Fireside Chat With John F. Milligan, PhD, President and Chief Operating Officer, Gilead Sciences

Well, I assume we're going to have to have a lot more revenue. It's a challenge.

Well, I don't think biotech is becoming more like big pharma. Across the industry, I sort of see two different trends right now. One is there is a remarkable amount of productivity in small companies, and I think that's a result of many things coming together, including all the work that was done over a decade ago in the genomics area to try to understand genes and now pathways. You can see that the biology is catching up to the chemistry, so we understand the pathways and the chemists can now attack them. There's ever been for these ideas. So it's kind of a strange dichotomy to me that we have these two things going on. I think as we're going through rapid changes in healthcare and delivery of healthcare, it's an industry that's never been more important because rapid innovation occurs best in small organizations, I believe, or at least those who can act like small organizations, like Gilead, so that we can try to come up with the answers that are necessary to help further healthcare delivery in America. So it's a really, really important time that we continue to fund this industry.

Yeah, it's a good question, Joel. Why aren't more people on therapy? It's really only been in the last few years that there's been an evolution in the understanding that bringing people on therapy early is a benefit rather than a harm. So we've had several different studies that have shown that if you treat people early, they can't transmit the virus as well. It really lowers the level of virus in the body, which makes it harder to transmit. So we now understand that there's a benefit to the individual and a potential benefit to society in lowering transmission rates if we treat more people and treat them earlier. In addition, we've now come to an understanding that testing people is important and there should be fewer restrictions around testing. There was a lot of privacy concerns about HIV testing. Now, I don't know if you've seen, there are ads on television: you can go into a pharmacy and buy an HIV test in the privacy of your own home and figure out your status. These are important trends which will only increase the rate of diagnosis and, of course, increase the number of people who are on therapy. But it has taken us about a decade to roughly double that number, and I think we can do better than that in the coming decade as well.

So the Stribild launch in the United States is going pretty much as we anticipated. We had a very good launch of Complera almost exactly a year beforehand, and I thought that was a pretty good proxy for how we're doing. We anticipated that Stribild would be better than Complera based on the clinical studies done and the robustness of the results, and that's in fact what we've seen. The prescriptions at the same point in time versus Complera, the first full quarter on the market, were 90% higher. So it's a significant jump up for Stribild over Complera, as we anticipated. In Europe, the process is taking a little bit longer and seems to be lengthening, quite frankly, as things are slowing down, but we're still on track for a first half of this year launch of Stribild, I should say EU approval, and then we'll go through the various pricing and reimbursement issues in every country as we go through and launch it during the course of this year. So yeah, we're still on track.

Well, it's a good question. There's certainly been a lot of studies that have been undertaken, and more are being undertaken now, looking at single-tablet regimens versus multiple components. We have a consistent finding that when you break up single-tablet regimens, people become resistant more quickly, and when they become resistant, they go into more expensive regimens. So what we see is that the trend is all towards single-tablet regimens. We have a couple of examples in Europe now: one was in Spain and the other was in Denmark, where there were small attempts to break up single-tablet regimens, and those experiments in those hospitals or systems largely failed. In each case, they went back to single-tablet regimens after a short experiment because too many people were having too many problems. So the health benefits are clearly outweighing the cost containment that they could have, and I think that's a trend that will continue for the future as well. So we're very optimistic that the standard of care will remain. The guidelines also help out because they endorse single-tablet regimens, and that's very important.

I think so. TAF, formerly known as GS-7340, is a very specific targeted prodrug of tenofovir, and it's got very unique properties. In fact, we can use it at a much lower dose, somewhere between one-tenth and one-thirtieth the dose, depending on the formulation we have it in. It seems to have greater antiviral activity and also lowers systemic exposure of tenofovir in the blood, which of course makes it safer. In the early studies, the phase 2 study, we saw statistically significant differences in bone parameters after only 24 weeks, and we also saw evidence that there were fewer renal events. Both of those things are of concern for patients on long-term therapy. In 48-week studies, whether we can show statistically that we have better efficacy is very difficult to do in this industry right now. We're very good at keeping people on therapy for 48 weeks; the groups we work with are very good at keeping patients from dropping out. As you approach 90%, I think that's really the upper limit of where you can end up in a 48-week trial in practical terms. So I don't expect it to be different on that front. Maybe over time, over 96 weeks or 144 weeks, we might see differentiation, and those are the studies we like to do: continue to monitor our studies for three years so that we understand the long-term benefits.

