Q1 2023 Gilead Sciences Inc Earnings Call
Our base business grew at 15% excluding victory with total product sales of $6 3 billion, reflecting outperformance across the portfolio.
On a year over year basis, roughly two thirds of the $735 million increase in our base business sales were driven by HIV and the other third was driven by oncology.
Once again, we're seeing the tangible impact of our transformation and the successful diversification of our business.
We saw year over year growth in HIV up 13%.
<unk> liver disease, which includes therapies for HCV, HBV and HGV up 6%.
Cell therapy up 64%.
<unk> up 52%.
As expected <unk> revenues continued to track lower rates of COVID-19 hospitalizations.
As a result revenue of 573 million was down 63% from the first quarter of last year.
On the clinical side, we received another FDA approval for <unk> in early February .
This latest approval was for a third indication pretreated HR positive <unk> negative metastatic breast cancer.
It's early days, but this has been a very strong commercial launch for <unk> in the U S. So far.
This further highlights the critical patient need that <unk> is addressing in this late stage population.
As well as the effectiveness of our commercial oncology team.
We continue to prepare for <unk> approval and pretreated HR positive <unk> negative metastatic breast cancer in Europe in the second half of this year.
Another key milestone for the quarter was the announcement of the primary overall survival data from the landmark phase III Zuma seven study.
Yes, Carter is now the first and only treatment in nearly 30 years to show a statistically significant improvement in overall survival for initial treatment of relapsed or refractory large b cell lymphoma patients versus historical standard of care in the curative setting.
Full results will be presented at this year's <unk>.
Turning to clinical progress in virology, we continue to add to the body of evidence for Atlantic <unk> effectiveness as part of a six month subcutaneous therapy.
At this year's Cory the team shared positive phase <unk> data on the investigation of Atlantic <unk> and <unk> combination.
The <unk> combination is of course, just one of the eight long acting combination options that we're exploring for Atlantic capital and we are pleased with our progress so far.
In the meantime, following our first approval of <unk> for heavily treatment experienced people living with HIV.
We are seeing strong engagement from Kols and physicians, who are interested in the full potential of blended cap of air for prevention and treatment.
As you know this first approval addresses a significant unmet need for a small number of people living with HIV, who have very limited options available to them and we look forward to making <unk> available to many more people beginning with the potential approval and prevention and the 2025 timeframe.
We see <unk> as having the most promising potential yet and the ongoing efforts to end the HIV epidemic and we're looking forward to working with others to make it broadly available as soon as possible.
With that I'll hand over to Joana for a review of our first quarter commercial performance Joanna.
Thanks, Dan and good afternoon, everyone.
The commercial organization delivered a very strong start to the year and continue to build on the momentum we saw in 2022.
Got a firm foundation for continued execution and growth in 2023.
As our results show on slide seven each of our core franchises delivered year over year growth led by HIV and oncology and total product sales, excluding decorate totaled $5 7 billion up 15% year over year.
Including secondary total product sales were $6 3 billion down 3% driven by lower back Larry sales associated with fewer COVID-19 hospitalizations.
On slide eight HIV sales were up 13% year over year to $4 $2 billion, driven by favorable pricing dynamics higher demand and lower inventory drawdowns.
Quarter over quarter sales were down 12% associated with the normal seasonality, we typically experienced in the first quarter.
As a reminder, at the start of the year patient Copays and deductibles reset, which had an impact on average realized prices and market growth.
We expect these pricing impacts to normalize for the remainder of the year.
And we also see typically a buildup in inventory in the fourth quarter, followed by meaningful inventory drawdowns in the first quarter.
Following a focused effort to better manage this dynamic we're pleased to see less of an impact than we have historically on both a quarter over quarter and year over year basis, highlighting our goal of better matching product delivery with end user demand.
We expect these efforts to contribute to a more stable quarter over quarter growth in our HIV business as compared to prior year.
Yeah.
Turning to Sun linker.
First quarter sales of $4 million were very much in line with our expectations.
Frontline guys an important option for the small number of people living with HIV, who have developed resistance and have few if any other option.
We're leveraging the launch to engage with providers and the community ahead of Atlantic Capital's potential launches in prevention and treatment.
Overall, the HIV treatment market grew approximately 2% year over year in the U S and almost 4% in Europe tracking in line with our expectations for annual growth of 2% to 3%.
And in prevention awareness continues to grow with the U S prep market up over 19% year over year.
Moving to slide nine.
It's Harvey sales of $2 $7 billion were up 24% year over year, driven by higher demand as well as favorable pricing and inventory dynamics.
It's Harvey continues to cement itself as a therapy of choice for people living with HIV now capturing a treatment market share 46% in the U S up 3% year over year, and representing a growth rate that has impressively outpaced new and existing regimens.
Moreover, the Kirby has maintained its leading position for new starts across the U S Europe and other major markets as well as in treatment switches.
Most major markets, including the U S.
Under Scobey Sanford.
Sales were $449 million in the quarter up 20% year over year.
Demand for <unk> for prep remained strong up 14% year over year.
<unk> once again maintained its greater than 40% market share.
The continued resilience of our business despite availability of other prevention options, including generics provides a solid foundation as we make progress towards the potential approval and launch of <unk> for prep.
Moving to slide 10.
The liver disease portfolio was up 6% year over year to $675 million highlighting the continuing contribution of our viral hepatitis medicines to patients and the gilead portfolio.
In HCV sales were $445 million up 12% year over year, driven by favorable pricing dynamics and timing of purchases by the department of corrections.
HBV in HDD sales were $230 million down 2% year over year, primarily due to pricing dynamics outside of the U S.
We continue to expect HCV starts to trend down over time, given the curative nature of therapy with some offset from HBV and H D D.
In the meantime, we're pleased to observe solid and stable market shares across all of our liver portfolio.
