Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to Merck Announces HIV Collaboration with Gilead. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press the pound key. If you are listening to the audio webcast, please mute your computer speakers while you are asking your question to avoid background noise. Thank you. I would now like to turn the call over to Peter Dannenbaum, Vice President, Investor Relations. Sir, please go ahead.
Thank you, Lara. Good morning. Welcome to Merck's call to discuss today's announcement of collaboration with Gilead Sciences, as well as our HIV program broadly. Our speakers today will be Dr. Dean Li, President of Merck Research Labs, Dr. Daria Hazuda, Head of Infectious Disease Discovery Research, Dr. Roy Baynes, Chief Medical Officer of Merck Research Labs and Head of Clinical Development, and Frank Clyburn, our Chief Commercial Officer. I would like to remind you that some of the statements that we make during today's call may be considered forward-looking statements within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are made based on the current beliefs of Merck's management and are subject to significant risks and uncertainties.
If our underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Our SEC filings, including Item 1A in the 2020 10-K, identify certain risk factors and cautionary statements that could cause the company's actual results to differ materially from those projected in any of our forward-looking statements made this morning. Merck undertakes no obligation to publicly update any forward-looking statements. Our SEC filings and an investor presentation that we will speak to on today's call are posted on merck.com. With that, I'd like to turn the call over to Dean.
Thank you, Peter. Good morning, and thank you for joining us today to discuss our exciting new collaboration with Gilead to create long-acting HIV treatment regimens of our two potentially first-in-class compounds, islatravir and lenacapavir, for the benefit of people living with HIV around the globe. We would like to also speak to our islatravir development program more broadly, and Daria, Roy, and Frank will share their insights in a minute before we take your questions. Now, through the execution of this collaboration, Merck continues to drive forward its strategy of innovation with a focus on finding the best science to address unmet medical needs. This transaction furthers Merck's capabilities in HIV, but more importantly, yields the potential to bring to market combination regimens that promise to transform treatment options for people living with HIV that otherwise would not be possible without this transaction.
This deal today reflects Merck and Gilead's commitment to maximizing the public health impact for people living with HIV in every corner of the Earth and providing long-acting treatment options that help provide sustained viral suppression to reduce transmission rates globally. Now, Merck has a long history and legacy in HIV research and has introduced many first-in-class molecules to address this illness over the past 35 years. More recently, we've introduced to the market our non-nucleoside reverse transcriptase inhibitor, doravirine, both as a single agent, as a part of a complete regimen, and as a fixed-dose combination as a single-tablet regimen. In addition, we've progressed our potentially first-in-class nucleoside reverse transcriptase and translocation inhibitor, islatravir, into phase III clinical trials across treatment and prevention.
We are excited to build upon this legacy of innovation in HIV through today's announcement of our collaboration with Gilead and to potentially bring multiple long-acting combination treatment regimens to people living with HIV. We believe that it is the right time to initiate this partnership with Gilead, given the broad understanding each company has built through their respective development programs of islatravir and of lenacapavir, and we are again following the science to deliver the best innovation that maximizes benefits for people living with HIV. Now, before I turn the call over to Daria Hazuda, who leads our infectious disease and vaccine discovery research and is our Chief Scientific Officer of the Cambridge Exploratory Science Center, I thought I would take a moment to highlight the important role that Daria has in Merck's HIV research.
During her tenure at Merck, Daria has played instrumental roles in the discovery of multiple products. Most notably in the area of HIV research, Daria is recognized for her work delineating the mechanism of the HIV integrase. This work provided critical insight into the potential of HIV integrase as a target for therapeutic intervention. Subsequently, she built on these observations to develop Merck's first-in-class integrase strand transfer inhibitor, raltegravir. More recently, Daria also played a critical role in the design and development of doravirine, which was approved by the FDA in 2018 for the treatment of adults with HIV and is marketed as PIFELTRO and DELSTRIGO. doravirine is now also being evaluated in phase III clinical trials in combination with islatravir.
Daria's knowledge and expertise in HIV and her ability to apply that knowledge to islatravir and our broader HIV program gives us confidence in Merck's ability to execute on our exciting HIV pipeline today. With that, I'll turn it over to Daria. Daria?
Thank you, Dean.
