2024-01-08 16:45:03 ET
Gilead Sciences, Inc. (GILD)
J.P. Morgan 42nd Annual Healthcare Conference
January 08, 2023 01:30 PM ET
Company Participants
Dan O’Day - Chairman and CEO
Johanna Mercier - Chief Commercial Officer
Merdad Parsey - Chief Medical Officer
Andrew Dickinson - Chief Financial Officer
Conference Call Participants
Chris Schott - JPMorgan
Presentation
Chris Schott
Good morning, everybody. I’m Chris Schott at JPMorgan, and it’s my pleasure to be introducing Gilead today. From the Company, we’re going to have a presentation from Dan O’Day, Chairman and CEO. And following the presentation, we’ll jump into a Q&A session with Dan and the broader management team.
So with that, Dan, Happy New Year, thanks for joining us, and over to you.
Dan O’Day
Thanks, Chris. Delighted to be here. Thank you for hosting us. Good morning, everybody. Delighted to have a chance to communicate with all of you this morning. I’ve got a great team up here, too, that can get into questions and answers with you as well. We’re off to a really good start this year. Let me just say that I think this is an incredibly important year for the Company in 2024. I’ll get into it. But the build that we’ve been doing over the past four years is really coming to fruition.
We more than doubled the portfolio, as you’ll see and importantly, this becomes a very catalyst-rich year for us. I may repeat this a couple of times, but we have close to two dozen clinical trials reading out this year, of which five -- as many as five or more could be Phase III readouts. So I’m really delighted of what the entire team, Gilead has done both during the pandemic and post-pandemic to build this portfolio while still making an impact on the pandemic with remdesivir and Veklury.
So let me start by just reminding you, before I get into the details, I want to remind you that our presentation will include forward-looking statements. And I refer you to the disclaimer in the presentation as well as in our SEC documents for a full discussion of the risks and uncertainties associated with the attachments.
So in my presentation today, I plan to cover three main points with you. The first one is we’re coming off a really strong momentum in series of execution of quarters over the past years, and 2023. And we’re entering this 2024 year with the solid commercial execution and foundation on the medicines that are available for patients today. Of course, on top of that, we have many new updates coming across our portfolio. Second, oncology is now annualizing over $3 billion at a run rate and growing very fast in the double-digit area, with clear opportunity for future growth and promising clinical momentum as we’ll cover today.
And then thirdly, perhaps the core and the legacy of Gilead, the HIV portfolio continues to perform very well with the medicines on the market today, but we’re really excited to share with you also some new disclosures today on the very extensive long-acting program in both treatment and prevention. And with that, we’re very confident for a durable growth output for the future. I’ll remind you that Gilead has no significant patent expirations between now and the early part of the next decade.
So let me start with highlighting where we stand in terms of the progress of our transformation strategy that we outlined actually at this meeting in 2020. Just to remind you, the aim of the transformation strategy that we shared here was to ensure sustainable growth through a stronger, more diversified portfolio. That was always the aim with core focus on virology, oncology and inflammation.
We invested significantly over that period of time, as you can see on the left-hand side of the slide, in both internal and external innovation, with a strong emphasis on the three therapeutic areas. Inflammation being a little bit earlier, of course, than oncology and HIV, but equally important in terms of the level of science we feel we can bring a variety of diseases in the inflammation area in the future. So that’s the left-hand side. You can see that doubling of the portfolio and you can see how it breaks out by therapeutic area.
In the middle column, we set out our ambition four years ago to have 10-plus transformative medicines by 2030. We’re halfway into that before we’re halfway into the time period. So, we’ve already delivered five currently, and you can see all this in the footnotes that you’ll have to prove when you get this presentation. But we’re really holding the bar high for transformation. Not every medicine meets this category. But I’m pleased to say the team is doing an excellent job at delivering on that.