On to slide 11, and as we expected victory sales of 573 million were down year over year and sequentially as COVID-19 related infections became less severe and hospitalizations remain below peak levels.
As a reminder, the winter surge occurred earlier than we had expected beginning in the fourth quarter and lasting only through the beginning of Q1.
As the clear refuse trucks hospitalizations, if sales are volatile and highly subject to searches and the overall path of the pandemic.
That clearly is backed by clinical data and real world evidence that reinforces its clinical profile and despite the lower hospitalization rates in the quarter. The query share of hospitalized patients treated for COVID-19 grew modestly maintaining well over 50% share in the United States.
Moving to oncology and beginning with <unk> on slide 12.
Sales of $222 million were up 52% year over year, and 14% sequentially driven by strong growth both in the U S and Europe .
Following U S approval in early February .
After a strong start with <unk> and pretreated HR positive <unk> negative metastatic breast cancer and some clinicians moved quickly to make this new option available for patients in this setting.
We look forward to extending <unk> reach out to these patients in Europe , where a decision is expected later this year.
Of course, our efforts here are underpinned by the successes and learnings in metastatic triple negative breast cancer or T. M D C.
From our expansion of the field force last year, and a strong body of data across a number of tumor types more physicians are recognizing two dolby is clinically meaningful overall survival benefit.
This recognition is not just in metastatic CNBC, but also in HR positive her two negative metastatic breast cancer, regardless of her two negative status.
Now onto slide 13.
Cell therapy sales in the first quarter were $448 million up 64% year over year, and 7% quarter over quarter.
We're pleased with the continued growth of the us Garda with sales up 70% year over year to $359 million, primarily driven by growth in the second and third line setting for relapsed or refractory large b cell lymphoma.
Sequentially sales were up 6% driven in part by strong demand and favorable pricing dynamics, both primarily in Europe .
Turning to Jakarta sales.
Sales were $89 million up 40% year over year, and 8% sequentially driven by growing demand for boats relapsed or refractory mantle cell lymphoma, and adult acute lymphoblastic leukemia.
Looking ahead, we continue to work to raise awareness of cell therapies and increase cost share.
We believe that compelling data, including Zuma seven recent positive overall survival results. In addition to peer datasets in the cell therapy space will support broader adoption over time.
In summary, it's been a positive start to the year with our current product portfolio of virology and oncology medicines delivering strong performance.
We look forward to maintaining this momentum through the rest of the year and beyond and with that I'll hand, the call over to <unk> for an update on our pipeline mehrdad.
Thank you Joanna we're off to a strong start in 2023 with our first regulatory approval of the year Petrodelta <unk> for certain HR positive <unk> negative metastatic breast cancer patients in the U S.
And an additional 10 trials initiated so far this year, including four phase III studies.
This brings our clinical pipeline to 61 ongoing clinical programs.
Starting with virology on Slide 15, we presented late breaking data among 83 abstracts at Croix and Seattle in February .
Highlighting gilead continued expertise and leadership across HIV viral hepatitis and COVID-19.
In HIV we.
Shared several data Readouts from Atlanta cap of your base development programs and prevention and treatment.
In prevention, we presented preclinical in vivo data, providing further validation that a subcutaneous injection Atlanta copier and confer long acting protection in an animal model.
We believe <unk> as a single agent has a potential to be the first once every six months option for HIV prevention.
We are currently testing this in our pivotal phase III purpose trials.
And treatment, we shared phase <unk> proof of concept data on twice yearly lending cap of gear in combination with two investigational broadly neutralizing antibodies.
26, 90% of trial participants receiving this combination maintained virological suppression.
Further treatment with the investigational regimen was generally well tolerated.
Moving to COVID-19 on Slide 16, we also shared positive data from three retrospective real world analysis of declaration and Croix seasoned.
These analyses showed that initiation of <unk> within the first two days of hospital admission reduce death and hospital readmission rates among all patients with COVID-19.
The right hand side of this slide highlights that both of our oral phase III trials evaluating <unk>, 5% to 45.
Or OBL that severe our investigational oral COVID-19 nucleoside in standard risk patients and in high risk patients are now enrolling.
Given uncertainties in the global epidemiology of COVID-19, we continue to be cautious with regards to the length of time it could take to fully enroll these trials.
Moving on to Slide 17, <unk> continues to build momentum as the cornerstone of our solid tumor portfolio.
As expected the FDA approved <unk> for its third indication.
<unk> is now approved in adults with HR positive <unk> negative metastatic breast cancer, who have previously received <unk> based therapy in at least two additional systemic therapies for metastatic disease.
This FDA approval is based on the overall survival benefit seen in the phase III tropics <unk> trial, we've already received acceptance of our European filing and continue to expect a regulatory decision from the European Commission in the second half of this year.
The phase III <unk> trial evaluating the potential for <unk> in second line non small cell lung cancer is ongoing. Additionally.
Additionally, we recently had F pie for the Phase III <unk> III study also known as keynote <unk> 46.
This trial is being led by Merck to evaluate <unk> in combination with <unk> in first line PD L. One high non small cell lung cancer.
Additionally, we're excited to announce that over 30 abstracts, including an oral presentation of the updated arc seven trial data have been accepted at <unk>. This year.
Not only do these data highlight elements of our investigational <unk> and dawn vanilla mab programs in breast and bladder and lung cancers. The abstracts include new insights on many of our promising targets, including ourselves therapy portfolio.
Speaking of which on slide 18, I am pleased to discuss the clinical progress we've made within cell therapy.
Recently, we highlighted new overall survival data from the phase III Zuma seven trial evaluating a startup for the initial treatment of adults with relapsed or refractory large b cell lymphoma.
These data will be presented as an oral late breaker at <unk>.