Good morning, everyone. As Dean noted, I've worked in the field of HIV research for more than two decades, and I've had the pleasure to see firsthand the incredible innovation and progress that has occurred in treating and preventing HIV, as well as the impact that our medicines have on people living with HIV, their families, and their caregivers. We have certainly come a long way, but unfortunately, there still remains significant unmet need in HIV today. In fact, in 2019 alone, there were 1.7 million global new infections and a total of 38 million people living with HIV. In the treatment setting, there is a need for new options that reduce stigma, improve adherence, reduce toxicity, and provide for continued antiviral suppression after missed or late doses. In treatment, once-weekly oral and longer-acting injectables offer significant potential benefit to patients.
In prevention, the current uptake of PrEP regimens is suboptimal for many complex reasons. In this setting, long-acting regimens like once-monthly oral dosing and once-yearly implants have the potential to improve uptake and implementation of prevention regimens. As one physician told me many years ago, "The best medicines to treat and prevent HIV are the ones people take." Options are critically important. As Dean highlighted earlier, when we discovered and launched ISENTRESS, we thought this would be a once-in-a-lifetime accomplishment in the field of HIV because of what integrase inhibitors have done to transform HIV treatment. That said, as we advance the development of islatravir, I would almost consider this to be a once-in-a-lifetime type of molecule.
The ability for a drug like islatravir to have the pharmacology and the potency to enable long-acting formulations that could last for more than a year is something I would never have believed possible. The continuing unmet need in HIV drives our efforts at Merck to innovate, and we believe that islatravir is ideally suited for long-acting regimens. The unique attributes of islatravir with respect to potency, its high barrier to resistance, and pharmacology, including a long half-life in cells, provides this foundation for extended dosing formulations, including weekly oral and long-acting injectable combinations with lenacapavir. Islatravir and lenacapavir each represent potential first-in-class assets that have progressed into late-stage clinical development. Islatravir is a novel nucleoside reverse translocation inhibitor that works through multiple mechanisms of action to inhibit HIV replication, resulting in very high potency and a high barrier to resistance.
islatravir uniquely blocks reverse transcription by preventing translocation, ensuring that the enzyme cannot shift to the next position in the growing DNA chain. islatravir also inhibits reverse transcription through delayed chain termination, altering the viral DNA so that additional nucleosides cannot be incorporated. Gilead's lenacapavir is a potentially first-in-class capsid inhibitor and also interferes with multiple processes in HIV replication by interfering with both the assembly and disassembly of the HIV capsid, critical steps in the HIV life cycle. We view lenacapavir as an attractive partner to islatravir for several reasons. First, as a novel first-in-class capsid inhibitor, lenacapavir has activity against wild type and drug-resistant HIV. Importantly, like islatravir, lenacapavir has a long half-life, which makes it ideal for longer-acting regimens. Further, also like islatravir, lenacapavir has the ability to be administered in once-weekly oral and injectable formulations, which is certainly not the case for most compounds.
As we looked at both islatravir and lenacapavir, we recognized they have the unique qualities needed to create effective long-acting oral and injectable combination regimens and change the treatment landscape in a meaningful way to address the unmet needs of people who are living with HIV. With that, I'd like to pass the call over to Roy to highlight our broad clinical development program studying islatravir across treatment and prevention, including how we see the combination with lenacapavir fitting into that program.
Thank you, Daria. Merck is progressing a broad internal development program studying islatravir across treatment and prevention. On the treatment side, we are in phase III clinical trials evaluating the combination of islatravir and doravirine as a once-daily oral regimen across participants switching from an approved regimen, heavily treatment experienced, and treatment-naive participants with HIV. We hope to see readouts from some of these trials later this year. We recently progressed the combination of islatravir and MK-8507, a developmental non-nucleoside reverse transcriptase inhibitor, into phase II clinical trials as a once-weekly oral regimen. Beyond these treatment regimens, there is potential for additional combination agents given our deep pipeline, including several integrase inhibitor candidates in early development.
In the prevention setting, we have begun recruitment for our two phase III trials, IMPOWER 22 and IMPOWER 24, studying islatravir in different populations at high risk of acquiring HIV infection as a once-monthly single agent oral therapy. IMPOWER 22 is evaluating the efficacy and safety of islatravir as a once-monthly oral capsule in adult women and adolescent girls, IMPOWER 24 is evaluating the same regimen in men who have sex with men and transgender women who have sex with men. We are also evaluating longer-acting prevention options, this past week, Merck presented encouraging data from our phase I single-agent implant at the CROI meeting, which I'll touch on in just a moment. We look forward to moving this regimen into phase II clinical development in due course.
