Gilead Sciences, Inc.'s (GILD) Management Presents at Barclays Global Healthcare Conference (Transcript)

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About: Gilead Sciences, Inc. (GILD)
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Gilead Sciences, Inc. (NASDAQ:GILD) Barclays Global Healthcare Conference Call March 12, 2019 10:45 AM ET

Company Participants

Robin Washington - CFO

John McHutchison - Head, R&D and CSO

Conference Call Participants

Geoff Meacham - Barclays

Jason Zemansky - Barclays

Geoff Meacham

Okay. Welcome to the morning session of the Barclays Global Healthcare Conference. My name is Geoff Meacham. I'm the senior biopharma analyst and I have Jason Zemansky here from my team on the podium. We're thrilled to have Gilead Sciences here and we have Robin Washington, CFO and John McHutchison, Head of R&D and CSO.

I guess, we'll start with a few commercial questions and then shift into the pipeline. So, Robin, when you look at the Biktarvy launch in the US, it's been fantastic. You're new to brand and the switch rates have been good. Maybe talk to what you guys view as the upside opportunity from here in the US? Is it just more of the same in the US and then obviously we can get into Europe too.

Robin Washington

Yeah. I mean, you're right. Biktarvy has gone very well in the US, Geoff. It's gone equally well in the country so far launched in Europe, particularly France and Germany, which as you said, we can talk about later. But yeah, more of the same continued uptake. We're seeing good switches. Ultimately, we do expect Biktarvy to become a number one drug overall. But our TAF portfolio has continued to grow with 77% of sales of our HIV products as of the end of Q4. We're excited about that. We continue to see switches from some of our old regimens in addition to the 25% from Genvoya as well as the 25% from dolutegravir containing regimen.

So we're excited about that. Our overall HIV franchise also includes prep, which has also continued to grow as well. I think we have a 30% - over 30% increase in patient. If you look at Q4 to Q4, 2018 and we're seeing good traction there. Obviously, excited about Descovy for prep data that just came out as well. So yeah, just overall, good momentum for us as a company with our HIV franchise. Again, prep, 1.1 million patients or I should say patients, people that could potentially benefit from that per the CDC, and we're only at 200,000. So lots of runway there as well.

Geoff Meacham

And from a commercial perspective, what do you guys or even from a clinical perspective, envision to be the tipping point for prep and maybe help us with the Descovy kind of switch rate, yeah, the transition rate.

John McHutchison

Yes. So look Biktarvy, just to follow on from Robin, Biktarvy is an incredible drug for most patients with HIV. Non-boosted integrase, single tablet, no resistance through week 96, no drug drug interactions, few of any compromises, no bone and kidney issues. So, that's an incredible franchise. We have about 50 studies going with an additional 8000 patients with Biktarvy as well. So sort of extended into other populations to see how it can be used and how effective it is in those populations as well. Look, this Descovy for prep from the Discover trial, we presented at Croix last week, the largest trial ever conducted as prep, it was Truvada versus Descovy.

So tenofovir versus TAF based backbone and it really achieved everything we wanted it to achieve. So there were a few if any HIV infections and most of the infections we documented were early during the study or probably in people who weren't taking the medicine. There were fewer infections in the Discover, Descovy based [arm] [ph], only seven infections versus 15 in Truvada. So that was non-inferiority, Geoff.

And then in terms of the safety, the bone and the kidney benefits favoring the TAF based regimen was statistically superior as well. So in all aspects, this indicated to us again a TAF based backbone was highly effective and very, very safe for prep. So if you think about prep participants or people taking prep, they're not patients as Robin said, very important, because they're young, they're going to be taking the medicine for a long time, they're not patients, so they don't want any side effects. So this is an ideal regimen...

Robin Washington

I think that safety is key, Geoff. We did in 2017 put in a small salesforce to support prep and then mid-2018, we started some direct to consumer [ad] [ph], because as John said, these aren't patients per se, they're healthy individuals. So we've been very focused in pockets of the US where and in all areas of trying to reach out to those potential populations and ensure that we can spur additional interest, but really exciting for us.

Geoff Meacham

Gilead has been successful with Biktarvy transitioning patients that were on - not on a Gilead regimen, but for the patients that have switched from a Gilead regimen, being cost neutral and so from a payer perspective, when you look to prep, does that - do you imagine that to be the strategy that kind of swap to the Descovy, would you expect to get a lot of payer pushback, just given the differentiation as you guys said on safety and efficacy?

