Okay, great. Thank you for joining us in day two of the Cantor Global Healthcare Conference. My name's Carter Gould. I cover the large cap biopharma names here at Cantor. I'm pleased to welcome Gilead to the stage. Joining us is Andy Dickinson, CFO. Jackie Ross from IR and Treasury is also in the crowd someplace. Andy, before we get started, maybe just any opening comments, then we'll jump into Q&A.
Sure. First of all, thank you for having us. We appreciate it. It's great to be here. Great to kick off the September conference season. It's a really exciting time at Gilead. I think you've seen the incredible progress over the last two or three years with our business overall, including our HIV business. We had an exciting new approval in the HIV business at the end of August that I'm sure we'll talk about. You're seeing very strong growth across the HIV franchise, obviously with the Sunlenca launch in HIV prevention. The growth of the HIV prevention market is an exciting, relatively new chapter for Gilead. Then you're seeing some exciting growth and developments in the oncology and the inflammation business. We have a lot of data coming later this year.
We have a really important approval that we expect later this year of anitocabtagene autoleucel for the cell therapy business. So there's a lot to watch and be excited about, and happy to kind of dig into any of it.
Okay, perfect. Since you teed it up, why don't we start off with Sunlenca, and maybe just give us sort of the state of the state in terms of on-ramping of new patients. Clearly, for those people in the crowd, we put out notes every Friday.
Yes
on the script trends. From your vantage point, how you feel about the new starts cadence of patients.
Sure. Yeah, we feel great about it, I think at a high level. Look, when you kind of step back, this is one of the most exciting launches in healthcare, right? You look at what's happening in the GLP-1 space and the HIV prevention space, I mean, this is a really exciting development for people at risk of getting HIV. At a high level, every single metric of the launch is either tracking to or exceeding our expectations. We've guided to roughly $1 billion of sales that are expected this year. Again, the drug was approved right at the very end of the second quarter of last year, if I remember correctly. So we're kind of at a year into the launch, and all of the metrics look great.
We talked at the end of the second quarter about a 70% persistence rate, which again, for a prevention medicine from our perspective is very, very strong as well. We're off to a great start. The big picture for the HIV prevention business is if you think about it over the next 10 or 15 years, and we expect to have a yearly injectable version of lenacapavir or Sunlenca available in 2028. Over time, we expect the market to consistently, steadily move from the orals, including the oral long-acting, to the injectables. A lot of the growth that you're seeing. The other thing I should mention, Carter, is today, we're on a $4 billion run rate for our HIV prevention business. It's not that long ago that this was a $1.5 billion business for us.
The market's been growing beautifully, mid-teens percentage growth for the overall HIV prevention market. You've seen stronger growth in our business as a result, both of the Sunlenca launch, also some pricing tailwinds and growth for Descovy, which is really exciting. The final piece of the puzzle is, in addition to the long-acting injectables, which we think will be the best option for patients in the long run, and you'll see the market continuously move towards the long-acting injectables. We have a weekly oral version of lenacapavir that we expect will be approved next year in the U.S., and that will allow us to target those patients that, for whatever reason, don't want to use an injectable or want to start with an oral. 50% of the market today is generic daily oral in TRUVADA.
I think the weekly oral opens up that part of the market significantly to move over as a precursor, potentially from a daily oral to a weekly oral before these people maybe consider moving to the long-acting injectable. Every which way we look at it, the launch is going really well. The prevention business overall is doing great, and we think it's just the beginning of a long period of growth for that franchise.
You sort of teed up the next question. As we think about that once-weekly oral, is that more of a way to cannibalize Descovy, or is it to, I guess you kind of alluded to it, opening up new segments that maybe weren't interested in the current offerings?
I think it's both. It's less about cannibalizing Descovy or TRUVADA and more about just offering a better alternative for people that are at risk of getting HIV. The future of HIV prevention, in our view, is clearly in the long-acting, so you see that with the Sunlenca launch. The weekly oral, the monthly orals that will be coming in the future, including our programs, will continue to open up that market. I think you have two dynamics happening at the same time. In the short run, when you have an oral-to-oral conversion, you can see pretty profound movements in the market in a short period of time if you bring an alternative that is better for patients that are at risk of getting HIV.