We believe that given the breadth of this clinical development program and favorable attributes that islatravir brings to the table, there is potential to establish islatravir as a foundational asset across future treatment and prevention regimens. To highlight some of the data generated across our program, we wanted to also take this opportunity to discuss some of the islatravir data presented at CROI last week in both treatment and prevention. Data continues to support long-acting dosing regimens in both settings, including the suitability of MK-8507 as a once-weekly treatment partner, and we've highlighted dose selection data for our once-monthly oral PrEP regimen. Of note, early data were presented from our subdermal islatravir implant for PrEP.
As you can see on this slide, the data support the potential for the implant to provide drug concentrations above the target PK threshold for at least one year, and we are excited to move this forward in development. Our new collaboration with Gilead naturally expands and complements our long-acting development program, and we plan to pursue treatment regimens studying the combination of islatravir and lenacapavir in both long-acting oral and injectable combinations. We will start development of the combination regimens as soon as possible and hope to have the first oral combination trial up and running in the second half of this year. With that, I'd now like to turn the call over to Frank to walk through the details of the collaboration and highlight the commercial opportunity across treatment and prevention.
Thank you, Roy. Today's announcement kicks off an important collaboration between two recognized players in HIV, with an initial focus on the development of long-acting oral and injectable combinations of two potentially first-in-class assets. The deal will allow both companies to work as partners to develop long-acting combinations of islatravir and lenacapavir for the benefit of those living with HIV. We will share operational responsibilities, development and marketing costs, and any future revenues of combinations. The specific terms of the deal include the sharing of global revenues on treatment combinations of islatravir and lenacapavir equally until each product reaches a certain sales threshold. For the long-acting oral combination regimen, annual revenues up to $2 billion will be split equally. Revenues above this threshold will be split 35% for Merck and 65% for Gilead.
Similarly, for the long-acting injectable combination regimen, annual revenues up to $3.5 billion will be split equally, and revenues above this threshold will be split 35% for Merck and 65% for Gilead. From a development and commercialization standpoint, Merck and Gilead will share costs 40% and 60%, respectively. Both companies will co-promote islatravir and lenacapavir combinations in the United States and other major markets. Merck will have rights to lead commercialization of the long-acting oral combination products in the EU and rest of the world, while Gilead will lead in the United States. For the long-acting injectable, Merck will have rights to lead commercialization in the United States, while Gilead will lead in the EU and rest of the world. The deal terms also include the option for both companies to license the other's investigational oral integrase inhibitors in development to combine as a treatment with either islatravir or lenacapavir.
Upon exercise of this option, both companies will split profits and costs of the new combination unless the non-exercising company opts for a royalty. There are significant benefits to this collaboration, both for Merck and Gilead and for people living with HIV, including the ability to bring forward innovation that otherwise would not occur by combining these two potentially first-in-class assets into long-acting treatment regimens. Gilead is a strong partner, given its expertise, presence, and commitment to HIV, and together we will have the opportunity to provide potentially transformational long-acting oral and injectable treatment options to people living with HIV. From a commercial standpoint, there is a large and growing opportunity across treatment and prevention. The global HIV market is expected to reach more than $30 billion by the middle of the decade, and on the treatment side, the market is expected to evolve to long-acting options.
Physicians continue to look for multiple treatment options to provide choices and customization to treat people living with HIV and to address the remaining unmet need in the market. In prevention, the market is expected to nearly triple by the end of the decade, reaching roughly $10 billion. Today, there is limited uptake in PrEP, but there are expectations that by 2025, roughly half of at-risk individuals living in the United States could be on prevention regimens as the market evolves to more long-acting options. There is significant focus on prevention, given its importance of achieving important public health goals, including the UNAIDS goal of achieving fewer than 200,000 new HIV infections by the year 2030. We believe Merck is uniquely positioned to capitalize on these growing markets with our broad offerings across treatment and prevention.
To conclude, Merck is well-positioned to remain a key player in HIV moving forward and has the potential to establish islatravir as a foundational asset across treatment and prevention. Our new collaboration with Gilead fits seamlessly into our broad development program, building on our long-acting treatment capabilities with the ultimate goal of maximizing our impact on the HIV epidemic by addressing the needs of people living with HIV around the world. We are confident in the potential of islatravir to be a significant driver of growth later this decade and well into the next. I'd like to now turn the call back over to Peter.
Thank you, Frank. Lara, we'd be happy to take questions.
