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Gilead Sciences, Inc. (NASDAQ:GILD)

Piper Jaffray Healthcare Conference

December 1, 2015 9:30 AM ET

Executives

Paul Carter - EVP, Commercial Operations

Sung Lee - Investor Relations

Analysts

Joshua Schimmer - Piper Jaffray

Joshua Schimmer

We are going to get started. Welcome everyone. I am Joshua Schimmer from the Piper Jaffray Biotech team. I am pleased to introduce Paul Carter, Executive Vice President of Commercial Operations at Gilead and Sung Lee, Investor Relations at Gilead. Before we start, let me draw your attention to certain disclosures regarding the relationship between Piper Jaffray and Gilead posted in the back of the room and at the registration desk. So with that, welcome.

Paul Carter

Thank you very much.

Joshua Schimmer

And lots going on at Gilead, mostly in HIV and Hepatitis C for now, but changing over time, but I thought we’d start with Genvoya for a change, starting on the HIV side of the business. Maybe just give us a sense of positioning of the product and what your expectations are as TAF kind of permeates into the treatment paradigm starting here and then about this?

Paul Carter

Yes, well, Josh, thanks a lot for having me first of all, having Gilead at your conference. We are very pleased to be here. So at Genvoya, it’s a very exciting new product launch for us. It’s the first in a series of TAF backbones single-tablet regimen for HIV and we’ve got approval in the US on the 5th of November and it’s got off to a good start and we are very confident in it. I think, we wanted to try and simplify things with Genvoya. There were two numbers that fill up my mind that’s 92 which is in fact the efficacy number for Genvoya, the viral suppression in the Phase III clinical trial, which is the highest efficacy ever seen in Phase III clinical trials for any drug in HIV history. That’s 92, the second number is 90, which is 9% less Tenofovir in Genvoya than in Stribild or in any of the other Truvada-based single-tablet regimen and that’s important because 90% Tenofovir mean – 9% Tenofovir less Tenofovir means, better safety profile and in the trials we saw statistically significant improvements in both renal and bone density. So, this drug has been launched in the context of HIV patients around the world who are getting older and older and the average age in the US now is actually over 50 years for an HIV patient. And HIV in itself causes renal issues and it can have impacts on bone density. And so, I think everyone is very happy to see that we now have a new generation of HIV single-tablet regimen which have a much better safety profile and tolerability and can be used for many, many years.

Joshua Schimmer

So, as we think about the different existing market segments with patients on everyone is on, to NRTI when they got the integrase inhibitor in the protease and the NNRTIs, is there a bucket within those or who you think Genvoya will resonate fastest [Indiscernible] and I guess, this is also of course the new patients, so maybe we can step back and do new patients, existing patients then get into the classes?

Paul Carter

Well, as I said, Genvoya is the first of a whole series of single tablet regimens with the TAF backbone and I think the conversation generally in HIV is moving back to the backbone now. Genvoya will be great for new patients and in the US there is about 50,000 new patients a year treated with HIV and a similar number in the Europe. So Genvoya will be a very good option for those patients who are going to be faced with a life time of daily treatments. Genvoya is also going to be a very good switch product for patients that are on Atripla and many patients in the US have been on Atripla for nearly a decade now and if you look at all patients, Atripla still has the highest market share in the US. But what it does have also is the third agent the – which is well documented in [Indiscernible] and so it will be a very easy switch actually to switch from the Truvada backbone of Atripla to the TAF backbone of Genvoya and there is also a double benefit of having the integrase agent as opposed to the rilpivirine agent. The other thing I should say about Genvoya which was approved on the 5th of November is, 13 days after approval, it became this is the preferred treatment option in the DHHS guidelines in the US which is unprecedented. Normally it takes months and months if not years to get on to those guidelines in a preferred place. So, I think the general recognition that Genvoya is a very welcome addition to HIV treatment alternatives in the US.

Joshua Schimmer

I guess, I you say it’s an easy switch from Atripla, maybe elaborate a little bit on that. The stickiness in the HIV community to stick with something that’s working I guess – they could switch to Stribild. And so, is Genvoya going to change that equation at all or how does this…

Paul Carter

Well, I don’t think it’s going to happen by itself. I mean, that’s why we have a sales force. We have a medical affair team across the country working hard to educate people. But it’s really – you could call it a switch, but you could also call it a conversion, because the backbone really is converting from Tenofovir. It’s just a mechanism of action over the TAF based regimen means that we have a 90% less Tenofovir in the blood and therefore, we have the probability of a much better safety profile and that’s being demonstrated in the – as I said, the statistically significant differences at Phase III trials around both renal and bone density.

