Gilead 2018: The party’s over

 

On the far side of the company’s brief but transformative adventure with Sovaldi and Harvoni, Gilead is returning to earth with a solid portfolio of HIV drugs.

 

 

 

 

Gilead Sciences Inc.

333 Lakeside Drive
Foster City, CA 94404
Telephone: 650-574-3000
Website: gilead.com

 

Best-Selling Rx Products

PRODUCT	2017 SALES	2016 SALES
Harvoni	$4,370	$9,081
Genvoya	$3,674	$1,484
Epclusa	$3,510	$1,752
Truvada	$3,134	$3,566
Atripla	$1,806	$2,605
Descovy	$1,218	$298
Odefsey	$1,106	$329
Stribild	$1,053	$1,914
Viread	$1,046	$1,186
Complera/Eviplera	$966	$1,457
Sovaldi	$964	$4,001
Letairis	$887	$819
Ranexa	$717	$677

All sales are in millions of dollars.

 

Financial Performance

	2017	2016
Revenue	$26,107	$30,390
Net income	$4,628	$13,501
Diluted EPS	$3.51	$9.94
R&D expense	$3,734	$5,098

	1H 2018	1H 2017
Revenue	$10,736	$13,646
Net income	$3,355	$5,775
Diluted EPS	$2.55	$4.38
R&D expense	$2,129	$1,795

All figures are in millions of dollars, except EPS.

 

 

Perhaps no pharmaceutical company has ever been financially transformed as quickly by a medicine as Gilead was by the HCV drug Sovaldi. In 2013 the company had top-line revenue just north of $11 billion. Sovaldi was approved in December of that year. By 2015 Gilead’s top-line revenue was $32.64 billion, mostly thanks to Sovaldi and its combination follow-on product Harvoni.

But as the industry has discovered of late, HCV is a harsh mistress. Rapid innovation in the field means that products are moving from spectacular first years to spectacular disappearances in record time. Harvoni might not even reach $1 billion in sales this year after generating nearly $14 billion in 2015, and Sovaldi did not even earn its own line in Gilead’s 2Q18 product revenue report, being lumped in with “other.”

And so Gilead is returning to a more reliable space: HIV. In 2017 six of the top seven products after Harvoni in the company’s portfolio were all HIV treatments, including four with growth rates greater than 50 percent. The dollars may be less – the company’s top line fell by 20 percent from 2015 to 2017 and looks to drop again this year – but at least those dollars look to be more stable.

“We started working on HIV treatments in the late 1980s, when HIV/AIDS was seen as a death sentence that disproportionately impacted marginalized communities,” says outgoing President and CEO John F. Milligan, Ph.D. “Today, our medicines are helping people diagnosed with HIV enjoy healthier lives – and a significant percentage of those individuals are over 50, a statistic that seemed impossible 30 years ago.”

Gilead’s top-line revenue fell by 14.1 percent in 2017 to $26.11 billion. Net income fell by nearly two-thirds to $4.63 billion and earnings per share were down $6.43 to $3.51, though this was disproportionally impacted by a $5.5 billion one-time charge related to U.S. tax reform. In the first half of 2018 top-line revenue fell another 21.3 percent to $10.74 billion, with net income dropping 41.7 percent to $3.36 billion and EPS falling by $1.83 to $2.55.

 

CEO to step down

Dr. Milligan will step down as president and CEO after a 28-year career with the company, Gilead announced in July. Dr. Milligan will remain in his current position through the end of the year, while the board of directors conducts a search to identify a successor.

“It has been an honor to work at Gilead for my entire professional career and, now that the company is on solid footing for the future, the Board and I have agreed it is a good time to turn the reins over to a new leader,” Dr. Milligan says. “I’m looking forward to a well-deserved break and will then move on to new and different opportunities.”

“Today, Gilead has the right strategy in place to successfully execute on its mission of improving the lives of people with some of the world’s most serious diseases, led by a robust HIV franchise, an industry-leading cell therapy platform and a late-stage pipeline in NASH and inflammation,” says John C. Martin, Ph.D., chairman of Gilead’s board of directors. “Moreover, we have the resources to continue investing in and expanding our strong R&D pipeline, which remains paramount to our success. We are excited about our growth potential, and intend to hire a CEO who will build on the foundation that John Milligan has put in place and execute on our ambitious goals for the future.”