The best example is when we launched Descovy, whatever it was for prevention now, five or six years ago, 50% of the market, roughly the daily oral market, moved from TRUVADA to Descovy in 15 months. As we launch the weekly oral, there's a real opportunity to take that 85% of the market that is currently using one of the two daily oral alternatives to move to a weekly oral and ensure greater adherence and compliance. It won't be for everyone.
Right.
The second piece of the puzzle that we have talked about, again, is that over time, we expect that 85% of the market on the orals to shrink as more and more of the market moves to the long-acting injectables, including Yeztugo.
Okay. On that long-acting side of the marketplace, how do you think about every six months and every 12 months sort of coexisting? Is that something we should expect, or would you expect it longer-term to gravitate to the-
We expect that they will coexist. Many of the physicians that are treating people at risk of getting HIV actually like seeing the patients twice a year, so the every six month Yeztugo is kind of the perfect formulation. There will be both physicians and patients that prefer the yearly injection. The yearly injection is going to be an intramuscular injection versus a subq injection. There may be some patients that prefer, and physicians, one over the other, but they will coexist. I think maybe the most important point is all of these launches will continue to grow HIV prevention awareness and grow the market overall, and that is exactly what you have seen in the last two years in particular. Once we had the PURPOSE data, which is the incredible long-acting every six-month lenacapavir phase III studies, you have seen this really substantial expansion of the HIV prevention market as awareness has grown.
I think they will coexist. The every six month, it is hard to say today. We do not yet have the data on the yearly injectable, but all things being equal, I think they both have a significant role to play going forward.
Okay. Maybe switching gears to the treatment side of HIV. BIKTARVY continues to just get bigger and bigger.
Yeah.
You are now over 52% share. How big can BIKTARVY get, particularly as we see the introduction of other agents, including some from Gilead
Yeah
albeit in different settings maybe?
Yeah. BIKTARVY can continue to grow is the answer. But it is such a big product now that, on a percentage basis, the growth has slowed over time, which is to be expected when you have that much of the market. You have mentioned 52% of patients in the U.S. roughly today are on BIKTARVY for HIV treatment, which is incredible. Over 70% of new patient initiations start on BIKTARVY, and there is good reason for it. BIKTARVY is the absolute gold standard for HIV treatment at every metric that you look at, whether it is tolerability, the resistance profile, et cetera. It is just a really fantastic medicine. We are launching, though, additional treatment medicines over the next decade that we think will play a really important part in that market as well, and the first one is the drug that was approved a couple of weeks ago.
This is another daily oral, but it's a two-drug combination of bictegravir, which is the integrase inhibitor in BIKTARVY, and lenacapavir, the capsid inhibitor that we just talked about in the prevention setting. This is a really exciting opportunity for two reasons. One, because the vast majority of patients start on BIKTARVY, if a patient is going to switch for any reason to another drug, for the last 10 years, we've had a lower share of the HIV switch market, which is the most dynamic part of the HIV treatment market. With the launch of Bic/Len, and I forget our trade name. Jack, you will remind me. Bixlenvo?
Bixlenvo.
Thank you. We now have a meaningful opportunity to participate more robustly in the switch market. The other thing that's really interesting is 5%-6% of patients in the U.S. on HIV treatment therapies have developed significant resistance or have other issues that put them on these multi-tablet regimens, kind of reminiscent of what you saw 15 or 20 years ago, where patients took all these different pills, some in the morning, some in the middle of the day, at night. It was very difficult to stay on those regimens. You saw more viral breakthroughs, a harder time bringing people to undetectable levels so that they couldn't transmit the disease. That 5%-6% of patients, in addition to the overall switch market, are logical candidates to go on this new launch therapy very quickly. So that's an exciting time.
Over time, as we have these launches, the next one coming next year is a weekly oral combination with our partner, Merck, that we think will be another exciting opportunity for patients in the switch market. Then over time, we expect to launch monthly orals, every three or every six-month injection combinations for treatment, all of which should open up bigger HIV treatment market and move more of the market from the daily orals to the long-acting therapies, just like you're seeing in prevention.
