Gilead Sciences Inc

NASDAQ:GILD

Earnings Call Transcript 2021-Q3

[Daniel O’day, Chairman and Chief Executive Officer]

To the significant reduction in the risk of hospitalizations after a three-day IV treatment of Veklury and the outpatient setting. In order to meet additional treatment needs, we also continued to advance our oral programs to develop a novel best-in-class therapy. Turning to HIV performance, we saw positive gains in the treatment market for the second quarter in a row, and reported record revenue for Biktarvy.

While treatment prescription volumes remained below pre -pandemic levels, we maintained total U.S. and EU treatment market share and we grew Biktarvy share sequentially in both geographies. The PrEP market continues to recover in our PrEP market share is holding steady despite generic entry.

Overall, our third quarter results give us confidence that the HIV market is recovering from the pandemic and our market share clearly highlights Giliead strong market position. As a result of the strong quarter, we have increased our full-year revenue and earnings per share guidance. That [Indiscernible] now look set to deliver close to twice the revenue we expected at the start of the year. While our base business has clearly been affected by COVID, it has also shown resilience.

At the guidance midpoint, we are now expecting full year total revenue to be $1.75 billion higher than we expected at the start of the year. Our confidence in the longevity of our HIV business is in part-based on our progress in developing the next generation of HIV therapy and prevention. Lenacapavir is the cornerstone of that work, and we have 4 clinical trials evaluating Lenacapavir across treatment and prevention, highlighting our efforts to extend the options available to people living with or at risk of HIV.

This quarter, Lenacapavir was granted FDA priority review for the heavily treatment experienced population. As a reminder, Lenacapavir has breakthrough therapy designation, and if approved, would be the first long-acting treatment for people living with HIV who have multi-drug resistance, as well as the first available 6-month long acting subcutaneous injection treatment for HIV. Separately, as you know, we signed an agreement with Merck earlier this year to explore combinations of Lenacapavir and Eslatrivir in long acting treatment.

Earlier this week, we announced the start of a Phase 2 study with Mark evaluating, lenacapavir, eslatrir, long acting oral combination treatment. Our approach to long acting is very much shaped by people living with HIV. We've heard that they would welcome weekly oral or infrequent subcutaneous injections that could coincide with routine office visits or even be taken at home.

The advantages of these options include greater convenience, that potential for stronger adherence and privacy. Lenacapavir has shown promising potential in both oral and subcutaneous injections and will continue to advance both options while updating you on our progress throughout. While extending our leadership in HIV, we're also executing on the significant potential in our broad and diverse oncology portfolio.

This has potential that could bring transformational benefits for people with cancer and value for our stakeholders. Third quarter highlights include the initiation of 2 solid tumor trials from magrolimab, head and neck cancer and a multi - tumor basket study. We plan to initiate an additional Phase III study in first-line unfit, acute myeloid leukemia or AML in early 2022.

The FDA approval of Tecartus for adult relapsed and refractory acute lymphoblastic leukemia or ALL, is our fourth approved indication in cell therapy. Additionally, the Kite team has filed an SBLA for Yescarta and second-line LBCL, which if approved, would be the first CAR T therapy in earlier line setting. And a positive CHMP opinion for Trodelvy in second-line metastatic tripling of breast cancer earlier this month, we expect an approval decision from the European Commission later this year.

And this could potentially be our 6th approval for Trodelvy in triple-negative breast cancer in 2021. Additionally, we've just announced a new clinical trial collaboration and supply agreement with Merck to evaluate the combination of Gilead's TROP -2 antibody drug conjugate for Trodelvy with Merck's anti-PD-1 therapy KEYTRUDA for the treatment of first-line metastatic triple-negative breast cancer.

When we acquired immunomedics last year, we said that we would explore the use of Trodelvy across a wide range of tumor types, and that we would pursue combinations with both internal and external molecules. You can see this start to play out now with this Merck partnership as an early example of our approach.

Next on Slide 5, I'm pleased to note that we delivered on 3 of our target milestones for the quarter. You'll also note that the timelines for TROPiCS-02 and the Phase Ib Magrolimab have shifted as we now expect to have the PFS readout for TROPiCS-02 in late January or early February. And the topline readout for the Phase Ib Magrolimab in the First Quarter of 2022. Merdad will also touch on this later in the call.

But as you know, these modest timeline adjustments are quite normal in oncology, especially event-driven trials like TROPiCS-02. We look forward to sharing these updates in the first quarter of 2022. Taken as a whole, our oncology portfolio now stands some of the most promising targets in the field today. In addition to Trodelvy for TROP-2, CD47 and cell therapy. These include TIGIT, adenosine and many others.

We are very encouraged by the momentum across these programs and look forward to sharing much more in the coming quarters. The positive momentum overall in the third quarter gives us great confidence in the direction we are taking and the pace of our progress. We are well on our way with the plans to sustain our leadership in HIV. And while there is much more to come in oncology, we've already begun to execute on the potential in our highly promising portfolio.

That glory is making a significant impact as the pandemic continues to evolve. And we are well-placed for when the HIV market bounces back. I want to thank all the Gilead kind of employees around the world who are making all this possible with their passion for scientific excellence, and their commitment to global public health. With that, I'll hand over to Johanna, who will share an update on the commercial performance in the third quarter.

[Johanna Mercier, Chief Commercial Officer]

Thanks, Dan. And good afternoon everyone. As you can see on Slide 7, total product sales of $7.4 billion grew 13% year-over-year, primarily driven by Veklury. Excluding Veklury, total product sales were $5.4 billion down 3% year-over-year, primarily due to the impact of the Truvada and Atripla LOEs.

Offset by continued growth in Biktarvy and contributions from our new medicines such as Trodelvy. On Slide 8, Veklury sales of 1.9 billion were up a 132% sequentially, and reflected strong U.S. demand consistent with the recent surge in COVID cases, including the Delta variant. Over 60% of patients hospitalized with COVID -19 in the U.S. with these Veklury, and we continue to expect the Veklury sales to track hospitalizations, which you can see peaked at the end of August and have been declining ever since.