Dr. Milligan will also step down from the Gilead board of directors at the end of 2018. Additionally, Dr. Martin has announced his intent to step down from the board at the time a new CEO joins the company, having determined that this would be a natural transition point from his successive roles as CEO, executive chairman and chairman.

 

Product performance

Sales may have nosedived since the magical nearly-$14 billion heights of 2015, though the hepatitis C product Harvoni still did well enough last year to generate $4.37 billion for Gilead. That amount represented less than half of the drug’s sales from the previous year, but was enough to rank Harvoni first in the company’s portfolio. The tumble, Gilead executives say, was due to increased competition and lower total market patient starts. In the first half of 2018, sales of Harvoni fell all the way to $679 million.

The news has been better for Gilead’s second-place product, the TAF-based HIV combination drug Genvoya. In just the product’s second full year on the market – the medicine was first approved in the United States and Europe in November 2015 – Genvoya rolled up $3.67 billion in sales, almost 150 percent better than the performance in 2016. According to company executives, this result was primarily driven by higher sales volume as patients shifted away from TDF-based regimens. In the first half of 2018 Genvoya’s sales growth slowed, but the drug still brought in $2.24 billion for Gilead, an improvement of 37.9 percent. 

In August, the China National Drug Administration approved Genvoya for the treatment of HIV-1 infection. Genvoya is the first TAF-based single tablet regimen for the treatment of HIV to be approved in China. The product is now indicated in China as a complete regimen for the treatment of adults and adolescents (aged 12 years and older with a body weight of at least 35 kg) infected with HIV-1 without any known mutations associated with resistance to the integrase inhibitor class, emtricitabine, or tenofovir.

In 2017, about 140,000 people were newly diagnosed with HIV in China. The number of diagnoses has increased significantly in recent years, partially due to expanded screening. At the same time, the number of people living with HIV and receiving antiretroviral treatment has also increased steadily. In 2003, the government of China began providing free antiretroviral treatment to all persons living with HIV.

Genvoya was studied in a Phase III HIV clinical program in more than 3,500 patients across 21 countries, including treatment-naïve, virologically suppressed, renally impaired, and adolescent patients. The approval was supported by 144-week data from two Phase III double-blind studies (Studies 104 and 111) among 1,733 treatment-naïve patients in which the regimen met the primary endpoint of non-inferiority compared to Stribild at week 48. At week 48, 92.4 percent of patients taking Genvoya and 90.4 percent of patients taking Stribild achieved HIV-1 RNA levels less than 50 copies/mL

Additionally, the approval was supported by a Phase III study (Study 109) evaluating Genvoya among virologically suppressed patients who switched from TDF-based regimens. The study enrolled 1,436 subjects and 1,196 had reached the 48-week time point at the time of filing. Among those patients, Genvoya was found to be statistically non-inferior to the TDF-based regimens based on the percentages of patients with HIV-1 RNA levels less than 50 copies/mL at week 48. Patients receiving Genvoya also demonstrated improvements in certain bone and renal laboratory parameters compared to those treated with the TDF-based regimens. Also, data from Phase III studies evaluating Genvoya among adolescents and adults with mild-to-moderate renal impairment supported the marketing approval.

Gilead’s hepatitis C virus portfolio did not entirely go south with the fall of Harvoni; helped by a label expansion to include use in patients coinfected with HIV, Epclusa generated sales of $3.51 billion in sales during 2017, more than double what the drug had the year before – though this result may be deceptive since Epclusa launched halfway into 2016. The product returned to earth in the current year, though, with sales halving to $1.04 billion in the first six months of 2018.

In May, the China Drug Administration approved Epclusa (sofosbuvir 400 mg/velpatasvir 100 mg) for treating adults with genotype 1-6 chronic HCV infection. The CDA also approved Epclusa in combination with ribavirin (RBV) for adults with HCV and decompensated cirrhosis. Epclusa is the first pan-genotypic HCV single tablet regimen (STR) approved in China.

