a little bit about our next generation first single tablet regimen, which is a combination of ledipasvir and sofosbuvir. Beyond that, there is also a third generation. We are looking at another oral therapy for all HCV genotypes. We think this could play well also with developing world countries going forward.
So here you have, I mean, outline of what consists of a single tablet regimen. In addition to sofosbuvir, it includes NS5A inhibitor, known as ledipasvir. We currently tested the single tablet regimen in over 2000 patients in various Phase 3 trials. Those Phase 3 trials were complete in 2013. We announced topline results in the fall of 2013, and these are liver disease meetings, there were several presentations on these Phase 3 results along with a simultaneous publication in the New England Journal of Medicine.
You can see there iron 1, iron 2, and iron 3 focused on genotype 1 naive patients as well as genotype 1 experienced patients. We have a fairly significant amount of psoriatic patients included in those trials and those are the sicker of patients with hepatitis C. We also in iron 3 tested different durations of therapy from 8 weeks as well as 12 weeks. Overall, we had a 97% overall SVR cure rate in those various trials.
So those data sets really have become the basis of regulatory filings for the single tablet regimen we filed in the U.S. back in February. We were granted priority review as well as breakthrough therapy designation by the FDA. Also, we filed -- in March we filed an MAA in the EU and we were granted accelerated review by the EMA.
As I mentioned, beyond the quarter of patients that are genotype 2 in Japan, the rest are genotype 1. So we currently have a Phase 3 trial ongoing. It was fully enrolled as of December of last year and we expect to be able to file for approval for the single tablet regimen as a follow-on regimen in Japan hopefully in Q4 of this year.
I now want to turn briefly to oncology. A lot of discussion in terms of our business development activities over the past year has been about Pharmasset, which brought us sofosbuvir. But in addition to that, we focused a lot on oncology. And through those acquisitions as well as several collaborations, we’ve been able to put together a good portfolio of molecules focused in various types of diseases in oncology and inflammation.
I want to particularly talk about idelalisib where we actually have filed for regulatory approval in the U.S. as well as in Europe for relapsed-refractory CLL as well as relapsed-refractory iNHL. You see the various states here. We have very good results relative to those studies. One of our Phase 3 studies that was Study 116 was actually stopped early due to positive risks benefit. And again, we expect PDUFA date in late summer, early fall here in the U.S.
We’ve also spent a lot of time building up our sales infrastructure in the U.S. and we’re starting to build it up in the EU to be able to support the commercial launch of those products. Most people know Gilead as a small molecule company with some of the acquisitions that I just mentioned, we have actually brought in-house two molecules that are biologic focused, one in particular that I mentioned is simtuzumab.
Simtuzumab is a monoclonal antibody that inhibits LOXL2. And what we found in previous trials with other areas of focus that we’ve been on is that LOXL2 levels are typically associated and elevated as diseases progress. So the ability to inhibit those could be very positive in a lot of disease areas.
We currently have seven disease areas that we’re focused on as we’ve shown here. They vary in areas of oncology, liver diseases as well as respiratory where we have or we’re using simtuzumab. It’s got very broad indications here. So we’re very hopeful of the outcome. I mean what that could bring to us in this area going forward.
Lastly, I want to talk about one of our cornerstone areas and that is HIV/AIDS at Gilead. If you recall from the first slide, we talked about single tablet regimen. And this slide really outlines about two benefits that we’ve seen to patients in terms of adherence of leveraging single-tablet regimen.
We’ve noted here that various studies have shown that there is almost a quarter lower risk of hospitalization versus patients who take multiple pills a day. So overall single-tablet regimen bring improved patient adherence as well as better outcomes and overall lower healthcare costs to the medical system.
Going into a little bit of detail of those single tablet regimens, Stribild is our actually first Integrase containing single-tablet regimen for the treatment of HIV. This is the number one prescribed regimen for treatment of naïve patients in the U.S. We’ve got a couple of statistics there relative to our Q1 results in this area.