And we’re also on track on another one of our strategic objectives that we announced four years ago, which to have the oncology portfolio contribute 1/3 of sales by the end of 2030, and I’ll cover that in a bit more detail. I think this slide really tells the story of the difference between our overall business and our base business. And you can see as of quarter three, the base business delivered a consistent year-on-year growth for eight consecutive quarters, and we’re on track for the ninth consecutive quarter here as well. I think it’s intriguing to note that both because of the pandemic and also because the evolution of our portfolio, still the tail end of hepatitis C. You can see fairly flat development in 2020 and 2021.
And then now the acceleration of 7% to 8% growth over the past couple of years. You can also see the important role of Veklury or remdesivir played on the pandemic during this period of time. It still plays a very important role with more than 60% of hospitalized patients benefiting from Veklury, and we’ll talk a little bit about the novel oral medicine that we’re expecting late-stage results for this year, but you can see the importance that it continues to play and certainly did play in the pandemic.
This is really a key slide that we all want you to be able to digest this week because it represents really a tremendous body of work that’s occurred over the past four: years, as I mentioned. We expect to have at least five Phase III updates this year. And that’s because really of both the transformation of the portfolio and the rate of progress that the teams have been making. So we’re looking forward to -- of those five, the data from PURPOSE 1, which is the twice yearly LEN for PrEP first of two studies coming out for the LEN for PrEP.
Well, there’s more studies than that, but on this particular focus on LEN for PrEP, obeldesivir, which is for standard risk COVID patients, the so-called OAKTREE study; and then three Phase III readouts for Trodelvy this year amongst a very, very broad program EVOKE-01, which is the first readout we’ll have on a Phase III basis in lung cancer. This is the second line lung, TROPiCS-04 which is our study -- our confirmatory study for bladder cancer, and the ASCENT-03, which is part of our strategy of bringing Trodelvy into earlier lines of treatment, where we’ve already seen effect. In this case, it’s triple-negative breast cancer.
We’ll keep you informed about the timings of these five Phase III readouts as we go throughout the year, including our quarter four call coming up in early February. But in addition, you can see that behind that is a whole-body of trials that is reading out this year as well. So we have more than 10 updates in the oncology field across novel targets and mechanisms and a really rich year in terms of the readouts on our long-acting treatment programs beyond the PrEP program for lenacapavir. It’s really impressive to see how fast this has moved and how important it is in terms of our goal of ending the epidemic for everyone, everywhere in HIV.
And this isn’t just a one-year event in 2024. I think what you can see here is as we look at the pyramid of studies that we’ve been building systematically over the course of our preclinical Phase I, Phase II studies. And we’re not done but clearly, the progress here you can see is that we have tremendous volume over this and it implies that 2025, 2026 and beyond, we’re now getting into this new era of Gilead, where we have this broader base of therapeutic areas and disease states and a continual readout of late-stage studies as we progress.
So again, obviously, always more to do, but this is an important moment in time after four years of a very strong build. So let me now turn to some of the specifics on our work in oncology. This is really to tell the story of the fact that we are firmly an established and a growing oncology company at this stage. And that compares to the fact that only four years ago, we had about $0.5 billion in sales. And currently, we have around a $3 billion run rate, and that’s growing very quickly. We now have an oncology team of more than 6,000 people in almost 50 countries and a really strong network of partnerships across the oncology community.
Today, our portfolio is anchored by two things. Number one, Trodelvy, which is the only approved Trop-2-directed ADC and an industry-leading cell therapy business with Yescarta and Tecartus both of which I’ll touch on in just a few slides. Let’s start with Trodelvy. It’s been in the market now for three years. We have three approved indications and it’s estimated that it’s been used for the treatment of around 30,000 patients so far. Following the approval for metastatic hormone receptor positive HER2-negative breast cancer last year in 2023, we also now see new encouraging data for Trodelvy and non-small cell lung cancer, head and neck cancer, small cell lung cancer and endometrial cancers. And we’re evaluating this in those cancer types and others because of the overall expression of Trop-2.
