Good day and thank you for standing by. Welcome to the Gilead Sciences First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the presentation, there will be a question and answer session. Please be advised that today's conference may be recorded.
I'd now like to hand the conference over to your speaker today, Jackie Ross, Vice President, Investor Relations. Please go ahead.
Thank you, Liz, and good afternoon, everyone. Just after market close today, we issued a press release with earnings results for the Q1 of 2021. The press release, slides and supplementary data are available on the Investors section of our website atgilead.com. The speakers on today's call will be our Chairman and Chief Executive Officer, Daniel O'Day Our Chief Commercial Officer, Joanna Mercier our Chief Medical Officer, Mehrdad Parsee and our Chief Financial Officer, Andrew Dickinson. After that, we'll open up the call to Q and A, where the team will be joined by Kristi Shaw, the Chief Executive Officer of Kite.
Before we get started, let me remind you that we will be making forward looking statements, including those related to the impact The COVID-nineteen pandemic on Gilead's business, financial condition and results of operations our plans and expectations with respect to products, product candidates, corporate strategy, financial projections and the use of capital and our 2021 financial guidance, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause actual results to differ materially from these statements. A description of these risks can be found in the earnings press release and our latest SEC disclosure documents. All forward looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward looking statements. Non GAAP financial measures will be used to help you understand the company's underlying business performance. The GAAP to non GAAP reconciliations are provided in the earnings press release, in our supplementary data sheet as well as on the Gilead website.
I will now turn the call over to Dan.
Thank you, Jackie, and good afternoon, everyone. We appreciate you taking the time to join us today. Before I hand over to the team to go into the details of our commercial pipeline and financial results, I wanted to share our overall assessment of Gilead's Q1. 2021 is a pivotal year for Gilead. And as you can see on Slide 4, we're off to a solid start.
Our Q1 total product sales were in line with our internal expectations. While our core business was more impacted by COVID-nineteen This was offset by higher VICLURY sales. In the United States, 1 in 2 hospitalized patients are receiving VICLURY and worldwide Viclauri continues to play a key role as a standard of care treatment for patients who are hospitalized with COVID-nineteen. Given the desperate situation in India, Gilead has been working with the Indian government health authorities and our voluntary licensees To increase supply of remdesivir and provide donated medicine. As the trajectory of the pandemic evolves globally, we will continue to invest And multiple clinical studies of VACLEARY, including alternative formulations.
Earlier this month, we received 2 FDA approvals For TRODELVI, the full approval for metastatic triple negative breast cancer extended the label to second line plus patients. This means Trodelvi could help many more patients as there are more than double the number of patients in this category as there are in the 3rd line setting. We also received accelerated approval in second line plus metastatic urothelial cancer. In March, we announced the new partnership to combine investigational lenacapavir with Merck's investigational eslatrevir While many people living with HIV may prefer a daily regimen like Biktarvy, we believe that broadening their options to include weekly oral therapies And infrequent injections every 3 months or longer addresses a significant patient need Such as lenacapavir as monotherapy are also likely to unlock further PrEP usage and reach many more people at risk of HIV. We are also pleased with our progress in advancing lenacapavir in both treatment and prevention settings as part of our internal clinical development.
This past quarter, we reported compelling long acting efficacy data for Lenacapavir in heavily treatment experienced People with multi drug resistant HIV. We are fully confident that Lenacapavir will be the foundation for our long And while we advanced lenacaftavir, Biktarvy usage Continues to grow with 1 in 2 people living with HIV starting their treatment on Biktarvy in the U. S. In addition, Biktarvy is capturing 1 in 2 switches and approximately half of those are Switching from a regimen that includes a non Gilead agent. In addition to securing regulatory approvals in oncology, We have already achieved several other pipeline milestones, including EMA validation of the Trodelvi MAA for metastatic Triple negative breast cancer and submission of the supplemental biologics license application to FDA for TECARDIS In relapse or refractory ALL.
Building on the work we did last year, we continue with the disciplined prioritization of our Pipeline across Gilead. To share one example, Kite completed an optimization exercise this past quarter to ensure that resources are focused on the most promising opportunities to make a difference for patients. Finally, we're looking Forward to a full year of clinical news flow for Gilead. Our pipeline list for 2021 includes over 20 milestones across therapeutic areas. While they are all important steps in Gilead's journey to serve more patients and diversify our business, Slide 5 lists the most significant items, so you can track our progress more clearly.
These include the Phase 3 TROPICS 2 PFS readout for Trodelvi and hormone receptor positive HER2 negative metastatic breast cancer. Yescarta's Phase 3 ZUMA-seven readout for second line DLBCL, which could result in an SBLA submission later this year. The Phase 3 readout for Haplutix that could lead to BLA filing, Arcus's domvanilumab Phase 2 ARC7 interim readout in non small cell lung cancer, which could inform an opt in decision. Megolumab's Phase 1b data readout in MDS, which could lead to a submission for accelerated approval later this year and potential Phase 2 initiation of Lenacapavir and aselatravir as a long acting oral HIV treatment in the second half of twenty twenty one. Our aspirations for patients are bold and our pipeline offers diversity across indications and risk profiles.
While execution will continue to be a focus, these milestones give us a great deal of optimism about the future and our ability to deliver therapies that make a meaningful difference for patients. Before I hand off, I want to take a moment to thank Doctor. Bill Lee, Who is retiring from his role as Executive Vice President of Research after 30 years at Gilead. On behalf of all of us, I want to offer my sincere gratitude to Bill for his outstanding contributions that have helped to benefit millions of patients around the world. I would also like to welcome Doctor.
