Gilead at Bernstein Conference: Strategic Growth and Innovation

On Thursday, 29 May 2025, Gilead Sciences Inc. (NASDAQ:GILD) presented its strategic vision at the Bernstein 41st Annual Strategic Decisions Conference 2025. CEO Dan O’Dea outlined the company’s focus on diversification beyond HIV, advancements in oncology, and risk management amid industry challenges. While Gilead faces potential headwinds such as tariffs and drug pricing reforms, O’Dea emphasized the company’s robust pipeline and strategic initiatives to drive growth and innovation.

Key Takeaways

• Gilead’s HIV business remains durable, with lenacapavir poised as a next-generation cornerstone.
• Oncology growth is significant, with a $3 billion run rate, contributing over half of Gilead’s growth.
• Increased R&D spending to 20% of sales supports diversification efforts.
• Gilead’s US-centric intellectual property mitigates tariff risks.
• AI integration enhances efficiency in clinical trials and drug discovery.

HIV Business

Gilead’s HIV division is positioned for sustained growth, driven by the imminent launch of lenacapavir for PrEP. This capsid inhibitor has demonstrated 99.9% effectiveness in preventing HIV, with potential for once-a-year injections. The company anticipates substantial payer coverage within a year of launch. With Biktarvy’s patent expiring in 2033, Gilead plans up to nine launches of long-acting HIV medicines before then, reducing reliance on Biktarvy. Internationally, Gilead is collaborating with generic manufacturers to expand access to lenacapavir in 120 low and middle-income countries.

Oncology and Cell Therapy Business

Gilead’s oncology segment is thriving, now exceeding a $3 billion run rate. Upcoming presentations at ASCO will showcase Trodelvy’s potential in breast cancer treatment, potentially doubling the patient population in frontline settings. In cell therapy, a late-stage product for multiple myeloma shows promising safety and efficacy, with potential approval as early as next year. Gilead is also exploring treatments for autoimmune diseases.

Financial Strategy and Investment

Gilead has increased R&D investment to 20% of sales, focusing on diversification beyond virology. The company maintains top-quartile operating margins and is committed to growing its dividend. M&A activities target late-stage and on-market assets, with investments in the mid-single-digit billions every few years. Gilead also allocates approximately $1 billion annually for early development projects.

External Risk Management

Gilead is confident in navigating tariff challenges, benefiting from FX tailwinds and a predominantly US-based intellectual property portfolio. The company supports discussions on drug pricing reforms and believes in collaborative solutions that benefit patients. Gilead advocates for FDA staffing improvements and is proactive in addressing potential impacts of the Most Favored Nation model.

Artificial Intelligence

AI plays a crucial role in enhancing Gilead’s operations, from selecting clinical trial sites to improving manufacturing processes. The technology accelerates drug discovery efforts, particularly in protein folding and antibody engineering, reducing time to market.

In conclusion, Gilead’s strategic focus on diversification and innovation positions it well for future growth. For a detailed insight into the conference call, refer to the full transcript below.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Yeah. Good. Alright. Wonderful. Thank you all for being with us here today.

My name is Courtney Breen. I am the Bernstein U. S. Biopharma analyst. And I’m very pleased to have with me Dan O’Dea, CEO and Chairman of Gilead.

I will begin by asking Dan to share a few words and a little bit about himself and a little bit about the business, and then we’ll dive into q and a. What I will ask is for all of you in the room and anyone online, please add questions that you have to the pigeonhole, and we’ll work to integrate them into the conversation today because we want make this as relevant as possible for everyone here. So Dan, over to you for a few words.

Dan O’Dea, CEO and Chairman, Gilead: Thanks, Courtney, and thanks very much for having me here. Thanks for your interest in Gilead. I’m delighted to be here. It’s a particularly special time, I think, for the evolution of Gilead, which has had a lot of proud moments in its history. Just as Courtney asked me, I’ve been at Gilead now for a little over six years.

And, you know, our mandate as a team when we came in was to use the strengths of Gilead but build it in a sustainable way for the future. And I think I’m sure we’ll get into all these things, but there are really three major components to that. One was, you know, the HIV business and making sure we had a durable, sustainable, growing HIV business. And, you know, my message to you here today is that, you know, particularly with the imminent launch now of lenacapavir for PrEP, it’s really the cornerstone of kind of the next generation of our HIV medicines in both treatment and PrEP, and I know we’ll talk about that quite a bit. But, you know, we’re unusual in that as a large biopharma company, we really only have, you know, one major or larger patent expiry.

It’s not until 02/1933 it’s Biktarvy. And between now and then, we have up to nine potential launches in both treatment and PrEP for long acting medicines that will kind of diversify our reliance upon Biktarvy by 02/1933. So I think that setup is quite unique in biopharma these days and a tribute to what the team has done. So really excited about I’m sure we’ll talk more about that, but the potential to have that be such an important growing business for us in the future well into the late 2030s. But that wasn’t enough, of course.

The second thing we needed to do is diversify into other therapeutic areas as a company of our size. And we did that through a strategic review about five years ago where we said with our immunology scientific background in BASE, we felt we could apply those skills differentially to oncology and to immunologyinformation. And I’m pleased to say that we really made some good progress there. In fact, we now have our oncology business at more than a $3,000,000,000 run rate, and it really accounts for more than half of our growth on a quarterly basis. And we’re just kind of getting going, that’s including both the cell therapy business of KITE, where we’re the world global leader there, and our non cell therapy business.