We have 30 Trodelvy trials underway and planned, including eight ongoing Phase III studies and we’re expecting updates on three of those, as I mentioned in 2024. The approach for Trodelvy because of this broad base of applicability across cancers, is really to have three goals: number one, to advance into earlier lines of therapy where we see effect in later stages; number two, to expand approvals globally; and number three, extending into new indications. And this is just an example of this calendar year 2024, what we can expect from Phase III studies that are underway.
So in 2024, you can see all three of those strategies playing out with many other studies behind us. But in terms of advancing from second line to first line in triple-negative breast cancer and you can see the approximate epidemiology of each one of these cancer types and beyond and expanding in -- for the second point, expanding beyond the U.S. in second-line bladder cancer and then extending into second-line non-small cell lung cancer as three of the pivotal trials that we expect to have data on this year.
So altogether, just with these three trials alone, it expands Trodelvy’s addressable population to what it is today to around 185,000 patients and the potential for much more beyond that. This is a slide that we presented earlier this year, but it’s just a data slide to remind you again of the compelling data that we presented at World Lung this year on the proof of concept for Trodelvy plus pembro in first-line non-scale cell lung cancer. The data further support the ongoing Phase III trial in a similar population with responses on the single-arm study comparing favorably to historical monotherapy benchmarks.
Together, the data from Cohort A that you see here and the preliminary data we have from Cohort B in this study, further inform our plans to have a broader approach in first-line all-comers non-small cell lung cancer. Now beyond Trodelvy, we have a very broad program across lung cancer, and this is designed to capture kind of a snapshot of what that is today. So beyond Trodelvy, you see it consists of -- and this has been part of our strategy to think about the three modalities of how we approach cancer. And then look at both monotherapies and combinations to extend it.
Obviously, Trodelvy and our anti-TIGIT compounds are the key anchors, along with many new novel mechanisms and immunotherapy and beyond. We’re about to enter a new phase of Phase II and III lung updates, starting with the EVOKE-01 that I mentioned -- and the start items, I would just note as you review these slides after the presentation, represent new disclosures on where we’re heading in the largest type of cancer with great medical need.
I want to turn the attention now to the cell therapy, where we are the clear global leaders in cell therapy and significant opportunity remains. We have the most extensive long-term data available in CAR-Ts. Yescarta has curative potential in large B-cell lymphoma as we saw from the recent ASH presentation of a landmark five-year overall survival data showing 43% of patients in full remission at five years. And that five-year OS data is really what’s used for the curative potential of a medicine.
In addition to the clinical programs in large B-cell lymphoma and other tumor types, we’re focused on accelerating our manufacturing time. We already have the industry-leading at 16 days of turnaround time. In the U.S. with further improvements on that coming in 2024, and we’ll be updating you as that continues. We’re equally excited about the potential to enter into the myeloma space, the multiple myeloma space with our collaboration with Arcellx.
You saw the Phase I data, again at ASH from the -- in fact, I was there on anito-cel which demonstrates a potentially best-in-class profile in terms of safety and efficacy. So we believe there’s a tremendous unmet medical need still available in earlier -- in myeloma in later lines and in earlier lines. And given both the promising science that was presented at ASH, coupled with Kite’s industry-leading manufacturing and reliability, that same reliability I spoke about in the other slide, we believe that anito-cel is strongly positioned for success.
So wrapping up the oncology section, we go beyond the medicines that I spoke about so far. We have a very extensive pipeline of novel agents in earlier stages. This is an example of some of those that are in the early clinical or preclinical phase. And you can see here, again, our strategy of both cell killing immunotherapy and tumor microenvironment, coming together both alone and in combination. And we just called out four examples.
Of course, on the left-hand side of the slide, you see the established medicines. In the middle, you see the next-generation targets. And then we called out four that we wanted to highlight. One is the CD19 CD20 bicistronic, it cites a cell therapy. And then we have the DGK-alpha, the CCR8 and PARP 1, all of which are novel mechanisms that we expect to progress and see how they progress in the clinic.
