Gilead Sciences has issued their press release with earnings results for the second quarter of 2023 and the speakers for the conference call are Chairman and Chief Executive Officer, Daniel O'Day; Chief Commercial Officer, Johanna Mercier; Chief Medical Officer, Merdad Parsey; and Chief Financial Officer, Andrew Dickinson. Cindy Perettie, the Executive Vice President of Kite, will also join the call for Q&A. The call will include forward-looking statements which involve certain risks and uncertainties that could cause actual results to differ from the statements.

Gilead had a very strong second quarter in terms of both business performance and clinical execution. Total product sales excluding Veklury grew 11% year-over-year and closed a very strong first half performance in the base business. HIV contributed two-thirds of the $615 million growth in the core business, while oncology grew 38%. The second quarter was also very active on the regulatory front, with approvals, positive opinions or recommendations for six of Gilead's therapies. This reflects the strength of Gilead's increasingly diverse portfolio and its ability to navigate regulatory processes quickly and efficiently.

Gilead shared positive pipeline updates at ASCO, including overall survival data for Yescarta, promising Trodelvy data in endometrial cancer, updated TIGIT data from the full study population of ARC-7, and long-term data for Hepcludex. Despite this progress, the Phase 3 ENHANCE study in Higher-Risk MDS was discontinued due to futility. Gilead has a rich pipeline of activity in the second half, including an initial look at a subset of EVOKE-02 data on Trodelvy plus pembro in first-line metastatic non-small cell lung cancer, and welcomed Cindy Perettie, Head of Cell Therapy, to her first Gilead earnings conference call.

Cindy has recently joined Gilead's leadership team, and their commercial results for the second quarter of 2023 were strong, with total product sales (excluding Veklury) increasing 11% year-over-year to $6.3 billion. In particular, HIV sales were up 9% year-over-year, driven by higher average realized price and higher demand. Quarter-over-quarter, sales were up 10%, and the US HIV treatment market grew more than 2% in the first half of the year.

HIV product sales grew 11% in the first half of 2023, and the company expects full year growth to be higher than the 5% reported in 2022. Biktarvy sales were up 17% year-over-year, driven by higher demand and favorable pricing dynamics, and Descovy sales were up 12%. The liver disease portfolio saw a 4% year-over-year and 5% quarter-over-quarter increase in sales, and patient starts in the US, Europe, and Asia increased in the second quarter. The company is looking forward to potentially adding lenacapavir as a six-monthly subcutaneous option for prevention as early as 2025.

Gilead's liver disease portfolio has grown due to HBV and HDV, and has reached a run rate of over $2.5 billion in sales a year. Veklury sales declined due to lower hospitalization rates, but it is still being used to treat COVID-19 patients. Gilead's oncology business has grown from less than $300 million to an annualized run rate of $3 billion, and their TROP2-directed ADC, Trodelvy, has an annual run rate of over $1 billion.

Gilead is looking forward to expanding its reach in Europe following last week's marketing authorization from the European Commission, and is also beginning discussions with health authorities in Japan. In the second quarter, sales of Yescarta and Tecartus increased by 29% and 21% respectively, primarily driven by strong underlying demand. Gilead is confident that Kite cell therapies will remain differentiated in terms of manufacturing reliability and efficacy as cell therapy is offered and delivered to more patients.

Gilead and Kite had a strong performance in the second quarter, with 64 ongoing clinical programs and 21 Phase 3 trials. They presented positive data readouts at medical conferences, such as overall survival data for Trodelvy and Yescarta, and long-term data from blabber tied in HDV. Gilead is also progressing well with their ARTISTRY-1 trial evaluating a combination regimen of bictegravir and lenacapavir for HIV treatment. They expect to provide an update on the Phase 2 portion of the study later this year.

