Despite steep budget and staffing cuts at the FDA in recent weeks and other headwinds, Gilead CEO Daniel O’Day assured investors that the pharma’s plans and preparations for lenacapavir’s launch remain on track.
Gilead is gearing up to capture a huge chunk of the rapidly growing HIV pre-exposure prophylaxis market with the potential approval of the twice-yearly injection lenacapavir despite macro uncertainty and concerns about how the new drug will affect the company’s existing medicines.
“We are absolutely ready for the launch,” Chief Commercial Officer Johanna Mercier said during a first-quarter earnings call on Thursday afternoon. She noted that a verdict from the FDA is just “around the corner.” The U.S. pre-exposure prophylaxis (PrEP) market, according to Mercier, has surged “about 16% year-over-year” in the quarter, which she attributes at least partly to Gilead’s “market development initiatives” in preparation for lenacapavir.
Gilead is proposing a twice-yearly injection of lenacapavir, an HIV-1 capsid inhibitor, to prevent HIV infection. Data from the Phase III PURPOSE program show that the regimen could reduce the risk of HIV by at least 96% in various patient populations. The FDA is currently reviewing Gilead’s application, with a target action date of June 19.
According to Gilead, the regulatory review seems to be on track, despite steep cuts and high-level HIV disruptions at the Department of Health and Human Services in recent weeks.
Gilead’s review also comes amid potential macro headwinds for the HIV space. In mid-March, reports broke that President Donald Trump was considering a major reduction to the Centers for Disease Control and Prevention’s HIV prevention budget, a move that would hamstring the agency’s surveillance and community outreach services. Last week, several news outlets reported that Trump was eyeing a $40 billion budget cut to the HHS as part of the sweeping structural overhaul at the agency.
“We haven’t heard or seen anything that would cause us to alter our plans or expectations,” CEO Daniel O’Day said during the investor call, adding that the pharma also doesn’t expect these macro uncertainties to “adversely affect . . . our HIV business.”
Some analysts also raised concerns about lenacapavir cannibalizing the business of Gilead’s Descovy, which is also indicated for the prevention of HIV but is taken orally once daily. The worries are warranted, given that sales of the drug, which dominates the PrEP market with a 40% share, jumped 38% in the quarter to bring in $586 million worldwide, according to Mercier.
She declined to give product-specific guidance on the investor call, instead emphasizing the rapid growth of the PrEP market, which lenacapavir can capitalize on given its more convenient dosing schedule. “There really is an opportunity when you think about a switch strategy,” Mercier said, noting that some of the first patients on lenacapavir would be coming from oral PrEP, which includes Descovy.
In the first quarter, Gilead reported $6.7 billion in revenue, which is largely flat from the same period last year. The HIV business contributed heavily to this outcome, bringing in nearly $4.6 billion in the quarter, a slight year-on-year increase. Gilead’s heaviest hitter, the HIV drug Biktarvy, earned $3.15 billion in Q1, falling short of analyst forecasts by 2%.
Analysts at BMO Capital Markets were unperturbed by the slight miss, calling it “sticker shock” rather than finding issues with Gilead’s underlying business. All eyes remain on lenacapavir’s launch, the analysts told investors on Thursday.
Gilead’s shares dipped 3% after the earnings release, according to SeekingAlpha, which analysts attributed to a miss for COVID-19 antiviral Veklury. BMO Capital Markets said this is actually a positive, as it means fewer patients needed the intervention. Also contributing to the miss were inventory and demand issues for Trodelvy. But BMO still expressed confidence in Gilead, especially as the lenacapavir launch nears: “our bullishness [is] rooted in the strength of Gilead’s HIV franchise and a positive view of the launch of lenacapavir in PrEP,” the analysts wrote.