Thank you, sir. At this time, just to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. If you would like to withdraw your question, you can press the pound key. We'll pause for just a moment to compile the Q&A roster. Your first question will come from the line of Andrew Baum from Citi. Your line is now live. Go ahead, please.
Yeah, morning. Congrats on the deal. Three quick questions, please. First, for your capsule PrEP, I'm assuming that you're not going to be forced to run another or even two extensive phase III trials. I assume that you can bridge using the data that's going to be generated from the oral PrEP, if you could confirm that. Second, could you just confirm the deal is non-exclusive? Finally, you're running the head-to-head BIKTARVY trials reporting out this year with doravirine. One of those is in treatment-naive patients. I'm expecting that you would show significantly lower weight gain and potentially lipid increases than that experienced by the BIKTARVY control arm. Is that consistent with your internal expectations? Many thanks.
Roy, I believe there's a couple questions there for you, and then maybe we'll turn it over to Dean and Frank.
Sure. Thanks, Peter. The first one, Andrew, was related to the PrEP trials and the size of these trials and whether we would be able to bridge. We are running a very traditional phase III in women, and that is actually in partnership with the Bill & Melinda Gates Foundation. We are running a novel trial design in the setting of men who have sex with men, and that trial should be detailed, should be available on clinical trials in the near future, if not already there. In terms of the head-to-head comparison with Biktarvy in the once-daily treatment regimen, we certainly in phase II had reason to believe that the two-drug combination of islatravir plus doravirine should have a salutary effect on metabolic aspects. Certainly we, in phase II, were struck by the lack of weight gain.
Again, it's a phase III study, and we'll have to await the data. Certainly from phase II, those seem like reasonable underpinnings.
Yeah. This is Dean. Thank you for that question. I just want to emphasize some scientific points that I think are important to underscore. We had talked about the potency, the high barrier to resistance, and the pharmacology, and the long half-life in cells, especially the cells where HIV is going to enter a person's life and bloodstream. I just want to emphasize that the monotherapy sort of studies that we've done, which are in prevention, really teach us a lot about what islatravir can do. I think that needs to be underscored. We have a very good sense of what it can do, and we also understand what might be important in terms of treatment.
In terms of treatment, I would say that what we are looking internally for and externally for are two sort of images that we have been led to believe, both in the developed countries and in the developing countries, is very important. In my internal programs, I look for compounds that can combine with islatravir, and I can give it orally at least two a week. When I look at my internal pipeline and I judge compounds, I look for an injectable combination that can go two, three months or greater. That's the way that I think about what are the combinatorial treatment options that Merck should focus on. In terms of any business arrangement, I'll turn that over to Frank.
Yeah. Hi, Andrew, it's Frank. Yes, the collaboration does preserve the ability of each Gilead and Merck to partner with others outside of this collaboration. It is subject to some certain reasonable timing and scope limitations. These limitations are necessary and reasonable to justify the company's joint investment in the sharing of intellectual property and confidential specialized know-how, as well as to help ensure the commitment to the collaboration. To answer your question, yes, it does preserve the ability for us or Gilead to partner with others, Andrew.
Great. Thank you, Andrew. Next question please, Lara.
Thank you. Your next question will come from the line of Geoff Meacham from Bank of America. Your line is now live, so go ahead please.
Morning, everyone. Thanks for taking the question, and congrats on the collaboration. I know data dependent, but for the long-acting injectable, what at this point do you think could be the dosing frequency? Do you have to get to at least quarterly dosing to be commercially competitive, and is every six months not realistic? Thank you.
I'll take a shot at this. This is Dean. When I've had conversations with people who think about this deeply, both in the developed countries and the developing countries, one of the issues that comes up with either treatment or prevention is adherence and making sure that there's good adherence, right? There is a downside, not just to the patient, but to the whole world when you don't have that adherence, because that's how we get resistant strains. In our discussions with NGOs and with health systems, I would say that what they're looking for is something at least in the Q3 months and potentially something that a health system could ensure that that is being taken.
I'm not sure that I can answer your sort of market question, but I can tell you that in our discussions with health systems as well as NGOs, they really emphasize to us the need that in the injection space for treatment to try to make it Q3 months and greater. What they've also said in terms of prevention is something similar in the fact that please make it as extended as possible, past Q3 months. I also want to just emphasize one important point that I think is very important for all of us to understand in relationship to prevention. If you're doing a long-acting, you really have to make sure, as Roy showed previously, that your compound is going to be very active for that whole period.