Yes, Scott is the first and only therapy of any time to show a statistically significant overall survival benefit versus standard of care in almost 30 years.
As we work to extend our leadership in cell therapy within our current portfolio. We're also building out our earlier stage programs.
As mentioned in our last earnings call. We closed our agreement to co develop and co commercialize our <unk> car T. DDB CMA for the treatment of patients with relapsed or refractory multiple myeloma.
Also we closed our acquisition of community Therapeutics in February extending our preclinical and clinical pipeline in blood cancers and solid tumors.
We're currently working to integrate the community team with their assets into our broader innovation pipeline.
Wrapping up on slide 19, we're sharing the updated key pipeline milestones that we expect in 2023, which as you can see spend F. P. Ais data readouts updates and regulatory approvals across oncology virology and inflammation.
Overall this highlights the progress that Gilead has made on its transformation journey.
The 61 clinical programs that are well diversified across indications and stage.
And ambitious clinical program and I'd like to thank the Gilead team that has worked tirelessly to execute and accelerate the progress of our portfolio.
We look forward to updating you as we progress through 2023 and with that I'll hand, the call over to Andy Andy.
Thank you Mark and good afternoon, everyone.
Starting on slide 21, the first quarter was a strong commercial start to the year with total product sales, excluding <unk> up 15% year over year. Despite continued FX headwinds.
Overall, our base business demonstrated growth in each of our product families, including almost 60% growth in oncology and 13% growth in HIV.
Total product sales were $6 3 billion down 3% due to lower <unk> sales.
Partially offset by growth in our base business.
FX negatively impacted first quarter total product sales by $106 million representing.
Approximately 160 basis points of growth.
Turning to slide 22, non-GAAP product gross margin was 86, 2%.
Down one two percentage points from last year due to among other things the timing of the <unk> royalty initiation in the first quarter of 2022 and product mix, partially offset by inventory benefits.
Moving to Opex expenses were higher than we anticipated in the first quarter due to R&D investments and inflationary pressures.
non-GAAP R&D was $1 4 billion up 25% year over year due to higher expenses, including the acceleration of certain late stage clinical studies as well as about $50 million in one time items.
As <unk> mentioned, we have started 10, new trials, so far this year, including four phase III programs.
This brings the total number of ongoing phase III studies for 'twenty, two highlighting the investment we're making in gilead future growth.
Clinical trial enrollment for a number of new and ongoing <unk> trials was faster than we expected with a notable acceleration for example in certain lending cap a very trials in March.
Our clinical team has been working hard to rapidly advance our studies and bring new therapeutic options to patients as fast as we can.
This includes working to close the gap at some peers have in certain programs and we believe we are starting to see the impact of these acceleration efforts in our trials. Although this did contribute to higher R&D expenses in the first quarter.
Consistent with past practice, we will continue to manage expenses carefully including the ongoing process of prioritizing programs based on potential impact and data.
We have taken the last several years to build the most diverse and robust clinical pipeline and Gilead history, now with well over 100 trials across our three targeted therapeutic areas.
We are excited to see so many of these programs and later stage trials with a number of data Readouts building momentum over the next several years.
non-GAAP acquired IP R&D was 481 million, primarily driven by expenses related to our acquisition of community as.
As well as upfront and milestone payments associated with the <unk> and <unk> collaborations non-GAAP SG&A was $1 $3 billion up 22% year over year, primarily due to the commercial expansion and investments in our oncology business. In addition to higher branded prescription drug fee expenses and higher corporate expenses, they continue to be impacted by inflation.
<unk>.
Moving to tax our non-GAAP effective tax rate in the first quarter was $18, 9% lower than expected driven by discrete tax benefits recorded in the first quarter.
Overall, our non-GAAP diluted earnings per share was $1 37 in the first quarter of 2023 compared to $2 12 for the same period last year, reflecting higher operating expenses and lower product gross margin.
I'll move now to guidance for the full year 2023 on slide 23.
There is no change to our revenue guidance, we continue to expect total product sales in the range of $26 billion to $26 5 billion.
And we continue to expect total product sales, excluding <unk> in the range of $24 billion to $24 $5 billion representing.
Representing growth of 46% for our base business year over year.
On Dec Laurie the first quarter was modestly below our internal expectations and our $2 billion full year guidance assumes an increase in infections at some point later this year not dissimilar from what we saw in 2022.
We know from experience that COVID-19 related sales are extremely volatile and are leaving our guidance unchanged pending additional data points as we move through the year.
Moving to the rest of the P&L.
We continue to target non-GAAP product gross margin of approximately 86%.
As discussed we now expect full year 2023, and non-GAAP R&D expenses to increase a low double digit percentage compared to 2022.
This resulted in an overall R&D investment for the full year in the low <unk> as a percentage of total revenue.
We believe this is a more appropriate level of investment for our company with a broad late stage clinical portfolio that is targeting attractive opportunities and sustainable revenue growth.
We continue to expect non-GAAP acquired IP R&D to be approximately $700 million.
Reflecting previously committed acquired IP R&D amounts.
Similar to prior quarters. We will continue to include expected acquired IP R&D expenses as we announce additional transactions over the course of the year.
Moving to non-GAAP SG&A, there is no change to our prior guidance, where we expect a full year declined by a low single digit percentage compared to 2022.
Although we will continue to look for opportunities to partially offset the higher R&D investments. We now plan for this year.
Overall, there is no change to our expectations for non-GAAP operating income in the range of $11 billion to $11 6 billion.
Additionally, there is no change to our tax guidance and we continue to target a non-GAAP effective tax rate of approximately 20%.
And finally, we continue to expect non-GAAP diluted EPS in the range of $6 60, and $7 per share, reflecting first that the initial guidance model. We shared with you in early February allowed for a broad range of potential revenue and expense scenarios and second that we're committed to finding room in our overall P&L to absorb the higher R&D.