Flavius Martin, who joined Gilead as the new EVP of Research on April 12. Flavius has an impressive track record in overseeing industry leading research and advancing new therapeutic candidates. With that, I'll invite Joanna to update you on our commercial operations in the Q1.
Thanks, Dan, and good afternoon, everyone. Starting on Slide 7, it was a solid quarter of execution for the commercial team with total product revenue of $6,300,000,000 up 16% from the Q1 of last year. This was in line with our internal expectations as VICCULRI sales offset A more substantial pandemic related impact on our core business than we had anticipated. Excluding Vicleri, total product revenue was $4,900,000,000 reflecting inventory and pricing seasonality, the anticipated HIV loss of exclusivity in the U. S.
An ongoing pandemic related dynamics in HIV and HCV. Moving to HIV on Slide 8, revenue was down sequentially as expected, primarily due to seasonal trends. As a reminder, two things happen every year to our HIV business It contributes to a sequential decline from Q4 to Q1. First, the channel builds inventory in the 4th quarter then draws it down in Q1. In the Q1 of 2021, this inventory impact contributed an estimated $410,000,000 to the sequential decline.
2nd, we realized lower net HIV prices in the Q1 due to items such as increased co pay support and Part D discounts, which tend to normalize throughout the rest of the year. This quarter, we had 2 additional impacts, A year over year decline of $335,000,000 in TRUJECTRATA and ECHIPLA revenue associated with the LOEs in the U. S. And a difficult comparison in the Q1 of 2020 given the pandemic related HIV stocking we saw in March of 2020 as well as the impact of the pandemic on HIV market demand. Our focus is on share driven by demand.
Overall, 3 in 4 people living with HIV initiate or switch to Gilead products, highlighting the strength and demand for our life changing medicines. While the pandemic dampened market size and switched volumes, we maintained share in line with prior quarter Across our total HIV portfolio despite generic erosion. In terms of product line, Vic Harvey was up 8% year over year, but down sequentially as expected, driven by seasonal inventory and pricing dynamics. Despite the pandemic impacting the new starts and switch volume in HIV, demand fundamentals for Biktarvy remained strong with 5 share point growth compared to the same time last year and 2 share point growth just in the last quarter in the United States. As Dan mentioned earlier, 1 out of 2 people living with HIV initiating or switching therapy is prescribed Biktarvy.
Further, nearly half of Biktarvy switches come from incremental sources. Descovy revenue was down sequentially And year over year, largely driven by seasonal inventory and pricing dynamics. Although prep volume continues to be impacted by the pandemic, Descovy share remains stable and strong at around 45% and positions us well as the prep market recovered post pandemic. Moving to Slide 9. HCV's 1st quarter revenue was $510,000,000 We continue to maintain a leading share of about 50% in the U.
S. And 50% in Europe. Despite COVID continuing to impact patient starts, We did see a very modest sequential improvement overall in patient volume, although it remains depressed versus pre COVID level. HCV also benefited from a pricing adjustment in France. As shown on Slide 10, in Q1, HVP and HTV sales totaled $220,000,000 with HTV sales of $214,000,000 growing 15% year over year, driven by strong Zenuity demand, most notably in China and in the U.
S. We continue to expect the HBV franchise sales to reach 1,000,000,000 by full year 2022. With the completion of the MiR acquisition during the Q1, our portfolio now includes Hepludex. There are currently no available treatments for HCV making PEPCLUDEX, which has received conditional approval by the EMA, a first in class treatment. This innovative drug blocks viral entry into liver cells, and we're targeting a BLA submission later this year and are excited by the opportunity to make hakudex more broadly available and address the unmet need for people who are infected with HCV.
Moving to Slide 11. Trodelbi delivered $72,000,000 in its 1st full quarter as part of the Gilead portfolio. In a span of just 3 weeks this month, XERDALBI received FDA full approval for second line plus metastatic triple negative breast cancer, We received accelerated approval in 2nd line plus metastatic urothelial cancer and had its ASCEND Phase 3 data published in the New England Journal of Medicine just a week ago. We can now leverage treatment efficacy data from the full trial population in our discussions with physicians and build even greater confidence to consider this potentially transformative therapy. This more than doubles the patient population, extending our reach to 6,000 second line metastatic TNBC patients in the U.
S. In addition to over 4,000 patients in the 3rd line plus population. Given the poor prognosis and difficulty in treating both second and third line metastatic TNBC patients, XODELVI could extend medium overall survival by almost a year, while also nearly tripling the medium progression free survival compared to chemotherapy. Outside the U. S, we submitted the TNBC marketing authorization application based on the Ascent Phase 3 clinical study for an accelerated review process.
We look forward to continuing discussions with the European Medicines Agency and anticipate approval as early as December of this year. Additionally, Chadelby TNBC is under review with the UK, Canada, Switzerland and Australia as part of Project Orbis. On Slide 12, Christy, who's on the call to answer your questions shortly, you can see that our cell therapy Business had a strong quarter with revenue of $191,000,000 up 36% from the same quarter last year, driven by growing adoption of the ESKARTA in Europe with our industry leading 4 year 44 percent overall survival. The recent approval of Koryostarta in follicular lymphoma would Broaden our addressable patient population and support our ongoing growth. Tecartis continues to see strong launch demand as physicians and patients adopt the 1st and only cell therapy approved for relapsed or refractory mantle cell lymphoma.