If you look at the cascade, there are a number of factors as to why people aren't treated. A lot of people who are diagnosed are either early in their disease and so they're more reluctant to take an interferon-containing regimen. Let's not forget: you give up your life for a year when you go on interferon. You have terrible side effects, you have them every week, people end up having to either give up their weekends or give up their jobs for a year because you feel so bad. So a lot of people will choose not to go on therapy. In addition, there are a lot of people who are simply ineligible to take interferon because of other underlying diseases they have. It's numerous things that will keep people from going on therapy. So at the end of the day, you end up with a subset of people who can come out of treatment, and then there's a natural constraint at the point of care that's going to keep people from going through. If you eliminate the interferon or shorten their duration, those barriers go away. So I think the natural evolution of this will be somewhat like HIV: once you have safer therapies, once you have access to doctors more readily than you do today, there will be a push to diagnose more people, and more people will be seeking care because obviously you want to cure your HCV before you need a liver transplant, which is very hard to get in this country, or before you get cirrhosis or liver cancer. So there's a strong desire to treat more people; there just aren't the right medicines at this point in time, and there isn't the right capacity.

Well, our aspiration is always all of it. So let me write that down: 100%. I said aspiration, just to be clear. I think about it in terms of the number of patients who come into care rather than market share, because this will be a little bit of a different kind of market. If you think about last year in the United States, we think somewhere around 70,000 people were treated for HCV. I think that can easily double. There have been periods of time that we've treated 140,000 people per year in the United States. As HIV treaters start to take on treating HCV patients, which I already see happening, there will be capacity. So I could easily see 150,000 to 200,000 people seeking care per year. Even under that scenario, it takes quite a few years to cycle 4 million Americans through. So it will take some time to get there. At the end of the day, there will be competitive regimens out there. I shouldn't say that; I think there'll be other regimens out there. As I see Gilead's regimens evolving, I think it's going to be very, very difficult to compete with us because we'll have very simple single tablets, and I have to say the barrier to resistance that we have with sofosbuvir, or GS-7977, is unprecedented in this area and I think will be a big advantage.

So the first wave for us is to get sofosbuvir itself on the market. There are four clinical studies, as you know. Three of those have been announced with regard to topline results, and the fourth study will be available sometime this quarter. Those studies will allow us to file for the treatment of genotype 2 or genotype 3 with sofosbuvir and ribavirin for a course of 12 weeks, or genotypes 1, 4, 5, and 6 for 12 weeks of therapy with pegylated interferon and ribavirin. That gives us the opportunity to treat every genotype. We thought it was important in particular to have the genotype 1 interferon arm because it is a revolution compared to what's going on today. 12 weeks, you just put people on for 12 weeks and you get very, very good outcomes: 89% of patients who have genotype 1 responded. That's unprecedented in this field, with a very promising side effect profile. But we know that there are going to be better ways to treat genotype 1 in particular coming up, and those are the studies we have ongoing with GS-7977 and GS-5885. These are two products, one pill, we're doing it with and without ribavirin in 12 and 24 week durations in a variety of different patients. The leading indicator that this is going to be successful really is the data we've seen from the combination of these two drugs. It's very promising. So I think that will be the next wave, particularly in genotype 1, and we're on track to be about a year behind sofosbuvir with that combination. So again, moving very forward. We have two pivotal studies, we might add a third, but we have two pivotal studies which are now enrolling. One is enrolled under way and one is enrolling. So we're moving very, very quickly with the next wave of innovation.

Well, we're doing studies in pre- and post-transplantation patients, and that speaks to the confidence that we have and, of course, the confidence the regulators have that this is a safe enough therapy that you go into people with very severely compromised livers and treat them to see if we can affect how the liver transplant goes. This is really a very important data set that we'll have to look at whether you can prevent the reinfection of a new graft in somebody, because if you have HCV and you have a liver transplant, 100% of the time you get reinfected even after the old liver comes out. If we can prevent that for a number of people, that's a big change in the outcome for those patients, and their prognosis with their new liver is much, much better. So this is an important data set for us. But I think it gets back to your point: this tells us that we don't see much that can go wrong in this area. It's the next generation compounds where we know less about where things can still go wrong, and those are the pangenotypic molecules that we're working on today.