And I think particularly when I think about the, if you like, the non HIV, we have a lot of really exciting launches coming up in the very near term. So I already talked about one in virology, that’s Len for PrEP or Lenacapavir for prevention. But then in addition to that, we have a recent launch that we just, launched last year, a medicine called Libdelzi for a form of liver disease, but it works through an inflammatory mechanism, so it falls into that third bucket. And then we have a few exciting oncology or cancer launches coming up. Were just talking, Corne and I, about ASCO.

We’re going to be presenting data there on one of our two recent positive readouts for Trodelvy, a medicine that is used predominantly in breast cancer today, and these are two frontline studies. So today, Trodelvy is approved in both hormone receptor positive breast cancer and triple negative breast cancer in the later line settings. But this study that we’re going to be presenting this coming Saturday is the first of two studies in the earlier line triple negative breast cancer setting. And although we haven’t exposed the data yet, what we have said is it’s very clinically meaningful, highly statistically significant, and we think it has the potential to change the standard of care. The reason that’s important is first of all triple negative breast cancer is a devastating disease, largely afflicting women that are earlier in their lifespan, and there are very few options.

So the only option that’s really been available in the frontline setting beyond chemotherapy is in immunotherapy. And our study with Trodelvy shows that both with and without immunotherapy, we have the potential to really advance on chemotherapy, which is really, as I said, been around for about twenty years. So that’s certainly exciting for patients. It’s also exciting for the growth of our business because the frontline setting more than doubles the patient population for that and a longer durability. There’s much more to the cancer story outside of cell therapy, but I won’t go into that right now.

The other eminent launch is a medicine in our cell therapy business. We’re already, you know, in lymphoma and leukemia, but we have a very interesting late stage product now and late stage clinical trials for multiple myeloma which is more than double the market of lymphoma and leukemia. And it looks like a very differentiated product in a late stage trial right now that we’ll have some more data on at just after ASCO. But it looks like it could really benefit from an enhanced safety profile and strong efficacy in that cell therapy segment. So this all saying that in our second bucket of beyond HIV, we’re really on a good path and a good cycle.

And then the last bucket I would say is we’ve had to disproportionately invest in order to build this new muscle at Gilead outside of virology over the past three or four years. We’re now at a level of investment that’s commensurate with kind of a company our size. So for instance, there’s one metric in R and D spend that’s around 20% of our sales, which used to be more around 13% or 14%. So we’ve done that investment. We have really strong both growth potential on the top line, but also we have very good operating margins.

We’re in the top quartile of the operating margins in the industry because of the areas that we work in, and we intend to keep it that way. In other words, leverage is coming back to our model after a time a purposeful time of investment over the past couple of years. And we remain committed to the dividend and our dividend policy and growing that dividend with this strong financial base. And then finally, we’ll do more ordinary course business development moving forward because of the size and the strength of our portfolio. So that’s kind of in a nutshell, I think, why the Gilead story is interesting right now.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Wonderful. That’s a that’s a great kind of summation of the of the business. I’d love to take a minute to zoom back out to the sector as a whole.

Dan O’Dea, CEO and Chairman, Gilead: Sure.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Sure. Because I think the sector is under real pressure at the moment.

Dan O’Dea, CEO and Chairman, Gilead: Sure.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Arguably, the Gilead stock has actually stayed a little bit more buoyant than than many of the other kind of peers in the industry. Right. But there’s a lot of pressures on the industry. You kind of think about tariffs. You think about MFN with drug pricing, potential Medicaid cuts as we look at the big beautiful bills, PBM reform, HHS changes, kind of strategies within the organization for the agencies changing in terms of what is acceptable now or what do they see as the bar, but also just straight cuts to those organizations too.

As you think about Gilead specifically and your business, how do some of those kind of relative risks rank for you? Because it seems to show up quite differently for each company.

Dan O’Dea, CEO and Chairman, Gilead: Yeah. I think I think you’re right to point that out. I I do think that, everything I just said, you know, for me, you know, the best defense is a good offense, particularly in times of uncertainty. So having the type of portfolio we have with very low patent exposure, strong portfolio, strong fundamental balance sheet, and underlying dynamics help us regardless of what happens, I would say. And that’s, I think, the reason why we are performing better than the sector significantly over the past twelve months or so.

Now specifically, as we dig into these things and of course, there’s a lot of speculation here on many things, but let me just take the tariff issue first. Always exciting news when you wake up in the morning on the tariff issues. So but let me just say, you know, we split it out into two different segments. And here, I think we also have a bit of differentiation on one of the segments. So we talk about, you know, non sector specific tariffs.

Those are the general tariffs associated with, you know, the construction that we do with steel or the chemicals that we buy for our labs. And what we said at our first quarter results is that, you know, we you know, while those may be under question after yesterday’s announcement, we we feel quite confident in being able to navigate those tariffs within the nature of our business, within our guidance for 2025. And we can do that because, you know, of our balance sheet and our income statement. Also, we’re getting a a slight benefit on FX headwind or we have some FX tailwinds that also help us offset those. So those are, I think, less of a concern for us in the short term.

I mean, I I would start by saying every dollar that goes to tariff is a dollar that could be spent in new innovation or or returning back to shareholders. So, you know, that that’s important that if we can we can avoid those, I think that would be important. And then secondarily, for the sector specific tariffs, one of the reasons we’ve been called out in general by analyst reports and others is that we’re while while they’re unknown right now, what they could be, we’re likely less exposed. And the reason we’re less exposed is because we have as opposed to a lot of our peers, we have the vast majority of our intellectual property in The United States. In fact, about 80% of our intellectual property is in The United States.

The reason that’s important is because, you know, when you transfer medicines from one country to another, you know, it’s based upon a transfer price calculation. We transfer our medicines into this country at a relatively high price because our IP is held here. And and we’re also a good taxpayer in The United States compared to, the large portion of our industry with a marginalized tax rate of around 20%, which is differentiated. So our structure is different. We benefited from the first Trump administration by repatriating quite a bit of our IP.

