Great. Well, appreciate everybody joining us here on the second day of Piper Sandler's Annual Healthcare Conference. I'm Joe Catanzaro, one of Piper's biotech analysts. It's my real pleasure to kick off this session here with Gilead. Joining us is their CFO, Andrew Dickinson. Obviously, 25 minutes is not a lot of time to run through things, but maybe, Andrew, I could give you a minute or two,
Sure.
To just give a quick rundown of Gilead, what you guys have been up to, and what we have to look forward to in 2024.
Great. Yeah. No, thanks. Thanks for having us. It's great to be here. Always fun to be here this time of year. We've been up to a lot. I mean, it's been an exciting 2023, and we have a lot teed up for 2024. So in a snapshot, for those of you that don't know Gilead, we're the world's largest virology company. We have a thriving virology business that's growing, led by our market-leading global HIV business, both HIV treatment and HIV prevention. We have one of the leading COVID therapies, remdesivir, which is used for severe hospitalized patients, and we have the world's largest viral hepatitis business, both HBV and HCV, which is stabilized. So a very solid and growing virology business. No major patent cliffs until 2033 at the earliest.
And then on top of that, we built a thriving oncology business that's really growing. It's now a $3 billion business. I joined the company seven years ago. It didn't exist. When our CEO joined five years ago, it was maybe $200 million in sales. And that's led by the world's leading CAR T business or cell therapy business, and an antibody-drug conjugate called Trodelvy, that's approved for three solid tumors. And we have a wealth of data coming out this year in the oncology business across cell therapy and Trodelvy, as well as some important HIV data as well. So it's a really exciting year of data and continued strong commercial performance from our perspective.
Great. That's perfect. So, maybe with that, we could kick into some Q&A here and maybe split the conversation into virology and oncology, and start with virology. So, you know, on the 3Q call, I think you guys spoke a little bit, but maybe you could elaborate a little bit more on some of the tailwinds the HIV business saw in 2023 and what we should expect to see heading into 2024?
Sure, yeah. It's a little bit about the tailwinds in 2023, probably more about the tailwinds in the second half of 2022, when you look at the comparison. But again, just to set the context for the HIV business, the HIV treatment market is still growing in all major markets, including the US and Europe, 2%-3% a year. So the volume treatment with additional infections, growth of the population is growing 2%-3%. That's despite the incredible impact of the HIV prevention treatments, two of which, the first two were launched by Gilead. So we are making progress, but the HIV treatment market, despite the progress in awareness, education, and prevention, is still growing 2%-3% in all major markets. It's growing much faster than that in the developing world, unfortunately.
The prevention market is in early stages of development. It's predominantly in the United States today. That market is growing, you know, high teens%. Recently, it was growing north of 20% for years. So that is a market that is really just starting to develop, and we expect there will be a whole another leg of significant increased growth as we launch, approximately two years from now, in every six-month injectable option for prevention, with our, our market, the first HIV capsid inhibitor called lenacapavir. So, in terms of the tailwinds, coming out of the pandemic and kind of the initial recession, there's been a shift in the government pay channels, in particular, a little bit in the commercial channels, so that the net price received has been a little bit higher.
So our HIV business grew over four or five percent, I believe, last year. We're projecting that it's going to grow north of 5% this year. Most of that is driven by the 2%-3% growth, market growth, demand growth in treatment and then the higher growth in PrEP when you combine the two. A piece of that, though, is driven by this higher realized net price. That dynamic has now normalized over the last six months, and so you're still gonna see growth in our HIV business going forward. You just won't have that net pricing tailwind that we saw really again in the back half of 2022 and then playing out in a little bit in the first half of this year.
So, you just mentioned it a couple of times, and I think you guys have mentioned it a number of times previously, how the PrEP market is growing considerably faster than the treatment market. What are some of the sort of key drivers that's driving that dynamic, and what's key for Gilead to be able to participate in that growth in the PrEP market?
Sure. It really starts with awareness and education. So again, you know, a lot of people, even physicians, aren't aware of the HIV prevention options that are available. So, you know, the two products that we've had that were approved, one of which is now generic, Descovy is our approved branded product. That's the market-leading product, branded product for HIV prevention. About 40% of people at risk of getting HIV in the United States that take PrEP or prevention medicine, take Descovy. It's all about raising awareness. So to put this in context, I think we launched our first HIV prevention medicine not quite a decade ago. The market has grown, awareness has grown. You've seen a significant growth in awareness during the pandemic. Again, and awareness is growing not only in the United States, outside of the United States.