Okay. BIKTARVY is going to run into some IRA impacts later in the decade. How would you advise investors think about the magnitude of those impacts, the cadence, timing of those impacts?
Sure.
Put your CFO hat on and help guide us through that.
We are in the middle of the negotiations with the U.S. government right now, to your point. I think what we have always said, I cannot give you any specifics in terms of where we are. The government publishes the results, if I remember correctly, at the end of November. We will have a sense just before that of where we end up in terms of the government, essentially a mandated price at the end of the day. It is a long process. We started a number of months ago with the government. It will impact our business in 2028. We think the impact should be manageable. Again, I do not know what the number is, but the impact should be manageable. I have always described this as a patent cliff that then you grow through.
I use the example of the TRUVADA patent cliff because that was the last major patent cliff that we dealt with, whatever it was, six years ago, seven years ago, where you saw a $1.5 billion step down in our HIV business, and we grew through it really quickly. I think you should expect to see the same thing here. To some extent, it depends on the magnitude of the price cut and the overall impact. But the key message is, we think it is manageable. We expect our HIV treatment business to be a growth business even with this impact through 2030 and beyond. Remember, with BIKTARVY, we have composition of matter patent protection through 2036. We talked about the launches that are coming, including the one that is just underway, all of which will grow and diversify our business.
When you think of just the HIV treatment business, let alone then layering on the HIV prevention business, the HIV treatment business is a growth business for us for the foreseeable future, just even with the BIKTARVY drug price negotiation.
Okay. It sounds like nothing terribly surprising coming out of those negotiations, more or less what we've seen in-
Again, I can't say specifically because we're in the middle of it. But I've always said we expect that it'll be manageable, and more to come later this year. As we have the price, then we can talk more specifically about what it means. But when you look at where we are today, our expectation is we can absorb that, we can manage it, and the business can grow through it.
Okay. Maybe let's switch gears to the I&I franchise. You sort of alluded to positive alpha-4 beta-7 data earlier this year. It's definitely caught the eyes of a lot of investors. Maybe before we jump into that, what is Gilead's, or what are Gilead's ambitions in I&I?
In I&I? Well, it's one of the three scientific areas that are our core focus areas. To again step back, we're the world's largest virology company. We've built a robust oncology business. And the third leg of the stool, so to speak, is the I&I business that we're growing. The other big-picture comment that I'd make is, I've been back at Gilead for 10 years. We have completely transformed the portfolio, the quality, size, and depth of the portfolio, the research portfolio. We've made the investments that are required to grow internal research and development, and you're really starting to see the fruits of that. And honestly, the alpha-4 beta-7, outside of lenacapavir, which I think people expect us to show that level of innovation in virology.
Outside of virology, the alpha-4 beta-7 may be one of the, it is one of many examples, but it is the most prominent one. The phase II data in ulcerative colitis will be shared here in the coming months at a scientific conference, so I can talk more specifically about it. We have said that we are excited about the data. We are moving the program forward into phase III as a monotherapy, and we are exploring combination opportunities for it. We know this market really well. We followed the leading injectable alpha-4 beta-7 for years. We know the other companies that are developing the oral versions of alpha-4 beta-7 like our program. So we followed it closely. We know what good looks like. We are excited to share our data and talk about it.
Maybe more importantly, I think this is a proxy for where the company is going in terms of the breadth, depth, and quality of our portfolio and additional growth opportunities that are coming outside of just the HIV business and the HIV prevention business.
Okay. So you affirmed we are going to get data this year. We are going to see it at a medical meeting.
Correct.
Okay.
Yes.
In terms of potentially executing on combinations, is that something Gilead can do internally alone? Will you need to look at a potential partnering or external assets?