Moving to HIV on Slide 9, revenue of 4.2 billion grew 6% sequentially driven by favorable net pricing and strong demand for Biktarvy, partially offset by continuation of the trends toward the less favorable payer mix. Our sequential trends were strong, total HIV revenues were down 8% year-over-year, given the impact of Truvada -Atripla LOEs and lower channel inventory, primarily driven by pandemic-related stocking in the prior year.

Excluding the impact of the LOEs, HIV revenues were up 4% year-over-year. Overall, we're encouraged by the improving trends in HIV treatment. The U.S. HIV treatment market grew about 3% sequentially, suggesting a modest pickup from the recovery that started in Q2. Our steer at the overall U.S. HIV treatment market continues to hold steady at approximately 75%. And reflecting the modest pandemic recovery and strong share gain, Biktarvy revenues grew 20% year-over-year, and 14% sequentially to a record $2.3 billion.

Descovy revenue of $433 million was flat quarter-over-quarter, driven by increased demand and inventory, offset by lower net price. We continue to see recovery year-to-date with the PRAC market growing 12% quarter-over-quarter, and our encouraged to see Descovy shareholding study around 45%, despite the availability of multi-source generic versions of Truvada.

Next on Slide 10, Biktarvy continues to gain market share sequentially and year-over-year, both in the U.S. and EU5. We're particularly pleased to see sequential quarterly growth of 1.5% in the US and 1% in the EU5, especially given Biktarvy's leading market share. We're proud to see continued uptake of Biktarvy now capturing 41% of the total treatment market in the U.S. with more than 57% of people living with HIV starting treatment on Biktarvy.

On Slide 11 HCV revenue of 429 million was down 8% year-over-year, primarily driven by favorable settlement in the Third Quarter of 2020 that did not repeat. Fewer patient starts outside of the U.S. and the timing of Department of Corrections purchases on a relative basis. Sequentially, [Indiscernible] revenue declined 22% due to inventory dynamics, including a sizable purchase by the Department of Corrections in the prior quarter and fewer patients’ stats.

Although stats improved in some geographies year-over-year, we saw sequential declines in the U.S. and Europe, driven by continued pandemic-related impact on patient visits, and lower testing volumes in additional -- in addition to normal seasonality. However, we continue to be pleased that Gilead HPD market share is holding steady around 60% in the U.S. and just about 50% in the EU5. Moving to Slide 12, HBV and HDV revenues of $247 million wrap 17% year-over-year, driven by Vemlidy demand in international markets and the addition of Hepcludex to our portfolio.

Q3 revenue for Hepcludex was $12 million reflecting sales now in Germany, France, Austria, and Greece. We are actively working with government authorities to secure full reimbursement in a major European market in 2022. Moving to Trodelvy on Slide 13, third quarter revenue of a $101 million grew 13% quarter-over-quarter, driven by increased share in metastatic TNBC in part due to the expansion to second-line. Trodelvy was approved for second-line metastatic TNBC in the U.S. in April.

And we already estimate that approximately 15% of second-line patients are receiving Trodelvy. In third line or later setting, we estimate that about a third of patients with metastatic TNBC are receiving Trodelvy. In urothelial cancer, at least one in four bladder cancer patients in the third line or later setting, start treatment on Trodelvy. And with adoption and second-line still, there's continued opportunity for growth across both settings. We are pleased with the uptake so far and remain focused on broadening physician awareness in community settings. Following recent NCCN, breast cancer, and ASMO clinical guideline updates.

Trodelvy is now included as a preferred regimen in second-line metastatic TNBC in both guidelines. And we expect this will drive further adoption. We are preparing the first commercial launches of Trodelvy from metastatic TNBC in Great Britain, Australia, Canada, and Switzerland. And later this year, we are expecting a decision from the European Commission following the recent positive opinion from the CHMP. Next, on slide 14, and on behalf of Christy and the Kite team, our cell therapy products grew 51% year-over-year to $222 million.

This was driven by LBCL demand and strong launches in both mantle cell lymphoma and follicular lymphoma, more than offsetting the expected impact of new U.S. entrants in LBCL. With the addition of our new MCL and FL indications, we are particularly proud that we have maintained our best-in-class manufacturing operations within 97% reliability rate. To support our expected growth, we are working to bring our new Maryland facility online in mid-2022, which will automate many of our manual processes and reduce costs. We also want to highlight the recent FDA approval of Tecartus in adults ALL.

This Makes Tecartus the first and only Car T therapy now available to these eligible patients in the U.S. The Kite team has also filed a supplemental BLA for Yescarta in second-line LBCL, which would bring us one step closer to potentially carrying even more patients. Kristy is here with the team and available to take questions on cell therapy during the Q&A. And with that, I hand it over to Merdad for pipeline updates.

[Merdad Parsey, Chief Medical Officer]

Thank you Jyna. As always, our focus today on the most important updates and refer you to the appendix of the earnings presentation for a more comprehensive view of our pipeline programs. First on Slide 16 in HIV prevention, we've initiated the 5,000-plus Phase III PURPOSE-1 trials, getting Lenacapavir for the prevention in adolescent girls and young women who are risk of HIV infection.

We're also in the initial stages of recruiting for Purpose-2, to evaluate Lenacapavir for prevention over 3,000 cisgender men, transgender, and gender non-binary who have sex with men. We will provide updated timelines once enrollment is further along. In HIV treatment, the FDA granted priority review in August for Lenacapavir for the treatment of people living with HIV who have developed multi-drug resistance to other antiretrovirals.

This is based on compelling CAPELLA data that demonstrated 81% of heavily treatment experienced individuals achieved viral suppression when Lenacapavir was combined with an optimized background regimen. The PDUFA action date has been set for February 28th 2022, and if approved, Lenacapavir would become the first available 6 months long acting subcutaneous injection treatment for HIV.