So I think in general, you know, from a sector specific tariff, not that we’re unexposed, but we’re less exposed. And I think that’s also why, you know, we’re we’re we’re working on those. We we fundamentally believe that that that those are not a good idea, and and we’ll continue to advocate for that. And then beyond that, I mean, let me just talk about the FDA quickly because I know there’s been a lot speculation around the FDA. Some of our major products that I just spoke about, lenacapavir for PrEP, for instance, we haven’t experienced the difference in the way the agency is reviewing our medicines.

And and it’s hard to tell whether that’s just because of the nature of our medicines getting a priority status at the FDA, and they do have priority status because of the impact that they have for patients or something else. But as of now, all I can say is that, you know, our review processes are going as expected, and lenacapagir for PrEP is one, just to put that on the table because it’s the most eminent one. It has a so called PDUFA date or approval date by June 19. Every everything is on track for that for that approval by that date, and and and we’ll see how that goes. And then other interactions we’re having with the agency.

So a lot needs to unfold at the FDA, and we’re advocating obviously for good staffing there and transitioning, right now, that that that’s worked out quite well for us. And then maybe the last thing I’ll just touch on and over to you, Courtney, is the so called most favored nation. There there’s been two executive orders out of the the White House that that are really quite different. One was in favor of things like PBM reform and fixing what’s called a pill penalty, which for those of you it’s it’s a technical, aspect of the inflation reduction act, which for a certain segment of products, they’re where there is Medicare negotiation, there are certain category of products that are negotiated thirteen years after launch, there are certain categories that are nine years after launch. Small molecules are nine years and biologics are thirteen years.

It doesn’t make any sense. In fact, small molecules are some of the most efficient ways to deliver healthcare, particularly to underserved patients. And we have very strong support within Congress for this and thankfully also in the White House to try to take it nine years and convert it to thirteen years. So we’ll see. You know?

So that’s kind of a positive executive order, and still there’s no certainty on any of those things yet because a lot of those things have to be done with legislation. And then there’s a second executive order that came out that is on most favored nations. So the concept of The US paying higher drug prices than the rest of the world and how do you try to square that circle. And and it is it is a it’s a it’s a perennial issue. It’s one that we’ve been dealing with for a long time.

Part of it has to do with the the structure of our US system that is very different than the rest of the world. We’re the only country of the world that that where 50% of every dollar spent on medicines goes to people that don’t invent the medicines. That’s unusual. No other country has that structure. So you have it’s really apples and oranges comparison.

And what I would say is that, you know, we wanna be productive here. We wanna as both a company and as an industry, we wanna lean into these discussions. We understand the topic. We have ideas for how we might be able to solve it. And and I fundamentally believe at the end of the day that the administration is not interested in penalizing one of the gems of American industry.

I mean, we are clearly the envy of the world biopharma in The United States. More than 70% of global investment, my global peers that have, you know, headquarters in Europe or in Asia, more than 70% of the global investment in the industry goes in The United States today. Why would you wanna disrupt that? Right? And there’s also national security issues, obviously, associated with China and having drug supplies and other things.

So I think there’s a lot to work on with the administration, and we also have to be very clear about what’s a bad idea.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. And and I think kind of this notion of finding common ground seems to be something that the entire industry is behind

Dan O’Dea, CEO and Chairman, Gilead: Yes.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: When it comes to this situation.

Dan O’Dea, CEO and Chairman, Gilead: And we wanna be at the table. We wanna you know, we’re not we’re we wanna be a a part of the solution.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. In terms of and this is a question that’s just come through and kind of everyone speculates on how big is that difference in price between between US versus ex US. And I think we heard from Moderna this morning that on vaccines, it’s often much more comparable than perhaps for for other medicines. Is there anything you can share about your exposure relative to others? And I I know this is a difficult question to answer.

Dan O’Dea, CEO and Chairman, Gilead: No. It is. And and it’s and it’s, it gets back to this kind of, what do you compare? Mhmm. I think that’s important.

And it is very different medicine to medicine. In some cases, you know, it can be 10 times more, in The US on a on a pure face value kind of, if you like, list price kind of perspective. In other cases, it can be five times. But the important thing is I think that you need to you need to correct some of those apples and oranges. So we do provide, you know, discounts here in The United States, significant discounts to the government, to the three forty b system.

So I think as a starting point, have to start at kind of a net price in The United States. And then likewise, I think when you go outside The United States, you do have to factor for different GDPs. You know? So, I mean, let’s just take France. I mean, it has about, you know, half the GDP of The US.

You need to kinda double that price to get so I think the differences are often conflated and and and confused. What what I would say is that, obviously, there’s little traction in congress for a legislative approach to MFN, and we can talk about that if you want to. So most things that could be done today, you know, could be done through kind of the administration or through administrative action. And and and those things are, you know, are largely done through CMS or the government, payer association, and they’re largely done through things like demonstration projects. So I I would say that because and back to Gilead, because we’re in a launch phase.

Right? We’re launching so many products in the short to medium term that, if you’re if you’re launching a product into an environment where you may understand how MFN is to be applied, you can make different decisions about how you launch that product outside The United States to reduce the impact accordingly. And we do that today, by the way. There are many medicines that we as a company and other companies don’t launch in certain countries because we just can’t get the level of value. It’s unfortunate.

We we always put the patient first, but you you you you know, you you just there are some countries that make it impossible to launch. So in a forward looking basis with the young portfolio, the young product, that’s how we think about being agile and adaptive depending if anything does come out of the MFN.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: That makes a lot of sense. A bit of optionality in terms of how you how you play things going forward if there is a new world order Right. Perhaps. The the next question I wanted to ask, and you touched on this a little bit in your in your opening, is kind of this diversification strategy. Yeah.