So I’ll turn my attention now to the leading HIV portfolio as the last anchor of the presentation. We really believe we’re well positioned to make a difference in HIV, continue to make a difference in HIV, both treatment and prevention and our goal of ending the epidemic. Let me start with Biktarvy.
I mean, the clear global leader in HIV treatment, and now more than 35 -- 30-plus years in the making at Gilead Sciences that really represents a phenomenal medicine for patients. Over 1 million people today manage their HIV with Biktarvy and its driving sales that are annualizing around $12 billion. We have over a 47% U.S. market share with Biktarvy alone, 57% for new starts, and we have 21 consecutive quarters of growth for Biktarvy.
I’ll remind you that Biktarvy, and this gets back to my patent expiration statement, Biktarvy has exclusivity in the U.S. and EU until at least 2033. In the meantime, based -- and we still have a lot to do with Biktarvy, but in the meantime, Gilead’s innovation continues. It never stops. And I want to talk about some of that on the next slide. The innovation has resulted in an HIV development portfolio that not only secures our position today but into the future.
And the confidence is based on both the quality and breadth of the portfolio, and how fast we’re able to progress the development. And the stars again on this slide, although we’ve updated you frequently almost every quarter, there continues to be updates because things are moving into the clinic and we’re progressing things as things happen in HIV and with the expertise of our team very quickly.
So we can expect to have multiple updates across lenacapavir and the potential partner agents in treatment during the course of this year, in addition to our large LEN for PrEP readouts that will also occur this year. So this is one way to look at it. A slightly different way to look at it is this slide, which again has new disclosures. But I just wanted to highlight a couple of key milestones on this slide.
We’re preparing for potentially five new launches in the HIV space by the end of 2030, beginning with LEN for PrEP as early as 2025. We’re looking forward to seeing the PURPOSE 1 data, the first Phase III update for twice years they LEN for PrEP later this year, but we’re also expecting updates on the treatment pipeline, including a once-daily oral formulation of BIC and LEN, and then our long-acting programs, which include three once weekly orals, two every three months and three twice yearly injectables.
So you can see, obviously, that we have the ground covered in terms of frequency. And of course, not all of these will go into late-stage development. Once we see the most promising targets, we’ll take those in the late-stage development. And I’m excited. I just want to point out to see -- to advance, we made decision to advance our long-acting potentially twice yearly injectable INSTI into the clinic as well this year.
So all that brings us back to this slide, which is we are entering a new era and a new phase for Gilead Science. It starts now in 2024 based upon multiple years of build with at least five Phase III readouts. In addition, we can expect at least 18 updates in earlier phases across HIV and oncology. So 23-plus updates in total, and we hope to have multiple catalysts to get us even closer to that goal of getting to the 10-plus transformative therapies by 2030.
This volume, as I mentioned, is not a one-time event. It’s something we fully expect to continue beyond 2024 as well. So, we’re confident that consistent growth that we saw over the last two years is sustainable because of the portfolio we built and the commercial execution that’s characterized by that diversity, that innovation and the quality.
With that, let me just close the formal part as we go into the Q&A by highlighting a couple of events that I wanted to call your attention to. The first one is on February 6 we have our quarter four and full year 2024 results. With all the updates we have later in the first half of the year we want to provide you with a more detailed update on the cell therapy business. We’re going to do that at one of Kite’s manufacturing facilities.
And in the second half of the year, based upon everything I covered, we think that’s an opportune time to bring you up to speed on the totality of our HIV program, particularly the progress on the long acting, both the prevention and treatment, and we expect to have that at our headquarters here in Foster City.
So on behalf of the entire team at Gilead that I’m so proud to work with every day, I want to thank you for joining us here today, and I’ll take this opportunity now to turn us over to questions. Thank you.