Earlier this week, we announced that enrollment head started for the Phase 2 trial, for the long-acting oral combination of Lenacapavir and Eslatrivir. This is part of our collaborative work with Merck to develop more flexible options for people living with HIV with a once-weekly oral pill. Gilliat is leading the development in clinical work for this oral combination. And Merck is leading the clinical work for the injectable combination that is expected to enter Phase 1 clinical trials next year.

Moving to Veklury on Slide 17, we presented a late breaker at the IDWeek 2021 conference last month based on the Phase 3 pine trees study evaluating Veklury as an outpatient intravenous COVID -19 treatment. The results demonstrated that a three-day course of Veklury significantly reduced the risk of hospitalization for high-risk patients with COVID -19. In particular, Veklury demonstrated a statistically significant 87% reduction in risk of the composite primary endpoint of COVID -19 related hospitalizations or all-cause mortality by day 28 compared with placebo.

There were no deaths in either arm of the study by day 28. We stopped PINETREE enrollment at the halfway mark of 584 patients in April due to the COVID -19 landscape at the time. But the study remains blinded and collected outcome data and the enrolled patients. Upon analysis of those data, the results were highly statistically significant and clinically meaningful. Again, demonstrating the efficacy of Veklury.

It also emphasizes the importance of early treatment with antiviral therapies. We have submitted these data to the FDA as an SNDA filing, and our discussions with federal regulatory agencies to explore approval for IV Veklury in an outpatient setting. We're also continuing our work to develop novel oral antivirals for the treatment of COVID -19. Moving to Slide 18, we continue to view Trodelvy as a pipeline interproduct. Trodelvy targets TROP-2, which is overexpressed in many solid tumor cells.

So, we believe that Trodelvy can have a meaningful impact on a wide - range of cancers. In addition to the second-line metastatic TNBC and in second-line bladder indications that are approved today. We're all eagerly anticipating the readout from the Phase 3 TROPiCS-02 study, a randomized Phase 3 trial in HR-positive HER2 -negative metastatic breast cancer. As a reminder, this is an event-driven trial evaluating disease progression. And we have not yet achieved the target number of events. As such, we now expect to have the top line data readout in late January or early February.

To be clear, data, announcements will only begin once we achieve the required number of events. We remain confident for the potential Trodelvy to deliver a clinically meaningful benefit to patients with HR-positive or 2-negative metastatic breast cancer. We also continue to do advance Trodelvy into registrational studies for other indications. For example, as recently posted on clinicaltrials.gov, we plan to initiate the Phase 3 trial in second to third line non-small cell lung cancer at risk, and look forward to sharing updates for other solid tumors as we expand the program.

As Dan mentioned, we'll also start to work with Merck on the New York clinical study looking at Trodelvy in combination with Merck's KEYTRUDA for first-line metastatic TNBC and plan to initiate the trial in the first half of 2022. Moving onto Slide 19, we continue to believe that with its synergistic potential in the safety profile observed to date [Indiscernible] could benefit patients with a variety of hematologic and solid tumors. As you know, our initial focus has been MDS and AML.

While our commitment to these patients remains unchanged, we continue to evolve our clinical programs in the context of the recent development in the MDS therapeutic landscape. The ongoing Phase 3 enhanced trial evaluating Magrolimab in higher-risk MDS is on track and enrolling well. We will discuss our development plans and regulatory path forward with the FDA before the end of the year. Meanwhile, the data from our Phase Ib trial continues to mature.

We now expect to share top line data in First Quarter of 2022. Looking beyond MDS, our enhanced 2 trial from Magrolimab in first-line TP53 mutant AML is ongoing, targeting the new therapeutic option for nearly 2,000 patients in the U.S. In addition, an estimated 6,000 patients in the U.S. are diagnosed and treated annually with unfit AML. So, we're expanding our development efforts to initiate a Phase III trial for one -- first-line unfit AML by early next year.

Over the past few months, we've initiated 2 solid tumor trials from Magrolimab. One in head and neck cancer, and a separate solid tumor basket study for patients with non-small cell lung cancer, small cell lung cancer, and urothelial cancer. We also plan to initiate a third study in metastatic TNBC. Based on broad CD-47 expression for [Indiscernible] bimagrumab potential to be an effective therapy for solid tumors, and look forward to sharing more updates as they become available.

Next, on behalf of Christy and the Kite team, I also wanted to highlight the most recent approvals for Tecartus in adults with relapsed or refractory ALL on slide 20. There's an incredibly high unmet need for these patients with 50% of adult patients relapsing on currently available treatment. The approval was based on data from ZUMA-3, which demonstrated 65% of patients who achieved complete remission.

Additionally, as Johanna mentioned earlier, Kite has filed the sBLA for Yescarta and second-line LBCL. With a medium follow-up of 2 years, the study met the primary endpoint of event-free survival with a hazard ratio of 0.398 and a P-value of less than 0.0001, representing a potential significant advance in the standard of care for LBCL patients.

We look forward to reviewing the entire dataset a dash and expect an update next year on approval status. Lastly, moving to Slide 21, we remain very excited about our oncology partners whose works expands many promising new pathways in oncology. For example, our partners at Arcus has a pipeline that includes not only anti-TIGIT candidates but also CD73 and adenosine receptor inhibitors to promote immune responses and inhibit tumor growth.

We continue to expect to trigger the opt-in review period for Arcus ' domvanalimab likely later this year or early next year, pending the review of more mature data. Additionally, through our partnerships, we have access to several candidates that could help modulate immunosuppressive and tumor permissive cell types and pathways, including [Indiscernible] HLAGE checkpoint inhibitor, which recently expanded to Phase 1b study.

And Johnson CCR -8 Inhibitor, which received IND clearance last quarter. Other potential opt-in programs from partners include Pioneers, [Indiscernible] antibodies which are in Phase 1 trials in actively enrolling patients, and a Genesis CD-137 agonist, which is expected to be evaluated in the combination trial that will be initiated later this year. In closing on slide 22, our teams are focused on executing across our oncology virology and inflammation pipeline.