Today, the reimbursement is primarily in the United States. The generic option, our generic Truvada, is used globally now. Again, so part of it is awareness. The second piece is having something that actually fits what people are looking for when they're at risk of getting HIV, and that is a long-acting injectable that provides protection for an extended period of time, and that's exactly what we're bringing to the market with lenacapavir. So again, I mentioned lenacapavir is the world's first HIV capsid inhibitor, been approved. It's already approved for treatment as a six-month subcutaneous injection. So this is not, this is not theory. The drug works. It's incredibly potent. It really is, as many KOL experts refer to it as, it's a unicorn. It's such a special molecule. We are in the end of our prevention phase III trials.
The first one should read out at the end, if not both, should read out at the end of 2024 or early 2025, and we expect to, expect to launch the product by the end of 2025. That should open up the prevention market, not only in the US to grow substantially, but also in Europe and Asia. So, I think that it really is not only raising awareness, but then giving patients or people at risk of getting HIV something that they can take that ensures that they're protected against getting HIV for six months.
So, you mentioned there that some of lenacapavir's sort of phase 3 trials are coming to a sort of a tail end. So you guys have guided towards some readouts, sort of the later half of 2024, into 2025. Can you just speak a little bit to those readouts, what they will tell us, sort of the opportunities they open up, the populations they're studying there?
Sure. Yeah, and again, there's readouts across our entire portfolio. So if you just step back and look at the clinical data that's coming, as we've invested in our pipeline. So when you look back with the new management team at Gilead, we've substantially increased as we needed to, our R&D investment, the size and quality and breadth of our pipeline. We now have what we, and I think many observers believe, is one of the stronger—the strongest pipelines in the industry across both oncology and virology. And now we're getting to the point where you're going to have multiple Phase III data readouts in the next 12 months.
So we'll spend a lot of time talking about that beginning of the year, but we'll have at least 5 phase III data readouts across both businesses next year, potentially 6. In HIV, the biggest is the prevention data at the end of next year with lenacapavir. Again, those are phase III studies. They take a long time to do the studies. But we will also have a lot of data on Trodelvy, which is, as I said, our market-leading antibody-drug conjugate targeting Trop-2, which is approved in two breast cancers, triple-negative breast cancer. It's a standard of care in second-line plus hormone receptor-positive breast cancer, again off to a very strong launch and then later-stage bladder cancer, when we'll have a lot of data.
In particular, in the first half of next year, we're going to have data in second-line non-small cell lung cancer. It's a phase III study called EVOKE-01 that is very exciting and could position Trodelvy as the very clear ADC of choice for very significant indications across lung cancer, breast cancer, and bladder cancer.
I, of course, want to obviously speak a little bit more to Trodelvy and the rest of the oncology business, but maybe just one more on HIV. You mentioned lenacapavir, obviously within the context of PrEP. You mentioned it's sort of approved for sort of later stage treatment setting. Where are the opportunities to leverage lenacapavir within the treatment setting further? What are some of the benefits it could potentially offer relative to other treatment offerings?
Sure. Yeah, great question. Thank you. So lenacapavir is such a unique molecule that we've been able to formulate it for a once-daily pill, once-weekly pills, every three-month subcutaneous injections, and every 6-month subcutaneous injections. That's almost unheard of. The reason you're able to do that is because it's one of the most potent molecules ever approved, in the pharmaceutical industry. It's really, it's really remarkable. So what's coming? I mentioned that lenacapavir for prevention, that's just a single agent, every 6-month injection, which, as I said, should completely transform the prevention of HIV. It's almost vaccine-like. We hear this from physicians and people at risk of getting HIV. They refer to it, some of the patients in the trial or people at risk of getting HIV in the trial, refer to it as a vaccine. The,
But then in treatment, lenacapavir is expected to become the backbone of the next generation of our combination therapies. So there are three examples I could give you today, but there are nine, I'm sorry, 10 different partnered agents that are being developed either in late preclinical or early clinical development today. I think, of the internal ones, nine of the 10 are internal. One is a partnership with Merck on one of their molecules. But of the nine internal programs, three are in phase II, three are in phase I, three are in late stage. A lot of them are integrase inhibitors, similar to our bictegravir, which is the market-leading integrase inhibitor.