Yeah. And it feels like if we look back perhaps twelve months, two years ago, that was very focused on oncology. It feels like perhaps if we look back more over the last six to nine months, the conversation has been diversification within HIV, but also diversification outside. And perhaps the the the size or the quantum of the bets that you’re making and the and the cash that you’re having to outlay to make those bets is also changing. Can you just talk a little bit about kind of how how the strategy has evolved there and and perhaps where you’re at now and and why it looks a little different today than it than it did two or three years ago?

Dan O’Dea, CEO and Chairman, Gilead: Yeah. And I like that you articulated, you know, diversification within HIV and outside of HIV. I’d say it’s hard to overstate, you know, the importance of diversifying within HIV. I mean, HIV is a disease that is still growing throughout the world, unfortunately, and and particularly in certain parts of the world, but certain parts of this country too, which are really important. So why it’s important to diversify within HIV, just to give you some of that dynamics, is that first of all, in the treatment side of the market, there’s still about forty percent of people in this country that have HIV that are not virologically suppressed.

And if you’re not virologically suppressed with HIV, you can still pass the illness on to others. So there’s there’s opportunity within the treatment market, is the vast majority of our revenue today, to not only, you know, give optionality to patients with Biktarvy, you know, a one pill once a day to more to less frequent options, and we’re working on everything from once weekly pills to once monthly pills to once every three and six months subcutaneous injections just on the treatment side. So I think that’s important optionality for patients, but it also allows us to actually access a part of the market that we can’t access today with a one pill once a day. So that’s important for the longevity of our business, over time. On the prevention side, just to put this into context, we have a very effective Gilead was the first company to have a prevention medicine.

It’s very effective if you take the pill once a day, up to ninety nine percent effective at preventing HIV. But the the, you know, the the the concept of people that don’t have an illness, you know, in the prime of their life taking one pill once a day medicine, you can imagine that not a lot of people do that, and people that do that aren’t very compliant. So of the somewhat conservative one point three million people that are identified by CDC today that could be at risk for HIV, there’s only about four hundred thousand people today that are on some type of a PrEP regimen. And of that four hundred thousand people, if you do the averages, only there’s only about fifty percent compliance on that. So so there’s a huge need here in it for for finding a medicine that that can really expand that.

So that’s why diversification in HIV has been so important. So lenacapir for PrEP is a medicine that’s shown to be ninety nine point nine percent effective in preventing HIV across two large studies with a twice a year injection. I mean, it’s and we just presented data at a medical conference this year that suggests that we can get to a once a year injection as well. Those studies are going on right now, but but we’re about to launch the twice a year injection. So the ability to expand that market over the next several years in comparison to where we were five or six years ago, that whole diversification within HIV has been fundamentally important for us.

And I think we’ve people now understand because there was always the question, well, you know, Dan Gilead, is your HIV business durable? And that was a question that meant, you know, could you continue to come up with innovation that would beat people where they are? And is your patent life long enough that it’s durable? And I think most people now understand why that is so durable for durable late into the twenty thirties. But beyond that, of course, I I think your question was around, you know, the diversification beyond that.

I think we’ve we’ve really we’ve really come a long way. As as I’ve said with both libelzi, Trodelvi, cell therapy, it’s not just oncology. You’re right. We also have now a really budding inflammation portfolio. Libelzi is kind of the beginning of that, but we have very interesting molecules in the phase two development on both oncology and inflammation mechanisms that could really provide significant advantage for a lot of inflammatory diseases like alpha four beta seven or IRAK four or STAT six that I think are the kind of the next wave of innovation for Gilead, whereas HIV is the here and now and the future.

Oncology is the here and now and the future, but growing slowly. And inflammation is kind of what could come in the next five years to the next fifteen years. And those are the cycle times we have to think about in our business on the portfolio side. And we’re not done yet. I mean, we’ll continue both through our own research efforts, as I said, through normal normal ordinary course BD Mhmm.

To continue to supplement that that in those three therapeutic areas.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. And and perhaps on that BD point, kind of as you think about m and a, I think there’s been an evolution of going from perhaps the Immunomedics deal and others that were kind of really sizable transactions to more of the business as usual that you’re you’re now talking about. Can you define what kinds of deals are interesting to Gilead at the moment? What are the parameters you’re looking for? Does the policy uncertainty impact kind of what might be on the table or not?

Does it raise the hurdle rates or anything along those lines? Can you can you give us a frame of reference there?

Dan O’Dea, CEO and Chairman, Gilead: Yeah. Absolutely. Mean, there’s always risk from a regulatory perspective or an FTC perspective that you have to factor in. But but maybe just to to be clear, you know, we we had to put a lot of capital to work in the first five years of my tenure. In other words, you have to get a footing in some of these new therapeutic areas.

You can’t just grow it through, through internal mechanisms. And that’s why we, you know, put a put quite a bit of capital to work, and particularly in the oncology segment and deals like immunomedics in the past. Fast forward five years, we’re no longer in that world where we need to put that type of capital to work. We have a very robust portfolio. We have to draw the line very, very high on our R and D spend.

We’re disciplined about that. I love that because that means there’s things you aren’t funding. There’s always gotta be things you’re not funding. Mhmm. Because otherwise, you’re funding things that that aren’t gonna be transformational accordingly.

So that’s where we’re at right now. So that means both the external BD and the internal innovation competes for each other at a high bar level within the organization. But it also means you deploy less capital externally. So the way we think about it is you always have to be feeding the early part of your pipeline, but that’s a relatively capital efficient way to apply resources. We put a bill you know, rough plus or minus a billion dollars to work on things in late research or early development a year.