And while it's still early days for our inflammation portfolio remain committed and invested in continuing to advance our pipeline across various mechanisms of action, such as [Indiscernible] four, Alpha 4 Beta 7, and Tippl 2 in combination with our opt-in partners, our pipeline portfolio spans many of the most promising targets across our three therapeutic focus areas. Very excited and committed to build out our best-in-class and industry-leading franchise. Now hand it over to Andy.

[Andrew Dickinson, Chief Financial Officer]

Thank you Merdad. And good afternoon, everyone. Moving to Slide 24, as you've heard from Johanna, our financial performance in the Third Quarter overall was strong, with total product sales up 13% year-over-year, driven by Veklury's continued role in the pandemic.

Year-over-year, total product sales excluding Veklury, fell 3% due to Truvada in a triple sales following their loss of exclusivity late last year, offset in part by the continued demand for Biktarvy and contributions from our new medicines such as Trodelvy. Sequentially, total product sales excluding Veklury were up 2%, highlighting the ongoing pandemic recovery in HIV treatment and PrEP. This was partially offset by HCV where new starts in both the U.S. and Europe continued to be impacted by the pandemic.

Turning to the rest of the P&L, non-GAAP product gross margin was 90%, 350 basis points higher year-over-year, reflecting the reversal of a previously recorded $175 million litigation reserve, as well as lower royalty expense and a change in product mix. Non-GAAP R&D was $1.1 billion down 4% year-over-year, reflecting lower remdesivir and inflammation-related expenses, offset in part by increased clinical investment in Trodelvy and Magrolimab.

Non-GAAP SG&A was $1.2 billion up 8% year-over-year, driven by increased promotional and marketing activities across all of our geographies primarily for Trodelvy. On tax, we realized a higher effective tax rate of 18.9% for the third quarter, we're up 50 basis points year-over-year, primarily due to a prior-year net discrete tax benefit.

Overall, our non-GAAP diluted earnings per share was $2.65 for the quarter compared to $2.11 for the same period last year. The year-over-year increase primarily reflects higher Veklury sales and product gross margin offset by a higher SG&A lower interest income and higher effective tax rate. On Slide 25, you can see that Veklury has already exceeded our prior guidance for the year with total revenues of 4.2 billion in the first nine months.

As a result, and with modestly updated expectations for the rest of our business, we are increasing our revenue and earnings per share guidance for the full-year by 6% and 13% at the mid-point respectively, as shown on Slide 26. After the wave of infections and hospitalizations in recent months, we believe we have moved past the peak of the pandemic for the year. We continue to expect that Veklury will play an important role in the treatment of patients with COVID -19 globally.

However, assuming we do not experience another surge, we expect Veklury revenue to step down significantly in the fourth quarter. As a result, we are raising our full-year total product sales in the range of 26 billion to 26.3 billion compared to our previous range of 24.4 billion to 25 billion reflecting results year-to-date in Veklury performance. We now expect full-year Veklury revenues to be in the range of 4.5 billion to 4.8 billion, up from our prior outlook of 2.7 billion to 3.1 billion.

We continue to expect that sales of Veklury will track COVID -19 related hospitalizations. We now expect full-year total product sales excluding Veklury to be approximately 21.5 billion compared to the prior range of 21.7 billion to 21.9 billion, reflecting our performance year-to-date in continued pandemic related impact. As for the rest of our P&L, we expect our non-GAAP product gross margin to be approximately 87% compared to 86% to 87% previously, primarily reflecting the strong gross margin in the third quarter.

For non-GAAP operating expenses, we now expect R&D to decline mid-single-digit percentage compared to 2020 levels, as compared to our prior expectations of low to mid-single-digit percentage decline. We expect SG&A to be flat on a dollar basis compared to 2020 versus prior expectations of flat to low single-digit percentage decline. On our non-GAAP effective tax rate is still expected to be approximately 21% this year.

Finally, with the updates to our revenue product gross margin and operating expenses, we now expect our non-GAAP diluted EPS to be between $7.90 and $8.10 for the full year. And GAAP diluted EPS to be between $5.50 and $5.70. On capital allocation, our priorities have not changed. We continue to invest in our business and at the same time, we've returned over $1 billion in the third quarter and $3.2 billion year-to-date to our shareholders through both dividends and share repurchases.

We have also repaid $3.75 billion in debt this year. And earlier today, we notified our 3 non-call 1-bondholders that we would exercise our ability to repay $1 billion of the notes early. Taken together, we now expect to pay down $4.75 billion of debt this year, significantly exceeding our prior guidance to pay down at least $4 billion. With that, I'll invite the Operator to begin the Q&A.

[Operator]

Thank you. [Operator instructions] We ask that you please limit yourself to 1 question. Then your line will be muted. If you have a follow-up, please re-queue. Our first question comes from Matthew Harrison with Morgan Stanley. Your line is open.

[Matthew Harrison, Morgan Stanley]

Great. Good afternoon. Thanks for taking the question. Probably unsurprisingly, my question's for Merdad. Merdad, can you just comment maybe in a little bit more detail in terms of the assumptions that you previously made on TROPiCS-02 and how they were tracking or not tracking that caused you to make this change especially around the blinded event rate and anything else you were watching in the trial? Thanks.

[Merdad Parsey, Chief Medical Officer]

Hi, Matthew. Sure. Happy to. Look, I think as you know, event-driven trials are inherently variable in terms of when the events occur and importantly, when those events come into the database. We had initially thought we would hit the mark this year, but as time has gone by, our best projections right now are that we'll hit that mark next year. And as we said, I think we will be able to share those results probably mid-January to mid-February time frame. That's how we're tracking to the events at this point.

[Johanna Mercier, Chief Commercial Officer]

Katherine, I think we're ready for our next call.

[Operator]

Our next question comes from Tyler Van Buren with Cowen. Your line is open.