Robin Washington

Yeah, I mean, keep in mind that it's primarily a commercial market today. And, this isn't new Descovy. I mean, yeah, Descovy is out there, already, right? So we don't anticipate that. We do view it more as neutral as well. We haven't announced pricing, but we feel very confident that given the trajectory we've seen for treatment that we can see that type of pace of development for prevention as well.

Jason Zemansky

That is a really good segue. I mean, you mentioned that Biktarvy is doing extremely well in some markets outside the US, Germany and France. Can you give us a sense of how reimbursement discussions are proceeding throughout the rest of Europe and the rest of the world?

Robin Washington

Yeah, making progress. These things always take a little time post announcement, but we do anticipate being on the market mid-year for the other big five countries, UK, Spain and Italy, we're in discussions for Biktarvy there, but similar uptake and trajectory in Germany, which is done very well. It's number one for treatment for us for switch as well as naive. And in France, it's already in the top five and was fast tracked. So I think very similar to the US, we see a lot of interest. We're already launched in 13 countries and as I mentioned, expect the remainder of the big five by mid-2019.

Geoff Meacham

Just going back to the Croix meeting. So from a pipeline, we had a physician call last Friday and it was pointed out that the long acting injectables are kind of the new, new thing, although they've been in development for maybe three or four years. So, your Capsid inhibitor had some really very good data. It looks like you can probably have a three month dosing interval. What's your sense, John with what would be the broadest commercially viable kind of program and do you feel like it, what are the steps that Gilead has to do beyond the Capsid inhibitor to get there.

John McHutchison

So it's a great question, Geoff. And, we have a number of HIV programs around [indiscernible] Biktarvy, other aspects of treatment for resistant patients, [cure, prep] [ph] and then long acting and long acting has always been one of our main focuses, we want to keep doing things in HIV. We want to keep being the leading company, we want to keep innovating, but the capsid data we presented at Croix was fantastic, healthy volunteers, but exposure after a single subcutaneous injection out to six months is above the required exposure to have an anti-viral effect. So that's a great backbone, if you like to use the word backbone for a long acting regimen. We believe that a long acting regimen to ultimately suit most people living with HIV, should be a small volume, non-painful subcutaneous administered at home injection every three months or less frequently.

That would be ideal. And, what sort of uptake that would have would be, time will tell if we can get there. So, what we have to do is we now have to do with the Capsid, which has all these favorable pharmacology properties for a long acting is look at its anti-viral effect. So, we'll do a study in humans infected with HIV, look at the antiviral potency. Then, we have to find the partner for it. And, it has to not be given alone because of resistance. So, could it be a TAF based partner, could it be a integrase based partner, what's the ideal partner to develop a very, very good small volume, those characteristics, subcutaneous injection.

And then of course, another exciting thing about Capsid is, if it's 24 weeks or three months plus exposure, a prep indicates particularly in people who don't want to take a medicine every day, the stigma of having to take the medicine every day. So there's another opportunity for us to explore this at least through clinical development and research in terms of what it might be suitable for, for prep as well. So that's how programs along - around long acting, but finding a partner, antiviral efficacy, phase 2 studies. That's the next steps.

Geoff Meacham

And just real quick on, before we move on beyond HIV, just do you feel like it's a - does it have to be a two drug regimen or can it be as low as two, but - or does it have to be three? I think a lot of patients and practitioners are sort of conditioned to think three drug better than two?

John McHutchison

So, historically, the field of HIV has always has more drugs, more mechanism, small potency that prevented resistance, prevent the [indiscernible] from being burned. So that was always daily oral medications. With long actings, we've got exposure over a period of time. There might theoretically be a little bit less resistance with fewer drugs. So we'll have to do those experiments to see if it should be ideally a two or a three drug regimen as part of a long acting strategy.

Geoff Meacham

Okay. Let's switch gears to the Yescarta and the KITE portfolio overall. So with Yescarta, you had some good commercial success, you've had some steady increase in the number of centers, reimbursement seems a little bit more seamless, maybe talk through kind of what would any feel like you're in, in terms of where you are adoption wise? And maybe where could you go or what's the opportunity and just the core third line DLBCL?