You know? Sometimes we may do a little bit more, a little bit less. Back to the dynamics associated with the administration or uncertainty, you know, when your cycle time at any of those things is ten years Mhmm. You can’t be fixated on the current administration. So don’t worry about that at all.

And back to the later stage deals, as I’ve said, you know, we do think it’s healthy for a company our size to be putting, you know, capital to work. We’ve said, you know, if you find the right opportunities in late stage development or potentially even on market, that in the sweet spot of mid single digit billions, every couple of years, if you find an asset like that, you bring it in. I mean, just to be tangible, one example of that is last year when we bought a company called CymaBay for about $4,000,000,000. It was in liver. It it it fit really nicely into our our commercial channels.

We had a lot of synergies there, and it’s already already off to a really good launch. I think that was that that that’s the the way we think about putting late stage capital to work. I mean, back to, you know, other other opportunities or the risks associated with what’s going on in internal environment. Obviously, biotech evaluations are are down. Yeah.

So, you know, that presents an opportunity for us on the one hand. On the other hand, I don’t think it’s gonna fundamentally change our bar for innovation. Mhmm. I mean, it may make things a little bit more, you know, cost effective, you know, on on that front, but the innovation still has to succeed at a high level better than something you have internally. So I don’t it’s not like all of a sudden because valuations are down in biotech, we’re gonna do five mid single digits.

That’s that’s just there aren’t that many assets out there, and there aren’t that many assets that are interested out there. So I don’t think fundamentally that the current environment with our cycle times really grossly affects our capital. I know it does to other participants in in our industry

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Yeah.

Dan O’Dea, CEO and Chairman, Gilead: But not to a large biopharma like ourselves.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. And certainly with that long duration Right. I think it makes sense if particularly if you’re buying at the discovery or or phase one phase. Right. At phase one stage, you got a long time to go.

Dan O’Dea, CEO and Chairman, Gilead: Right. And, usually, those are launch products where if if MFN does come into play, you have a chance to price it from the launch in a way that that is commensurate with whatever is going on in the environment at the time. So

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. I wanna pitch shift to to lenacapavir. I think we’ve touched on it a couple of times, but it’s it’s a particularly important part of the Gilead story at the moment and the next big launch. You mentioned the PDUFA date. Great to hear that everything’s on track there with the the FDA so far.

Kind of we’ve had a question come in through here. What’s the long term ambition with lenacaprevir? And and I’ll have got a few other follow ups that I’ll I’ll follow on, but I think maybe start with that ambition.

Dan O’Dea, CEO and Chairman, Gilead: Well, maybe just to put this into context, and and I give credit completely to the Gilead scientists on this, but lenacapavir was the breakthrough medicine of the last of the year last year in Science Magazine. So you don’t have to believe me. You can believe a a third party reference. But it’s quite an extraordinary molecule, even for a company that’s been working in HIV for three decades, because this molecule has been working on for sixteen years. And while most things most of medicines we use in HIV attack the viral enzyme, not to get too scientific, this isn’t a completely novel mechanism.

It it it attacks the coding of where the viral enzymes are. It’s so called capsid inhibitor. It’s the first ever capsid inhibitor that has been created. It it it was thought of as a nondruggable target, which is why it took sixteen years to work on because the Gilead scientists said, no. No.

We don’t believe that. But not only were they able to drug the target, which is one task of scientific, you know, what we call a unicorn strategy sometimes, but they were able to get it to this very long half life. And, it takes really talented chemists in this case because it’s a small molecule to try to find a half life that you could actually only dose a patient or a person in this case every six months and get the type of the efficacy that we got. I think the entire world was even stunned at the level of efficacy that we got last year with two very large studies with thousands of patients, where we showed a hundred percent, of patients in one trial did not, get HIV as compared to the control arms. And it was about ninety five percent in the others, so the combined is about ninety nine point nine percent.

So it’s actually quite extraordinary. And so it’s hard to it’s hard to overstate how important this is for people living with HIV or people that are at risk of HIV. And I would just say, you know, back I I don’t know if I said this already because I’ve had so many conversations say, the PK profile is such that we believe we can get this to a once a year medicine as well.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: That was really exciting

Dan O’Dea, CEO and Chairman, Gilead: about it. Is really exciting. So if you can imagine a medicine and we don’t equate it to a vaccine because vaccines are not a % effective. So, I mean, it’s it’s it’s a medicine that has extraordinary benefits in the developed world in the developing world, and we have a very we have a keen strategy to make sure that everybody in the world that wants access to this can get it working through voluntary licensing and generic manufacturers for 120 low and middle income countries. Because you never get to distinguishing a disease if you only distinguish it from one continent.

So we’re we’re quite clear on that. But yes, it’s critically important to help all those people that are getting HIV today. And in this country alone, seven hundred people get HIV every week. A hundred people die. Fifty three percent of them are women.

And and and a lot of them are underserved communities in the rural South. So, I mean, it’s and because the one pill once a day has not been it hasn’t met people in the stigma and discrimination associated with this disease where it needs to meet it. So it is critically important in preventing the disease, but it’s equally important. It is the backbone to all of our long acting treatments because this molecule is so unique, that we’re formulating in in once weekly versions, once monthly versions, and once every three and six month versions. Now the key in treatment is you need a partner molecule because you can’t have a single agent like you can in prevention.

You need a partner molecule because of the nature of HIV and resistance. And we have a very broad program, as I said, you know, up to nine potential launches across those ranges of of different conveniences for patients and and and things that will help those people that aren’t on it today between now and 2033. So it is the backbone of our conviction when we say that HIV business is durable well into the late twenty thirties. It’s it’s lenacapavir based.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. It’s it’s very exciting, and I think kind of the the data is is very, very compelling.