[Tyler Van Buren, Cowen]

Hey, guys, good afternoon. Thanks for taking the question. I have another one on TROPiCS-02. Can you just remind us or help set expectations in terms of what you feel is a clinically meaningful benefit on PFS? A lot of people seem to be taking it at around 2 months. If you do reach that sub two-month PFS benefit, let's say, a 1.6 or 1.7, would you guys still go ahead and file or how would you view the data? Thank you.

[Daniel O’day, Chairman and Chief Executive Officer]

Thanks, Tyler. Yes, Merdad?

[Merdad Parsey, Chief Medical Officer]

Yes, Tyler, thanks. I do think the consensus that folks have seen we would've agreed d that 2 months is that threshold for clinically meaningful. I think if we were to fall short of that, which is a difficult place to speculate and not our expectations.

But if that were to happen, we would look at the totality of the data. We'd want ed to look and see if there's other areas where we could provide benefit to patients, and we look at the totality of the data before deciding what we would do.

[Operator]

Thank you. Our next question comes from Umer Raffat with Evercore. Your line is open.

[Umer Raffat, Evercore]

Hi. Maybe let me focus on the Ramdevsivir for a quick second. I'm just trying to understand the reported number a little better, it's a billion five in U.S. on third quarter, which if you re-express based on the [Indiscernible] that’s near our price point would imply maybe 750 thousand patients on the drug in third quarter in U.S. and we know the total U.S. COVID hospitalizations were right around 750,000 in U.S. as well. Is it just reporting artifact [Indiscernible] estimates? I'm just trying to understand why this was materially different than the 50% to 60% penetration remdesivir historically had. And I'll spare my TROPiCS question for Merdad subsequent to the call.

[Merdad Parsey, Chief Medical Officer]

Thanks, Umer. Go ahead, Johanna. You want to hit that one.

[Johanna Mercier, Chief Commercial Officer]

Sure. Umer, I think what -- so the $9 million that Dan referred to earlier is really a mix over the year, right? So that's a little bit different than what you're referring to. The $1.5 billion you asked, most of the sales actually of the total $1.9 billion, obviously coming out of the U.S. and the patient population.

So, I can't track your math per se, but what I would say is that the U.S. patient population, was the greatest, and if you just do the math on about a five-day therapy on average price for Ramdesivir that you would get to less than near 750, just doing it off the top of my head. I think it's probably a little bit lower than that and higher in other parts of the world just because of price points.

[Merdad Parsey, Chief Medical Officer]

And Johanna the -- maybe also the color on the [Indiscernible] the current market share of patient for patients in the hospital.

[Johanna Mercier, Chief Commercial Officer]

Yeah, I thought probably a little bit north of the 60% that you're referring to. We've seen -- obviously we're looking at different databases, but we've seen up to close to 66%, 67% of share of Veklury in early days of hospitalization.

Obviously, often used with Demethazone and other inflame products that anti-inflammatory products. But we do see the share increase and we've seen that obviously with the surge in August and September, we saw that take out both from a protocol standpoint as well play out in the usage itself in the U.S. specifically.

[Umer Raffat, Evercore]

Thanks, Johanna.

[Operator]

Our next question comes from Brian Abrahams with RBC Capital Markets. Your line is open.

[Brian Abrahams, RBC Capital Markets]

Hey guys. Thanks for taking my question. Sticking with COVID, curious to learn more about. Your outlook on how COVID treatment will evolve into next year and beyond. I'm curious if you could give us a little bit more color around the efforts to develop oral direct-acting and antivirals for COVID that you spoke about at the beginning to call, are these primarily [Indiscernible] derivatives you're looking at protease inhibitors, potential combination cocktails. When might we learn more about those? Thanks.

[Daniel O’day, Chairman and Chief Executive Officer]

Thanks, Brian. I think we've all been a little bit shy about predicting how the [Indiscernible] will continue to evolve because, I think, we've proven to be not always right on that. I'm going to let Merdad comment and I'll sort of the other team members have anything to comment. What I will say is back to the previous cash cushion from Umer is that there's no doubt that we see a direct connection correlation between Ramdev's use and outbreak. So that continues.

And as Johanna says we continue to get the market share, and there's also no doubt, Brian, to your point that the although injectable Ramdesivir continues to play a really important role around the world for hospitalized patients, and now the data, obviously we have in the outpatient setting. We're not satisfied yet, and we want to continue to put our science to work, and maybe Merdad, if you want to have any forecast on the future of pandemic to endemic, you're welcome to.

[Merdad Parsey, Chief Medical Officer]

No, no. Thank you. No, I agree with Dan. I think it's incredibly difficult to predict outside of -- I think what we're all starting to believe is it'll be a combination of vaccines, therapeutics of various types, or course, anticipating changes in the virus over time, we'll have to keep an eye on it and see how it goes. Importantly, to date none of the variance have shown any resistance to [Indiscernible].

We think that's a positive outcome so far. We haven't disclosed yet what the oral compounds are going to be. They're -- we are moving them forward as quickly as possible and we'll share those data as those molecules begin to mature. But our hope is that they certainly provide an alternative treatment option, in particular, in the outpatient setting with Veklury remaining really a stalwart in the hospitalized and, potentially, the outpatient IV setting.

[Andrew Dickinson, Chief Financial Officer]

And I would just add, Brian, I think it's fair to say that obviously we continue to work on oral versions of remdesivir. We have said before in the past, and to your point -- from a scientific standpoint, the opportunity to look at combination therapy and oral medicines for COVID to also anticipate future viral resistance. So those are all themes and then to Merdad, of course, the updating you as those medicines continue to move forward.

[Daniel O’day, Chairman and Chief Executive Officer]

Thanks, Brian.

[Operator]

Thank you. Our next question comes from Geoff Meacham with Bank of America. Your line is open.

[Geoff Meacham, Bank of America]

Afternoon, guys. Thanks so much for the question. Just had a bigger picture question on HIV. When you look in the pandemic, remdesivir has done quite well even this quarter, and your oncology pipeline has really grown.

