Home » Gilead Sciences’ (GILD) CEO John Martin on Q2 2014 Results – Earnings Call Transcript

Gilead Sciences’ (GILD) CEO John Martin on Q2 2014 Results – Earnings Call Transcript

We have significant activities ongoing across other therapeutic areas as well. A number of studies of Simtuzumab, our investigation of monoclonal antibody to organic LOXL2 protein are ongoing in a variety of fibrotic diseases and solid tumors. The Phase 2 study and non-alcoholic steatohepatitis is fully enrolled and data are expected in the middle of 2015. We also look forward to providing updates for the Simtuzumab studies in pancreatic and colorectal cancer and myelofibrosis before the end of the year.

GS-9620, a TLR-7 agonist has been evaluated in our Phase 2 study as a potential cure for hepatitis B in with the first patients have been screened at the beginning of July. GS-5745, a MMP9 monoclonal antibody inhibitor is firmly in Phase 1 and has been explored in Ulcerative Colitis and solid tumors. The synergistic activity of Ranolazine in combination with dronedarone an Atrial Fibrillation and the activity of GS-6615 and long QT-3 syndrome were presented recently at the annual Heart Rhythm Society meeting.

While I am only highlighting a few of our R&D accomplishments for this year I’m very pleased with our high level of innovation and productivity I would like the thank the more than 6,000 employees at Gilead and our collaborators and partners around the world for their dedication and immeasurable contributions for the Company. Their work and commitment have enabled us to achieve a number of milestones across different therapeutic areas of the business. And importantly continue to bring life changing therapies to patients and communities of need.

I would now like to turn the call over to Paul.

Paul Carter – EVP, Commercial Operations

Thanks John and good afternoon everyone. In the second quarter of 2014 our worldwide total net product revenue increased to $6.4 billion representing growth of a 141% over the second quarter last year. U.S. sales exceeded $4.8 billion and European sales exceeded 1.3 billion. This performance has been driven mainly by healthy demand in our HIV business and the uptake and stability which had sales totaling $3.5 billion. Of that number $3 billion represent U.S. sales with most of the rest of the remaining revenues coming from France and Germany. Patients are now being treated with Sovaldi in 34 countries worldwide and that number will continue to increase as further regulatory approvals and reimbursements are achieved.

Beginning with the U.S. and HIV, prescription volume continued to grow on our HIV products. Nine out of 10 patients new to treatment were prescribed to Gilead medicine, with seven out of 10 receiving one of Gilead’s TRUVADA-based single-tablet regimens. Of these Stribild continued to be the leading HIV regimen for patients who are beginning therapy, capturing three out of 10 stops. Prescription growth of Gilead’s TRUVADA-based single-tablet regimens including Stribild, Complera and Atripla is 13% year-over-year. I’m pleased to report that Stribild prescriptions alone grew 19% in quarter two over quarter one this year and Stribild is now approaching a $1 billion annual run rate in the U.S.

ADAP purchasing in the U.S. was in line with expectations and historical norms and we did not see any unusual movements in wholesaler inventory levels.

Moving to U.S. hepatitis C performance, Sovaldi sales of $3 billion showed strong patient demand and rapid adoption by physicians. We estimate that approximately 70,000 patients have now prescribed Sovaldi in U.S. since launch. The prescribing of Sovaldi in the U.S. has been driven mainly by hepatologists and gastroenterologists, but internal medicine specialists and primary care physicians, many of whom also treat HIV patients have also prescribed the treatment. Approximately 70% of the physicians visited by our therapeutic specialists have prescribed Sovaldi to-date.

We are seeing signs that physicians have begun delaying treatment for some patients also known as warehousing in anticipation of the approval of the single-tablet regimen of the differences across the derivatives. The initial patients who started a Sovaldi-based treatment in the U.S. became aware they were cured late in the second quarter. Based on prescription data and our cure rates in Sovaldi clinical trials we estimate that around 9,000 individuals have been cured to-date and that number will continue to accelerate as the year goes on.

Of the patients treated so far we believe that around 80% are new to therapy. The genotype distribution of patients that receive treatment is approximately representative of the U.S. HCV population with around 60% usage in genotype 1, 25% in genotype 2, 10% in genotype 3 and 5% in genotypes 4, 5 and 6 combined. We have noticed the reporting of an increased use of the interferon free regimen used in the Phase 2 Cosmos study comprised of Sovaldi with simeprevir and we estimate that during quarter two 70% of Sovaldi usage was in interferon free regimens including Cosmos.

On the payor front most commercial Medicare policy and state Medicaid plans take a full six months to review new drugs and we’re working with these plans to facilitate patient accessibility to Sovaldi. As anticipated we saw a slight shift in the payor mix in quarter two due to more patients from the BA and other non-retail coming on to treatment. As we exited the second quarter the overwhelming majority of state Medicaid all covering Sovaldi roughly half of them with a prior utilization to label and the other half with restrictions around fibrosis scores. Only three states are not covering Sovaldi pending completion of their review or the establishments of prior utilization criteria.

In the U.S. we have one of the most comprehensive patient assistance programs in the industry to help ensure cost is not a barrier for patients. The components of that program include providing coupons to bring the co-pay down to as low as $5 per month and paying the entire cost for the eligible uninsured. We also provide financial support to an independent non-profit organization offering assistance to patients who cannot cover their out of pocket medication costs.

Turning to Europe we are very pleased with our strong HIV performance again underscoring our confidence in the benefits of TRUVADA-based single-tablet regimens. Gilead single-tablet regimens have grown over 20% in volume year-over-year in the big five EU markets. Of these Eviplera is the most prescribed regimen for treatment naive HIV patients and also continues to extend its lead over Atripla as the most commonly switched to regimen.

Despite the availability of generic fibrates in Europe 70% of switches out of Atripla in quarter two went to Eviplera which since the beginning of the year has been actively promoted to switch in most countries where approved. This again demonstrates the value of TRUVADA-based single-tablet regimens. In fact we have seen little impact to our business from generic fibrates so far.

By the end of the second quarter we have sales from Stribild in 19 countries across Europe including all five EU big five markets. Stribild is now the second most prescribed regimen for switches after Eviplera, gaining most of these switches from previous protease inhibitor or raltegravir containing regimen.

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