This paragraph discusses the development of HIV treatment and prevention regimens, as well as the updated European Association for the Study of the Liver (EASL) guidelines for the treatment of chronic hepatitis B virus (HBV) infection. It also mentions the approval of Hepcludex by the European Commission and the positive results of a 96-week trial of bulevirtide for HBV. Finally, it mentions the approval of Trodelvy, an antibody-drug conjugate (ADC) for the treatment of three different tumor types.

Trodelvy has treated over 20,000 patients and evaluated more than 2300 in clinical trials, showing a low discontinuation rate and no need for increasing monitoring for severe interstitial lung disease. At ASCO, the final analysis from the Phase 3 TROPiCS-02 trial was presented, which resulted in the European Commission's marketing authorization last week. Additionally, efficacy data was presented from the Phase 2 TROPiCS-03 Basket trial in heavily pre-treated endometrial cancer, demonstrating the potential of Trodelvy. The comprehensive clinical development program in non-small cell lung cancer includes signal-seeking and ongoing Phase 3 clinical trials, with a preliminary readout from the Phase 2 EVOKE-02 trial at the World Conference on Lung Cancer.

This paragraph discusses two treatments, Trodelvy and Yescarta, being evaluated for first-line non-small cell lung cancer and relapsed or refractory large B-cell lymphoma respectively. Data from the Trodelvy study is expected to be released in August and presented at World Lung in September. Data from the Yescarta study was presented at ASCO in June and showed a statistically significant longer overall survival compared to standard-of-care with a 27% reduction in risk of death.

Kite has a strong pipeline of six ongoing Phase 2 and 3 trials across lines of therapy, and is working with partners like Arcellx to support their efforts. They are disappointed by the outcome of the ENHANCE trial evaluating magrolimab, but they have multiple opportunities to improve the lives of patients. They are making strong progress on delivering their key clinical catalysts and advancing their early-stage inflammation assets into Phase 1.

Gilead's base business performed well in the second quarter with total product sales (excluding Veklury) up 11% year-over-year, and total product sales up 7% year-over-year. Product gross margin was 86.9%, up 131 basis points from last year, and R&D expenses increased 25% due to investments in Gilead's clinical pipeline and ongoing partnerships. Acquired IPR&D was $236 million, reflecting the XinThera acquisition and expansion of the Arcus collaboration into inflammation.

In the second quarter of 2023, SG&A was $1.8 billion, up 45% year-over-year due to a legal settlement accrual and increased commercial activities. The effective tax rate was 21% and non-GAAP diluted earnings per share was $1.34, including $0.32 of expense associated with the legal settlement accrual. Total product sales are now expected to be $26.3 billion to $26.7 billion, with 6.5% to 8% growth year-over-year, excluding Veklury which is now expected to be approximately $1.7 billion. Non-GAAP gross margin is expected to be approximately 86%.

The company has updated their non-GAAP guidance for R&D, SG&A, and acquired IPR&D expenses. They now expect non-GAAP operating income to be $10.4-10.9 billion, non-GAAP effective tax rate to be 17%, and non-GAAP diluted EPS to be $6.45-6.80 per share. These changes are due to a one-time legal settlement accrual of $525 million, additional acquired IPR&D expense of $200 million, and a decrease in expected tax reserves.

Gilead is on track to hit its goal of having one-third of its 2030 revenue come from oncology, and its portfolio has significantly grown in both quantity and quality. Daniel O'Day and Andy have discussed the broad range of novel mechanisms, technologies, and approaches across many indications that Gilead has available to ensure that each clinical card turns out favorably.

Andrew Dickinson and Daniel O'Day discussed their initial assumptions around their oncology business representing a third of their total revenue by 2030. They remain confident in their cell therapy and Trodelvy franchises and are on track to produce $3 billion in revenue this year. Merdad Parsey then discussed the upcoming EVOKE-02 data that will be shared at World Lung, which will include the ILD profile in this setting, as well as a potential TROP-2 expression biomarker-driven approach.