But when we look at the core HIV business, long-term great -- long-term growth rate we used to think was high single-digits and it's much lower last year and this year and I know you have generics and I know the pandemic has affected the market, but the question is, do you think you'll go back to a higher long-term growth rate in HIV and maybe just help us with the drivers of that. Thank you very much.

[Daniel O’day, Chairman and Chief Executive Officer]

Thank you, Geoff. So, Johanna.

[Johanna Mercier, Chief Commercial Officer]

Sure. Geoff, are you asking specifically the market or just generally?

[Geoff Meacham, Bank of America]

For you guys, maybe [Indiscernible] for the market.

[Johanna Mercier, Chief Commercial Officer]

Okay. I think what we said in the second quarter was exactly what's playing out today. We have seen a little bit of a recovery in Q2 and we're seeing that recovery continue, actually, and accelerate a little bit into Q3. We're at about 3% growth, we're about 2% in Q2, and we were negative 3 quarters before that. What we're -- the -- what we're assuming at this point is, actually, we're going to get back from a market standpoint back to where we were prior to COVID.

We're just starting from a much lower base, so it's going to take a little bit of time. I think the assumption is that as we get to 2022, you will see that play out, assuming no other major surges come through. That's from a market standpoint, which, obviously, will help from a product standpoint. When you think about Biktarvy and you think of our growth year-on-year at about 20%, and then of course, double-digit growth on a quarterly basis as well.

We have different dynamics going on. Obviously, demand is still strong, so we're quite pleased with that. We grew about 1.5% share over the last quarter, over 6% in a full year. So, we're on a much larger base because we are our market leader. But we've also had some different pricing dynamics as well going on that are related to obviously the mix that we're looking at.

So that's something that has impacted directly by the pandemic. As you think about your government versus commercial mix, and we've seen PHS channels specifically grow a little bit more rapidly than any other segment over the last couple of quarters. So those are the dynamics that we're dealing with. But if you look at the basic demand, very strong in double-digit growth.

[Andrew Dickinson, Chief Financial Officer]

Jac, it's probably -- Andy, it's also probably worth highlighting again, the difference in the PrEP market and the treatment market. They just joined a touch base on the treatment market that's exactly right. Remember that a lot of the growth that you're referring to a couple of years ago was driven by the incredibly strong PrEP market as well.

We think you will see that again, it's just going to take the introduction of Lenacapavir in a couple of years to get there. So, the dynamic in the treatment market, I think is relatively constant with what we've seen historically, it's just we're building off a bigger base as Johanna said. And the market will continue to grow and then you should see the PrEP dynamic coming back in and a couple of years in terms of driving additional growth.

[Daniel O’day, Chairman and Chief Executive Officer]

Thanks Geoff.

[Operator]

Thank you. Our next question comes from Michael Yee with Jefferies, your line is open.

[Michael Yee, Jefferies]

Hey, good afternoon. Thanks for the question. [Indiscernible] go to TROPiCS-02 I do think it's important. I wanted to ask for Merdad what his was on the importance of OS. Obviously, it would be immature and I think Mark, which suggests you could get OS later in '22. But if you do have a TFS benefit around, 2 months, how confident are you that it still be okay and confident around OS sitting and the crush over and other impacts wouldn't impede that result? maybe just comment on that a bit. Thank you.

[Merdad Parsey, Chief Medical Officer]

Sure, Michael. Happy to. Look, I think as you recall, one of the reasons we modified the stage, it's important you go back to the early part of the year, when we modified this trial. We expanded the sample size and we changed the endpoint. And I think the main purpose behind modifying the sample size was to make sure that we could hit OS with the assumptions that we had in the trial.

So, I think if we hit PFS, we feel reasonably confident with all the caveats that you said right around crossover and things like that that are difficult to control, that we should be able to hit OS. So, I think that's important. And I think that really gets to the other underlying issue around this delay as we moved from investigator to central overrides of the progression events, those are the things that led to the slight delay here that we're talking about. But I think that all means we'll have a stronger outcome when the data are available.

[Daniel O’day, Chairman and Chief Executive Officer]

And maybe just the risk because I know there's been several questions on O2 just to complement what Merdad had said. When we think about trials in the oncology space for all of us have a lot of experience, but it's certainly not uncommon when you think about event-driven trials to have to have the slight adjustments of timelines.

And I would just point out that initially we anticipated that we would have this data and to Merdad's point with all the protocol adjustments that we did in the middle of the year in December of this year.

And now we're talking about those data coming in mid-January to mid-February. So, the timeline changes are really very minor. And in terms of the trial conduct and design, nothing has changed in regards to our confidence for TROPiCS-02. So, I just wanted to make sure I also had a chance to say that. Thanks, Mike.

[Operator]

Our next question comes from Cory Kasimov with JPMorgan. Your line is open.

[Cory Kasimov, JPMorgan]

Good afternoon, guys. Thanks for taking my question. I just wanted to ask you about the Arcus TIGIT program in which regard to the added data you expect to get on this asset to make the go-no-go decision. Is it just more durability or you're going to see more patients to basically just looking for your latest thoughts there on what it would take for you to opt-in. Thank you

[Daniel O’day, Chairman and Chief Executive Officer]

Merdad, you want to take this?

[Merdad Parsey, Chief Medical Officer]

Yeah. Sure. Thanks Corey. We do anticipate that the data move will mature, I think is what we've been thinking. And I think that's a combination of things. More patients per arm, as well as longer observation time for the patients that are enrolled in the study. We remain really interested in that and enthusiastic about that study.

And as I said, I think we feel that it's likely that we'll be able to make our opt-in decision this year. So, we continue to believe that that's where we're headed with those data. In total, I think we do expect to see a larger, more robust dataset to decide on.

[Andrew Dickinson, Chief Financial Officer]

And as we said before, what we're looking for is clear separation of the doublet from single agent and we're looking for an ORR of over 50% in the doublet and hopefully in the triplet as well, that would be upside for us.

[Johanna Mercier, Chief Commercial Officer]

Katherine, we're ready for the next caller, please.