Robin Washington

Yes. Great question, Geoff. I mean, I still think it's early days for Yescarta, so maybe we're not in the first, but we're probably not passed the third any yet here and all the points you made, we were able to achieve the level of [centers] [ph] that we wanted in the US, we've made traction in Europe and our focus there this year, we anticipate that we can double our revenues in 2019 for Yescarta. It's still studied and measured launch. I mean, I think the reality of it, this is a new treatment for centers and there was even an article I think this [indiscernible] mobilizing and getting these centers, getting people trained and up to speed remains a major step up for hospitals and then at the same time, we've been delighted with the enthusiasm.

Teams - our oncology teams geared up to work with the community and colleges that we continue to increase awareness. And I think reimbursement is getting easier, there are still pre-ops. But I think we've made progress not only for commercial, but we're making progress on the Medicare side as well. It's typically a two to three year process to ultimately get a DRG and I think we continue to see progress and interests to get this treatment in the hands of as many patients as there can be. So we're delighted where we are. Again, I think, many innings to go, as we work through this.

Geoff Meacham

And from a clinical development standpoint, you're obviously moving up the paradigm in second and then first line DLBCL is logical and the many ZUMA studies are doing that, but based on what you know today, what are other indications that you think are particularly viable when it comes to say, other forms of NHL, mantle cells, DLL, even myeloma.

John McHutchison

Yeah. So we're doing all of those things to get to earlier lines of therapy and the ZUMA-7 trial is in second line. And ZUMA-12 is a small cohort in first line. Both of those studies have started, so they're important. But look other indications, mantle cell, we've enrolled out registrational mantle cell trial. So we'll gather that data. We haven't sort of indolent non-Hodgkin's INHL type trial as well, but ZUMA-5, so that's fully enrolled registrationally as well. ZUMA-8, well the Zumas is a CLL trial that started enrolling as well in people with advanced CLL. So all of these different supplemental extensions, if you like, into other labels for other diseases will be very interesting as long as the data supports, so we need to have that long lasting, durable response with a high rate of efficacy in a group of people who have no other options, really. So, we're doing all those things.

The other things we're doing too in terms of Yescarta, just immediately is optimization, trying to increase efficacy. So we have a trial with 4-1BB agonist from Pfizer in combination. We have a checkpoint combination trial as well and we have other strategies and cohorts going on to improve safety like de-bulking chemotherapy to improve rates of CRS and neurotoxicity, high dose corticosteroids, et cetera. So, if we can improve safety, it sounds like a simple thing to do. And if we can improve safety significantly as well, then that makes the risk benefit for treating these patients very different as well.

Geoff Meacham

Let's switch gears to the filgotinib and the NASH portfolio and I'll have Jason do a few NASH questions. But just to the filgotinib program, you have a successful phase 3, you have another couple of studies coming out of them, and the priority should be an indicator of success there. But maybe, so from a development standpoint, how much of a strategic priority would you say filgotinib is? I mean, it's not liver disease. It's not - it's sort of an outlier, but it is - there are big markets and obviously filgotinib could be differentiated in a very, very, very large market. So maybe just if you're sort of ranking your sort of pipeline and maybe your business priorities like where does that one fit in?

John McHutchison

We started inflammation and really got going on this a number of years ago and then the filgotinib opportunity presented itself. So, it's one of the four top programs right now in terms of advanced clinical stage development. It's the HIV programs, the NASH programs, the filgotinib programs and some other things and of course cell therapy. So it's one of our four biggest most advanced programs. Look, the drug is differentiated. Let me - I have two more phase, we have two more phase 3 trials that need to read out that'll allow us to put our package together for rheumatoid arthritis.

More importantly, it's the most advanced JAK inhibitor in development for Crohn's disease and I believe - we believe will be second in ulcerative colitis. They're in less competitive markets or not as aggressively competitive as rheumatoid arthritis and this differentiating factor is important. This JAK1 specificity, different rates of thromboembolism infection, platelets, anemia, hemoglobin, preventing less hemoglobin reduction, et cetera, let's see what the entire phase 3 package is and then we'll be able to move it forward. It's also the backbone in our inflammation therapeutic area upon which we will build by adding other drugs or additional drugs for the treatment of inflammatory bowel disease, rheumatoid arthritis and other diseases.

Geoff Meacham

When you look across the universe of indications that other JAK inhibitors are going after, atopic derma is one, is there - do we have another wave of phase 3s with filgotinib or do you feel like that's a combination approach that you just mentioned with other assets?

John McHutchison

So, we have, it's a great question. We have five other diseases, we avoided the skin actually and didn't go down - we thought about atopic dermatitis, but we have uveitis, Sjögren's disease, ankylosing spondylitis, psoriatic arthritis, where we've announced that we will start a phase 3 program and lupus, particularly skin lupus and other types of Lupus. So they are the indications that we thought we should explore in proof of concept trials in phase 2. This was done after a careful analysis of the commercial opportunities and the necessity and need in those diseases.