The approval of Epclusa in China was supported by five international Phase III studies, ASTRAL-1, ASTRAL-2, ASTRAL-3, ASTRAL-4, and ASTRAL-5. High overall rates of SVR12 (defined as undetectable HCV RNA 12 weeks after completing therapy), ranging from 92 to 100 percent, were achieved across difficult-to-cure patient populations including treatment-experienced patients and those with compensated or decompensated cirrhosis. HCV is the fourth-most commonly reported infectious disease in China, with about 10 million people infected. HCV genotypes 1, 2, 3, and 6 account for more than 96 percent of all cases.

One of Gilead’s old reliables, the TDF-based HIV treatment Truvada, generated $3.13 billion in sales for the company in 2017, down 12.1 percent. First approved by FDA in 2004, Truvada is being superseded by TAF-based treatments like stablemate Genvoya, but the process has been a slow one; in the first half of 2018, sales were down 7.1 percent to $1.42 billion.

During May, FDA approved once-daily oral Truvada in combination with safer-sex practices to reduce the risk of sexually acquired HIV-1 in at-risk adolescents. The safety and efficacy profile of Truvada for HIV prevention in uninfected adults, a strategy called pre-exposure prophylaxis (PrEP), is well established. Truvada for PrEP was first approved for use in adults in 2012.

The expanded indication was based on a single-arm, open-label clinical trial conducted by the Adolescent Medicine Trials Network for HIV/AIDS, a research network funded by the Eunice Kennedy Shriver National Institute of Child Health and Human Development. In Study ATN113, 67 HIV-1 negative young men who have sex with men ages 15 to 17 all received Truvada once daily for PrEP. The Truvada safety profile in the study was similar to the safety profile that has been observed in adult trials of Truvada for PrEP, in which the most common side effects were headache, abdominal pain and weight loss. Bone mineral density (BMD) was also monitored and four study participants had a decrease in BMD through 48 weeks (three adolescents had a modest decrease and one had a >4 percent decline in total BMD at week 24).

In July, Gilead announced results of a retrospective nationwide analysis of the impact of Truvada for PrEP use across all 50 U.S. states and the District of Columbia. Conducted in collaboration with researchers at Emory University Rollins School of Public Health and the Centers for Disease Control and Prevention, these data demonstrated that use of once-daily oral Truvada for PrEP has had an independent and significant impact on the number of new HIV infections diagnosed in the United States from 2012 to 2016.

In the analysis, states with the highest utilization of Truvada for PrEP during this five year period (2012 to 2016) had significant declines in the average number of HIV diagnoses, while there was an average increase for the states with the lowest use. The impact of Truvada for PrEP use occurred even after controlling for the effect of antiretroviral therapy use in those living with HIV, known as treatment as prevention (TasP), in a subset of 38 states and Washington, D.C., where virologic suppression data was available.

The analysis of state-level data was based on National HIV Surveillance System and national pharmacy data on HIV diagnoses and prevalence of use of Truvada for PrEP from 2012 to 2016. Across all 50 states and Washington, D.C., Truvada for PrEP use prevalence increased from 7.0 to 68.5 per 1,000 people at highest risk of HIV acquisition during the five-year period, and the rate of new HIV diagnoses decreased significantly from 15.7 to 14.5 per 100,000 people among the general population.

Two other TAF-based HIV products approved in 2016, Descovy and Odefsey, both reached the billion-dollar sales mark for the first time in 2017. Descovy earned $1.22 billion in sales and Odefsey added $1.11 billion. Descovy, a fixed-dose comb0 of emtricitabine and TAF, is being evaluated in Phase III trials for potential use in PrEP. Odefsey is a fixed-dosed combination of emtricitabine, TAF, and rilpivirine. In first-half 2018, sales of Descovy rose 42.3 percent to $764 million and sales of Odefsey were up 49.9 percent to $727 million.

 

 

 

Acquisitions and collaborations

Kite Pharma, which was acquired by Gilead for $11.2 billion in October of last year, entered into a clinical trial collaboration during January 2018 with Pfizer Inc. The companies agreed to evaluate the safety and efficacy of the investigational combination of Yescarta (axicabtagene ciloleucel) and Pfizer’s utomilumab, a fully humanized 4-1BB agonist monoclonal antibody, in patients with refractory large B-cell lymphoma. A multi-center Phase I/II study sponsored by Kite was expected to begin in 2018. The results will be used to evaluate options for further development of this combination, or similar combinations between Kite’s engineered T cell products and utomilumab. The Gilead subsidiary Kite is focused on innovative cancer immunotherapies.