[Operator]

Our next question comes from Andrew Garlow with Wolfe Research. Your line is open.

[Andrew Garlow, Wolfe Research]

Hi. Thanks for taking my question and I just have one on the HIV pipeline. So, given you're collaborating with Merck on lenacapavir and [Indiscernible] as a combo? One of your competitors in this space claim that frontline standard of care needs to include an integration inhibitor. So, given your experience with [Indiscernible] do you agree or not that integrates Inhibitor as always likely to be needed in a first-line setting.

[Merdad Parsey, Chief Medical Officer]

Yes. Thanks for the question. It's an interesting statement to make. We obviously don't believe that. That's why we're pursuing the combination approach that we are. So, I think the data will tell the story in the long run. We're pretty confident that we can get there with the combination approach that we're taking right now.

[Daniel O’day, Chairman and Chief Executive Officer]

Thanks, Andrew.

[Johanna Mercier, Chief Commercial Officer]

Katherine our next caller.

[Operator]

Our next question comes from Geoffrey Porges with SVB Leerink. Your line is open.

[Geoffrey Porges, SVB Leerink]

Thank you very much for taking the question. Why don't we go back to the [Indiscernible] impairment question for the core business? Perhaps you could give us a sense of where your stats for HCV and HIV in Q4 compared to Q4, 2019. And then secondarily, do you expect those businesses to grow in 2022? I know it's early for guidance, but you've obviously developed your plan already. Just be helpful to see how you're thinking about COVID impact on those core businesses.

[Daniel O’day, Chairman and Chief Executive Officer]

Can I just clarify you meant Q3, Q3?

[Geoffrey Porges, SVB Leerink]

No, we're in Q4 now. And I'm really trying to get a sense of -- you showed pretty clearly the decline in hospitalizations and in number of different therapeutic categories were recovering in Q4. So, really wondering where we are today compared to Q4 2019.

[Daniel O’day, Chairman and Chief Executive Officer]

Got you. Johanna.

[Johanna Mercier, Chief Commercial Officer]

Sure. Let me start Geoff with that HBV and then I'll move onto HIV. So, at an HBV standpoint where we talked about being about 8% under year-over-year. A lot of that has to do with timing and pricing adjustments. So, it's not patient per se. We are actually flat pretty much year-over-year, about 2% positive.

What we did see though is market starts declined in Q3 and that's directly related to the pandemic, because less screening diagnosis, they were down again in Q3. And so, we believe that it will pick back up. I wouldn't go so much to say that it will be an increase. But I would say that we should be able to hold flat because you typically see HDV patient starts decline over time just because there's less patients that need the cure, but not as quickly as what we're seeing in the quarter.

So, we do think that will pick back up. It's -- so we would assume a little bit more tempered decline in 2022. The HIV piece of the puzzle, we still are seeing screenings and diagnosis less than pre - COVID -19. So, we're seeing about screenings 10% down versus 2019. And diagnosis, there's still 20% below 2019 levels. So as much as we're seeing recovery quarter-over-quarter, and we're excited about that, because that's in line with what we had assumed, we're still not back to the levels that we're needs to be.

And so I would say that you are now growing from a lower base and it's what we talked about in the last quarter where the assumption was it would come right back, but the dynamic market in HIV is very small and it's going to take a little bit longer, and therefore, we're just growing from a lower base and we do believe we'll get back to typical levels of a couple of single-digit growth from a market standpoint in 2022, is just going to take us a couple of quarters to get there. Hopefully that helps a little bit to give your perspective.

[Geoffrey Porges, SVB Leerink]

That helps a lot. Thank you.

[Daniel O’day, Chairman and Chief Executive Officer]

Thank you.

[Operator]

Our next question comes from Robyn Karnauskas [Indiscernible] Securities. Your line is open.

[Robyn Karnauskas, Unidentified]

Hi guys. Thanks for taking my question. Just thinking big picture on your long-term growth. Obviously, there are a lot of questions here on Trodelvy and thinking about the HIV business as -- two core areas that are very important for your long-term growth.

Can you talk about how your expectations of Trodelvy market opportunity have changed from your initial acquisition? And if you don't see the data that you want to see from TROPiCS-02 how are you going to think about your strategy for growing the business? Because it seems like that is core to the long-term future of the Company. Thanks.

[Daniel O’day, Chairman and Chief Executive Officer]

Right, thanks Robin. All of Andy start here, and certainly ask.

[Andrew Dickinson, Chief Financial Officer]

Hey, Robyn, Thanks for the question. And Johanna may want to weigh in as well. Look, I think there are a number of growth drivers. If we just step back, when you think about long-term growth there has been a number of questions. Just to paint the picture again, there are a number of growth drivers that we see driving.

We don't provide specific long-term guidance. What we've said and we'll continue to say is that the HIV business, including the long-acting collaboration that you mentioned, Trodelvy, Magrolimab, Cell Therapy, and a number of the other programs, potentially the Arcus programs are expected to drive our long-term growth.

In the short run, we see a much more promising growth profile than we did historically. We think that we've done a lot to turn the Company around and now the growth profile is improving significantly from our perspective. When you get to '24 or '25, again, we've said we see an expected inflection in our growth profile as a lot of these programs that are currently in the clinic hopefully reach the commercialization, including a number of the Trodelvy programs.

On Trodelvy, specifically, I think we continue to be very bullish on the prospects for Trodelvy overall. Similar to where we were when we did the transaction. So, you'll remember, we highlighted there are a number of ways to win with Trodelvy when we acquired Immunomedics. The hormone-receptor positive study was just one of those studies. Obviously, we're excited about the work that we're doing in lung cancer and other areas. So, there's a much broader clinical development plan for Trodelvy then the market probably fully appreciates today.

The announcement with Merck earlier today is a good example of that. That will give you a sense of where we're going and we expect to give you a much greater sense of that overall. So, I think at a macro level before I ask Johanna to comment, I'd say our expectations for Trodelvy have not changed. We continue to be very enthusiastic about where we are and where we're going and there's lots of different ways for us to get there over time.