Moving to the Clari on Slide 13. 1st quarter revenue was $1,500,000,000 with demand tracking to hospitalization rates. Although we saw lower hospitalization rates and increasing vaccination rates in certain parts of the world, Overall progress was more gradual than expected over the Q1 and as such we are now assuming a slower pandemic recovery for the 2nd quarter. As the pace of recovery builds momentum in the second half of the year, this should contribute to the modest recovery in patient starts for HCV as well as HIV Franchises. We will continue to play our part to support broader access for eligible patients in need of remdesivir.
We We are working with our voluntary licensees to accelerate production capacity for India, while also donating over 450,000 vials of Acluri to help patients as the supply of licensed generics increases. Our thoughts are with those who continue to tackle the worst of this pandemic. And so with that, I will hand over the call to Murdett.
Thank you, Joanna. As both Dan and Joanna mentioned, We're off to a solid start in a catalyst heavy 2021. And my comments today will focus on near term events and changes to our pipeline. A comprehensive update on our broader pipeline is included in the appendix of the slide deck available on our IR website.
I'll start
with our virology pipeline. We remain as focused as ever on driving innovation in HIV therapies and there are no changes to the expected timelines associated with our linacapavir In HIV prevention, we're activating sites for our 1st Phase 3 study of lenacapavir as monotherapy for the prevention of HIV We'll begin screening patients later this quarter. This study will focus on preventing infection in cisgender men, transgender women and men and Gender Non Binary People Who Have Sex With Men. In the second half of twenty twenty one, we plan to initiate a study looking at Lenacapavir for the prevention of HIV infections in adolescent girls and young women. In treatment, we presented additional data from our Phase twothree CAPELLA trial for linacapavir at Croix.
And we continue to expect our first linacapavir filing for use with other Antiretrovirals and heavily treatment experienced individuals in the second half of this year. We anticipate data Later this year from the Phase 2 CALIBRATE study in the treatment naive population to support virologically suppressed indication. And we plan to launch a Phase 2 trial for a long acting oral treatment combination of Gilead's Lenacapavir and Merck's islatravir in the second half of this year. Both medicines have shown long half lives and high potency at low doses. As such, we believe that the lenacaprevir plus islatrevir combination is promising.
And we're excited by our new partnership and working with our colleagues at Merck to bring the maximum benefit possible to people living with HIV. Based on our commitment to HIV, we continue to work towards a potential cure. There are several early stage program is evaluating combinations to understand the biology and identify a path for this important mission, leveraging our internal expertise as well as external partnerships, including Elix and Gritstone. On Slide 16, moving on to the oncology pipeline, which has over 20 internal clinical stage Programs including many built around TRIDELVY. We're excited to have received full FDA approval of TRIDELVY in second line plus metastatic triple negative breast cancer based on the confirmatory Phase 3 ASCEND trial data.
In the U. S. Alone, this indication expands upon the accelerated approval for third line metastatic triple negative breast cancer to now include second line patients who had at least one prior treatment for metastatic disease. Trodelvina has the potential to significantly improve overall survival In the U. S, there's a population of 10,000 patients who may benefit from TRIDELFI.
We also received FDA accelerated approval for 2nd line metastatic urothelial carcinoma based on positive data from the Phase 2 TROPHY study. With almost 1 third of patients responding to treatment in the 7.2 month median duration of response, Tradelvia offers a much needed new treatment option for the many patients metastatic urothelial cancer, whose disease continues to progress despite receiving available first and second line treatment. In the U. S. Alone, we estimate there are roughly 8,000 addressable patients.
2021 will continue to be an exciting year for Trodelvi and there have been no changes We submitted the MAA to the EMA for TRODELVIN second line plus metastatic TNBC in March And it's now under accelerated review. We continue to target EU approval in the second half of this year. Later this year, we anticipate a Phase 3 TROPICS-two Progression free survival readout for hormone receptor positive HER2 negative metastatic breast cancer. Pending data will evaluate and determine the appropriate next steps From a regulatory standpoint. We estimate there are roughly 17,000 patients in the U.
S. Who could benefit from TRYALFI in this setting. We're now actively recruiting additional patients for the Phase 2 TROPICS 3 Basket study in solid tumors to expand eligibility to patients regardless of TROP-two expression. We've already decided to initiate a Phase 3 trial in non small cell lung cancer in the second half of this year and we'll share updates on additional planned studies later this year. Moving on to cell therapy on Slide 17.
With FDA's accelerated approval of the Ascarta for patients with 3rd line Plus follicular lymphoma in March. We now have added a third indication for the KITE portfolio. ZUMA-five study data showed The 91% of patients responded to a single infusion with an estimated 74% of patients in continued remission at 18 months. We're working towards making this option available to patients outside the U. S.
And continue to target an MAA filing in the next several months. There are no changes to the expected timelines for the ZUMA-seven study assessing Yescarta for the 2nd line diffuse large B cell lymphoma or DLBCL patients. We expect to announce the top line Phase 3 outcome later this quarter followed by SBLA and MAA submissions in the second half of the year. Additionally, the FDA has approved the inclusion of the ZUMA-one cohort 4's updated safety data into Yescarta's label for 3rd line DLBCL. Cohort 4 demonstrated that early use of corticosteroids and or tocilizumab led to reductions in cytokine release syndrome or neurological events.
Moving on to Cartus, we submitted our SLA for relapsed or refractory adult B cell precursor Acute lymphocytic leukemia or ALL just after the end of the Q1. If approved, Tecartis would add a much needed treatment option for patients 18 and We plan to share the ZUMA-three data at ASCO this summer and we continue to enroll patients for ZUMA-four to evaluate Tecartis for ALL in the pediatric population. Consistent with our ongoing diligence across both Gilead and KITE, we will continue to focus and streamline the KITE portfolio to align with our key strategic priorities and expertise in hematologic malignancies, specifically lymphoma and leukemia.