Yescarta is the first chimeric antigen receptor T (CAR T) cell therapy to be indicated for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, including diffuse large B-cell lymphoma (DLBCL) not otherwise specified, primary mediastinal large B-cell lymphoma, high-grade B-cell lymphoma and DLBCL arising from follicular lymphoma. Yescarta is not indicated for patients with primary central nervous system lymphoma.

Utomilumab, also known as PF-05082566, is an investigational 4-1BB agonist that has been shown in preclinical models to enhance T cell mediated immune responses. Pfizer is investigating utomilumab in hematologic cancers and solid tumors as a single agent and in combination with other anti-cancer therapies. Evidence also suggests that 4-1BB, a costimulatory protein expressed on activated T cells, is upregulated upon exposure to CD19-expressing tumor cells. Utomilumab could potentially enhance T cell proliferation and activity by augmenting the CD28 costimulatory domain of Yescarta with exogenous 4-1BB signaling.

In February, Kite and Sangamo Therapeutics Inc. entered into a worldwide collaboration using Sangamo’s zinc finger nuclease (ZFN) technology platform for the development of next-generation ex vivo cell therapies in oncology.

Kite will use Sangamo’s ZFN technology to modify genes to develop next-generation cell therapies for autologous and allogeneic use in treating different cancers. Allogeneic cell therapies from healthy donor cells or from renewable stem cells would provide a potential treatment option that can be accessed directly within the oncology infusion center, thus reducing the time to infusion for patients.

Under the terms of the agreement, Sangamo would receive an upfront payment of $150 million and is eligible to receive up to $3.01 billion in potential payments, aggregated across 10 or more products using Sangamo’s technology, based on the achievement of certain research, development, regulatory and successful commercialization milestones. Sangamo would also receive tiered royalties on sales of potential future products resulting from the collaboration. Kite is responsible for all development, manufacturing, and commercialization of products under the collaboration, and is responsible for agreed-upon expenses incurred by Sangamo.

In April, Gilead and Verily Life Sciences LLC, an Alphabet company, announced a scientific collaboration using Verily’s Immunoscape platform to identify and better understand the immunological basis of three common and serious inflammatory diseases: rheumatoid arthritis, inflammatory bowel disease, and lupus-related diseases. In this first large-scale deployment of Immunoscape – a platform for generating immunological data and insights – Verily will analyze biological samples and clinical disease and treatment response data from patients participating in current and future Gilead clinical trials. This three-year collaboration, company leaders say, represents the broadest effort to date to interrogate the activity of specific subtypes of immune cells to better understand disease signatures and treatment response, and has the potential to guide future drug discovery and development with the goal of improving outcomes for people living with these diseases.

Verily’s Immunoscape platform combines immunogenomic phenotyping and advanced computational analysis techniques to profile the molecular characteristics of inflammatory diseases at high resolution. Through the collaboration, Gilead will provide clinical data and thousands of immune cell samples from participants before, during and after administration of novel drugs in the company’s ongoing Phase II and Phase III clinical studies.

According to company executives, this effort may lead to important new insights into these inflammatory diseases, including identifying molecular signatures that can help physicians to select a therapy or dosing tailored to a specific subgroup of patients, which could improve treatment results and avoid side effects. The data generated in this collaboration may also enable better characterization of subtypes of inflammatory diseases to help scientists identify new molecular targets leading to new therapies. All data and samples will be coded to protect patient privacy, and any findings of the analysis will include patient data only in aggregate.

Launched in 2015, Verily is a subsidiary of Alphabet focused on life sciences and healthcare. The company’s mission is to make the world’s health data useful so that people enjoy healthier lives. Verily develops tools and devices to collect, organize, and activate health data, and creates interventions to prevent and manage disease. The company partners with life sciences, medical device, and government organizations, using hardware, software, scientific, and healthcare expertise to enable faster development, meaningful advances, and deployment at scale.

In June, Gilead and Hookipa Biotech AG, a clinical-stage biotech company pioneering an innovative class of active immunization therapies for oncology and infectious diseases, entered into a research collaboration and license agreement that grants Gilead exclusive rights to Hookipa’s TheraT and Vaxwave arenavirus vector-based immunization technologies for two major chronic infectious disease indications, hepatitis B virus and human immunodeficiency virus.