[Johanna Mercier, Chief Commercial Officer]

Yeah. No, I -- thanks, Andy. I would just add, I think we are pleased with where we're going with Trodelvy today in the short-term. We still believe that there's a lot of growth opportunities specifically in the earlier lines setting betting both across triple-negative breast cancer, as well as bladder cancer.

And so, we're seeing those opportunities play out. I think the guidelines are going to help us set up for success, let alone setup for future pipeline studies such as HR -positive coming through, hopefully. in a positive way as you mentioned, and that should just [Indiscernible] expand our market opportunity even more so.

The only thing I would add to what Andy was saying is also on the HIV front, we are not looking just at the oncology opportunities, but also from an HIV standpoint, we still believe that TAR - VIR is foundational to our HIV opportunities. In addition to of course, Lenacapavir that Merdad spoke too earlier. So, we're excited about what we have going on there as well.

[Daniel O’day, Chairman and Chief Executive Officer]

Thank you, Robyn.

[Operator]

Our next question comes from Ronny Gal with Bernstein, your line is open.

[Ronny Gal, Bernstein]

Good afternoon and thank you for taking my questions. I wanted to ask a little bit about the agreement between -- about a combination of Trodelvy and Keytruda. This might get a piece of economics that Trodelvy, can you talk a little bit about the elements of the agreement. And then one of your peers signed an agreement with Merck on non-small cell lung cancer. And I was wondering, are those steps of agreements exclusive that is, they can have another TROP-2 ADC in triple negative breast cancer, and you may partner with them in lung cancer as well.

[Andrew Dickinson, Chief Financial Officer]

Yes. Hi Ronny. it's Andy. Thank you for the question. It's relatively straightforward, this is a straightforward, simple clinical collaboration Merck is providing Trodelvy. They obviously had input on the study design KEYTRUDA. I'm sorry, KEYTRUDA. To be studied, thank you.

They do not have any economics on Trodelvy as a result of the study, but they will enjoy hopefully they've added benefits to KEYTRUDA on their end. And these studies are not exclusive. They have the ability to do other studies in the same area with other agents, including other TROP-2 antibodies. And we have the ability to do studies with other PD-1 inhibitors as well. And of course, we started in triple-negative breast cancer.

You're highlighting that there's another study that they will do with another TROP-2 inhibitor in lung cancer. That of course is an area that we're going to look at as well. So, I expect that there's more to come, but these are relatively straightforward, simple, plain vanilla clinical collaborations.

[Daniel O’day, Chairman and Chief Executive Officer]

And its part of our strategy, right Ronny, to scale the opportunity with Trodelvy because there's many things we can do ourselves. But frankly, given the multi - tumor opportunity for Trodelvy, engaging in partnerships like this allows us to expand much more than we could ourselves. And I think it's the beginning of what you'll see from as we look to really expand the promise and potential of Trodelvy.

[Johanna Mercier, Chief Commercial Officer]

Katherine, I think maybe we have time for 2 more questions.

[Operator]

Okay. Our next one comes from Brian Skorney with Baird. Your line is open.

[Brian Skorney, Baird]

Hey. Good afternoon, everyone. Thank you for taking my question. I guess we'll be seeing a bunch of potentially transformative data in Large B-cell Lymphoma in a couple of months, I assume at ASH. I guess in addition to your own data, just thoughts on given the Telerik success, how do you think about the potential for CAR - T19 to move upwards into the frontline setting, and does the success of... actually change the market opportunity in your view for second-line as well? Thanks.

[Daniel O’day, Chairman and Chief Executive Officer]

That's fine. Christy, please.

[Christi Shaw]

Sure. Yes, we're very excited about our submission at the end of September for second-line and expect to hear back on the status from FDA first half of next year. But we will be presenting the data at ASH, as you said, and CAR T is really the only potential cure we're seeing right now. So, when you look at the out of class second-line agents and moving to frontline.

It typically has been a delay to [Indiscernible]. And now with this new study coming out, we'll have to see what that exact duration will be for those patients. We hope it will be successful, but we don't see a huge impact to our projections in the cell therapy marketplace. Second-line actually allows us to basically double the market that we can play in, which is about 14 thousand patients in the US.

That combined with you'll also see our frontline data ZUMA-12 which was completed, we'll be presenting that at ASH as well. You will see that on frontline, second-line and see how it may stack up, although they're not head-to-head trial. We're pretty confident in where we are, and it doesn't really change our projections for the future of cell therapy or for our specific brands.

[Johanna Mercier, Chief Commercial Officer]

Katherine, maybe just our last question, please.

[Operator]

Our last question comes from Carter Gould with Barclays. Your line is open.

[Carter Gould, Barclays]

Great. Good afternoon. Thanks for squeezing me in. Maybe just one on the long study that's going to get started later this year for Trodelvy. You've characterized that study at risk, but presumably you've had some insight from the basket study. Is that a fair assumption, and could we see data from that basket study, maybe by the time we see TROPiCS-02 data? Thank you.

[Merdad Parsey, Chief Medical Officer]

Thanks. Great question. Our -- we're looking at the totality of the data we have. It's not just the TROPiCS-03 data, we're looking at the totality of the data in line that we have accumulated, and that's really the approach we're taking. So, I take your point, and it's arguably not that bigger risk given the data we've seen.

We -- I would not expect for us to be sharing those data around the time of the tropics, too, but we do -- we will plan on sharing those data over time. So, we'll definitely share those data over time, but for now, we're pretty excited by it what we've seen in terms of the Trodelvy performance in [Indiscernible]

[Daniel O’day, Chairman and Chief Executive Officer]

[Indiscernible]

[Operator]

That's all the time we have for questions. I'd like to turn the call back to Jacquie Ross for closing remarks.

[Jacquie Ross, Vice President Investor Relations]

Thank you, Katherine. And thank you all for joining us today. We appreciate your continued interest in Gilead and look forward to updating you on our progress.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.