Joshua Schimmer

1% of patients have renal and/or bone density issues and is that really the target for conversion?

Paul Carter

It’s a small percentage, but it’s a cumulative thing. It’s – we are talking about patients, so it’s got to be treated for 20, 30, 40, 50, 60 years and it’s a very, very small cumulative build up of renal and bone density issues. And we’ve seen actually until recently patients were unable to take Viread because of the renal – for example creatinine clearance, really had no alternatives and that’s why we’ve seen some switch for those patients to our competitor products for example, Triumeq. But we believe now that, with Genvoya and the subsequent single-tablet regimens with the TAF backbone, they will be very good options for patients who been previously were on a Viread based regimen to convert, I would say, upgrade to a TAF-based backbone.

Joshua Schimmer

Is the renal and/or bone density changes with Tenofovir reversible?

Paul Carter

Well, we’ve certainly seen bone density changes reversing in the Phase III trials and on the renal side, the label is very encouraging in the US. You can prescribe Genvoya to patients who have creatinine clearance is low, it’s 30 milliliters per minute, a normal person has about 90 milliliters per minute, but the Viread label, you couldn’t prescribe to a patient that has creatinine below 50. So this is actually a significant difference and a great benefit.

Joshua Schimmer

I am wondering if a patient on Viread develops nephrotoxicity and then they switch, does that resolve or is ultimately the message here, don’t even take your chances, because once you get nephrotoxicity with Viread, if you are one of those very small number of patients who get it, it’s done. There is no reversing it. And so, to get Viread altogether, get you off Viread, get you to Genvoya?

Paul Carter

Well, certainly the message now is, if you are a new patient, start with a TAF based single-tablet regimen, because that’s going to be highly efficacious and very safe and very tolerable for the long-term usage. And if you are on a Viread based regimen, it’s a great idea to convert, switch, upgrade to a TAF based regimen as soon as possible.

Joshua Schimmer

What’s going on a payer and access level in HIV? Is it still a generally protected indication or payers starting to swing some influence?

Paul Carter

Well, we certainly keep in very close contact with the payer community across the US. I mean the strong efficacy for HIV in the US and in Europe, the strong Efficacy to have the best therapies available and I think payers recognize that, when you got patients having life long therapy you do need to watch that very carefully. And I think we’ve got a good situation with payers in HIV in the US and in Europe at the moment.

Joshua Schimmer

Got it. As the other TAF programs come online, I guess, and ultimately Viread, Truvada go off patent, do you have objectives for what share ultimately you would like to see converted to TAF based regimens as you head into the next decade?

Paul Carter

We don’t have any specific share targets at the top of the mind at the moment, but we do intend to keep our market leadership in HIV and we think we are in a great place to do that as I said with the series of single-tablet regimens with the TAF backbone. So, we just launched Genvoya which has the integrase third agent. We have a scheduled PDUFA date for our next single-tablet regimen, a TAF plus rilpivirine which will be the 1st of March 2016. We see that as a great opportunity to convert from COMPLERA or EVIPLERA as it’s known in Europe. Then we have the new Truvada, the TAF based, just F/TAF which is around – PDUFA date is around of the 7th of April next year. That gives another option for doctor prescribed a TAF based regimen albeit not a single-tablet regimen. We have a partnership with Janssen to make a single-tablet regimen. They are developing this with an F/TAF backbone and PREZISTA, which is the leading protease inhibitor in the US. And then we have our own integrase program which we are just starting the Phase III studies for which is TAF plus our integrase on boosted called GS-9883 and we are very excited and confident about that to the future of single-tablet regimen as well.

Joshua Schimmer

Maybe shifting to HEP C now.

Paul Carter

Sure.

Joshua Schimmer

What’s your sense of how the market is which is evolving, I guess, with so many new regimens coming, Gilead is obviously seeming to have still a dominant profile compound and with those combinations, how do you kind of forecast coming years to between competition, payers evolving, where does this all go?