But to your question, then, the way I kind of paint the picture is in the coming years, so by the end of the decade, you should have at least four approvals of new options in treatment with lenacapavir as the backbone. One of them is a once-daily pill that combines lenacapavir with bictegravir. We'll have some data that we're sharing from a phase II study early next year. That is now moving into phase III studies. Think of it as something that if patients want to switch from Biktarvy, which is the market-leading HIV treatment, our drug, to another therapy for any reason, this gives them a great option, and it will compete head-to-head against Evotaz, which is a competitor product.
We will have a once-weekly oral, so we have a once-weekly oral integrase inhibitor that's being paired with lenacapavir. This is a really interesting, big opportunity. A lot of patients living with HIV have mentioned that they would love to have a once-weekly pill instead of a once-daily pill. This is that we're going to share that data from a phase I study early next year, and then that's moving into phase II development, and these studies move very quickly in HIV. And then we have two broadly neutralizing antibodies, where we demonstrated last year that you can infuse these antibodies together with lenacapavir for an every six-month treatment. That actually worked reasonably, you know, very, very well in most patients.
And interestingly, the feedback, Joe, from the analysts or from KOLs and physicians has been that they see a much bigger opportunity there than maybe we did. And the reason being that it's surprising, but many patients that have HIV do not take the pills on a regular basis. The adherence or compliance is actually much lower than you'd expect, and in certain patients that just aren't good at taking it, physicians are saying, "I really could use an option that where I can infuse it for six months and know that there will ensure adherence over that period.
Perfect. So, maybe I want to switch to the Kite business, and first ask you about sort of the news yesterday from the FDA and their sort of warning around CAR-positive T-cell lymphomas for CD19 and BCMA CAR products. Sort of your response to that, were you surprised by that? And maybe your experience with Yescarta and Tecartus around that warning.
Sure. Yeah, I mean, I think we were surprised, like the rest of the market, only because we don't really see this. I mean, we've treated over 17,000 patients. I think it's almost 18,000 patients now in clinical studies in the real world. There's always been a known theoretical risk of secondary malignancies. You're inserting a viral vector into these T-cells that is inserted into the genome and the T-cells in kind of a random, in random places. There's always been a theoretical but very remote risk that you could cause secondary malignancies. If you look at the FDA's adverse event database, it suggests that if this happens, it happens at a very, very low rate.
Of course, the risk-benefit, in our minds, at least, in all of the approved indications, very clearly is in the favor of the CAR T therapy. Again, for those of you that aren't following the cell therapy space, for instance, we have, you know, patients that have late-line lymphomas, DLBCL, for instance, from our ZUMA-1 study, which was the first kind of one of the key studies in CAR T, show that, you know, more than 40% of the patients appear to be cured five to six years out, and the response rates are just remarkable. These are patients that have weeks or months left to live. The same thing is true in the second-line DLBCL. We did a study called ZUMA-7 of Yescarta, which is the market-leading CAR T, against stem cell transplant.
As you know, stem cell transplant has an incredible amount of side effects. It's really tough for patients. The mortality rate is high. We showed a 27% reduction. Or actually a 30+% reduction in mortality in that study. I think it was a 0.73 hazard ratio, if I remember correctly. But really remarkable data in that study. So when we look at the risk-benefit, you know, clearly, cell therapies, we think, are gonna become a much much bigger market over the coming decades, both in oncology and probably outside oncology, but you're always gonna have to look at this. So we don't see it. We don't see any causal you know link between our vectors and our cell therapies and secondary malignancies. Of course, we'll look at it.
We'll reach out to the FDA to try to get more information, but you know, it doesn't appear to be a risk that we think is either there or substantial at this point in time.
So I think you guys have mentioned one of the keys to growing the cell therapy business is trying to move some cell therapy delivery into the community setting.
Yeah.
We had a cell therapy panel yesterday, and I brought up that idea, and the sort of KOL who comes from an academic tertiary care center sort of raised questions around whether that's possible, whether the economics could work for some of these, you know, for-profit community oncology centers. So what are some of the efforts you guys are working on that is going to be able to allow you to deliver Yescarta and Tecartus and-
In the-
future offerings into the community setting?