Investments that we are choosing to prioritize in 2023.
On a GAAP basis, we expect diluted EPS to be in the range of $4 75.
To $5.15.
Moving to slide 24.
You can see there is no change to our capital allocation priorities.
We returned $1 4 billion to shareholders in the first quarter through our dividend and repurchase of shares.
Finally on business development. There is no change to our philosophy, we are very comfortable with the breadth and the quality of the pipeline that we've built acquired or partnered and the growth it will enable in the coming years.
With that in mind, you can expect us to continue to Opportunistically access high quality assets through partnerships or to make smaller acquisitions in the normal course of business.
And now I'll hand, it over to Dan for some closing remarks.
Thanks, Andy before we open for Q&A I'll, just summarize our prepared remarks by noting that this is another quarter, where we demonstrated the continued impact of our transformation.
Going forward, we are committed to building on the track record of strong commercial and clinical execution that we've shown in recent quarters. Thanks to the dedication to gilead and kite teams around the world.
With this positive momentum, we look forward to delivering on our portfolio, while maintaining financial discipline.
With that I will invite the operator to open the Q&A.
Thank you if you would like to ask a question. Please press star followed by one on the telephone keypad, if she's like Oh a question. Please press star followed by case law.
To ask a question. Please enter your phone as a me too likely.
Also please limit yourselves to one question per person.
Our first question today, I guess you'd Michal <unk> of Jeffries Michael. Please go ahead. Your line is open.
Quite a bit better staying on for Mike Thanks for taking the questions.
Two Q.
Two from US maybe number one what are your expectations for the competitor took two data that's coming imminently.
What would you like to see and how would you differentiate and could you perhaps look at PFS like Euro competitor and then number two just to.
Talk about the progress of here.
Long acting oral integrase inhibitors for HIV.
Are they in the clinic yet thank you.
Thanks for the questions.
So.
In terms of the <unk>.
Competitor Trop two data I think it's a little early for us to be doing comparisons across data, we haven't seen yet we're really comfortable with the data we've already shown and has certainly led to approvals and in breast cancer with OS benefit.
So.
You can see from the uptake of <unk> and the breast cancer market that.
Being approved and having those I'll ask data has had an impact for our patients and.
Very comfortable with where we are of course, we'll keep an eye on those emerging data.
As they become available and every indication.
And then in terms of the long acting oral.
As you know we have a number of programs in the clinic for our long acting portfolio.
Both oral and injectable and we have moved several of them, including an oral program into the clinic and we will be sharing those data as they become available very excited about that.
That portfolio.
We remain committed to and really excited about our long acting portfolio to do.
To leverage <unk> unique profile.
Two.
Go into both oral long acting as well as parenteral long acting formulation. So stay tuned as those data develop we'll gladly share.
Now do you maybe have a next question please and can I remind all our callers to please limit themselves to one question. So that we can get to as many folks in the queue as possible.
Yes.
Thank you. The next question guys Supine Abrams of RBC, Brian . Please go ahead. Your line is open.
Oh, Hey, good afternoon. Thanks, so much for taking my question.
Regarding <unk> I was wondering if you could talk a little bit about what youre seeing with regards to its use across the different lines of therapy post the HR positive <unk> negative approval and I guess, along those lines as you think about the.
Moving next to earlier outlines in this indication.
What's your latest thoughts on the potential trial design for ascent.
Kevin.
Optimize in terms of optimizing the right patient population to expedite trial enrollment and support a meaningful commercial.
Expansion. Thanks.
Thanks, So much Brian Dan O'day here I'm going to have Joanna answer the first.
Part of your question and then my Dad the second thank you.
Thanks, Brian .
So basically we're really pleased with.
The early launch results that we've seen so far in HR positive <unk> negative.
And what we've been seeing is strong initial uptake basically in fourth line plus at some share even in third line and I think that's really important for us as we think about even the earlier trials, leading up lines of therapy, but I think the data with the overall survival that we've shown in addition to the work that we've done in metastatic CNBC also showing overall.
It either has really helped because we had strong awareness obviously of <unk> in the community as well as in.
Academic centers and the extended field team work that we did last year has really helped us make sure that we solidify the launch of HR positive <unk> negative. So it's still early we only have a couple of months in.
But definitely on the right track and we're really seeing physicians.
I understand the benefits of Qdoba and what they can what they can bring for their patients in this setting.
Yeah, and then in terms of a seven 7%.
Look at as we design and move into earlier lines of therapy.
That study as you know we're going to be looking at the <unk> population and we do anticipate that study getting started.
The second half of this year, so things are moving along very nicely.
And we are really excited about that program.
Final details in terms of design will will be rolled out I think we are.
Crossing the Ts and dotting the I's right now in terms of that final protocol, so youll see that posted an and.
Available in short order.
Not even though we have our next question. Please.
Thank you. The next question Gucci, Chris Schott of JP Morgan Chris. Please go ahead. Your line is open.
Great. Thanks, so much for the question I just had one on Opex can you just talk a little bit about how we should be thinking about gilead operating costs going forward. It sounds like you're obviously accelerating some R&D programs and you've got this double digit step up in R&D. This year, but should we think about operating margin dynamics kind of going forward I guess off of the two.
2023 levels can we start to think about margin expansion going forward or do we need to maybe think about another year or two of investment before we can kind of think about margin expansion for the company. Thank you.
Hey, Chris It's Andy Dickinson, Thanks for the question.
Yeah. It's a great question, maybe just stepping back again highlight and reinforced that we have built a large and diverse portfolio that really positions us for significant growth both in the short term as well as in the long run as you heard in our prepared remarks, we're really investing in kind of leaning into that we had accelerated.