We have launched it in 19 countries in the EU today. It was approved in May 27th of 2013 and just this past April, we’ve launched it in the fifth market of the Big-5 that was Italy and was also added to the British guidelines as a preferred regimen, just recently as well.
Turning to Complera which is also known as Eviplera in the EU. This is another improvement in a single-tablet regimen. In the U.S., it is the number two most prescribed regimen across all treatment in patients. As you can see, we have a significant amount of sales in the U.S., in the EU. We also recently got switch data associated with this. So we can market it not only for naïve patients but also for switch patients. And it is launched currently in 20 countries in the Big-5 as well as all the Big-5 markets.
What we’re trying to show here again is our innovation and leading nature of our product for the treatment of HIV. We’ll see here both in EU as well as in the U.S. We’ve outlined the top ranking HIV regimen for naïve as well as for our patients. And what we’ve shaded there in blue are the single-tablet regiment that we’ve just been discussing.
I think what’s also equally important on these slides and even in the white blocks there is the fact that all of the top five rank products include some component of a Gilead regimen.
So lastly, I want to talk a little bit about the innovation that continues in this area. A lot of you may have heard about TAF. TAF is actually a prodrug of tenofovir. It is much more targeted. It goes directly in the plasma and is targeted on the HIV reservoirs. It is more safe. And as the HIV population continues to age, we think this brings good optionality to HIV patients going forward.
We’re able to dose this at a tenth of the dose of tenofovir and as all know less of anything indicates much more safer medication. There are currently two Phase 3 studies, fairly large studies that are currently in process. And we expect to read out on those later this year.
We also have several ongoing special population studies for TAF as well. This is really important because the combination of these seven studies, which we expect to be part of the NDA, will allow us to really support a very broad label at large, switching at large as well as special populations including both the does that have failed the treatments before.
So as I start to wind down here, I do want to quickly cover our overall financial results for just this past quarter. As I mentioned, we had a very successful launch in the first full 90 day in terms of revenue generation from Sovaldi for hepatitis C over $2.2 billion of revenues, which really allowed us to have a greater than 100% increase year-over-year related to net product revenue.
I’d also like to highlight that the other aspects of our P&L and our products also had healthy year-on-year growth, as you can see our HIV product as well as our cardiopulmonary. As a result, our net income and our EPS both increased over 200% on a year-on-year basis.
We also generated about $1.5 billion in cash flows, just this past quarter and that along with our overall cash leverage associated with our core franchise HIV as well as the fact that given our valuation and how we view our pipeline in our future, we did go and our board did approve an additional $5 billion stock buyback program on May 7th of this year. In addition to that, we announced the fact that on our current program, which expires in 2014 -- the September of 2014, we have about $2.9 billion remaining. And we expect to utilize that in buyback shares between now and September of this year to that magnitude.
I’d also like to point out a really important statistic that we’ve been really focused on returning value to shareholders over the past several years and between the period of January 2010 through March of this year, we have bought back and retired over 20% of our outstanding shares.
So overall, my last slide here, it’s a very exciting time at Gilead. I’ll just kind of reiterate some of the key messages and point that I would like you to take away. We’ve talked about Japan. This will be our first regulatory submission for Gilead in Japan for sofosbuvir and ribavirin for genotypes 2 patients and again that’s anticipated mid 2014. We’ve talked a lot about oncology during this presentation.
We anticipate an approval of idelalisib for the use in CLL and iNHL, hopefully, I mean, late summer or early fall. And then we also have the launch and approval of our next-generation of hepatitis C drugs and that is for the approval of the single tablet regimen of sofosbuvir and ledipasvir for genotype 1 patient for HCV in the U.S.
And as I mentioned, we’re at an all-time high relative to overall R&D productivity with the record number of clinical studies ongoing. So, I’ve hopefully given you a little bit of insight into all the exciting things that are going on at Gilead and we look forward to your questions in the breakout session.
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