Moving on
to Slide 18. In addition to the previously mentioned milestones for virology, Trudelty and KITE, we have several other notable upcoming events. First, I want to take a moment to highlight migrolimab's progress And outlook in myelodysplastic syndrome and acute myeloid leukemia. In MDS, we expect to see Phase 1b data in the second half of this year. Pending results, those data could lead to a BLA submission before the end of the year.
If approved, mibrolumab will be the 1st in class Phase checkpoint inhibitor targeting CD47 and Gilead's 1st frontline oncology indication. There's a significant unmet need for MDS With no new treatments approved in 14 years despite 15,000 new patients diagnosed each year in the U. S. Alone. We're also exploring pivotal studies in frontline AML.
Additionally, we continue to evaluate multiple solid tumor indications for migurilumab, most recently initiating Phase 1b2 second line plus solid tumor basket study and a randomized Phase 2 study for head and neck cancer in combination with chemotherapy and Merck's KEYTRUDA. 2nd, in virology, we're thrilled to officially add Hipcludex into our portfolio and look forward to Phase 3 data readout later this quarter with the potential for a BLA filing in the second half of the year. As for potential opt in programs, Arcus' ARK7 non small cell lung cancer study is expected to evaluate interim data in the 2nd quarter. We and the Arcus team have indicated that the interim analysis is targeting an ORR of 50% or greater and a clear separation in ORR from the zimborelimab monotherapy arm when compared to the dombanilumab plus zembrolumab combination arm. Last on Slide 19, you can see our robust and diversified pipeline across oncology, virology and inflammation.
In addition to the readouts on the previous slide, We have multiple collaboration programs that we're monitoring closely, including ARK8 study in pancreatic ductal adenocarcinoma An ARK6 study for castration resistant prostate cancer expect both of which expect initial readouts later this year. And the Galapagos SYK2-three Toledo proof of concept trials across psoriasis, ulcerative colitis and RA are expected to have readouts later this year. In closing, we're pleased to see how our portfolio has grown from about 30 clinical stage programs 2 years ago to 47 today, while maintaining our focus on disciplined management of R and D expenses. We've also gone from 6 molecules approved, filed or in registrational studies to 15. Our teams have worked tirelessly to continuously evaluate and accelerate priority programs.
We're thrilled to see how our portfolio is developing And we look forward to accelerating innovation to help transform patient care. With that, I'd like to hand the call over to Andy.
Thank you, Mehrdad, and good afternoon, everyone. As you can see, we are building momentum in our clinical pipeline and we expect to have plenty of data to share as we move through the rest of 2021. Moving to Slide 21. The Q1 was a good start to the year with total product sales in line with our internal Expectations overall as modestly higher Vectlery sales offset a slower pandemic related recovery than we had anticipated. In addition to pandemic impacts, our HIV business reflected the inventory seasonality we typically see in the Q1.
Total product sales were $6,300,000,000 up 16% year over year driven primarily by Vectluri. The Q1 reflects continued growth from Biktarvy, our first full quarter of TREDELVY sales and strong growth in HBV as well as cell therapy. This growth was offset by ongoing COVID related softness across our business in addition to the Truvada and A triplet LOEs. As also indicated by Joanna, there is the difficult comparison to the Q1 of 2020, given the pandemic related HIV stocking observed last year. As a result, total product sales excluding Vectlery were $4,900,000,000 down 11% year over year.
Non GAAP product gross margin was 86.5 percent, 60 basis points lower year over year, primarily associated with product mix And a small inventory charge, partially offset by favorable royalty adjustments. Non GAAP R and D was $1,000,000,000 Up 4% year over year, primarily driven by investment in new pipeline products, including Tridelvia and migrolumab, offset by timing of certain clinical studies and lower veclary related expenses. Non GAAP SG SG and A was also $1,000,000,000 down 4% from Q1 2020 due to timing of grants and sales and marketing activities. This was partially offset by higher commercialization investments associated with Veklury for DELVY cell therapy and HBV and HIV in China. Moving to tax, we realized a lower rate of 18% for the quarter due to recognition of favorable settlements with tax authorities.
Overall, our non GAAP diluted earnings per share were $2.08 in the Q1 of 2021 compared to 1.6 The $0.08 for the same period last year. The year over year improvement was primarily due to Vectlery revenues, flat operating expenses and a lower tax rate offset in part by lower interest income. You can see on Slide 22 that there is no change to our full year non GAAP guidance. While the pandemic remains unpredictable and as we realized a more substantial impact to our core business in the Q1 than we had anticipated, We are nonetheless encouraged by the lower hospitalization rates and increased vaccinations. We have modified our assumptions on the timing of pandemic recovery to allow a more Gradual improvement starting in the second quarter.
We continue to expect total product sales excluding Vectlury of $21,700,000,000 to $22,100,000,000 We continue to expect full year non GAAP R and D and SG and A expenses, Each to be flat to down low single digit percentages year over year. Given our first quarter results, You can see our R and D expenses are somewhat back end loaded in 2021 based on the timing of clinical activities, which include the anticipated initiation of the solid tumor study with mongrelimab, advancing internal long acting combinations with Lenacapavir for the treatment of HIV and other pipeline activities. Our work with Merck on a long acting treatment regimen for people living with HIV is also underway and will ramp up during 2021. Although we are able to absorb this program into our current R and D expense guidance. In SG and A, We are ramping up sales and marketing to support efforts such as the ongoing and expected launches of TRIDELVIA in the U.