Our significant focused efforts to accelerate some of our clinical development, which is starting to pay dividends.
We're also seeing the validation of this approach in our in our commercial resolve that Joanna highlighted and the strength across our base business.
So to your point, we are now this year I think we already up 22 phase III trials underway, which is significantly more than we have as a company historically, it's actually frankly, a healthy level I highlighted in my comments.
This year, we're targeting kind of low twenties percentage point of revenue for our R&D investment in that.
It's a reasonably good place to be we believe it's online with peers.
Over the long run there will be years, when we have expenses that are greater than that in years lower but over the cycle I think that's kind of what we're targeting so and then maybe to your question on operating margin. We still have a very healthy operating margin as you know again, it's apples and oranges comparisons it with the new IP R&D rules.
But we do expect to see our operating margin strengthened again over time as we get through this bolus of phase III trials that we have underway and drive growth above and beyond what you've already seen in the last 18 months, which we think is off to a great start so more to come it's going to take a little more time to get through it.
Your point, but we are in a very good spot from our perspective.
No I didn't even have the next question. Please.
Thank you. The next question guys. He sells Lena <unk> of Goldman Sachs. Please go ahead. Your line is open.
Good afternoon. This is Don for Shelby and thanks for taking our question just on the ticket combo data ESCO.
How do you view this update is it more incremental and then just on the Roche OS data, which is now expected in <unk>, how much read through do you anticipate on that front. Thank you.
Thanks.
Well, what we have said and I think what we're planning is we'll have an updated data set from a more recent cut so there'll be additional data compared with what was presented what we talked about last year at the <unk>.
<unk> plenary and so there should be more mature data.
With a larger patient population and so that should help reinforce our confidence in terms of the the Roche data.
I think it is.
Great question.
Look I think.
We believe in our own data as well as all of the other public data that are out there in terms of ticket.
Bringing benefit.
Certainly in terms of response rates and other parameters certainly in our data set we've seen those PFS benefit and our expectation is that the Roche data will continue to demonstrate benefit.
Adding <unk> to.
PD one inhibitor. So PD one PDL one inhibitors in their case, so we will be looking forward to seeing those data and I think that should.
Help too.
Provide additional confidence to to all the tissue antibodies out there.
Now the next question please.
Yes.
Thank you. The next question go to Geoff Meacham of Bank of America. Jeff. Please go ahead. Your line is open.
Great afternoon, guys. Thanks, so much for the question.
Or that you guys have been very successful commercially with <unk> and it looks like the pipeline has some logical next steps in terms of liquid tumors I guess, what I wanted to ask you is whats your appetite for for leveraging the expertise to look at non oncology indications like rare diseases or maybe towards solid tumors and why do you think the feel.
Thats, mostly evaluated the same targets in myeloma lymphoma leukemia et cetera. Thank you.
Thanks, Jeff Yeah, it's a very complicated question.
I'll try to give a very brief answer.
Look I think that leveraging the engineered T cells. So far in hematology has as demonstrated really great efficacy and a reasonable tolerability profile for that patient population I think it's all about therapeutic index as you start to go into broader indications.
Where treatment options are different and.
The disease state is different I think there are different considerations for therapeutic index.
So as we look into different populations, we're going to keep a very close eye on the appropriate therapeutic index.
For a given patient whether youre talking about lupus or anything else and outside of oncology.
Oncology.
Related to your question.
From our perspective, maybe the broader perspective that I would offer is that we do believe the modulating the immune system will lead to.
Better outcomes in patients.
Whether youre talking about agonizing or antagonizing.
And then.
In <unk> disorders, we do believe that.
Getting getting to better and more targeted.
Immune blockade is going to be better for patients and so from our perspective, there is not only a cell therapy in play and I think thats, what we like about our portfolio is that we have.
Modality restricted and you've seen the deals we've done we have our BLA.
Antibody and the.
The rest of our portfolio in inflammation. So we are going to be pursuing the best outcome for patients, regardless modality, and certainly cell therapy will be one of those.
Now the next question please.
Thank you. The next question guys, Hey, Terence Flynn of Morgan Stanley . Kevin. Please go ahead. Your line is open.
Hi, Thanks, so much for taking the question just one for me on used car to I was wondering if you can give us any more color in terms of the breakdown between second line versus third line right now obviously, you're seeing some nice momentum and then on the manufacturing footprint, maybe just any color there in terms of.
Total number of patients who can supply in a year. Obviously, that's been an issue for some of the other car T therapies out there, but just want to understand kind of longer term supply dynamics. Thank you.
Sure. So let me start and then maybe Andy can touch on the manufacturing came to the pet owner.
So thank you for your question Karen.
We have seen is really strong growth across second line and third line and obviously, a little slower coming into second line, but we're seeing nice momentum in the second line as well and I think the OS data from Zuma seven coming through that will be presented at ash that will only help.
Continue that and really differentiate it versus current standard of care and but what we have seen is growth.
That has really picked up quite nicely and youre seeing it both in U S as well as Europe , and really happy to say actually we're although we just got recent approval for second line in Europe late last year, we're getting a lot of market coming in from reimbursement accelerating reimbursement because of the endpoint.
Importance of this data for patients and actually one example of that is actually just today with the nice approval for second line therapy with just car that so we're very excited about where this is going there's still a lot of growth opportunity in second line and obviously the team is really working diligently to make sure that physicians are well educated to make sure that they understand the benefit.
And the overall survival over long term for these patients so more to come on that and with that I'll just turn it over to Andy for manufacturing, yes. Thanks, Sean.
Nice to talk to you again.
On manufacturing, but what I would say is that as a real area of competitive strength for Kate and for US as you know we have three approved manufacturing centers globally two in the United States One on East Coast and then the one in the Netherlands. All of them are fully operational we are already moving in our Maryland facility to partial automation of our manufacturing process, which as it were off to a great start.