Paul Carter

Well, first of all, we are very happy with the place that we found ourselves in a year of the launching Harvoni in the US. As I think, everyone knows, we have a market share in this country north of 90%, maybe around 95% of patients thrown at Sofosbuvir-based regimen. We saw at AASLD just very recently that Harvoni in the real world has stellar results, perhaps better than anyone thought possible. The SPRs have been actually higher in many cases in our Phase III trial and that kind of statistic is almost unheard in our industry. So there is a great reassurance for payers and physicians alike that if you prescribe Harvoni or one of the top Sofosbuvir-based regimens, in all the genotypes, you are going to get a very good result. But we are not resting on all orals that we’ve just recently had added to the Harvoni label, you can now prescribe for Genotype 4, 5 and 6 for co-infected HCV HIV patients and we’ve reduced the duration of treatments for treatment-experienced cirrhosis from 24 weeks to 12 weeks if you add ribavirin. So Harvoni is strengthening over time and looks very good. But we’ve also got our next what we’ve been referring to previously as our wave three treatment which is a two-drug pan-genotypic regimen which is Sofosbuvir plus velpatasvir where we show, again, outstanding data than the actual trials at AASLD. And then off of that, which is starting on now a Phase III trial and our free drug regimen which adds in a protease inhibitor to the pan-genotypic protease inhibitor to the Sofosbuvir, velpatasvir regimen. And we are thinking about that in terms now, perhaps being the salvage regimen for patients who’ve been previously treated on almost any other previous treatment. We think we could probably cure them with this way four regimen. That’s our objective and we are also looking at eight weeks duration pan in a pan-genotypic way for that regimen. So, we’ve got strengthening data on Harvoni. We’ve got the next wave of regimens from Gilead and we are feeling very confident.

Joshua Schimmer

Is 90% plus share is sustainable and if not, what is sustainable and could you see is mostly likely to pick up share?

Paul Carter

I think, market share will evolve of course over time, but I said, we are feeling very confident in where we are today and the future options that we have. It all depends on the clinical profile of future drugs and competitive to us. Pricing, almost maybe going ahead here, but pricing could be a challenge, but what’s most important is the label that competitor drugs are going to have and what we saw at AASLD doesn’t give us any particular concerns that that’s going to be competitor drugs at that labels than we have with Sofosbuvir-based regimen.

Joshua Schimmer

Is Gilead is right in the middle of that pricing access to be and it sounds like, you made some concessions on the price to volume calculation and we are not quite seeing the volume ease yet? Are you seeing any signs of that starting to change and access improving?

Paul Carter

Well, you are certainly right that Gilead is in the center of the, sort of pricing debate and we are certainly keeping very close to the major payers in the US and the governments around the world. There is kind of two aspects to your question, I think the first is that, we did treat, we have treated and we are treating a lot of patients in the US this year, at the end of quarter three, we treated about 190,000 patients in the US this year. That compares with about a 140 in the whole of 2014. So, we are treating a lot of patients and the payers have opened access quite considerably in 2015. But what we’ve also talked about the second part of this is, there is still a lot of constrictions and restrains on access in the US by some payers and we are particularly seeing that being applied to people who have low fibrosis scores. So, if you have a zero, one, fibrosis score, many payers are not going to cover you at this point and they are getting a pushback and what we found is that, physicians quite often don’t even bother writing prescriptions for patients with fibrosis scores of zero and one, because they just know they are going to get rejected and that eases up a lot of time and resources in the physicians’ offices. So, they are waiting. Having said that, behind the scenes, we are continuing to try and encourage payers to think about opening restrictions. We are doing that in terms of pricing and discount negotiations, but we are also trying to draw their attention and I think we are having some success and it’s gradually, that the real economic basis for treating people earlier than later, when you can benefit from eight weeks of treatment of Harvoni as opposed to 12 weeks of treatment and we are starting to see a more eight week usage and we wouldn’t expect to see that, that number is growing in the next year or two.

Joshua Schimmer

There is a large unidentified patient population in the United States. Do you feel like you need to improve the access before you go out, identifying them, because you might find a lot of stage zero patients who can’t do anything?

Paul Carter

Yes, that’s a good question. There is about, well, we don’t really know the number of people who are infected in the US, I think is the truth that various dates to point out that is, some people say there is 4 million people infected in the US, where we’ve done, sort of micro studies in high prevalence areas, we found the prevalence to be a lot higher than people expected. So, maybe that 4 million is understating the reality in the US. But even if 4 million is the correct figure, the number of people treated so far is less than 10% in the US. So, we’ve still got 90% of people out there that are either under doctor care which means, they readily know they are infected and they are registered and they are waiting for treatment or they are undiagnosed and we are working on both areas to try and increase diagnosis and the linkage to care that gets people to it in the end. But your point is also right that, if people go into care, but can’t get the treatment because of payer restrictions, that is a very frustrating thing and going back to my previous point, we are also working hard with the payers to really try and incentivize them and encourage them to think about treating earlier. Because in the end, that investment is going to payback much more if they treat with eight weeks and 12 weeks.