Dan O’Dea, CEO and Chairman, Gilead: Mhmm.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: As we think about this near term launch for for prevention after the the June PDUFA date, What will be key to a successful launch? Number one. And number two, Descovy is is currently used in in this segment for prevention, that one pill once a day, not in an adherent way, though. Mhmm. Mhmm.

Will Descovy in this segment go down to zero?

Dan O’Dea, CEO and Chairman, Gilead: So I think Descovy will continue to have a role. Some people may prefer to take it once a pill once a day. We think the vast majority of the people would prefer to have it be less frequent. But back to the launch dynamics. So this is important.

I mean, this is it it’s it’s it’s it’s it’s disease changing type therapy, and it’s something new and different for people. I mean, you know, oncologists are using used to giving administration in their office. Mhmm. HIV physicians or general practitioners aren’t. So we’ve got a wraparound to make this as simple and as easy as possible.

I mean, the first thing is it’s a subcutaneous injection, so it’s not an intramuscular injection. It’s it’s it’s a bit easier to to to to administer. But secondly, we have a we have teams of people that have that are designed to make sure the practice that administers this medicine has everything taken care of. You know? Insurance coverage Mhmm.

Making sure they get the medicine at the right time for the injections, reminders for people to come back every six months. If there’s one thing that Gilead is very good at, it’s understanding the HIV community of practice, working with advocates, working with patient communities. And I can tell you, I mean, getting that right is really, really important to launch. Of course, payer coverage is very important. And as usual from I mean, PrEP in general enjoys a very high payer coverage.

Today, Descovy has more than a 9090% payer coverage here in The United States Mhmm. Because of the benefit it provides. So we expect that to be the same for LENPROPREP. But in the first couple of quarters, as usual, as you know, it takes a little while to get that pay payer coverage up and going. Having said that, because of the extraordinary nature of this, we believe we’ll be at about a about a 70 per 75% payer coverage within six months

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Mhmm.

Dan O’Dea, CEO and Chairman, Gilead: And probably 90% care payer coverage in in twelve months. So getting that payer piece fixed out, making sure providers understand what it is, and then eventually getting to new audiences that we haven’t gotten to. I mean, the low hanging fruit, as you point out, is to is to convert people that are perhaps noncompliant, so they’re one pill once a day to something they can be compliant on and be better protected on. But then, of course, we don’t stop there. We go to new populations of people in this country, some of the populations I’ve already mentioned here today.

And then globally, this is largely a US market. Globally, countries outside The United States are now very interested in this, even more so than they were with the one pill ones and much more so, because they see that they can actually reduce the incidence significantly in their market with this because they know adherence is is is more is is more prescribed. You know? They can achieve the adherence they need. And if you achieve the adherence you need, you reduce the number of people in your country with HIV.

And for every person that’s infected in this country, it’s about $1,100,000 of lifetime cost with HIV. So if you protect somebody, perhaps not their whole life, but in a period of time where they have multiple sexual partners, and you avoid that cost per patient, it’s a very strong pharmacoeconomic story for other countries as well where it hasn’t been as strong with the one pill once a day. So we see we see the ability to expand this, you know, well beyond The United States as well.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. And I and I think the points that you you made around the the kind of practice changing nature of this this opportunity, I was quite impressed at the HIV day when kind of Joanna, I think, got up there and detailed all the different things that you’re working on, and it feels like this is a really reinforced plan. And Yeah. Perhaps there’s a risk that you’re slightly overinvesting, but you’d rather overinvest than than kind of face the risk.

Dan O’Dea, CEO and Chairman, Gilead: Agreed. I think I I was at the launch meeting last week. The team is ready. They’re it’s it’s been the place, you know, for people to to come in and and and want to work in HIV. And if we are if we are slightly overprepared, I’m okay with that.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Fantastic. Wonderful to hear. Another another kind of HIV opportunity that doesn’t get as much airtime is the bict the bictegravir plus lenacapavir combination.

Dan O’Dea, CEO and Chairman, Gilead: Yeah.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: This perhaps isn’t coming and bringing kind of necessarily the long acting option.

Dan O’Dea, CEO and Chairman, Gilead: Right.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: But it is your first doublet coming into that treatment space. And so, arguably, this could be used in many more patients than just the the the kind of clinical trial set that you’re, kind of currently targeting.

Dan O’Dea, CEO and Chairman, Gilead: Yeah.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Can you talk a little bit about where else this could go?

Dan O’Dea, CEO and Chairman, Gilead: Yeah. I think it’s very exciting. It’s the most nearest term of kind of, you know, our our oral version of lenacapavir. And Biktarvy, to be clear, is the standard of care today. It’s a three drug regimen, and it’s a three drug regimen because those mechanisms require three different mechanisms to get the level of efficacy and the resistance that we have.

Because lenacapavir is a brand new mechanism and it works differently, we’ve seen in our data so far that a two drug regimen can be as strong potentially as as Biktarvy for some patients. And so I think the differentiation factor for us is we’re running studies in both switch patient populations and and and naive patients. And this will give optionality Mhmm. I think for for for patients that either may prefer a two drug regimen or may, for whatever reason, need to switch from Biktarvy

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Mhmm.

Dan O’Dea, CEO and Chairman, Gilead: To another Gilead regimen that is novel, that’s new, that that that has strong data. And so we’re expecting that data in the relatively near term. And then obviously moving from that to once weekly, to once monthly pills is kind of the next generation of those lenacapavir backbones.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. And and I think something that I’ve heard throughout the conversation is it feels like you’re really looking to provide that optionality for the patients that exist rather than pick an option and and kind of run after that with your innovation. Exactly.