Yeah. Again, this is really a U.S. dynamic, as many of you know. So if we just step back and you look at cell therapy, again, I talked about the extraordinary efficacy and life-saving potential of these therapies relative to other existing therapies. In the U.S. today, only 12% in DLBCL, 12% of second-line plus patients are getting cell therapy. In Europe, it's over 40%. I think we have almost 400 approved treatment centers globally, about 140 in the United States, or just less than 140. The key in the U.S. is that the academic centers and the large hospitals in large cities are using cell therapies. The community physicians that treat 80% of the patients are slowly moving this towards cell therapy.
It's become clear to us and others that we really need to work with the community physicians in the United States to open access, help them understand the extraordinary benefit of these therapies for their patients, and then allow them to have access there. There's no barriers from our perspective in terms of opening treatment centers with the community physicians. It's gonna take a lot of work with them over time, and there's a lot of excitement, I think, in the large community oncology centers that we've been talking to about doing this.
It's gonna be a point of focus for us over the coming years to work with the community physicians to open up broader treatment center access together with them, to make sure that all the patients that could benefit from these therapies are getting it in the United States, in addition to Europe and other major markets.
So the other question I had on sort of the cell therapy side of things, and relates maybe to something we spoke about yesterday on our panel, was the commercial BCMA products, and it still seems to be a lot of supply constraints, consistency and reliability around manufacturing. It still has a lot of questions around it. So maybe that's a sort of good segue to Gilead's interest in BCMA CARs, and would love to sort of understand what led to the recent sort of re-upping around the Arcellx collaboration and where you see ddBCMA sort of fitting into this landscape, where it sort of takes market share and how it takes market share.
Sure. Yeah. So again, just to step back, it's becoming clear that, in second-line plus multiple myeloma, CAR Ts are likely to become the standard of care. They're already becoming the standard of care. There are two approved BCMA CAR Ts, from two different companies. But they still... It's very early days, and they can't serve the market. So a number of companies in CAR T have significant manufacturing challenges. Kite, our CAR T business, on the other hand, is the market leader in terms of manufacturing and manufacturing reliability. And again, just to put it into context, 96%+ of the bags of cells that we get are manufactured and delivered on time, typically in 16 days or less.
Most of the competitors are struggling to get manufacturing reliability above 50% or above 60%, and their turnaround time is often north of 30 days, which creates a lot of frustrations with the treatment centers and physicians, given that these patients oftentimes have very rapidly advancing disease. So there is a substantial opportunity in the multiple myeloma market to bring additional BCMA CAR Ts to market. As a result, we did a partnership with a company called Arcellx in the Bay Area that has a very promising BCMA CAR T construct called ddBCMA. We are working with them. We're in the middle of our phase 1, 2 studies, study. There will be additional data presented at ASH in the coming weeks that we're excited to share with the world. And that product could be to market in two or three years.
When you look forward, kind of the three years out, our expectation is that the existing approved therapies will still not be able to satisfy much of the market demand. So there is a big opportunity to satisfy the market demand and benefit patients, even as a latecomer to this market, and that assumes that your product is on par. The data that we've seen so far with the Arcellx product suggests that it has the potential to be better than the approved therapies, both in terms of efficacy as well as safety. The approved therapies are showing some severe neurological side effects in 7%-8% of patients, including the development of Parkinson's. Again, the risk-benefit suggests this is clearly in the benefit of patients to take the therapies, but it provides a significant opportunity for us and others.
So we're excited about it. It's a great partnership. And then to your question on why did we expand the partnership, again, I think we think that the science and the team at Arcellx is fantastic. They had another second-generation program that's interesting to us. We wanted to provide capital to allow them to take that forward. We then have options to partner on that program, and it also gives us the opportunity to look at the BCMA CAR T beyond just multiple myeloma. It's not clear what we'll do there today. There are some rare B-cell malignancies that we don't treat today with the CAR Ts and Yescarta, that we could consider treating.
We'll work with Arcellx to figure out where we go with that, but it was an exciting expansion, and it reflects the confidence that we have in the Arcellx team and their program.