Question-and-Answer Session
Q - Chris Schott
Great. Well, appreciate all those comments. Obviously, a very busy year for you guys ahead here. So I thought I might just kick off the Q&A talking maybe first on the HIV business. So on the commercial side, to start with, how should we be thinking about kind of net price and mix dynamics going forward? And it’s something we’ve talked about in the past, but you’ve had some tailwinds in the last few years. How do we think about those in ‘24 and beyond? Do those kind of go away and give us a flavor of how that business is looking?
Johanna Mercier
Thanks, Chris, for the question. Yes. So as we’ve discussed in the past, throughout 2023, we’ve seen some nice tailwinds from pricing favorabilities both in the second half of 2022 as well as the first half of 2023. We’ve been very clear that actually, that was really due to some of the different dynamics with inflation post-COVID and that those would normalize. And we’ve really seen that normalize through the second of 2023. And that’s our expectation as we move forward that now that it’s normalized, we’ll still continue to see growth, and that will be really driven by the market and the demand trends, both in HIV treatment as well as prevention but really less of the tailwinds that we’ve seen in the past and more of normalization on pricing.
Chris Schott
Great. And then just on volume growth. We’ve seen some very strong trends with the U.S. prep market. Just help us -- how do we think about the growth rate for that opportunity going forward? And I guess, what does that mean for Descovy?
Johanna Mercier
Yes. So with Descovy, what we’ve seen is really nice market growth and strong demand share continuing to be maintained despite some of the different activities, namely generics in the marketplace with Tobata Generics, for the last couple of years as well as new entrants, but we’re still holding strong over 43% share with Descovy. The market has been growing at about 15% or so year-on-year. And we expect that to continue. And actually with new entrants such as lenacapavir twice yearly injection, that market should actually be accelerated.
We believe the opportunity will continue with Descovy in the oral, that Descovy for prevention, taking a pill every day when you’re not sick is going to be very different when you have something that’s offered that is twice yearly in a subcu formulation. And so, we expect that the market will be expanded drastically.
And so for example, right now, we think about 33% of the CDC definition of people who could benefit from prevention are currently treated with prevention medicines, we believe that number will be well over 50% as lenacapavir subcu formulation every twice a year will come to market. So, we’re very excited about the opportunities, and Descovy is a great foundation for lenacapavir launch.
Chris Schott
And maybe just building on that, how do I think about beyond the number of patients increasing just the higher compliance rate you get with an oral. Is there any color you could provide on how meaningful of an opportunity that is?
Johanna Mercier
Yes. No, that’s a great point. We actually see that as a huge benefit with lenacapavir in light of the fact that it’s really yearly injections. What’s currently happening for daily oral and prevention is people take it almost on demand. And so what will happen is they might take it a couple of days over a weekend. If there’s social agenda demands it and then be off the drug for another week or so.
So compliance is really IPI versus HIV treatment, the compliance rates are incredibly high. And so, we believe that’s a huge benefit as you think about something that’s twice yearly. And it will be really important to make sure that people are compliant with the twice yearly. But we believe that in light of the fact that sexual health visits are actually every six months, this coincides incredibly well for their lenacapavir injections as well.
Chris Schott
Great. With the PURPOSE 1 and PURPOSE 2 data, I guess, later this year or early next year, just help us in terms of framing expectations for the data. I know we’ve seen some in treatment with the asset, but just talk a little bit about the profile that you’re envisioning?
Merdad Parsey
Sure. As you know, the studies are designed right now to look at -- it’s counterfactual design essentially means that we are looking at the background rate of HIV. Our expectation is that by preventing HIV in these risk-prone infected populations that we should see a dramatic decrease in incidence of HIV compared to the incidents that happens as people are being enrolled. So we’re excited about the data coming out for PURPOSE 1, obviously, in PURPOSE 2 quickly. And we believe those two should be sufficient for filing and approval for lenacapavir.
Chris Schott
And maybe just last question. As we expect that data, how quickly can that expansion of the market occurs? I think about potential 2025 or ‘26 launch for the product. Is this something that’s going to take a few years to go up and running? Or do you think that the market is kind of primed for an agent like this?