Yeah. We do have other assets in IBD. For instance, we have a TYK2 inhibitor that also was internally developed. We have a gut-restricted FXR agonist that we have two of them. One was acquired, the one that we are taking forward is internally developed as well, all of which could be combination partners. When you look at the logical combinations in this space, I will use one example, like oral IL-23s, right? Which could be a logical combination when you see some of the drugs that are approved. Those today would come from outside partnerships. We are looking at multiple potential partnerships. I think we have been pretty open that as we build this business, it is no different than frankly, what we have done in HIV. Over time, Gilead has partnered with a number of companies, most prominently Bristol Myers Squibb on ATRIPLA back in the day, J &J on SYMTUZA.
More recently, the Merck partnership for the weekly oral that we just talked about. Doing the same thing in the IBD space, or in I&I more broadly, makes a lot of sense. Maybe the other thing, Carter, that you and I have talked about is we do not yet have a commercial organization in I&I. We do have a large organization in oncology, virology, and then in liver disease, part of which kind of has an I&I focus through our CymaBay acquisition, and PBC franchise. As we build that out, there is always the opportunity to leverage what other people have built as well. More to come. Those are early-stage discussions. I cannot tell you where it is going to go, but the most important point is I think there is a lot happening in that I&I franchise. We did not talk about Ouro, one of the acquisitions we did this year.
You will also see data, I expect, later this year in the B-cell depletion space. That is a partnership with Lakefront Bio, one of our partners, formerly known as Galapagos NV. You should see some data there too. Just another example of a program that we have in that space that we can build out over time.
Okay. We could go down that for another 20 minutes, but we will move along.
Okay.
Why don't we move to cell therapy? You do have the anitocabtagene autoleucel PDUFA coming up before the end of the year. Been a lot of questions, certainly debates within the halls of Cantor around what that label will look like. Any updates on the conversations with FDA and your confidence you'll get that fourth-line-plus label?
Yeah. No specific updates. We still have a lot of confidence that we're going to get the fourth-line-plus label.
Yep.
That's always been our expectation. We don't comment specifically on the interactions with the regulatory authorities when we're going through an approval like this. But again, nothing's changed from our perspective. We see anitocabtagene autoleucel as a significant growth driver for our cell therapy business, an incredibly important entrant in the multiple myeloma market. We think it has a differentiated profile. The most obvious piece is kind of on the safety side when you look at the neurological side effects that one of the competitor regimens has, as well as some severe colitis side effects that some KOLs will highlight. We think we have the potential to have a therapy that is safer on both of those measures, and that over time could take a significant part of the multiple myeloma market. You highlighted that we expect to start in the fourth-line-plus market, which is a smaller piece of the market.
Still a pretty big commercial opportunity for us when you look at the size of our cell therapy business today. Could easily directionally double the size of our cell therapy business. But then moving into the second line-plus, we've already fully enrolled the phase III trial looking at anitocabtagene autoleucel in second-line plus. Then as you would expect, we'll have that data over the coming years, and we would expect an expanded approval in second line-plus. That really opens up the opportunity for anitocabtagene autoleucel. But we see cell therapy in multiple myeloma, and the BCMA cell therapies in particular as a huge part of the long-term treatment algorithm, especially in second line-plus and in some earlier line settings, and we think anitocabtagene autoleucel can drive a lot of growth in that franchise.
Your confidence and willingness to make those investments, has that been in any way impacted by the progress we have seen with the bispecifics? We have seen combination bispecific data. We have had more BCMA bispecific data just last week with better CRS profiles. Does that change the calculus?
Well, it is certainly something that has been part of the calculus. We look very closely at the bispecifics. We have a number of our own bispecific programs. Actually, the B-cell depleter that I talked about earlier is a BCMA B-cell depleter that we acquired together with Galapagos NV. So we look at all of these spaces. Look, the multiple myeloma treatment guidelines are relatively clear. When you look at the, I forget the exact organization, but the group that develops the treatment guidelines for multiple myeloma suggests saving the bispecifics for after CAR T, recognizing the benefits of CAR T. One, the data to date suggests that you get much more durable responses with CAR T. You certainly see that in the DLBCL space. This is the patient's really one opportunity for something that could be a curative regimen, right?