S. For bladder cancer and in Europe for triple negative breast cancer. Additionally, we expect to start seeing higher travel and other costs scale up in the second half of the year as social distancing restrictions lighten up in some geographies. Despite the lighter expenses in the Q1, we're leaving our operating expense guidance unchanged as we expect to catch up on this to some extent later in the year And for now retain the flexibility to manage the timing of clinical and commercial investments. We continue to expect our non GAAP tax rate to be 21 for the year.
While we are carefully monitoring the discussions on a higher corporate tax rate here in the United States, we believe any impact is more likely in 2022 and beyond, Although, of course, a more immediate change could alter our current tax guidance. Finally, with no changes to our revenue or operating expense guidance, We continue to expect non GAAP diluted EPS of $6.75 to $7.45 for the year. We have updated our GAAP diluted EPS guidance and now expect to be in the range of $4.75 to $5.45 Down from $5.25 to $5.95 reflecting fair value losses for our equity holdings in the Q1, Donation expenses and other pre tax charges including upfront payments related to collaboration. On Slide 23, You can see that we remain diligent in our capital allocation priorities. Already this year, we have repaid $1,250,000,000 in debt And we're on track to pay down at least $4,000,000,000 in total by the end of the year.
We have also returned $1,200,000,000 to shareholders through dividends and repurchase of shares. To close, we remain committed to delivering for patients and for shareholders as we look to invest in our business and R and D pipeline, while paying close attention to our expenses. With that, I'll hand the call back to Dan for a few closing comments. Dan?
Thanks, Andy. And before we open up for questions, I'd like to thank the broader Gilead team who accomplished a great deal in the Q1, Setting the stage, I think, for quite an exciting year, rich and catalyst across our clinical portfolio. Of course, Gilead would not be the company it is today without And became a global organization firmly rooted in its commitment to science and to patients. That commitment will be a constant as we work to take John's legacy forward in Gilead's next chapter. With that, I'll invite the operator to begin the Q and A.
In the interest of time, we ask that you limit yourself to one question and rejoin the queue for any follow ups. Our first question comes from Brian Abrahams with RBC Capital Markets.
Hi, thanks so much for taking my question. It looks like you're seeing steady growth in adoption of TRIDELVY. So I'm just wondering, how should we think about the potential for a near term inflection and update Now that you have full approval and triple negative, the publication out and label expansion into urothelial. And I'm curious, are you starting to see some pull through? And where do you stand with respect to community physician awareness?
How important
is that as well for adoption? Thanks.
Thanks, Brian. Joanna, please.
Sure. Thanks, Brian, for the question. And we're really excited with the recent news that we got with Sujabi. It's really going to help us gain momentum, exactly what you said. We have strong awareness in academic centers above 80%.
We haven't been able to break through. We're only at about 50% or so in the community. And as you well know, If 3 quarters of the patients sit in the community, this is an incredible opportunity for us to make sure that we make sure the messages come across. We haven't been in a position in the past to promote overall survival in light of the fact that we just had that conditional approval. And so now with this full approval, not only do we get to double The patient population that TRUDELV can actually help, but actually we also get to promote the overall survival, which is the only agent with overall survival in this setting.
So I think it's really going to help us ramp up. And the focus is still going to be despite the urothelial In bladder indication, the focus is really going to be more like a ninety-ten, 90% on 2nd line plus triple negative breast cancer and then 10% from a promotional standpoint on urothelial cancer. We believe that that's going to work well because there's a high overlap. There's about 70% of physicians that overlap from bladder cancer and also treat TNBC. So we're going to be in good shape To ramp this up, this is really the opportunity for TDALDI right now for this year.
Our next question comes from Phil Nadeau with Cowen and Company.
Murda, I had A 2 part question for you. You highlighted a couple of oncology events happening in the second half of the year, namely the motrelimab Phase 1b data And TRODELV data in ER positive HER2 negative breast cancer. On migrolumab, can you give us some sense of what data needs to be produced to support a filing. And on TREDELVY, there's been a fair amount of breast cancer data recently. Has anything that you've seen questioned The powering assumptions behind the revised design of the TROPICS-two trial.
Thanks.
Thanks, Phil. Great questions. In terms of Magro, in terms of what we think we need to see, look, I think the Challenge there is obviously that we're looking at external comparisons. So we believe that it's really around the strength of the data and its consistency with what we've seen already in that setting with mongrelimab. I think our assumption is as long as we are consistent with the data that has emerged, That will give us really good grounds to go and approach regulators To discuss a potential filing.
So we're, I would say, reasonably confident there and our expectation is as long as things Continue to go the way they have been, we'll be fine. In terms of the breast cancer data for TRIDELVY, Yes. I think in terms of our confidence, I think we remain confident that we're really well powered in that study To show benefit in particular in PFS as well as OS in that trial. So I don't think we've seen anything emerge that shakes our confidence around that.
Our next question comes from Louise Pearson with Redburn.
Hi, thanks for taking my question. On Yescarta, I was just wondering, could you frame the incremental effort that would be required on your site to access the 2nd line DLBCL population should see the 7 readout positively? Just thinking in terms of any overlap there might be in the sorts of centers where these patients are treated. And kind of on a related note, has there been much COVID impact on Cell therapy franchise Germany seems to have performed pretty robustly. Thank you.
Thanks, Louise. Over to you, Christi.
Thank you. So, I'll take the last one first maybe, which is the COVID impact. We did see COVID impact and slowing of our Ramp up that we started doing well Q1 of last year and there was a slowdown in Q3, Q4. We've seen that rebound in Q1. We do believe that, that has to do with less COVID impact, especially in the U.