Dan O’Dea, CEO and Chairman, Gilead: I mean, it’s definitely not one size fits all for HIV. There may be some people that really wanna keep taking that daily pill. We think that’s gonna be lower and lower because if you can get into a mechanism where you’re taking your pill once a week or once a month, I think compliance is still strong with that, and, and it gives people optionality. Or and some people may like injections unless frequent, and some people may not like injections. So the more optionality you can give, first of all, the more likely people are to stay on their medicines, stay virally suppressed and not pass the disease on, which is really important.

But then you could also get to patient populations that just aren’t even taking a pill once a day, and that both those things are critically important.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. I wanna pivot to the CAR T space. Yeah. This is another place where you are a leader as a as a company, and you’ve kind of began in the lymphoma space and kind of mastered the manufacturing. And perhaps there hasn’t been quite as much advancement in the pipeline yet, but we’re beginning to see that come through.

Yeah. I would love to to hear a little bit. We’ve got kind of Anita Sell is kind of the next big thing on the horizon. Yeah. There was an update last quarter with the MRD, which is the minimum minimal residual disease endpoint being added to the trial because multiple myeloma tends to take a long time to read out, so potentially a faster path to to market.

Do you think that still stands given kind of the changes we’ve seen at the FDA and perhaps differing perspectives evolving and what’s acceptable as an endpoint for kind of trials to be approved under under this particular administration?

Dan O’Dea, CEO and Chairman, Gilead: We do. And again, we’re starting in kind of fourth line multiple myeloma setting where single arm trials, particularly when you have an improved safety profile with at least as good efficacy, I think that’s been a tried and true path with the FDA. We’re not seeing anything there in this patient population that would adjust our our thinking on that nor are we hearing anything from the agency. When we go up in lines of therapy in multiple myeloma, those those are randomized trials.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: And Mhmm.

Dan O’Dea, CEO and Chairman, Gilead: I think, you know, and and you pointed out the the potential advantage of having a minimum residual disease endpoint, which for the is it is it earlier approval endpoint that then is followed by, you know, other clinical manifestations of the disease later on, so it represents an ability to get a medicine sooner. No. I think we’re really we’re really excited about it. You’re gonna you’re gonna see some some ongoing data from that as we go throughout the course of this year. It continues to be robust and hold up in our mind, and we could have this approved as early as next year in the fourth line setting.

Mhmm. The other piece that’s important is not just the medicine, but cell therapy, for those of you that, you know, may not be familiar with it, the infrastructure that you need for cell therapy is a competitive advantage and the ability to have turnaround time. What cell therapy is, it’s really the ultimate personalized medicine. In other words, every every medicine is an N of one from the patient. You take you literally take, you know, T cells from the body, you ship them to one of our manufacturing facilities of which we have four around the world, and then they’re shipped back to that patient and infused back in the patient’s body.

So it’s it’s we have a competitive advantage because we have, you know, the largest manufacturing network, the shortest turnaround time. So you need to you need to have a short turnaround time because people are, you know, are put in immunocompromised state while they’re waiting for their cells to come back. And you wanna make sure you get those back as quickly as as possible so you get the best clinical benefit. And we’re world leading there on our lymphoma and leukemia business. And our multiple myeloma asset, the amino cell, will go right into that infrastructure and into that process, into that turnaround time that we continue to kind of decrease in time.

So we think there are significant advantages both in terms of our ability to fulfill. I mean, in multiple myeloma, the demand can’t be fulfilled with the current incumbents out there. And so we really think that that, you know, with our ability to come in with our world class cell therapy position, we’ll we’ll be in good shape. And then beyond that, we’re not done with multiple myeloma or moving up the lines of therapy. We have some interesting data coming up at ASCO and kind of the generation of leukemia and lymphoma assets, and also even some early data on a solid tumor in glioblastoma that’s really interesting.

And then we’re doing work on autoimmune disease. So, you know, cell therapy and the reason it’s so important is because of the clinical benefit you get. I mean, just on their approved product today, about fifty percent of patients are cured with one treatment, which is extraordinary when you go back to pre cell therapy in that same disease state, you had on average about six months to live. So so these are these are important therapies. Mhmm.

They’re they’re they’re they’re transformational, and we believe we can bring these to different disease states and earlier lines of therapies to get even more cures out of this, not only in cancer, certainly hematological malignancies and solid tumors, but potentially now as we see that play out in other disease conditions like autoimmune.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. There’s lots of shared biology Right. Kind of so many disease states out there as well. We’ve had a a couple of questions come through that I that I want to make sure we hit on as well. One of them kind of comes back to a theme that I think we’ve seen through many of the conversations over the last couple of days is is AI.

And the question here is, can you help us understand a little bit more about how AI is helping to improve either the timeline or cost of drug discovery? Certainly, the way that I think about it is you’ve got an efficiency opportunity, but you’ve got an innovation opportunity as well. It feels like lots of companies are going after inefficiency first. It’s easier. Mhmm.

And then there’s innovation as well. So maybe you can tell us if a little bit about those two and what you’re doing with Gilead.

Dan O’Dea, CEO and Chairman, Gilead: I I agree with you, by the way. First of all, I mean, it it affects every part of our business. And, you know, I think there’s a lot to do on the efficiency case. And and most of our most of our use case examples, as we call them in the company, are around efficiency. I mean, we’re getting good leverage in, you know, our clinical trial placements and construct going to those sites through AI and through merging databases that allow us to pick the right sites and therefore recruit faster.