And we just have an outstanding team. So we have not had capacity constraints either on the manufacturing of the cells or.
On the the viral vectors. So remember we have both an outsourced and an internal viral vector supply.
Manufacturing our own viral vector out of our Oceanside, California Biologics facility. So I don't think tenants we've shared specifically.
The capacity of our manufacturing footprint, but rest assured we have.
Adequate capacity.
Capacity to serve the market today, our team does a great job of forecasting where the market is going we're always one or two steps ahead.
And we don't expect that to change so from.
From a manufacturing standpoint, the team has really done an outstanding job.
No.
Our next question please.
Thank you. The next question does he Tim Anderson of Wolfe Research Tim. Please go ahead. Your line is open.
Hi, Thanks for taking our question. This is Adam on behalf of 10.
So on the carving it doesn't mean, it's exclusivity until the next decade.
Possible with its targeted by the IRA before then.
We know that Medicare only accounts are limited portion of harvest volume.
Possible, but the pricing impact extend <unk>.
<unk> patients.
Also the other aspect the IRR that you think investors are discounting beyond the negotiation.
Yes, I'll take that one Adam.
We do believe that the IRS will have an impact on big Harvey.
Although we do believe there'll be later this decade, and probably the earliest could be 2028 or so.
Again, what you said is absolutely true it is only on our Medicare business and obviously, there's a lot of things that can happen between now and then its still early in understanding exactly how it's going to play out including the pricing negotiations that will happen.
The spillover effect that you mentioned, we believe that we've had situations obviously in other channels today, where we have higher discounts and in our commercial channels.
And we've been able to manage that specific to the patient populations within those channels and so we believe we will be able to do that again and mitigate the risk of spillover.
And so.
Yeah, So I think that that kind of what we're managing in addition to the fact that our portfolio.
Much of the target out to 2033 and that will I think really continue to be the standard of care for a daily oral we're also expanding our portfolio as you think about where we're going with Atlantic half of their <unk>.
Different combinations and treatment and obviously with our convention works so more to come on that but I think we're more than prepared to manage the situation and I have a couple of more years to figure out some of the different dynamics within the IRI.
We have our next question please.
Thank you. The next question goes to <unk> <unk> of Evercore. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my question I wanted to touch up on.
So that'll be a real quick in terms of how the prescription trends are tracking in T. N B C. In particular, especially in light of your competitor Daiichi, saying, they now have number one patient chair and her too low and growing so I'm just curious how that's shaking out because I know you've got a new indication this quarter and secondly, also there is a lot of renewed interest in car T.
We got that relates to immunology, but as I think of immunology and the price points, maybe three ex humira. So there'll be a 150 K, but conversely, I would imagine each cell therapy dose would be at least 100 K. So how do you think about economics as you head into potentially immunology indications. Thank you very much.
Yeah, I'll take the first part of that specific pitches out there and what we're seeing in CNBC and metastatic QVC.
So what we've seen at that stage.
Growth in <unk>, and really that has a lot to do with the expansion of our field force, but also the continued data that come through right. The OS data and CNBC is one piece of the puzzle. The other piece is obviously the loss that we've shown also in HR positive. So really the breast cancer community understanding today will be better in that space.
Haven't split the market and either have physicians at this point really split the market between her too low.
Population that what we look at is each indication CNBC and HR positive <unk> negative and what we're seeing in metastatic CNBC in the lines of therapy that second line plus is really established itself as a standard of care in this setting and it continues to do that.
So I do think just remembering and CNBC the split between IHT zero in IC went into is 65 35, so a much more represented.
It's a less represented by maybe some of our competitors, having said that we work across the spectrum, which I think it's really important to remember so thats the dynamics right now in metastatic <unk>.
This is Dan O'day to I think I. Appreciate your question on the second wanted to dovetail onto us.
Ed said before about the importance of therapeutic index, but before I do that let me just articulate.
The tremendous benefit that car T is providing a large b cell lymphoma from a farmer economics standpoint.
We now have.
Patients in very late stage disease, 50% of them surviving out to five years in essentially a flat line survival curve you can imagine the benefit from both a mortality perspective and cost to the system of the current price points and large b cell lymphoma, I think any any price point in other therapeutic areas.
It would be based upon the clinical benefits that that brings.
To those particular patients of course, we understand that.
This is going to necessarily be a broad scale use across all different types of patients. So we'll be patient segments, where the therapeutic index is more important and for those patients. We would look at the level of benefit that brings both for the patients the health care system, and then price. It Accordingly of course, so I think it's hypothetical at this stage, but given the given the.
Benefit that we're seeing in cancer, we would take the same approach to other disease states.
As we move to our next question. Just another reminder, please limit yourself to one question. We do have 10 folks still hoping to ask a question on the call and we'd like to get to as many as possible. So would that not in May we have our next question. Please.
Of course, the next question guys, Hey, Tyler Van Buren of TD Cohen Tyler. Please go ahead. Your line is open.
Great. Thank you very much for taking the question I guess, given legend tremendous topline data leak in the second line I figured I would ask you your latest thoughts on that opportunity and how you plan to differentiate in that setting with the <unk> program.
Hey, Tyler it's Andy that can said I'll take the question on behalf of the team.
Obviously, we and others want to see the full data set we read the same releases that you've read.
And we continue to believe that our solid and now.
We have a very interesting program that has the potential to.
To be very competitive in that area to get on par or better potentially than the J&J legend product and as Dan said earlier it doesn't come as a surprise to us that cell therapy is delivering that magnitude of benefit to patients across different disease areas.
And it's exciting to see where cell therapy may go in terms of becoming the standard of care in second line.
<unk> potentially over time, which of course incur.