Johanna Mercier
We’ve been working on the prelaunch activities for lenacapavir for some time now. We are expecting a launch for lenacapavir in the United States as early as late 2025. And we will be more than ready and we think the uptake will happen very quickly. There’s a demand out there in the community. People are talking about it already without us having any input to that. People are excited about what lenacapavir twice yearly can offer. And so I think the uptake will be quite rapid.
Chris Schott
Great. Maybe just pivoting over to lenacapavir and the treatment combos that you’re developing. I guess, two of the most advanced ones seems to be lenacapavir with NAbs. It’s a longer-term agent and then with islatravir in the once-weekly side. Just maybe starting with those two, what role do you see those two combos playing in the market?
Merdad Parsey
Well, I think looking broadly on treatment and long-acting treatment, we believe there’s a population who -- for whom long-acting treatments are going to be important. It will complement the existing treatment regimens like Biktarvy that are out there, many people will choose to stay on Biktarvy. By providing alternative treatment regimens, we believe that our goal of ending the epidemic for everyone everywhere will be enhanced because we’ll have more opportunities for people who may not want to take a medicine every day.
The approach there for -- I’ll take the bNAb first is that, that will be an infusion. That’s what we’re exploring right now. The hope there is that, that would be the first every six-month therapy regimen. It will be the benefit risk and the therapeutic index as we work that out in trials, I think, will help determine how large a population will be well design that sort of approach. By providing multiple approaches, we think we will be able to address those different populations because on the other end of the spectrum, as we mentioned, we are looking at then an oral weekly as well as oral monthly and potentially treatment with small molecules at every three: to potentially every six months.
So the portfolio is really diverse. The bNAb are sort of leading the fray as it were, and we think that will provide an option for a certain population, but we think with all the opportunities we have, we can expand that opportunity to allow us treat more people.
Chris Schott
It sounds like in some updates this year, but as I think about the subcu either three-month or six-month opportunities, what are you most excited about there? Or what most focused on there?
Merdad Parsey
I think it’s -- where we are right now is in the exploratory phase. Our hope -- our aspiration is to match lenacapavir within every six-month treatment, if possible. It’s very much going to be dependent on the tolerability and the kinetics of the molecules, that’s the information we’ll learn this year. The way I think about it is that with Islatravir and then our own actually oral weekly therapy, we have two opportunities to provide a once-weekly oral therapy.
We think that’s a reasonably high probability of success. And then getting to monthly oral is also possible. That’s something we’re working on. And then on the treatment side, putting the bNAbs side, we think every three months is more attainable. Every six months is more aspirational right now. But as a data develop, we’ll have more confidence around where we’re going to land. Of course, we’ll aim for every six months. We may -- it may be iterative as we find the right molecules and the right regimens.
Chris Schott
Great. And maybe just last one on HIV. Just you’ve got obviously a lot of assets that are kind of moving forward in development. Should we be thinking about kind of Gilead picking winners here and that you’ll get like kind of like one on weekly, on longer-term kind of injectable going forward? Or will the approach be running four or five of these forward and maybe fragmenting the market because each of the profiles appealing to different populations?
Merdad Parsey
Maybe I’ll start, and I don’t know if Johanna is going to want to add. Look, I think for us, the imperative is to treat and the epidemic. That’s the imperative. And that’s a combination of treatment and prevention. Lenacapavir role in prevention is going to be really important in preventing the epidemic from expanding.
And think in terms of treatment by providing these options, we believe that the more convenient the options are, the better the compliance is going to be the less resistance there will be and the more people are going to be treated and hopefully live better lives with it.
So we are -- look, if we can get to a monthly oral, for example, we’d have to ask whether weekly oral still makes sense. But right now, the most attainable is going to be that weekly oral. So it will be iterative. It’s the history of Gilead in terms of how we’ve developed our HIV therapeutics in the past. We’ve constantly incrementally approved to bring what people living with HIV need and want. And we’ll do that in the long-acting space as well.