S. Europe, in spite of the COVID impact, continued to grow Over those quarters, Germany and Italy being the exceptions, where the COVID impact has been greater on our business there. Overall, though, we're very pleased with what we're seeing from quarter 4 to quarter 1 of this year, significant growth and coming off a couple of down For Yescarta, both the U. S. And Europe, up quarter over quarter now with Yescarta.
And on the second line VLBCL question, so the good news is the ATCs are already set up. Just like with ZECARTIS, we're able to launch quickly. So moving up to the 2nd line, doubles the market opportunity, doubles the number of patients that we can serve. We also have community reps in the field already, both in Europe and in the U. S.
So this referral pattern will continue to be something But the belief or my belief is that as we look at patients in the 3rd line plus, those are typically patients that are going Physicians and patients are still looking for a cure. So if the study is positive, we're looking at replacing stem cell transplant as a standard of care in second line
Thanks, Christy.
Our next question comes from Jeff Meacham with Bank of America.
Afternoon, guys. Thanks so much for the question. I wanted to ask one on Biktarvy. The adoption has been Hugely successful and really for quite some time. So the question is, where do you see share maximizing in the U.
S? And what are the bigger Growth opportunities and then in the EU, what has been the primary headwind to greater share? Thank you.
Thanks, Jeff. Over to you, Joanna, please.
Yes. Thanks, Jeff, for the question. Yes, we're really quite pleased with Biktarvy's It just continues. And obviously, there's been some ins and outs because of dynamics around us from a market standpoint because COVID and inventory, but the share growth 8% year over year, as well as the fact That we continue to grow share and even 2 points in the last quarter. We also grew 2 points not only in the U.
S, but we also grew Just under 2 points in Europe and about 5 points year over year as well. So we are seeing solid growth in Europe and We are seeing in other markets as well like Japan and Canada, we're number 1 with Biktarvy. So I think that as the data continues to show The benefits of the profile that Biktarvy offers for patients, I think there's no stopping us, Jeff. I think we need to continue To grow this business and we are well poised to get out of this COVID-nineteen pandemic and hopefully the markets reset. The market already has reset in the naive patient populations.
We're almost back to pre COVID levels, which is great. And that's where Biktarvy Truly differentiates itself. And in the switch business, we're not there yet. We're about 30% under pre COVID levels. But again, with a share of close to 50%, also well poised for that to come back on track.
So I think we continue to expand and continue to gain share over older agents because of the benefits that Biktarvy offers, not just in the U. S, but really around the world.
Thank you.
Our next question comes from Michael Yee with Jefferies.
Hi, thank you and appreciate the question. Going back to TRIDELVI in the TROPICS II study, I think it's Fantastic. You guys upsized that and overpowered it. I guess I had two questions. One was, can you describe sort of What inputs went into your power and assumptions for that?
And then also do you guys have a view that prior CDK4six matters given that that's a pretty Much a standard of care nowadays and that's certainly evolved over the last few years as you think about the study. Thank you.
Thanks, Michael. I'll take that. So, 2, yes, great questions. In terms of assumptions, I think what's safe to say is we've been fairly conservative on our inputs to the assumptions In terms of looking at what the standard of care PFS looks like and using sort of that as our approach. I'd say actually that's fairly, our general approach.
I think we try to take a fairly conservative approach In terms of designing our trials and balance, what I would sort of a statistically significant benefit With a clinically meaningful benefit and I think that's we keep both of those in mind when we're powering our studies to make sure that We're hitting not only statistical significance, but looking for clinical significance. In terms of prior CDK4six, I mean, it's obviously something that's come up a fair bit appropriately. I think people Are looking at some data. There are a number of hypotheses that are going around What could be there? We're trying to take a very data driven approach on this.
And I guess I would say a couple of things. One is that, In our hands and what we've seen so far from the prior studies where we looked at Those people who had gotten prior CDK4six, compared with standard of care, TRIDELVY continues to bring Benefit to those patients. There's a big caveat there's a fairly small number of people in that from us where we look at it, but I think We're comfortable that that continues to be the case. And secondly, we are going to look at the data From the upcoming trial and we will look at that group of patients as a subgroup analysis To see if there is a difference in terms of how they respond compared to the overall population of patients that are going to be enrolled in that. So we'll make sure that we
Our next question comes from Terence Flynn with Goldman Sachs.
Hi, thanks for taking the I guess maybe 2 part for me. You mentioned a more gradual recovery now in the Q2, but you maintained your guidance The components, so just wanted to understand that a little bit more. Do you baked in more of a cushion there when you initially gave the guidance? And then on the prep side, how are you thinking about the recovery there in the second half of the year? Thank you.
Okay. Thanks, Terence. So Andy, why don't you start and Joe, I might want to add to the prep.
Yes. Hi, Terence. Thanks for the question. You're right. At the beginning of the year, we recognized that 2021 was likely to be more dynamic than prior years.
And when we put together our guidance for the year, we looked at a range of scenarios. We're well within the range of scenarios in the Q1. We're off to a good start. The mix was a little bit different than we expected with the additional pandemic related headwinds that you heard about. But to be clear, when we think both about our total product revenues, including Vectlary, but also our base case revenues, Our base product revenues excluding Vectlery, we're very comfortable with where we are and we're on target for the year.
We'll provide another update of course in the middle of the year, but That's how you should think about it at a high level, Terence.
And on the pet market, you're joining.