<unk> the size of the potential opportunity for the <unk> and <unk>. So.
Look forward to seeing more on the data look forward to carrying our program forward together with you guys selling steam in.
And to updating you over time, but certainly certainly.
It looks like a fantastic dataset and great for patients.
Thanks <unk> our next question please.
Okay.
Our next question guys you haul attach Singh of Oppenheimer and co Hot Hatch. Please go ahead. Your line is open.
Great. Thank you thanks for the question.
I just had a quick question.
Entre to Lv and non small cell lung cancer I know those trials are still about a year or two years from being out.
But Matt can you just remind us of the scientific rationale behind.
And also cell lung cancer, and just opine a little bit on just the zero, one and <unk> three trucks. Thank you.
Sure.
Hi, touch Yeah I think.
There are several things that give us a lot of confidence in terms of moving forward in non small cell lung cancer certainly the distribution of trip two has demonstrated.
Broad expression in non small cell lung cancer not too.
Similar from.
Breast cancer, and so I think that that gives us.
A lot of.
Incentive to believe that expression of <unk> in those tumors is going to give us efficacy by delivering the payload to those cells.
Secondly, we've seen both internal and external data.
<unk> <unk> targeted ADC is that.
Support the value of bringing.
Trip to directed antibodies.
Antibody drug conjugate to non small cell lung cancer. So our approach which has been brought in we're very excited about I think is going really well.
As we are as you know in <unk> going into the second line non small cell lung cancer and that study is going very well.
We are then as well looking in frontline lung cancer.
Our other trials and looking at combinations of.
<unk>.
PD ones with.
With <unk> and <unk>.
In those tumors and non small cell and we think that.
The potential for <unk> in those tumors is very high we believe that.
That will start to see those data.
Start to rollout from our second line.
Studies first as you would imagine and then we will continue to build on that as we go.
Thank you maybe have our next question please.
Yes.
Our next question goes to you, Brian Scully of RW Baird.
Please go ahead your line is open.
Hi, Thanks for taking our question. This is certainly more on for Brian I had a question about when a cap of beer. So with regards to the recent data with the <unk>. It seemed like one case out of 'twenty experienced a viral rebound.
Was wondering how that might inform which combinations you are thinking about moving forward with regarding overcoming resistance.
And kind of along that same line, what kind of expectations you have for the size of the long acting market and HIV. Thank you.
Yes very important.
Breakthrough was not associated with <unk> resistance, right and I think that's really important to keep in mind.
<unk> are relatively.
The new clinical.
Tools to look for options for for people in terms of treating HIV and it's one of the many approaches were taking.
Our approach has been to move.
A broader portfolio of small molecules to complement that early foray into long acting with banner ads.
Where we believe that.
The tried and true mechanisms that we have used again, both orally or parenterally should provide us with an opportunity to bring treatment options.
To people living with HIV.
That will be associated with low resistance rates and.
Hi advocacy so that's what we're testing out as we find the ideal partners.
And I use the plural intentionally we'll be moving that forward and so I would look at those the <unk> data is early.
In early first approach.
Two two along acting along that came.
Treatment for people living with HIV.
And maybe just to cover Charlie the second part of your question around the size of the market.
I'm going to split it out when you think about the market from a treatment standpoint, we do believe that the long acting market probably by the end of the decade was up about 50 50, or so we think that.
There are definitely patients out there that are looking for us not to be reminded that they have HIV and an opportunity to think about.
The next generation long acting can really bring to patients like they are looking for I think that's the key.
Laughter unmet medical need in this space at this point in time I also think the Carty will continue to.
To be the standard of care in the daily oral market, where there is still a lot of patients that actually do you want to take their medicine every single day to make sure that they know that theyre, taking something to to put it put a beta HIV.
Just to touch on the expansion from a prep standpoint, I'd just say, it's the prevention market very different in our view and some discussions we had with community partners and people that are at work.
HIV, what we're seeing here is probably the split is different but the market expansion is also very different. So the split is probably going to go towards 70 30 by the end of this decade is what we assume that has a lot to do with the fact that these are not patients. These are people at risk.
And they don't necessarily want to take a pill a day, but something they don't have and so that makes a lot of sense is something every six months align with physician visits could be an ideal scenario in this setting and then from an expansion standpoint.
As you well know we talked about this a lot.
If you look at the CDC assumptions around the number of people that are at risk in the U S. We've only captured about 25% of those folks that are currently under.
Undramatic medication and unfortunately, there are still 75% that are not and that are at risk and so there's an incredible opportunity, especially with something every six months to really expand in this marketplace and make sure that we truly work together to end this epidemic.
Very exciting times to come and within the next two years, hopefully, we'll have lentic half of the year.
As the data reads out and approvals and prevention and then just a bit after that in treatment with different partners that right that it was essentially zero.
Sitting tight.
If I move to our next question. Please.
Thank you. The next question guys, Hey, Steve seat House of Raymond James Steve. Please go ahead. Your line is open.
I know this is Ryan deschner on for Steve.
Thanks for the question just curious what the current non Hospitalize theirs is hospitalized usage split for declaring and do you anticipate a large amount of potential cannibalization and the non hospitalized usage coming from mobile density or if its clinical development is successful.
So Ryan I'll take that question. So what we have seen in the last year or so.
And somewhat of a lessening of the severity of infection and therefore for hospitalization standpoint, obviously less hospitalizations as well.
So we've seen a couple of different things. So obviously much more non hospitalizations of late and we see that obviously in the numbers because as you well know they clearly tracks very closely to hospitalization and what we've seen is that.
Despite the fact that hospitalizations have come down versus our expectation in Q1, the actual usage of equity has gone up.
And that's super interesting in a lot of that has to do with the strength of the data that keeps delivering for bat cleary around the update the guidelines of the strength of our data real world data that's come out continuously showing reduction in mortality and reduction in readmissions to hospitalization. So.
