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Gilead Sciences, Inc. (GILD) Wells Fargo Healthcare Conference - (Transcript)

Gilead Sciences, Inc. (GILD)

Wells Fargo Healthcare Conference

Company Participants

Andrew Dickinson - Chief Financial Officer

Conference Call Participants

Mohit Bansal - Wells Fargo

Presentation

Mohit Bansal

All right. Thank you very much for joining us today. My name is Mohit Bansal. I'm one of the biopharma analysts here at Wells Fargo. And we have Andy Dickinson, CFO of Gilead with us. I think this is fifth year in a row. I'm hosting you at different platforms.

Andrew Dickinson

Yes. Thank you. Thank you very much for having us again.

Mohit Bansal

Thank you very much for joining. So I think we should start with, I think a few years ago, you started with this -- when you joined as a CFO, so the Gilead 2.0 and oncology progress and everything. So we'll talk a lot about that. But before we get into that, let's just briefly touch upon the core business, the HIV business here. And we will get to the -- I think you want to spend a lot of time on oncology right?

Andrew Dickinson

Sure. Yes.

Question-and-Answer Session

Q - Mohit Bansal

So let's just start with HIV, where we saw a favorable pricing tailwind in last few quarters. And I know you have guided a little bit conservatively that it happened in last few quarters, but now it may not. But you have been seeing that for quite some time now. So as investors and analysts, when we think about going forward, what should be our base case? And should we expect any reversal there, which we should worry about or how should we think about that?

Andrew Dickinson

Yes. On the pricing side. Well, maybe just to start off, I'll step back and comment on your first point, which is Dan O'Day, our CEO, has been here 4.5 plus years. I've been in the CFO role for almost four years. We are making a lot of progress, and the company is doing extraordinarily well. So when we look at it from a macro perspective, and I'll start with the HIV business, then we'll talk about the oncology business, which is really exciting. We're doing exactly what we plan to do. The strategy is paying dividends. You're seeing the results. Our quarterly results have been very strong, and we're really excited about where the business is overall and where the pipeline is. On HIV, specifically, again, the HIV business, which is our legacy, is still just an extraordinary business of the product portfolio and the development portfolio are extraordinarily strong. What you're seeing -- you've seen a lot of strength in our commercial performance over the last two-plus years, which is exciting. So we'll talk about the treatment market and the prevention market. But overall, a lot of that is driven by the growth of the market, not by price or net price. And so maybe we start there, Mohit, in terms of the market, the treatment market is growing 2% to 3% a year in the US and outside of the US. It's a little bit harder to see that in the script data, I think, because -- there's a difference between the retail market and what we call the nonretail market, which is 30% to 35% of the US market is non-retail. So think of those as some of the 340B and Cs and others. So what you see in the script data from the CVSs and Walgreens of the world doesn't always translate. In both the retail and the non-retail market, to your question on pricing, we've seen a shift to -- it's less about price increases and the net price realized, which really doesn't change that much year-over-year. But the mix of buyers has changed over the last couple of years, which has been favorable and not unexpected. And if you just look at what's happened with the economy, generally and the decrease in unemployment over time, it would be expected that more patients or people that are at risk of getting HIV would have commercial coverage or other areas. So you see the mix shifting. And to your question, we don't expect to see that unwind or change materially over the coming quarters or years. I think that you've seen a little bit of a move from lower -- more heavily discounted segments like the ADAP segments, either to Medicaid, Medicare or commercial segments or the 340B segments. But overall, again, the business is doing great, and it's driven predominantly by the growth in the market. In prevention -- as I talked about the treatment market growing 2% to 3%. In prevention, the market has grown 20%, plus or minus over the last couple of years. And again, the prevention -- HIV prevention market is still in very early days in terms of development of that market in the US and even more so outside of the US. So that's an exciting growth opportunity for us over the long run.

Mohit Bansal

So I want to talk about the prevention side of it because you have a once-a-day pill, but longer-acting could be a potential game changer. We have one from Wave or GSK, but this is not quite the longer acting that you are going to have. But are you seeing any new patients coming in with the Wave on the market? Also, given that their strength in Europe, are you seeing anything from Europe that is changing?

Andrew Dickinson

We're not seeing that much change. The therapies that are available, the vast majority of people that are at risk of getting HIV that take HIV prevention are taking daily oral medicines, either our marketed product, Descovy or the generic available medicine, which is generic Truvada, which was our previous flagship product that went generic three years ago. So when you think of -- you look at Descovy, Descovy has 40% plus of the market in the United States, which is extraordinary and speaks to value that it brings people at risk of getting HIV. It's also used for HIV treatment. A very small piece of the market today is utilizing the long-acting therapy that's available. And it's a good test case. But it's not the right long-acting therapy from our perspective. We're talking about intramuscular injections every month or every two months. So to your question, the prevention market, as I said, it's early days of development. If you fast forward to where we see the market going with lenacapavir, which is our novel HIV capsid inhibitor that is already approved for treatment. So it's already approved, it's already shown to work over a six-month period. It's in Phase III studies for prevention that we'll read out over the next couple of years and be launched. That should fundamentally change the HIV prevention market because you go to a market where you should see better outcomes because you're ensuring adherence and compliance. And it should also open up the market in Europe to your point given the significant benefits that it would have over the once daily oral medicines that are oftentimes used intermittently.

Mohit Bansal

Got it. But even without the population expansion, compliance and the gross-to-net improvement in that cells should be --...

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