Yes. Thanks, Dan. So on the prep market, as I mentioned, Descovy share is holding at about 45%, 46 Percent in the Q1, so we're quite pleased with that. We've obviously been working closely with payers to make sure That patients and providers had choice in their prevention approach. The market is still dampened because Of this pandemic, as you can appreciate with the social dynamics that we are all living with, although we have seen some uptake in the last month or so, We'll see how that plays out.
But again, I think it's going to be in line with what Andy said, which is going to be a bit of a gradual recovery for the prep market. I think we're very well poised to make sure that once that market gets back to pre COVID levels, I think we'll be in very good shape in light of our holding our share at this level.
Thanks, Joanna.
Our next question comes from Robyn Karnauskas with Truist.
Hi, guys. Thanks for taking my question. And my kids, if they're screaming in the background, they're excited about your earnings call.
We love it.
We're very, very excited. I just want to thank you for your outreach for India. I I have a question about your guidance of $2,000,000,000 to $3,000,000,000 for Veklar V. How do we think about this? I mean, it does feel like this is going to go on longer outside the United Based on what we expect, but obviously some places are cheaper than others.
Can you give us some estimates on how do we think of general trends on pricing and Thanks for what you're doing over there. And then this is a very simple question. You talked a lot upfront about cell therapy. There's Till, there is also off the shelf IPCs, we talked about that a lot. Can you give us any sense if you're interested in augmenting
I appreciate your kids, Robin. That's terrific. And thank you for acknowledging the efforts of the company for so many countries out there that are stricken with this. Can I ask Joanna to cover the VACLEARY question and then Christy to cover the cell therapy?
Absolutely. Thanks, Robin, for your question and comments. I think what we've seen with VEGLIRI It's a really directly proportional effect with hospitalization rates and it's kind of what we've been saying for the last couple of quarters and we're seeing it. I mean you could Literally draw the line with the hospitalization, both in the U. S.
As well as outside of the U. S. Where we've seen sales as In the Q1 and I think that's going to continue, although to a lesser degree, we've seen hospitalizations really come down in the month of March and kind of hold steady, unfortunately. And hopefully they'll keep coming down as months go by and vaccination rates increase. But what we have seen is sales are really coming out In the U.
S, of course, also within our European region as well as Asia, there's a lot of markets in Asia that are also Taking full advantage of the benefits of BigQuery for their patients, their appropriate patients. And so we believe we've always said that we think the tail is longer. I know nobody wants to hear that, but I think we think the tail is longer than anybody thought originally. And I think that's what we're seeing as we go into Q2 and it will be a gradual So we do believe that Vykluri still will have an important role to play within the next couple of quarters and potentially beyond Into 2022. As for some of these, for example, India Or other countries that are served by our voluntary licenses, obviously, those are royalty free during the pandemic and that is something at a much lower price So our price for Vicklery hasn't moved.
It's well below the value of Vicklery for the developed countries. For the developing rolled up, it's obviously quite different. With that, Christy?
Yes. Thanks, Robin. Thanks for the question. So you heard a little bit in the beginning from both Merdad and Joanna and maybe Dan that we recently took a really hard look at our and did a portfolio review. A A few things are evolving or transforming, if you will.
Kite had such a success story bringing the first potential cure for lymphoma. We've transformed now to a company that has multiple brands, a franchise basically, 3 indications now And with a couple more to come in the next year, as we look at that, we know a lot more now about how to affect leukemia and lymphoma in this area. So Really taking a focus on making sure that we double down on our life cycle management, improving the risk benefit profile of what we have, trying to get patients with combination therapies for etcetera To ensure we increase the efficacy, that's really our main focus on our core. We're also looking at disrupting what we have today, whether it's iPSC, allo. We do believe eventually the market will be and we'll be trying to drive that way too towards a lower cost off the shelf, more convenient for patients Treatments, but today unfortunately from what we've seen at the recent congresses and publications and study results, it's a bit further out than we had anticipated just 12 to 18 months ago.
So we really need to focus on improving autologous where we have it today, disrupting ourselves in the future. And lastly, to your question, Beyond IPS your question was IPSC, but even beyond that, as we look at solid tumor, we really are the partner of choice with our successful manufacturing process, Our ability to deliver reliably in a short period of time, we are looking at transformations, really good transformations where we have proof of concept And solid tumors with March will be the largest in the long term.
Our next question comes from Matthew Harrison with Morgan Stanley.
Great. Good afternoon. Thanks for taking the question. Question on Galapagos and I guess there are 2 parts here. First part is you've got these upcoming Toledo readouts, Merdad, maybe you could Just comment on what you're potentially looking to see from those readouts given that the duration of those trials is fairly short.
So Maybe what you would view as sort of a positive outcome. And then I guess second question is a more sort of broader strategic question here. But If you don't see something that's positive out of those, how do you think about the longer term relationship there? And given that you're the largest shareholder, what might you consider in terms of that relationship? Thanks very much.
Great. You want to start, Mehrdad, and then I'll follow.
Yes, sure. It's a great question. And I think you, Matthew, you've mentioned, I think look, where we are now with the TALIA programs is looking for evidence of Tolerability and proof of concept, proof of principle for that pathway in multiple indications. And I would describe these early small studies as a place to demonstrate that and look To see where, the biggest impact could be. I think it's an early part of the longer journey, Ranging from, is there a particular indication that we would want to pursue further to confirm and expand on the signal To, do we have the right molecule for that?
So I think we view these together with Galapagos, I believe, we view these as sort of Very early in the story of the Toledo program. So We'll be looking to see, what those data look like in the near term.
