Q1 2024 Earnings Summary
- Gilead has 54 active clinical programs, with no major patent expiries through the end of the decade, and multiple Phase III trial readouts expected this year, including lenacapavir for HIV prevention, two Trodelvy Phase III trials, and seladelpar with a PDUFA date in August, highlighting strong growth potential.
- The company is expanding its oncology portfolio, particularly with Trodelvy, which is currently the leading regimen in TNBC and is advancing into HR-positive HER2-negative breast cancer and potentially into earlier lines of therapy, aiming to differentiate itself versus other ADCs in the market and expand its reach to more patients.
- Gilead sees significant growth opportunities in the HIV prevention market, with plans for long-acting treatments and a robust program that could lead to accelerated HIV total growth as they head towards the second half of the decade.
- Gilead expects its HIV sales to be roughly flat in 2025 due to the impact of the Medicare Part D redesign, which will offset HIV growth and potentially affect profitability.
- Impairment charges reduced the carrying value of Trodelvy's intangible assets from $5.9 billion to $3.5 billion, following disappointing trial results and a smaller addressable market in non-small cell lung cancer, potentially impacting future oncology revenue growth.
- The CymaBay acquisition resulted in a large nondeductible expense of $3.9 billion, leading to a negative diluted EPS of $1.32 in Q1 compared to a positive $1.37 last year. Additionally, Gilead did not conduct an independent third-party pathology review during due diligence, despite previous liver safety concerns with seladelpar, potentially posing future risks.
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Growth Outlook Amidst Medicare Part D Impact
Q: Will Medicare redesign impact HIV growth in 2025?
A: Gilead expects the Medicare Part D redesign to impact their HIV business, resulting in HIV sales being roughly flat year-on-year in 2025 due to the offset from Part D changes. However, they anticipate overall business growth despite this headwind, with top-line momentum building beyond 2025. They remain focused on disciplined expense management and expect operating margins to improve over time as they see continued top-line growth. -
Medium to Long-Term Growth Strategy
Q: How will you achieve higher growth rates in the future?
A: Gilead plans to drive substantial growth over the next decade through their expanded portfolio, which has more than doubled in the past four years. They see significant opportunities in their HIV franchise, particularly in the PrEP market and potential long-acting treatments, expecting accelerated HIV growth in the second half of the decade. Additionally, their oncology portfolio, including cell therapy and novel agents like Trodelvy, is expected to contribute to growth with multiple readouts and approvals anticipated. -
M&A and Capital Allocation Plans
Q: How are you approaching M&A given your cash position?
A: Gilead does not expect to pursue sizable M&A in the near term, focusing instead on executing their existing pipeline and growth drivers like Calabar. They will continue ordinary course business development and licensing deals but are unlikely to pursue meaningful M&A soon. They remain therapeutically agnostic, seeking attractive science across virology, oncology, and inflammation to complement their portfolio. -
Trodelvy's Oncology Pipeline and Upcoming Data
Q: What can we expect from the upcoming Trodelvy data at ASCO?
A: While under embargo, Gilead indicated that the Avoca 1 and 2 studies will present data at ASCO, including overall survival, progression-free survival, overall response rate, duration of response, and safety profile. These data motivate them to advance in lung cancer and discuss options with regulators. They are also exploring intra-portfolio combinations, such as combining Trodelvy with dambinelumab, to enhance efficacy. -
Seladelpar Launch and Competition
Q: How will competition affect seladelpar's launch?
A: Gilead is confident that seladelpar is well differentiated and potentially best in disease for PBC, with significant impact on ALP normalization and improvement in pruritus—a key symptom with no effective treatment today. They believe that having multiple competitors increases disease awareness, benefiting patients. Their established commercial and medical footprint in liver disease covers about 80% of U.S. PBC prescribers, and they don't think the competitor's earlier launch will make a difference. -
Cell Therapy Strategy and Next-Gen CAR-T Priorities
Q: What are your priorities for next-gen CAR-T assets?
A: Gilead is advancing three constructs in Phase Ia and Ib trials: a bicistronic CD19/CD20 with 41BB and CD28, the same construct with 3-day manufacturing, and a CD19 like Yescarta with 3-day manufacturing. They aim to select the best candidate to advance rapidly into pivotal trials, utilizing their scale and integrated capabilities to expedite development. -
Cell Therapy Growth Expectations
Q: Are you confident about returning to cell therapy growth in H2?
A: Gilead is very confident they will return to growth in the second half of the year. They acknowledge constraints, such as manufacturing capacity due to multiple myeloma constructs entering the market, but believe hospitals and treatment centers are working through these challenges. They have nearly a fully staffed sales team and are executing their strategy effectively. -
Trodelvy in HR-Positive, HER2-Negative Breast Cancer
Q: How do you view competition in HR-positive, HER2-negative breast cancer?
A: Gilead is proud that Trodelvy is the only TROP2 ADC approved, playing an important role in breast cancer treatment. They continue to expand their footprint and remain confident in their position in HR-positive, HER2-negative breast cancer. They believe offering more options is better for patients, and Trodelvy can differentiate itself through its efficacy and safety profiles. -
Commitment to Anecacleucel and Autoimmune CAR-T
Q: What's your commitment to anecacleucel and plans in autoimmune CAR-T?
A: Gilead is fully committed to anecacleucel, feeling differentiated in both safety and efficacy, and has not observed the neurotoxicity seen with other constructs. Regarding the autoimmune space, they are monitoring the field and plan to participate but are taking time to assess opportunities and have no specific updates currently. -
Purpose 1 Trial Design Clarifications
Q: Can you clarify the Purpose 1 trial design for HIV infection rates?
A: Gilead utilizes a thoroughly studied recency assay for HIV to determine how recently a participant was infected at screening. They don't need to compare risk behaviors before and after randomization; instead, they will look at overall HIV incidence at screening and compare it to what happens after therapy initiation.