Johanna Mercier
I would just add to what Merdad was saying, I think, number one, we’ve always been leaders in HIV, and we will continue to be leaders with the portfolio that you’ve just seen. I think that our development program is absolutely, by far, going to be ahead of the game as you think about the future of HIV, but I would also add that it’s all based on what patient research has told us. It is based on what patients living with HIV want. And I think that’s the key to our portfolio and our success.
Chris Schott
Great. Maybe pivoting over to oncology. Maybe first on the CAR-T side. I know there’s been some recent FDA safety updates. Can you just address those a little bit in terms of what you’ve seen with your data and any impact you’d expect to uptake of the medications from?
Johanna Mercier
Sure. So the FDA has alerted CAR-T companies around the possibility of secondary T-cell malignancies occurring. This is something that we have known from the start. It’s a theoretical concern. It has been embedded within our protocols within our informed consents and within our label since 2017. And so FDA is, again, sharing that concern. Today, with Yescarta and Tecartus we have the largest database of 17,700 patients. In our 13,000 Yescarta patients, we are not seeing causality as an impact of T cell malignancy, secondary T-cell malignancies and the same for Tecartus.
Chris Schott
And then in terms of the category, if I just think about penetration of CD19 at this point? Like how penetrated our CAR-Ts? And how much runway do you still feel like you have to go here?
Johanna Mercier
We have a lot of opportunity, if I look at lymphoma as an example. In the United States, only two and 10 eligible patients are receiving CAR-T today. Outside of the U.S., that’s a little bit higher. We’re looking at three to four out of 10 because of socialized medicine. So, the U.S. has a fragmented health care system. It makes it a little more difficult and challenging to deliver CAR T. And so, one of the things that we’re focused on in 2024 is how do we meet patients where they are, so not just at academic centers, but also within the community. So we believe there’s a lot of runway for CAR-T.
Chris Schott
And my last one on CAR-T, just with the Arcellx partnership, can you just talk a little bit about -- you’ve got a competitor who’s a bit ahead with data, they’re pushing the head pretty aggressively moving their studies into earlier and earlier lines. How does Gilead -- you could compete here and differentiate themselves?
Johanna Mercier
So anito-cel is a very interesting construct. And for those of you who are able to attend the ASH conference, you would have heard more about the D domain. So the binding domain is differentiated. It’s small. It’s compact. It’s highly stable. So whether there’s changes in temperature or pH in the cell the binding domain remains intact. And it’s also we have a higher transduction efficiency with the molecule -- with the construct. So 70% transduction efficiency and other constructs in this space today have about 15% transduction efficiency. So it allows us to use half the dose. And I’ll say, have the killing power.
Now this is early days. We have 38 patients worth of data. We’re looking forward to seeing more data as we complete the enrollment of the IMAGINE 1 study. But we believe both from an efficacy standpoint, we are differentiated and also from a safety standpoint. So in those first 38 patients where we have an average median follow-up of 26.5 months, we are not observing the neurotoxicity that are seen in the other constructs, which are in the form of Parkinsonian syndrome, cranial nerve challenges with Bell’s palsy or Guillain-Barré. So we believe we have a differentiated molecule, both from safety and efficacy, and we’re looking forward to continuing to finish the IMAGINE 1 study as well as starting the IMAGINE 3 study in earlier lines.
Chris Schott
Great. Moving over to Trodelvy, we’re waiting the EVOKE-01 data. Maybe just a two-part question here. Just be interested in your view on the competitor data set that we saw and how you think about Trodelvy is differentiation from your competition?
Merdad Parsey
Yes. Look, I think for us, what I would come back to is that what we’ve learned over time is that all ADCs are not the same and that they behave differently. Our data has been consistently strong and supportive of our clinical development program. So, we’re really excited about where we are. We have a higher affinity for the target. We have a different linker. We have a different payload and so our data have been supportive in the front line.