Daniel O'Day asks Johanna Mercier to comment on the quarter-over-quarter inflection in Trodelvy, which is attributed to the HR+/HER2- launch. Johanna states that they have not seen a correlation between TROP-2 expression and efficacy, but they are optimistic. She also states that they do not expect to see TROP-2 data in the upcoming dataset.

Tyler expressed his excitement about the successful launch of HR+/HER2- in the US and the recent EC approval for HR+/HER2- in Europe. Johanna then discussed the potential for CMS to cover prep, which could help end the HIV epidemic.

Bill Jahangiri asked about TIGIT and whether any prognostic biomarkers have been found in the tumor microenvironment that could potentially warrant further development of dom in the upper GI indications. Daniel O'Day answered that they are looking for biomarkers of responsiveness to predict TIGIT responsiveness and their interest in the upper GI is based on TIGIT expression levels and clinical data seen for its efficacy. They are also looking for any potential markers for predictive response across the programs.

Daniel O'Day discussed the futility analysis of the high-risk MDS trial and the data generated from it. He mentioned that the team is looking at the data and will make the information publicly available. He also discussed the ongoing trials in AML and solid tumors and that the success or failure of the drug could depend on the biological experiments in each setting. Lastly, he expressed disappointment that they could not bring a benefit to MDS patients.

Gilead is partnering with Arcellx to address the clinical hold on their CAR-T ddBCMA IND, which was placed by the FDA following a patient death. They are confident in the molecule and the IMAGINE-1 study design, and are retraining clinical sites to ensure protocol adherence. The FDA has allowed Arcellx to dose patients who had gone through lymphodepletion while on clinical hold.

Merdad Parsey of Daiichi Sankyo discussed the company's focus on lung cancer and their expectations for Trodelvy, a therapy for multiple myeloma. They will be presenting preliminary frontline data from the EVOKE-02 study and hope to see benefits in terms of outcomes, particularly PFS and OS, for those in the second line. They are confident that Trodelvy will have comparable efficacy to other treatments, as well as a better tolerability profile.

Jacquie Ross and Johanna Mercier are confident in the success of Trodelvy, an antibody-drug conjugate, as a standard-of-care in metastatic triple-negative breast cancer and second-line settings. They believe that Trodelvy's overall survival in both triple-negative breast cancer and HR+/HER2- sets it up for success, and that awareness of the benefits of ADCs is growing. They acknowledge that the introduction of a third ADC may be more challenging, but ultimately believe it is a great thing for patients.

Gilead and Kite are both actively looking for opportunities in oncology, inflammation, and virology, both externally and internally. Over the next five years, there will be a different focus than in the past five years, with more emphasis on building out the research groups in oncology and inflammation. They will still remain active externally, but with fewer virology opportunities.

Immunomedics is excited about their deal with Trodelvy, and they plan to focus on ordinary course partnerships and smaller acquisitions. They are also aggressively pursuing the development of the XinThera PARP-1 selective inhibitor, with the potential to combine it with Trodelvy in order to bring better outcomes to patients.

Andrew Dickinson explains that the company has a strong business model with high efficiency and historically has had industry-leading operating margins. The expenses have increased in the short-run due to the move into oncology, but they expect the expenses to moderate over the coming year, allowing for strong growth in the base business. He does not provide long-term guidance, but expects the expense growth to moderate and carry to the bottom line.

Gilead and Kite have seen positive momentum in their business and have exceeded expectations in their pipeline delivery. They have 64 ongoing clinical programs, 21 of which are in Phase 3. They are particularly interested in the developments within the CAR-T space in non-oncology indications such as lupus.

The speaker thanked everyone for joining the conference call and informed them that there is much to look forward to in the second half of the year and beyond, particularly with regards to transforming beyond diseases already being helped with, such as lung cancer and HIV. They also encouraged anyone with questions to contact Jacquie and the IR team. The call was concluded with an invitation to disconnect.

This summary was generated with AI and may contain some inaccuracies.