Once you don't do that, you're going to get pop up of resistance for your PrEP, and the minute you do that, you will make it harder to treat with that class. I just want to make sure that it's very clear that from a treatment standpoint, what we've been told is from an injection standpoint, please try to make something Q3 months or greater. I'm not sure that, Frank, did you want to speak about anything in relation to market? No. I think scientifically we know what the profile is that we're trying to achieve.
Roy or Daria, do you have anything to add, or did Dean capture that well?
Yeah, I would just add that the Q months oral islatravir is also a very meaningful addition to the PrEP armamentarium. As you've heard, we are well-positioned across pretty much all of the treatment opportunities here we think to have an impact on the disease.
Thank you, Roy. That's a good call-out.
Great. Thank you, Geoff. Next question please, Lara.
Thank you. Your next question will come from the line of Terence Flynn from Goldman Sachs. Your line is now live, so go ahead please.
Hi, good morning. Congratulations on the collaboration, just had two questions. I was wondering if you can speak to any of the remaining technical hurdles for both oral and injectable formulations beyond just drug-drug interaction studies. The second one, I was curious why integrases were included in the collaboration here. Just wondering if that speaks to your confidence in the need for another drug in the mix, potentially for a three-drug combination, or if you're confident that two drugs will likely be enough. Thank you.
Great. Thanks, Terence. Daria, maybe you can take the question about technical hurdles, and then I'll turn it over to Dean for the question about integrase.
Yeah. With respect to technical hurdles, the two companies really need to start working together to really understand that a bit better with respect to co-formulation, because that is really our ultimate goal. I'm fairly confident that technically the two compounds can work together in the context of a clinical setting. I think the technical hurdles for us will be making sure that we can co-formulate them because that really provides us with the maximal impact for patients.
Yeah, in terms of the deal in relationship to having access to both integrases, Merck and Gilead for a combination, I think our view at present is that a two-drug combination for treatment is going to be an important contribution. The reason why both companies are interested in integrases, because as we talked in the beginning, Daria's work with integrases is that's a workhorse
Class of medicines. We have integrases, and I've already told you the profile that I've asked my team to achieve. Gilead has integrase inhibitors, and we just thought that it would be important for the field to develop both of them and give the optionality that these integrases could combine either with lenacapavir or with islatravir, because more options are important and could be critical in the future, depending on how the HIV epidemic plays out over the years.
Yeah, thanks, Dean. It's really important to emphasize that options are important, and we believe in once-weekly oral regimens as being potentially transformative for this space. Having once-weekly NRTI with MK-8507, having a once-weekly option with lenacapavir, and then potentially having a once-weekly option with an integrase inhibitor, I think will provide the whole field with a whole suite of potential medicines to choose from.
Right. Roy, did you have anything to add to either of those questions?
No, I have nothing to add, Peter.
Okay. Thank you, Terence. Next question, please, Lara.
Thank you. Your next question will come from the line of Louise Chen from Cantor. Your line is now live. Go ahead, please.
Hi. Thanks for taking my questions here. You did note some revenue splits and economics. Can you elaborate more on how you came to these agreements and how quickly you think you can get to these billions of dollars of sales? Also in terms of peak sales potential, you noted some market opportunities. Just curious where you think or how we should think about where that would play out. Last question is just if you could provide more color on how you're thinking about the design of your oral combination studies that could start in second half 2021. Thank you.
I'll just say that the excitement that we have is in relationship of exploring all these options and executing, right? This is a deal that gives optionality to the field, not just to Merck and Gilead, but to the field. We need to focus on executing on those options. We are hopeful that we can execute and get these Q-week oral and these three-month greater injectables moving into the clinical trial arena in due course. In relationship to some of the questions about clinical trial, Roy, did you want to make any comments in relationship to that?
Yes, just for clarity on that, obviously, Gilead has tremendous expertise in the area of combining oral medications. Both islatravir and lenacapavir have completed phase I studies, you would imagine the first phase IIs would explore the concept of putting the two together. In terms of the injectables, clearly, there's some initial work to be done on co-administration and co-formulation, for that reason, we think this will probably take us into the following year to get into the clinic. I'll hand it back. I think there were some questions about the deal structure.
Yeah, it's Frank, Louise, and just a couple of additional points. We believe that the revenue and the cost split that we have come up with for both companies really should create shareholder value for both. It reflects the value of the programs and the capabilities you're hearing from Dean and Roy and Daria. I can tell you we're very excited by the collaboration. If you think about the marketplace and the size, Daria mentioned 1.7 million new patients globally. It's a very sizable market today with 38 million people living chronically with the disease. If you can come up with a combination of islatravir and lenacapavir, if they're successfully developed in long-acting formulations, we think this provides a really significant opportunity and, in particular, an important driver of revenue growth well into the next decade for Merck. We're excited, Louise.