There are some important differences between the DLBCL market, where we started with YESCARTA and multiple myeloma. In DLBCL, the first-line and second-line treatments are also curative, right? When you look at R-CHOP and then stem cell transplants. So physicians treating those patients already have curative regimens. In the multiple myeloma space, generally today, it appears that cell therapies are really the only potential for a cure in that market, which is incredibly important for patients and physicians. So our belief is that the cell therapies over time will be used earlier and will be really solid for many patients, second line treatment option, and then you can save the bispecifics for later for patients that do not have the robust response to cell therapy. But all of that, to your question, did go into how we looked at it.
When we bought the rest of Arcellx earlier this year that we did not already own, that was based on our expectations, not only for the label, but how the market is going to develop over time.
Okay. As far as the other acquisitions you completed this year, Ouro and Tubulis, you alluded to some potential updates on the Ouro side. Maybe just recap that, as well as on the Tubulis side. The ovarian data at ASCO was standing room only.
Yeah.
You had to send our associates hours before to get seats.
Thank you for doing that.
What else can we expect on these fronts this year?
Yeah. I think it is just an exciting example of where Gilead is. I talked earlier about the strength and breadth of our internal research and pipeline, and then we can add to that over time with these acquisitions. We just talked about the full acquisition of Arcellx, and owning all of that. Part of that, by the way, is the things that we can do with the BCMA binder from Arcellx and other programs, especially for in vivo cell therapy that we have been focused on, and others for years now. We are excited about that. On Tubulis, and Ouro specifically, maybe just starting with Ouro, given that I highlighted it earlier, the B-cell depleter space is a really exciting space. Many of you have seen companies working on this.
The idea of resetting the immune system and letting the B cells and plasma cells repopulate, and getting rid of the cells that are causing the disease aberrant B cells in a safe way. The early data from Ouro, and it was a very competitive process, is really exciting. The company was studying it. Ouro is a small company. They licensed the drug from a company in China, studying it in three relatively large orphan diseases, which I also think is a great fit for us in terms of your question earlier about building out in the I&I space. If we continue to see success and get these products approved, building out your commercial organization in these large orphan diseases is a really elegant and capital efficient way of building the next step of our I&I franchise.
You will see the early sets of data later this year, I expect, at a scientific conference again. We are working on that with our partner, Lakefront, so whether it is later this year or early next year, at some point, we expect to share some of that data. On Tubulis. Tubulis was a large private company in Germany that had developed what we believe is a best-in-class antibody drug conjugate, ADC, platform that was very differentiated. To step back, since we did the Immunomedics acquisition to acquire rights to TRODELVY, I think that was six years ago now, roughly, if I remember correctly. We have been looking to expand in ADCs and to find the right platform. We had a partnership with Tubulis.
It was a great proving ground to really work closely with them to see what the platform could do, and we are absolutely convinced that this is the highest quality, best, most differentiated ADC platform and technology and chemistry, including their linkers and what you can attach in terms of the warheads. You can use this technology in oncology, including for the lead ovarian program that you referenced that had the exciting data that was shared at ASCO earlier this year. You can also use it in virology. There are a number of ADC applications in virology. You saw that with a deal earlier this year that another one of our peers did. There is a lot to do with that that we are really excited about. The other thing, when you look at our capital model-
Yep
We are a very efficient company. We are finally spending at the right level, R&D as a percentage of revenue. Roughly 20% of our revenue is reinvested in R&D. We were much, much lower than that when I joined Gilead 10 years ago. We had the ability to bring in all three of these assets and fold them in. There would be a modest increase in our R&D, but it does not really change anything in the long run to build these out. We still expect that our top-line growth will lead to significant earnings accretion over time. We are excited about all three of them. They all go to the diversification, the build-out of the business, and most importantly, like everything that we have done, the early data, recognizing it is early, looks really significant in terms of moving the needle for patients.
Since we have you here, it would be a derelict of duty to not ask you on capital allocation and continued-
Sure
focus on M&A. You guys have been pretty disciplined. You made some splashes this year. I guess the question is really, again, how that M&A appetite, you expect that will evolve over the course of this year and into next year, and the appetite to move into some of these additional TAs, or should we view your TA scope as established now and unlikely to evolve?