Well, I don't know their timeline specifically. I know that we will be very, very close behind. You know, we're doing everything we can to make sure that we can accelerate that. I think if you launch a drug, people will use it, there's no question about it. When there's a better alternative, people switch pretty quickly.

Well, I think for a disease like HCV, we do need a dedicated sales force. We haven't determined exactly how large it will be. It could be as few as 100, it could be as many as 150, somewhere in there. I think this is a product which will be fairly well known and have good recognition, so I think we could probably err on the smaller side and be okay with it. I think what we do well as a company is medical education, and I would put a little bit more emphasis on our medical scientists who go out and talk more on a peer-to-peer level with doctors and are able to respond to the sophisticated questions that you would get in these difficult diseases. I think that's where we'll do a particularly good job with this product. As part of that, we'll probably lower the size of that sales force and take some of those people and dedicate them to HCV. So whenever you have a change in your business, it's a good chance to disrupt something, and I think we'll do that in this case.

Idelalisib. It rolls right off the tongue, doesn't it? I like GS-1101 better. So the answer is one. There'll be a trade name for it at some point, and that will be the last name that we'll have for it. Yeah, we tried to keep it as simple to go from 101 to 1101, but of course then you have to think about what duration can go. That's what we're trying to test right now. We've had some open-label studies at a wide range of doses, up to three years with patients on 1101, so that bodes pretty well for the long-term benefit. The longest study of a single set of doses is the indolent NHL study, where we've had people on for quite a long time now. We're coming up to the point where sometime over the course of the midpoint of this year, we'll probably get to the median time on therapy, and we can make a guesstimate about what this is going to look like. But we've been very pleased with how well tolerated it is. I think with the exception of some liver elevations which you do see with this drug, it's been very well tolerated. We also have a PI3 kinase delta inhibitor that's also a twice-daily drug. Both of these are twice daily, and we looked at some early studies of synergy and see quite a bit of synergy between the two. In fact, I've just opened up an IND to study those two in combination, so it's very exciting for us.

Well, indolent NHL: there's a long shot that we could get on the market based on the phase 2 data. It's going to depend on the robustness of that data set: how many patients actually responded and for how long they respond. That's not clear yet, whether we'd have to go into bigger phase 3 studies. At any rate, we'd start those studies so that we could get an accelerated approval. So I think there's a chance we could end up in the lead there, but there's also a chance we could be forced to do the bigger phase 3 studies before we'd be allowed to seek approval. So it's a little bit hard to know. Joel, these are really competitive areas right now. You say you're in the lead in CLL; I know there's a session on CLL coming up, and there are a lot of different companies coming at it from a lot of different angles. So it'll be very interesting to see how it evolves and how it's carved up at the end of the day.

You're welcome. I'm interested in that too, and we will be talking about those drugs.

So we've been putting together a whole series of different components that I think will be useful in combination in various different B-cell disorders and other blood cancers. We felt that having a JAK1/2 inhibitor would be a nice piece to add to the portfolio we're developing right now. In addition, on its own, it looked like it might have differentiating features versus Jakafi, which is a very good product that's come out from Incyte. So we felt that there was a good chance that this could be competitive, if not better, than Jakafi, and we would be willing to try to run a very important controlled head-to-head study to see if we could show superiority for myelofibrosis. So as we've rounded out this portfolio, we went out looking for this kind of molecule, and it seemed to us that YM had the best one. That's why we chose to do this transaction. We're very pleased that we were able to close that last week, and now we can bring the compound in and accelerate.

Well, there are a lot of really interesting things. We are becoming a biologics company. I mentioned GS-6624, our first antibody. What I'm seeing in Gilead right now is very interesting: it's a real explosion in productivity. We're seeing great biology. So it's a really productive group right now. We're seeing good progress in a number of areas, and I hope that we can expand beyond where we are into some of the really important diseases like fibrotic diseases, where I think we could make big inroads into some diseases that could affect more and more the aging population. That's where we're putting a lot of our effort.

All right. Thanks, Joel. Appreciate it.