Yes. Sure. So maybe just to you, Matthew, to give a little bit of context to people who may not be completely familiar with our relationship with Galapagos. So Of course, there was a filgotinib relationship, but then there was a separate relationship that we went into, as you know, A couple of years ago now. And that was really based on their research platform.
And I would say that Nothing has really changed in relation to that. I mean, one of the reasons to do that was to diversify our approaches From a discovery research perspective across if you like the Gilead Group. I listened hard to the scientists at that time. I continue to listen hard to the scientists Today, I think they have a very discriminated platform for screening compounds for 1st in class. And I'll remind you that's really their approach first Which of course comes with some risks, some of which we've seen in the later stage programs.
And of course, Toledo is the most advanced now of those But having said that, there are many others within their discovery platform that we continue to be intrigued about. I think it's an important part Of our overall inflammation strategy, albeit at an earlier stage for Gilead. But when we think about our strategic approach, that really focuses on immunology and virology as our core scientific skills, We have now obviously leaders in virology built up a really significant presence in oncology With inflammatory disorders really kind of the next step and the next stage of our platform where Galapagos presents, I think one aspect of that, but a very important aspect in terms of 1st in class approach. So we continue to be Working very closely with our partners at Galapagos to determine what's the next screens are and what the next targets are And the concept of our the entirety of our inflammation strategy. So thanks, Matthew.
Our next question comes from Ronny Gal with Bernstein.
Just a question on Descovy, the 22% down of the year over year, I was wondering if you can unpack those for us. So how much of that was inventory, COVID impact and price? So when it comes to price, do you think this is a kind of 1 year giveaway or should we expect a kind of a pricing decline every year going forward at least when it comes to the back class compounds?
Ronny, just at the very end, what did you say?
Yes, please.
Are we expecting the price declines this year to be a repeating events of the year? Or is this essentially expected to be a one time decline as Truvada Genetics Center?
Got you. Okay. Joanna, you got it?
Yes. Thank you. Sorry, thanks for that. I didn't hear the last part of that question originally. Yes.
So for Descovy, the year over year, obviously, it does have to do with higher payer And that was to ensure that patients and providers had choice and make sure that We didn't have any step edits. And now we do have some step edits for some plan, but for most plans, access is very open to make sure that Our patients and providers choose which therapeutics is best for them for prevention. And so I think that we will continue to be smart And we will continue to be disciplined in the way that we look at those discussions with our payers, but we're also looking at data That's been pretty clear. That shows that if you basically put a step at it, You don't actually get the patient on a Truvada generic, you actually just lose your patient. And I think as we think about ending the epidemic, Prevention is a big piece of that.
And so that's why choice is so important and that we keep people And so if that's what we need to do moving forward to ensure that, that might impact the price as we go, Our intent is obviously to keep the balance between what we do from a payer standpoint, but also what we do from a share standpoint. And that's why We're proud of the fact that we've been able to manage the payer dynamic and actually hold and even grow share in the last quarter.
Our last question comes from Hartaj Singh with Oppenheimer.
Great. Thank you for the question. And I just want to also echo what Robin said. I think people forget we donated almost 1,000,000 vials of remdesivir last year around this time, which very few companies have done. Just a quick question on your partnership with Merck.
What's the logic behind Gilead, I guess, leading the U. S. Development for the oral and then Merck on the injectable? What was the thinking that went into sort of the parameters of that and then also the cost sharing and the revenue sharing assumptions? Any color on that would really help.
Thank you for the question.
Thanks, Hartaj. And believe me, it means a lot for you to comment on that for all the colleagues at Gilead, who I think feel very Strongly about the intrinsic work we do for patients and donations is just one piece of that. It's part of our DNA. Andy, I think you're going to answer the question.
Sure. Hi Hartaj. Thank you for the question. Look, it was relatively simple. You have 2 outstanding organizations that are deeply experienced in Formulation and Drug Development, Gilead obviously is one of the leading companies globally in terms of co formulating orals For a single tablet regimen, especially in the HIV arena, and it made sense, I think, to both companies to have us take the lead there.
And at the At the same time, we recognize that to keep both programs moving forward quickly, it probably made the most sense to have Merck also lead a program and the injectable Formulation program is one that was in their sweet spot. So this is a win win. Both companies will be involved in both programs. And we think by doing that, we're going to be able to advance these programs more quickly than we could individually. As far as the cost sharing, we Took on more of the cost sharing because we have more of the upside, right?
So it was a relatively simple. I think we are both bringing great molecules to the collaboration. We're both very Excited about what we think these combinations can do in the treatment market, both in oral and the subcu injectable formulations. And we recognize that when you looked at the patent life of the two products, for instance, was different. The franchise that we have in HIV, the impact of these on our existing franchise, when we put it all into the mix, I think there was a clear alignment between the two companies that it made sense at certain revenue levels for Gilead to share disproportionately in more of the revenue Or the profits, I should say.
But in exchange for that, fairly, we had to agree to take a little bit more of the R and D expense, which we were happy to do. So, that should I think Hartaj, that should answer your question.
And Hartaj, I just want to end by thanking our colleagues at Merck. It's terrific when you get 2 companies to come together to put patients first to accelerate treatment options for patients in need. And We have a lot of respect for our Merck colleagues and happy to say that already the collaboration is getting off to a very strong and rapid start. So we look forward to Moving fast to make a difference for patients with different treatment options.
That concludes today's question and answer session. I'd like to turn the call back to Jackie Ross for closing remarks.
Thank you, Liz, and thank you all for joining us today. We appreciate your continued interest in Gilead and look forward to updating you on our continued progress.
This concludes today's conference call. Thank you for participating. You may now disconnect.