We're not going to give specific guidance, obviously, but clearly, we think that the combinations provide really important benefits for HIV patients moving forward.
Great. Thanks, Frank, and thanks, Louise. Next question, please, Lara.
Thank you, sir. Your next question will come from the line of Umer Raffat from Evercore ISI. Your line is now live. Go ahead, please.
Hi, guys. This is Jonathan Miller on for Umer. I just wanted to ask about some of the IP differences. We know IP is longer for the Gilead capsid than for islatravir. Does the profit split or the arrangement of collaboration change at any point when those IP situations change, and can you remind us what those dates are? Secondly, will Merck and Gilead then compete with each other on the monotherapy PrEP side of things, and can you talk to us about how you perceive that market proceeding?
Great. Thank you, John. Roy, do you want to start the question on IP?
Sure. The intellectual property estate around islatravir will extend into the next decade, and that relates, for example, to the combination with doravirine. We believe the combinations going forward will add important clinical meaning for patients. Certainly the IP for islatravir goes into the 30s.
Second question was on the monotherapy.
Yeah. This is Dean. I'll take the monotherapy. The monotherapy question is really a question of prevention. I would just make one or two points. One is we are very comfortable. We've taken this molecule out, and we have a good understanding of this molecule, and we are very confident of the Q1-month oral prevention and potentially, as you saw in the data, the potential for a Q1-year prevention. We are very confident about that monotherapy. We would ask people to look carefully at our data, especially in relationship to all the attributes that Daria talked about and the critical importance that the resistance profile and these long-acting prevention is critically important. I won't speak to competing or in the marketplace, but I will just say that we are very confident of the monotherapy ability of islatravir in prevention.
That is not something that is covered by this deal.
Yeah, and I'll just add to Dean's point to your question, John. Yes, we will clearly be competitors with Gilead in the therapy space for monotherapy and for other regimens. We will compete there and then work on the collaboration for the long-acting oral and long-acting injectable. The other thing I would mention, and you mentioned the deal terms. The deal terms, as I highlighted, are throughout the collaboration, its entirety, and the thresholds of the $2 billion for the long-acting oral split 50/50. The threshold changes above that to 65% Gilead, 35% Merck. Just to reiterate that for the long-acting injectable, it's up to $3.5 billion annually. We split 50/50. The thresholds do change above that to 65/35, 65 Gilead, 35 Merck.
Great. Thank you, Frank. Thanks, John. Next question, please, Lara.
Thank you, sir. Your next question will come from the line of Ronny Gal from Bernstein. Your line is now live. Go ahead, please.
Good morning, and congratulations on the deal. Three quick ones, if I may. First, following Louise Chen's, a question about combination for PrEP. If you can share with us with a decision not to go ahead and combine your products with that of Gilead, reflect business consideration or scientific consideration. Essentially, is it not needed? Do you choose to do something else, or simply could not agree on how to split the economics there? Second one is any antitrust concerns here? You're two of the three big companies in this field. Is there something we need to look for there? Third, as long as we're talking about this, can you talk a little about the implant for islatravir data that you presented?
Can you talk a little bit about the process of implanting the molecule and putting the implants into the body, and can that be done by a typical primary care physician? How should we think about that?
Let me just clarify something that I might not have been as clear as I should have been. In relationship to prevention, we are very confident that a monotherapy approach will work and that islatravir has all the unique properties that allow us to believe in that strategy, and Daria highlighted it. There is not a thought in our mind that, at least for islatravir, that there will be the necessity to have another agent added onto it in relationship to prevention. I just want to make sure that monotherapy, in a simplistic term for islatravir, equals, in some sense, the prevention strategy. That I think is an important point. Peter, can you remind me on the other questions?
Yeah, there's a question. I think it's for Roy, the process of an implant, how an implant works or how we envision it working.
I would just remind everyone that Merck has been a leader and a pioneer in the area of implants. For example, implantable contraceptives in the form of, for example, Nexplanon, uses very similar technology, and we have many, many hundreds of thousands of training episodes that have been conducted. The insertion is well-described and well-recognized, and certainly trained physicians should be able to undergo training to insert this fairly readily. We're very confident that the implantation technology is well-evolved and well-described, and certainly physicians will be trained on that.