I'll just make one comment. One thing that was said yesterday in talking about the BCMA commercial products and some of the challenges there, the KOL source said, "Well, maybe a little unfair because Kite set a really high bar, and that's what we're comping to." I wanna shift to Trodelvy in these last few minutes. You know, I remember sort of in my days covering Immunomedics and when Dato-DXd data was first coming along, there was this big concern that ultimately Dato-DXd would sort of eat away at Trodelvy's opportunities. I guess, where do you think that stands today? How do you think competitively within the established markets where Trodelvy is in breast cancer, how do you think that stacks up today relative to what we now know about Dato-DXd?
Yeah. Well, we think it stacks up incredibly well, and I think the market is coming to the realization that the... When you look at the competitor Trop-2 construct, there was an assumption that it would be as good as Enhertu is in some forms of breast cancer, which has demonstrated really strong data. And that doesn't appear to be the case based on the data that was shared at ESMO, as you know, both in breast cancer and lung cancer. So we've always had a thesis since we, you know, we acquired Immunomedics, we believe that the Trodelvy construct was unique and differentiated in all four, you know, components of the antibody-drug conjugate. So, for those of you that follow this, the antibody-drug conjugate is an antibody with toxic warheads attached to it.
And when you look at our antibody, it has a higher binding affinity. We have a different linker that releases more of the toxin in the tumor microenvironment. We use a different, very potent toxin, and we have more of the toxin on each antibody than the competitor. All of which leads to very clear differences based on the clinical data and the commercial data so far in the safety profile. And now you're starting to see some potential differences in the efficacy profile as well. And again, it just, it, we believe, is validating our thesis that Trodelvy is really an extraordinary product. Again, as I said earlier, it's already approved with incredible overall survival data in two forms of breast cancer, very strong early approval in bladder cancer.
We have the confirmatory Phase III trial underway that may allow us to move up in bladder cancer as well, and it's expected to show overall survival. And then, as I mentioned, the really big opportunity, of course, is in lung cancer, both in the second line and the first line, and all those studies are underway. The first big set of data will read out in the first half of next year. So it's very exciting, and I think we—our sense is the market underappreciates the competitor program that you are referencing. Many analysts expected that to be a $15 billion or $18 billion a year drug. You know, we think Trodelvy has extraordinary pot...
potential and, you know, the data over the next 12-18 months is gonna give all of us a much better sense of how these two really stack up next to each other.
Maybe one last quick question on Trodelvy and relates to the sort of goal of 1/3 of 2030 revenues coming from oncology. How big of a factor in that sort of projection comes from Trodelvy within lung cancer?
It's certainly part of it. I think, when we acquired Immunomedics, what we said, and we still believe, is it's an incredible opportunity because it really is a pipeline and a product. I mean, again, as I said, you have three existing approvals in breast and bladder. We're expecting to move up in lines of therapy. Those areas, in and of themselves, are very, very large commercial opportunities that are not fully reflected in how the market thinks about Trodelvy today. Lung certainly is a huge opportunity. So what I would say is, in terms of getting to one-third of our total revenue by the end of the decade from oncology, there's lots of different ways for us to win.
If you have success in either first-line or second-line lung cancer, obviously that significantly influences our growth and the growth of Trodelvy and makes it even easier to get there. But there's lots of different ways for us to achieve that goal, and when we look at the totality of our pipeline today, we're absolutely confident that we're gonna get there.
I know we're out of time. I wanna squeeze in one last question, sort of around business development and your goal of sort of diversifying away from virology. Where do you think you stand in that process? Do you think you're where you need to be, or is there a little bit more work to do there?
Well, there's always a little bit. I mean, first of all, we're doing, I think it's going incredibly well, and I wanna highlight that the virology business is incredibly important. It's growing. It's a very large business. When you look at our $27 billion of revenue, the vast majority of it still comes from the virology franchise, and we need to diversify. We now have a much broader, much deeper pipeline, including in virology, but also in oncology and immunology. But we need to do more, and we're gonna continue to do business development in the ordinary course. So, as you know, Gilead didn't do that much business development before 2017.
After 2017 and after our new CEO arrived five years ago, we really started to do more business development, and now we're getting to the point where we have the size of portfolio and the investment that we're looking for in R&D. More should be coming internally. Our—we have an increased investment in our internal research, including in oncology. That looks really promising, and then we'll continue to supplement it with outside business development activities. But over time, again, that's the goal is to get by the end of the decade, to get kind of one-third, and we think we're well on track to doing that.
Perfect. With that, out of time, I wanna thank Andy for his time.
Appreciate it.
Thank everybody for tuning in and-