Under the terms of the agreement, Gilead will provide an upfront payment of $10 million. Additionally, Hookipa will be eligible to receive milestone payments based upon the achievement of specified development, regulatory, and commercial milestones up to a total of more than $400 million. Gilead will fund all research and development activities. Hookipa will also be eligible to receive tiered royalties on net sales.

Hookipa´s Vaxwave technology presents a completely new replication-defective viral vector platform designed to overcome the limitations of current technologies. Vaxwave is based on lymphocytic choriomeningitis virus (LCMV). In this vector the gene encoding the LCMV envelope protein, normally responsible for virus entry into target cells, has been deleted and replaced with an antigen of interest. The resulting vectors infect dendritic cells and stimulate very potent and long-lasting immune response; however, they cannot replicate and are therefore non-pathogenic and inherently safe.

Hookipa’s TheraT platform is based on an attenuated replicating arenavirus and is capable of eliciting the most potent T cell responses – a crucial step in treating patients with aggressive cancers. Significant pre-clinical data demonstrates that TheraT is a powerful modality capable of turning “cold tumors hot” which should result in an additional layer of efficacy in the fight against solid tumors. Specifically, TheraT has proven to be safe in animals as well as capable of eliciting uniquely potent antigen-specific CD8+ cytotoxic T cell responses and strong tumor control in mice. The first clinical trial with HB-201 targeting human papilloma virus-induced head and neck cancer is currently being prepared. This immuno-oncology technology is further being leveraged to target tumor self-antigens or shared neoantigens.

In July, Kite and Gadeta B.V., a privately held company focused on the discovery and development of novel cancer immunotherapies based on gamma delta T cell receptors (TCRs), entered into a strategic collaboration to develop novel gamma delta TCR therapies in various cancers. Under the financial terms, Kite will provide research and development funding for the collaboration and Gadeta is eligible to receive future payments upon achievement of certain regulatory milestones. In addition, Kite will make an upfront purchase of equity in Gadeta from Gadeta’s shareholders and may acquire additional equity in Gadeta upon achievement of certain R&D milestones. Kite has the exclusive option to acquire Gadeta.

Gadeta has developed a proprietary technology to engineer alpha beta T cells with gamma delta TCRs, called TEGs, for the potential treatment of various hematological cancers and solid tumors. This platform has the potential to combine the advantages of conventional T cells, which express alpha and beta TCR chains, with TCRs derived from gamma delta T cells that recognize novel targets in cancer cells, according to preclinical models evaluating the lead TEG candidates. Unlike alpha beta T cells, gamma delta TCRs do not require expression of cell surface proteins (major histocompatibility complex (MHC) molecules) for target recognition, and their ability to recognize novel targets under stress or metabolic conditions offer an attractive approach to develop potentially effective cell therapies in solid tumors.

In September, Gilead and Precision BioSciences entered into a strategic collaboration to develop therapies targeting the in vivo elimination of hepatitis B virus (HBV) with Precision’s proprietary genome editing platform, ARCUS. An estimated 257 million people are living with HBV infection around the world. Current treatments suppress HBV viral replication but do not completely clear the virus. The presence of covalently closed circular DNA (cccDNA) enables HBV replication if treatment is stopped. Preliminary studies at Gilead using ARCUS nucleases to target HBV cccDNA in vitro have demonstrated significant activity against cccDNA and integrated HBV DNA in human hepatocytes.

Under the terms of the collaboration agreement, Precision BioSciences is primarily responsible for the development, formulation, and preclinical evaluation of the investigational nucleases. Gilead is responsible for the clinical development and commercialization of potential therapies. Gilead will fully fund the research and development. Precision is eligible to receive milestone payments of up to an aggregate of $445 million and tiered royalties that go up to the mid-teens for commercial products developed through the collaboration.

Also in September, Gilead and Trianni Inc. entered into a license agreement that grants Gilead the use of the Trianni transgenic human monoclonal antibody discovery platform to support the company’s drug discovery efforts. No financial details were disclosed.

“We look forward to integrating Trianni’s technology into our research and development program,” says Bill Lee, Ph.D., executive VP of research, Gilead. “This platform will help enhance our ability to discover human antibodies and to develop new therapies in areas of unmet medical need.”