Very powerful data, but definitely.
A bit of a play there.
Our outpatient use of February is still quite small in the single digit or so having said that it is growing.
But it's really the only antiviral that is approved in hospitalized setting for COVID-19, and so that continues to drive I think as we think about our Covid program I think we are thinking more than non hospitalized.
Setting, which I think we've been complement what we have in our portfolio.
It's really nicely both in the non hospital setting and the hospitalized setting to make sure that patients at risk have what they need if they do get injected.
And then we have our next caller please.
Yes. The next question goes to you and if you're a buyer of Cantor Fitzgerald. Please go ahead. Your line is open.
Hey, good afternoon, and thank you for the question have you guys started to think through a commercial rollout strategy for from a growing up, especially when you look beyond the initial academic centers and is there anything you can do to help drive initial adoption for a transfusion guidelines in that community setting specifically.
Okay.
I'll take that one Olivia as we think about MACRA. We are excited obviously, we're waiting for the data.
To read out, but we are excited and we have started thinking about our commercial model for sure.
I think a couple of pieces to that one one is.
The strength of the community and making sure we understand kind of what that looks like but also the strength that kite brings.
In this play as well so we're not starting from scratch right. We are going to we partner very closely with our colleagues to make sure that theres a lot of learnings there that and I think we can apply in a lot of.
Overlap from a physician standpoint that also that we've been working through this so a lot of those pieces are in play and the last last piece I would say just to add to the commercial model and our thinking also has to do with the fact that we're also trying to get ahead of the game and better understanding right. These are diseases that are.
That.
Sometimes community additions will not see on a regular basis and how do we make sure that we understand the when and where and making sure that the commercial model supports.
That timing is well and being a little bit smarter in our approach from an execution standpoint. So all those pieces are coming into play.
But obviously, we're excited and anxious for the data that.
We will be sure that we are ready for not only the data, but the approvals as well.
Not able try and squeeze in just a few more here.
Of course, the next question guys, Hey, Colin Bristow of UBS. Colin. Please go ahead. Your line is open.
Oh, Hi, this is Tim on for Colin Thanks for taking our question.
Go ahead or not but can you specify how many impairing or plan in total for the enhance trial.
And for the inherent update in the back half of the year, where there'll be actual data disclosure or just a high level update.
And for and what's your expectation also what's your expectation on the SCR in overall survival for the Decitabine control arm there was some chatter.
Shadows around it but I decided the arm outperformed the pocket of the phase III trial.
Are they use them more intensive dosing regimen. So what's your thought over there. Thank you.
Sure. Thanks for the question so.
<unk>.
Terms of the interim analysis.
It's a good reminder, that the study is powered for the final analysis and so our expectation for any study that has interim analyses that we run to the final analysis, which I think we've guided to occurring next year.
When an interim analysis occurs we generally will not see the data generally what happens is that the.
<unk> will tell us to either continue or potentially discontinue if obviously, we discontinue we'd share that but if it's just continue.
We would.
Turning to the trial and when there will be nothing other than that to share because we don't have any data to share since we wont have seen it.
So our expectation is that we run to the end of the trial. It would certainly be upside if we saw something earlier than that.
Then.
I think in terms of.
The expectations you are absolutely right I think everyone has looked at the Takeda data and are wary as to the.
The efficacy of Azacitidine and performing.
In that patient population and so.
The we're going to have to wait and see what that looks like at the end of the trial.
I guess.
Buttressed by the fact that we have continued the TSMC has told us to continue the trial.
Gives me a little bit of.
More confidence that we are going to see a treatment effect, but that's a very indirect assessment. So we're going to have to see but we are powered for.
We've made some assumptions in terms of how we power the trial, so hopefully we'll be able to detect a difference between the two.
Now Dan maybe just time for one last question. Please.
Thank you our final question guys, Hey, Mohit Bansal of White Wells Fargo. Please go ahead. Your line is open.
Great. Thank you for taking my question and maybe maybe a question on BD at this point I mean, how are you thinking about.
Our BD I know in the past you talked about there's no. There's no urgency then you could be thinking about tuck in but has anything changed at this point now that you're in a good position with the with the growth coming back.
Is that a bit to talk to that.
Hi, Mohit, it's Andy Thank you for the question.
Nothing has changed from our recent updates I mean, we think that BD as an important part of the puzzle for us going forward, it's important to continue to bring.
New and exciting innovation and products into our portfolio over time we.
We don't expect that to stop that said and to your point, we have made extraordinary progress over the last four years that we're really proud of and so the breadth given the breadth and depth of our pipeline you should expect that we will do less over the coming years than we did over the last three or four years.
But we will still be active in what we've said recently and I'd reinforce is that we will do ordinary course licensing deals. Obviously, you saw the community and our so it feels last year, we've talked about the Merrell biodiesel.
All of which were very excited about.
And then we expect from time to time to do small acquisitions, but our portfolio to your point is in a great spot. We're very excited about what that's going to do to drive growth and we will always look for opportunities to add to it. If we can in a thoughtful way that we think will benefit patients and our shareholders.
That's the way I would think about it at this point.
Thank you that's all the questions. We have time for today I will now hand back to Dan for any closing comments.
Thank you so much I just want to thank you all for joining today for your continued interest in Gilead.
Look our bottom line is we've had a very strong start to the year building on the momentum from 2022, and we collectively at Gilead and kite believe we have a very strong and firm foundation for continued growth in 2023 as usual if we didn't get to your questions or you have additional follow up questions. Please reach out to reach out to Jackie and the IR team and we'd be.
More than happy to support you. Thank you very much for joining.
Thank you. This now concludes today's call. Thank you so much for joining you may now disconnect your lines.
[music].