Thank you, Roy. I think Ronny's last question was about antitrust question.
Yeah, Ronny, we're not concerned about antitrust because we will be competing vigorously in all areas outside of the collaboration. It is not a concern. As I mentioned previously, we'll be developing islatravir in other treatment regimens outside of this collaboration, and we will be competing. We're not concerned.
Great. Thanks, Frank. Thank you, Ronny. Next question, please, Lara.
Thank you, sir. Your next question will come from the line of Mara Goldstein from Mizuho. Your line is now live. Go ahead, please.
Oh, thanks so much for taking my questions. Just two questions, if you will. One is, I'm curious about the decision-making process for who would lead commercialization for long-acting oral versus injectable. The second is really a question around potential for co-formulation and how IP would be shared if that would be the case.
Great. The first question, I believe, is for you, Frank.
Could you repeat that, Peter, for me?
Sure.
Yeah. All right, got it.
Sure. Just the decision around who would lead development on the oral long-acting orals versus long-acting injectables and how that came about.
The question is on commercialization, who leads U.S. versus who-.
No, I think it's the development, Peter, who's the development of the injectable.
Oh, development.
In
Right. I mean-
I can take that if you like. The developmental lead for the oral weekly will be Gilead, and the injectable lead will be Merck. Obviously, there'll be a collaboration. Both companies bring remarkable skills to the table around single-tablet formulations and co-formulation of injectables.
Your second question again, Mara?
I think the second question was about IP that's generated for the co-formulation of dolutegravir and lenacapavir.
Right. Yeah, go ahead.
That IP is one that both of us are going to be working on it, and both of us are going to have access and share that IP.
Does that answer your question, Mara? Okay. Thanks, Mara. Next question, please, Lara.
Thank you, sir. Your next question will come from the line of Seamus Fernandez from Guggenheim. Your line is now live. Go ahead, please.
Oh, great. Thanks very much. Congratulations on the collaboration. Just really a quick question. I think most of my other questions have really been answered. As we look at the global opportunity here, the HIV opportunity seems to have been a little bit less broad than what we've seen in terms of the opportunity in the U.S. With these new formulations and the opportunity to really drive longer-acting treatment in HIV, would you expect that in international markets, we're likely to see the market opportunity expand versus what it has been previously? Maybe if you could just help us understand the dynamics affecting that most significantly, that would be helpful. Thanks.
Yeah, Seamus, it's Frank. The market dynamics, you're right, the market this year is probably somewhere around $28 billion-$29 billion globally, and it is weighted to the U.S. at probably about 65%-70%. There are a couple of factors, and I think one in why we're excited about this potential collaboration, if we're able to develop long-acting oral or long-acting injectable options, we do believe that these will be very meaningful to patients with HIV around the world. We do think there's opportunities. Clearly, if you can help adherence with the profile that we're talking about, you can expand into some of the international markets. Clearly, there's access challenges in some markets outside the U.S., the access is not as available. We are confident, and both companies have a long history of working in many of the international and ex-U.S. markets to gain access.
If the profiles are successful, we feel really good about the opportunity moving forward.
Thanks, Frank. Thanks, Seamus. Next question, please, Lara.
Thank you, sir. Your next question will come from the line of Daina Graybosch from SVB Leerink. Your line is now live. Go ahead, please.
Hi, thank you. Congratulations on the collaboration. I think two questions from me. One, is there any room for the implantable here in this particular combination or any others as you work through the injectable? Could you get to that point? The second question is there any near-term go, no go where you would decide not to go forward with either the oral or injectable in the clinical trials or in the formulation work? Thank you.
Let me just take one shot at some of your questions. We need to look at how well these co-formulate, and if we find out the situation either in the oral or in the injectable, that it is not a feasible route, I think both companies will steer into that and be interested in exploring other options available to them. I will just leave that at that part. I think in relationship to whether or not you would have a longer-acting treatment with an implantable, I don't think that what I know about the molecules, that at this point we would conceive that may be a technical hurdle too high. I would also ask Daria or Roy to provide any thoughts they have. An implantable treatment that's greater than two, three months
Technically, that is something that I'm not so sure is an easy bar for us to aspire for at this time.
Dean, this is Daria. I would agree with you. Islatravir is somewhat unique in that the dose is so incredibly low that it lends itself to yearly or greater implantables. I think there would be insufficient real estate in an implantable to allow co-formulation with a molecule, even one as special as lenacapavir. I think it would be very aspirational, to say the least.