 

In the pipeline

FDA approved Biktarvy in February as a once-daily STR for the treatment of HIV-1 infection. Biktarvy combines the novel, unboosted integrase strand transfer inhibitor (INSTI) bictegravir, with the demonstrated safety and efficacy profile of the Descovy (FTC/TAF) dual nucleoside reverse transcriptase inhibitor (NRTI) backbone, and is the smallest INSTI-based triple-therapy STR available. The product was subsequently approved by the European Commission in June.

Biktarvy (bictegravir 50mg/emtricitabine 200mg/tenofovir alafenamide 25mg, BIC/FTC/TAF) is indicated as a complete regimen for the treatment of HIV-1 infection in adults who have no antiretroviral treatment history or to replace the current antiretroviral regimen in those who are virologically suppressed (HIV-1 RNA <50 c/mL) on a stable antiretroviral regimen for at least three months with no history of treatment failure and no known substitutions associated with resistance to the individual components of Biktarvy. No dosage adjustment of Biktarvy is required in patients with estimated creatinine clearance greater than or equal to 30 mL per minute. Biktarvy does not require testing for HLA-B*5701, has no food intake requirements, and has no baseline viral load or CD4 count restrictions.

The approval of Biktarvy was supported by data from four ongoing Phase III studies: Studies 1489 and 1490 in treatment-naïve HIV-1 infected adults, and Studies 1844 and 1878 in virologically suppressed adults. The trials comprise a diverse population of 2,415 participants, including a wide range of adult age groups and races/ethnicities. Biktarvy met its primary objective of non-inferiority at 48 weeks across all four studies. Through 48 weeks, no participants in any of the four studies failed Biktarvy with treatment-emergent virologic resistance, no patients discontinued Biktarvy due to renal adverse events and there were no cases of proximal renal tubulopathy or Fanconi syndrome.

In March, Gilead announced 48-week results from a Phase III trial (Study 1961) of 470 virologically suppressed adult women with HIV infection, evaluating the efficacy and safety of switching from a boosted protease inhibitor (bPI) or boosted elvitegravir-containing regimen to Biktarvy. In the ongoing study, Biktarvy was found to be statistically non-inferior to regimens containing a bPI or boosted elvitegravir and demonstrated no treatment-emergent resistance at 48 weeks.

Also in March, Gilead announced detailed 48-week results from a Phase III trial (Study 1844) evaluating the efficacy and safety of switching from a regimen containing abacavir, dolutegravir and lamivudine (600/50/300mg) (ABC/DTG/3TC) to Biktarvy in virologically suppressed adults with HIV. Through week 48, Biktarvy was found to be statistically non-inferior to ABC/DTG/3TC with a numerically lower incidence of mild or moderate study drug-related adverse events and no treatment-emergent resistance.

In August, the European Commission granted marketing authorization for Yescarta as a treatment for adult patients with relapsed or refractory DLBCL and primary mediastinal large B-cell lymphoma (PMBCL), after two or more lines of systemic therapy.

The marketing authorization application was supported by data from the ZUMA-1 trial of axicabtagene ciloleucel in adult patients with refractory aggressive NHL. In the single-arm trial, 72 percent of patients who received a single infusion of axicabtagene ciloleucel responded to therapy, with 51 percent achieving a complete response (as assessed by an independent review committee, median follow-up of 15.1 months). At one year following infusion, 60 percent of patients were alive and the median overall survival (OS) had not been reached. Axicabtagene ciloleucel is being developed by Kite Pharma.

In September, Gilead and partner developer Galapagos NV announced that FINCH 2 – a global, randomized, placebo-controlled Phase III study of the investigational, selective JAK1 inhibitor filgotinib in adults with moderately to severely active rheumatoid arthritis and prior inadequate response/intolerance to biologic agents – achieved its primary endpoint in the proportion of patients achieving an American College of Rheumatology 20 percent response (ACR20) at week 12.

Also at weeks 12 and 24, the proportion of patients achieving ACR50 and ACR70, low disease activity (LDA, DAS28(CRP) ≤ 3.2), and clinical remission (DAS28(CRP) < 2.6) were significantly higher for patients receiving once-daily filgotinib 100 milligrams or 200 milligrams compared to patients receiving placebo.