I mean, it is efficiency, but it’s also innovation to a certain extent. Because if you get that medicine to patients six months or a year sooner, it’s obviously better for patients. It’s certainly better for shareholders. So I think, you know, it’s hard to tease those things apart. But those are what I would call not easy, but low hanging fruit cases.

And we do the same thing in our commercial organizations and some of our manufacturing processes. I think the holy grail of this is is can it help you discover medicines, that you may not have been able to discover without the use of AI? I think we’re still at the early stages there. Obviously, there’s a lot of capital flowing into that area. We have a lot of partnerships.

We’re doing a lot with that. You know, there’s there’s there’s been tried and true things like, you know, can you accelerate chemistry protein folding using AI? Mhmm. Which, again, you know, don’t know whether you’ve called that innovation or efficiency. Mhmm.

In some cases, it could be both, but that could also shave six months off of a of a long cycle time. There’s antibody engineering that can be inflicted with AI. And there’s just a lot of experimentation going on and whether it will help us, you know, more fundamentally identify new targets, or find different ways to drug targets. That’s still early. Mhmm.

We still need humans Mhmm. And a lot of humans. But the more we can enable humans to focus on the most intractable scientific problems, the better. You know? And then there’s the whole back office efficiency, which, of course, we’re we’re working on.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: And and every industry in the world does penetrate. Exactly.

Dan O’Dea, CEO and Chairman, Gilead: So diffusion is the name of the day Yeah. For diffusing those principles into our business as well.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Fantastic. Just because we you were talking about six months here, six months there in terms of opportunity

Dan O’Dea, CEO and Chairman, Gilead: Right.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Kind of as you think about some of the things that you’ve deployed today, how much time do you think you’re potentially saving on an average average life cycle? Question.

Dan O’Dea, CEO and Chairman, Gilead: I don’t know that we’ve actually done all that analysis. You know? If you do it across the weighted average portfolio of probability of success, I I don’t know that we’ve run those numbers yet. So it’s probably hard to do on the aggregate basis. Mhmm.

I think it’s probably easier to point to examples. But but for sure, it’s starting to reduce the time to market.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: And and it certainly sounds like it’s in the months to low years kind of range.

Dan O’Dea, CEO and Chairman, Gilead: I would think so. Yeah.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Fantastic. You also mentioned and there’s another question that’s come up a couple times, and it’s come up in a couple of the the different conversations I’ve been in. As you think about the comment you made earlier, 50% of drug spend in The US doesn’t go to manufacturers, and I think different people quote different numbers. 51%, sixty %. It’s above 50.

Right. Right. You know that. Do you have any views on how that split across across different players, of where that gets distributed, or kind of is there a way that kind of list price becomes net price, and, basically, there are savings in the environment and but yet the farmer industry doesn’t get hit from a revenue perspective?

Dan O’Dea, CEO and Chairman, Gilead: No. It’s yes. And there there are third party published studies that break that more than 50% down to the different players. And, you know, I think about a quarter goes to kind of the the the PBMs of the process. Other things go to other, you know, kind of government channels as well.

So so, yeah, I I think there are great sources on that. And and, again, that’s aggregated information. Sometimes you can have 90% going to the middleman. Sometimes you can have, you know, 30 or 40%. What was the second half of your question?

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Second half of the question is is there an opportunity with kind of pulling list price down

Dan O’Dea, CEO and Chairman, Gilead: Oh, yeah.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: The net price?

Dan O’Dea, CEO and Chairman, Gilead: What? We get savings from the I think there are. You know? And and there has to be cooperation in the whole health care system. In other words, let me just give you one example.

I know other companies have pinpoint examples like this. But but, you know, during the hepatitis c times, we had both a branded product and an authorized generic product. And the authorized generic product was more priced at the net price.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Mhmm.

Dan O’Dea, CEO and Chairman, Gilead: But because of the nature of our system, there was very little uptake of the branded generics. You know, a different purchase price because there is much less margin to be made by that 50%. I mean, if it’s a 50% of a hundred dollars or 50% of $50 Mhmm. Unfortunately, there’s a lot of perverse incentives in in our system that that that lead, you know, the folks in the middle to prefer the high priced medicine. And obviously, that’s not good for the health care system.

It’s not good for patients. So could I perceive a world where you can get through a net price? Yes. But there’s gotta be some type of a probably not cooperation, but regulation that allows those savings to be passed on to get us there. And, again, we’re we’re very open to those types of concepts if if if if it truly helps

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Yeah.

Dan O’Dea, CEO and Chairman, Gilead: The fundamental system. Most importantly, the patients or employers that are paying for health care coverage, if it helps them, then, yeah, we’re we’re we’re all in.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: And and I think this comes back to that that comment you made earlier about finding kind of constructive ways to collaborate with the administration and finding opportunities to actually really set set the health care system straight and and find a partner.

Dan O’Dea, CEO and Chairman, Gilead: And I’ll just leave on this note. I I think, know, I won’t speak on behalf of all my peers, but I think, you know, there was a time when our industry was accused of only playing defense. I think we’re very much leaning into solutions. And and and some of those solutions, like in the IRA act, like what’s affecting our company today, like part d reform, cost the industry money. But at the end of the day, that helps the the the the patient out of pocket costs go down.

And as an industry, I think we’re very into those impacts on our industry if it helps. What we’re averse to is things that impact our industry that don’t do anything to help patients. I think those things, that’s not productive for the industry, and it’s not productive for the problem we’re trying to solve in this country.

Courtney Breen, Bernstein U. S. Biopharma analyst, Bernstein: Absolutely. Well, thank you so much. We really appreciate the conversation.

Dan O’Dea, CEO and Chairman, Gilead: Thank you very much, Courtney. Good to be with you.

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