Great. Thank you, Daria. Next question, please, Lara.
Thank you, sir. Your next question will come from the line of David Risinger from Morgan Stanley. Your line is now live. Go ahead, please.
Yes. Thanks very much. Just wanted to follow up on that question. Could you update us on the timing for the validation of your yearly implantable for prevention? One other question, could you discuss the compliance in the real world that you see with the current HIV regimens and how differentiated the longer duration dosing will be in facilitating better real-world efficacy?
Great. Thanks, Dave. Roy, do you want to take the first part of the question and I think Daria maybe the second question?
Sure. As we mentioned, we just presented our phase I data at CROI. I think we are very comfortable from the modeling and simulation that we are able to achieve above target levels of islatravir for at least 12 months. This will be moving into phase II and it's proceeding apace. We're very encouraged by what we see. Daria, did you want to talk about compliance with current HIV regimens?
Yeah. It is a major issue. We focus on it in HIV because of the potential resistance issues and also the potential for the longer-term implications of less optimal adherence with respect to inflammation and comorbidity. It is something that the entire field really focuses on. Honestly, for any chronic medications, as I'm sure you well know, adherence over time is a significant issue. Of course, it's very difficult, as Roy will tell you, sometimes to measure in a clinical trial setting because of the type of people who enter those studies. You're absolutely right. This needs to be demonstrated in a real-world scenario. We can tell you that even after a year, a significant number of people are actually switching off their medications for a variety of reasons. They're not satisfied for either tolerability or convenience issues.
We know it continues to be a major problem. Stigma, even people seeking care continues to be a significant issue in many parts of the U.S., in the South, where the epidemic continues to spread and because of people are afraid to admit their status. I think there are many reasons that long-acting regimens can significantly improve treatment for people living with HIV, getting people into care, and keeping them in care. We know no medication is perfect, which is why our goal is to be able to develop as many potential long-acting options as technically possible so that we can try to tailor the most appropriate medication to the individual.
Great.
Maybe one additional point is related to the concept of forgiveness, and that is that, as Daria says, long-acting, we have the belief that this will improve adherence and compliance, but it's also important that there be some forgiveness in terms of the PK characteristics of these molecules, so that as we get to the end of term, it's not sort of like the light switch going off. The idea here is to have forgiveness in terms of PK.
Yeah, Roy, that's a really important point, and we know that is even more important when we're talking about prevention. That's why we're so excited about the potential for islatravir because of its long intracellular half-life and tissue distribution, which in principle translates into a very forgiving molecule in that setting especially.
Thank you, Dave. We have time for one more question. Lara, please.
Thank you, sir. Your last question will come from the line of Phil Nadeau from Cowen. Your line is now live. Go ahead, please.
Hi, good morning. Thanks for taking my question. Two questions for Moz. First, Gilead, this morning, suggested that the long-acting oral could be on the market in 2025 and the long-acting injectable in 2027. Does Merck agree with those estimates? Maybe more specifically, why the two-year lag between the oral and injectable? Second, in terms of the oral, it's following on the last question, what duration of long-acting oral do you think is most useful for improving compliance? Is a weekly better, or monthly, or even something less frequent than that? Thank you.
Yeah, I'll take that question. This is Dean. We are comfortable with what Gilead has said in relationship to 2025 and 2027. There is a difference between putting an injectable together and putting an oral together, and we have looked at that. We are comfortable with those time frames. There is a difference technically with these molecules in relationship to oral and injectable. In relationship to your question of what's the sort of, ideal sort of position in relationship to an oral treatment, we think that a q-week is immensely doable. That's where we're focused on.
For many of the same reasons that Daria talked about, is the potency of islatravir means that you don't need to use a lot, whether it be in an implant, in prevention, and you don't need to use a lot in a q-week or a q-month sort of prevention standpoint, where we do the q-month prevention and we're doing the q-week treatment. I think you would need a partner that could extend you past q-week and not have someone take an ungodly number of pills. We believe that right now the sweet spot in terms of oral is q-week oral, and the sweet spot in relationship to injection is q-three months or greater.
Great. Thank you, Phil. Thank you all today for joining us. Appreciate the questions, and we'll be around all day if you have any follow-ups. Thank you very much.
Thank you, sir. Thank you so much, presenters. Again, thank you everyone for participating. This concludes today's conference. You may now disconnect. Stay safe and have a lovely day.