Joshua Schimmer

Maybe, I’ll stop now. Seems there are questions in the audience.

Paul Carter

Sure.

Question-and-Answer Session

Q - Joshua Schimmer

And if not, I’ll happy to keep on going.

Paul Carter

Okay.

Joshua Schimmer

Do we think of ex-US as kind of a bunch of staggered US type bolus peak then decline and plateau launches? How do you think about the dynamics?

Paul Carter

Yes, I think that’s somewhat true. I think we need to be quite specific there about the different types of countries. So for example in the Europe, Germany has been a country which has decided to treat for people of all fibrosis scores. They are seeing really little restriction and we’ve seen actually a picture that developed fairly similar to the US so far that was a big warehouse group of patients, there was bolus being treated and that has now gone and we’re not to move to the steady state in Germany. Other countries, like in Southern Europe are certainly limited by the budgets they have, so they are sort of treating people prioritized based on the budget available. So they are treating the sicker patients first. And I think what that means is, we’ve probably got a longer tail in the type of countries we are kind of getting to a plateau and I suspect that plateau will stay flat for quite a long time and that shape of that curve will be slightly different to the US. And then, a country like Japan, where we’ve recently launched, we are not sure the extent of warehouse patients is still very early days, but we are certainly treating a lot of people very quickly it seems.

Joshua Schimmer

Do you think there is growth in the HEP C franchise on a global basis? If so, for how many years do you think it can keep growing?

Paul Carter

I think, each country as I said, has its own kind of profile and we’ll see it won’t be a straight-line growing type of profile that will grow for a while then it will plateau and then it will start to gradually fade away, but as more and more patients get treated, but we have just touched the top of the iceberg, I think in terms of treatment worldwide at the moment and what’s really encouraging to physicians and payers this thing, as I said this very high FBR rate and the fact that this investment will payback. And we’re seeing quite a lot of experiments around the world as well to try and demonstrate that investment in HCV really does payback. So we’ve got experiments in countries like Georgia where there is an eradication policy. We are looking at Iceland as an example, it’s just a fairly small country with a fairly small HCV infected population. We are trying to do – experiment that to demonstrate that a country can eradicate HCV completely by making even an upfront investment and treating people early and we are looking at prism populations and these types of groups to show that HCV treatment is a good investment for governments.

Joshua Schimmer

Many investors believe that 2015 will be the peak year for HEP C sales for Gilead? Do you have a strong view whether that filler not be the case?

Paul Carter

I am not sure whether it’s the case or not, to be honest. I mean, certainly I think in the US, everyone sees the prescription data like I do, typically before the end of the week. That’s the retail data. We’ve seen that peak and starting to come down gradually over time. Although I would say now, we’ve seen quite a few weeks of sort of flat to slight growth. What we don’t see in that data is the non-retail side in the US, group part of VA who are treating pretty helpfully. And then we have the rest of the world which is on different growth trajectory and when you aggregate all of that, I am still not sure yet, whether we’ve seen peak or not. I would certainly be hopeful we may have some growth, but what I can to certain say is, we’ve treated a very small proportion of the total number of infected people. So I would expect HCV business to continue in a very healthy way for many, many years.

Joshua Schimmer

I know the other, probably most active debate amongst investors, coming back to the HIV side is, is post-Viread, post to Atripla patent expiry, what percent of the HIV franchise can you kind of drag into next generation type products including Stribild, Genvoya? Do you have a thought as to what type of success you can have to that point and beyond?

Paul Carter

I think we are pretty confident that, again, because of the strong efficacy and strong patient knowledge in HIV that people want that treatment, especially when they are going to have a life long therapy and what we’ve seen with various molecules going off-patent so far in the US and in Europe is very little impact actually on the branded products, especially single-tablet regimens. So, in the US, patients use the treatment now seven out of ten are being given a single-tablet regimen and I think it’s hard to go back from that now. In the US, the first time that a single-tablet regimen generic will be available will be at some point in 2021 and that would be a generic Atripla. That’s another five years away. Atripla is already been downgraded by the DHHS in the US and in five years time, I think it’s going to be a bit of ancient history in terms of HIV treatment. Therefore, we are pretty confident that we’ll move the vast majority of patients on to the TAF based single-tablet regimen.

Joshua Schimmer

Okay, I think we are ahead of time. Thank you so much.

Paul Carter

Okay, thank you very much Josh.

Joshua Schimmer

And some more updates.

Paul Carter

Thanks for having me. Thank you.

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