We saw from the EVOKE-02 data set that we shared earlier this year. And so we’re very confident around EVOKE-01 and where we’re going to go with EVOKE-03 as well into the earlier lines in lung cancer. So with the ADC we have with the differentiated safety profile and we believe an emerging differentiated efficacy profile, we’re very confident in our programs and where we think Trodelvy is going to play a role in non-small cell lung cancer over time.
Chris Schott
Great. Just a couple of financial questions in the last few minutes here. You’ve made a lot of progress on the pipeline. You got it seems like a whole bunch of updates are expecting for the year. Just I guess, help me understand on the level of investment in the business. Do we still need to think about investment years ahead where we’re going to see a little bit less on the margin expansion front? Or are we kind of getting to the tail end of that cycle and you start thinking about more margin expansion going forward?
Andrew Dickinson
Yes, Chris, I’d be happy to start. I think we’re at the tail end of the investment phase. So as Dan highlighted, in his presentation, you’ve seen the significant expansion of our portfolio over the last four or five years. It was needed. We now have what we believe one of the most exciting portfolios in the industry that should drive long-term sustainable, predictable growth.
And we will continue to invest, but it’s much more of a normal level. So for instance, if you look at the growth in our R&D line last year, guidance for the year for 2023 is approximately 15% growth. You should see a substantial reduction in the growth of R&D expense in 2024 and beyond.
It doesn’t mean that our expenses won’t grow. It will just grow it at a normalized basis. And we still have a very strong operating margin, as you know. And you should see as the revenues grow over the coming years as we expect, you’re going to -- you should expect to see a significant expansion in our operating margin as well and our profitability. So, it’s an exciting time.
Chris Schott
Okay. So when you kind of thinking about that margin expansion kind of as we look out a few years and as the pipeline starts to come into fruition that becomes a bigger piece of the?
Andrew Dickinson
Yes, I think that’s right. And again, I just highlight you’ve seen really strong revenue growth the last couple of years in the base business, as Dan highlighted it. So, I think if you look at our performance over the last three or four years, while we’ve been working through this investment cycle, been really strong from top line all the way to the bottom line. And now you’re getting to a point where you’re not going to see the level of increase in R&D spend or SG&A. We do have exciting data, as you’ve heard, in lung cancer coming up.
To the extent that, that’s positive, it will require additional investments on the sales and marketing side for lung cancer. But beyond that, we’re largely kind of where we want to be in terms of building out the business, and now you’ll just see much more, again, normalized growth going forward and strong performance. Again, we’d expect top line all the way through the bottom line, accelerating over time.
Chris Schott
Maybe in the last minute or two here, just updates in terms of BD and capital deployment where we are. What’s kind of the appetite for the deals? What’s the -- that’s kind of the sweet spot for you right now?
Dan O’Day
Yes, maybe I’ll take this one just to balance the team out a little bit. But look, I think we can afford to be selective at this stage. And the reason for that is what I presented here. I mean the portfolio has expanded, that’s expanded through both internal research and progressing those molecules, but also a significant deployment of capital on the BD side over the past four years. That was purposeful. That was needed. It was an infusion shot.
But as we sit here today, we have all the pieces we need to achieve our ambitions. So, we’re going to be selective about finding things that, of course, bolt-on and connect to our strategy. So I’ll just remind you as well, I said we don’t have any significant patent expirations, until the early part of the 2030s. So we look at BD through a lens, I think, that is sensible. We look at BD through the lens of having a very robust demand on our R&D system.
A lot of good competition within the R&D space to make sure that we’re making the best decisions and those things that don’t hurdle our bar, we’ll find other ways and perhaps leverage for our shareholders, but we’re really keeping that tight. So yes, we’ll continue to be because we think internal external elevation is critical, particularly in the late research early development phase is where you’ve seen this very active and continue to be active.
Late stage, we’ll look at, but we’ll be selective about it.
Chris Schott
Great. Well, I think we’re about out of time here. Really appreciate the comments today.
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Gilead Sciences, Inc. (GILD) J.P. Morgan 42nd Annual Healthcare Conference (Transcript)