Yeah. Maybe starting with the last part of the question. I think our TA scope, at least for the reasonable foreseeable future, is firmly established, and that is where we are focused. We always retain the right to change that if we see something that we think could dramatically change healthcare for patients or an opportunity that we just cannot pass up. I think we are very focused, and highly likely that we stay in oncology, virology, and I&I for the foreseeable future. In terms of the M&A appetite, we are always going to add things from external innovation. There is a lot that is happening outside of our walls that is really important. You see that with the Tubulis, the Ouro deals, Arcellx. We are going to add that.
But the big picture is we're just in such a different place than we were 10 years ago when I joined the company, where we had a very modest, to say the least, pipeline, a much smaller research group that was focused predominantly on viral hepatitis and virology or HIV. Today, we have a really robust internal research engine. To put this in context, when I joined, we would have two, three, or four molecules move from research into clinical development any given year on average. We're now at 10+ a year, moving towards more of those. And we can be really selective about what we take forward. So the need for large external deals is. We don't have the need that we had 10 years ago, seven years ago, when Dan joined and when I joined. But we'll always look at things.
So do I expect to do more deals like the Tubulis deal over time? Yes. But there's no sense of urgency to do that. Many of our peers that have large patent cliffs coming up, I think, have a greater need than we do. We are really excited about what we're seeing, not only internally, but in the outside world in terms of the level of innovation. So we'll want to keep adding some of that, but we can be pretty selective. Maybe the other thing I'd say, Carter, on this is we are really focused on kind of the capital model, the efficiency, pulling forward. We went through this big phase of growth as we rebuilt the business. You see the last two or three years, we've been very focused on making sure that we pull forward efficiencies across the entire business.
I still think we're relatively early in that journey, and there's more that we can do over the next five or 10 years in terms of pulling forward efficiencies on things like procurement and contracting, leveraging different models over time to find efficiencies that will help drive the bottom line as well. So more to come on that.
Maybe on the last point, and I'm going to do the unfair thing of only giving you a minute and a half to answer the last question.
That's okay.
As you think about those push-pulls around contemplating, potentially expanding your alpha-4 beta-7, and taking that into what would almost inevitably be a large set of later-stage
Yeah, phase III trials.
trials against what you talked about, discipline on the margin side and still some ambition on M&A.
Yeah.
How do you balance all that? I guess it kind of gets back to the earlier question around that appetite and that willingness to make those big investments in I&I.
Yeah. I think that first of all, we have to see where we go, right? Some of those trials, as we said earlier, could be combination trials where you are sharing both the risk and the cost with a partner. The other thing to remember is we have a lot of large trials that we started in the last 10 years that are rolling off. Like any company, we have a really disciplined modeling approach where we are looking at where we are in our R&D spend, what is rolling off, what is rolling on. Honestly, at the beginning of the year, I was more concerned about not having enough in the pipeline as we looked at 2027, 2028, and 2029. Not only do I think these three deals really add to the quality of the portfolio, but we also had a need to add to the overall portfolio.
We are at a point, though, where there is more that we could do than we are going to do, which is a really healthy place. Historically, when our portfolio was smaller, it was much easier to take everything forward because you did not have enough. I think we are at a very healthy place now, and you can kind of balance both. R&D spend as a percentage of revenue is never a flat line. There will be periods where it may go above 20%, there will be periods where it is below 20%. I always think about this over the cycle. When I look at it right now, there is a lot that we can do. First of all, maybe the other thing to say is we will always focus first and foremost on what is best for patients.
If we have something using the alpha-4 beta-7 as an example that we think we can really benefit patients, we will take it forward and find a way to take it forward. The last thing there, on the TRODELVY lung cancer study that we did over the last couple of years, we did a partnership around that where we had some R&D funding that helped pay for that study. There are examples like that of ways that companies can use partnerships or capital partners to make sure that you are taking all the programs forward that could benefit patients.
Perfect. Well, we will have to leave it there. Andy, thanks very much.
Thank you. Appreciate it. Thank you very much.