Geoff Meacham

Obviously, if you're worried about the safety from the ongoing, the study, you wouldn't have started these phase 3s. I mean, should we read into that and I'm saying with respect to the filing?

John McHutchison

We've been bullish, we started those phase 2 trials a while ago before we had any safety data from phase 3. But we felt confident in the - when we started the relationship with Galapagos, the amount of phase 2 data they had in rheumatoid arthritis and in Crohn's disease from the Fitzroy study was a large data set for any company with the JAK inhibitor in phase 2. So we felt confident then, we continue to feel confident now. Let me - let us allow the next phase 2, phase 3 programs to read out, but they will have a very large data set which happens this quarter.

Jason Zemansky

Just to switch gears to NASH, I mean, obviously, STELLAR-4 was a small setback. But in talking to our KOLs, the understanding at least in the community is that stage 4 fibrosis level is fairly difficult to reverse with many in the community thinking that it's essentially irreversible, I mean, just the first question would be why look at that patient population initially. And does that change your attitude about the outlook for STELLAR-3?

John McHutchison

It's a great question. Disappointing, we were disappointed in the STELLAR-4 results. But look, we felt that it was important to do the STELLAR-4 trial, which was 800 patient study in cirrhotic patients with NASH, because that's where the greatest medical need was. The patients who are at risk for the most significant and serious and burdened some complications. It is a high hurdle. There's still debate as to whether cirrhosis is reversible in this disease. Is it the same as a virus and so forth? We don't know the answer to that.

And in terms of the read through to STELLAR-3, I believe we always thought the populations were similar and the fact that STELLAR-4 did not reach its primary or other endpoints in terms of fibrosis makes us less confident that will be successful in STELLAR-3. That's a short answer to your question.

But look in terms of NASH, we've got three programs in the clinic, including the one we've discussed. We've got two other collaborations we just announced preclinically and other internal program. We're a liver disease oriented company. We've had a setback in one study, but we have great depth in our programs and we believe we'll get them, we believe we'll ultimately serve the patients by having effective therapies for NASH. We may not be their first right now, but we will be there. And akin to what we did in hepatitis C, I think we have that focus that will allow us to get there.

Jason Zemansky

I guess, and then looking at NASH overall, it's a very complex disease. It manifests over years, there are a number of different pathways involved. You're looking at a number of different doublets with ATLAS, but at what point do you think that'll be enough to handle the disease, are we thinking triplets, or quadruplets, down the road?

John McHutchison

Remember the conversations about hepatitis C, was it four drugs, five drugs or whatever, and it's the same with NASH now, we don't know. Three key pathways we believe, lipotoxicity, inflammation and fibrosis and how much you have to inhibit those pathways and whether it's doublets or triplets, I don't know the answer. We will explore the doublets first, because that's what we could do in clinical development. And then we'll move forward after that. And I think the field will be waves of incremental benefits as well. You get to a certain level of efficacy with the first strategy. And then a second strategy becomes more efficacious and all the while maintaining safety as well. And I think that's the way it will play out, exactly what the steps are and what the key basic mechanisms are or central mechanisms. We don't know the answer yet, but we hope to have most of the bases covered and that's what we're trying to do internally right now.

Geoff Meacham

And along those lines, I know we'll hear you know from Dan O'Day when he complete the sort of listening tour, then kind of gives his perspective, but I just want to get kind of Gilead as of now, is kind of the BD like M&A kind of approach. Because last year you've done some smaller deals or kind of bolt on to your existing assets and particularly the cell therapy, is that something going forward that you think is a implementable strategy for the balance of the year?

Robin Washington

Yeah, I think Geoff, so it's been two weeks for Dan. He's highly engaged, he spent a significant amount of time already with the BD team. And as we said all along, we've continued to be very aggressively focused on what external assets make sense to add to our portfolio and we continue to be. So stay tuned, but I would say he is integrated perfectly into the process for getting them up to speed, but it hasn't necessarily slowed us down in any way, shape or form. We remain committed and focused to look for those right next set of assets.

Geoff Meacham

Okay. With that, we're out of time. So John, Robin, thanks a lot.

Robin Washington

Thank you. Appreciate it.

John McHutchison

Thank you.

Question-and-Answer Session

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