Every year, major healthcare companies get an opportunity to tell their story at the J.P. Morgan Healthcare Conference. At this year's conference, Gilead Sciences' (NASDAQ:GILD) story sounded better than it has in quite a while.
Several Gilead Sciences executives answered questions at the J.P. Morgan conference on Monday, including interim CEO Gregg Alton, CFO Robin Washington, head of worldwide commercial operations Laura Hamill, and Chief Scientific Officer John McHutchison. These key members of the biotech's management team identified seven things to expect for Gilead in 2019.
1. A new CEO at the helm
Gilead will soon have a new CEO. The company announced on Dec. 10, 2018, that Daniel O'Day will take the top spot at Gilead effective March 1, 2019. O'Day is currently CEO of Roche Pharmaceuticals.
Interim CEO Gregg Alton, who also serves as Gilead's chief patent officer, said that O'Day's "commitment to science and innovation" was especially attractive to Gilead. Alton added that O'Day brings broad experience and is a "strong cultural fit" with the company.
2. A return to growth
Former Gilead CEO John Milligan predicted in late 2017 that 2018 could be "the beginning of a growth phase" for the biotech. Although Gilead's revenue and earnings didn't actually increase on a year-over-year basis in 2018, the company did set the stage for what Alton says will be a return to growth in 2019.
CFO Robin Washington, as other Gilead executives have done in the past, referred to 2018 as a "trough year." Alton agreed that Gilead will begin to turn things around this year with higher year-over-year product revenue growth.
3. Continued strength in HIV
While Alton acknowledged that competition will heat up in HIV, he stated that Gilead's HIV franchise will remain strong. Washington also pointed out HIV as a major source of long-term growth for the company.
Biktarvy will be the primary driver of that growth. Laura Hamill said that the drug is "setting the record for the most successful HIV launch in the industry." Biktarvy is already the No. 1 HIV drug in the U.S. for both treatment-naive and switch patients.
4. Stabilization for HCV
The sore spot for Gilead over the last few years has been its steep decline in revenue from its hepatitis C virus (HCV) franchise. While sales might still slip some, Washington said that Gilead is seeing stabilization for its HCV drugs.
She noted that "HCV is still a very important franchise for us." The HCV market is less volatile now than in the past now that it's shaped up to be pretty much a one-on-one battle between Gilead and AbbVie. As a result, Washington thinks that Gilead will be able to forecast HCV revenue more accurately in 2019.
5. Building on leadership in cell therapy
Alton boasted that Gilead is the leader in cell therapy with Yescarta as a best-in-class product. Although sales for Yescarta picked up in 2018, the cell therapy is still likely to generate less than $300 million for the year. However, Gilead expects momentum to continue in the new year.
John McHutchison pointed out what he called "incredible" real-world data from patients who have been treated with Yescarta. He said that Gilead is moving forward with the cell therapy in multiple early lines of therapy as well as targeting new indications. However, McHutchison added that the biotech probably won't advance its BCMA cell therapy candidate because it didn't show the "depth of response to put forward a best-in-class program."
6. Lots of important late-stage clinical results
Alton and McHutchison mentioned that Gilead anticipates announcing results from late-stage clinical studies in 2019. One is for an already-approved drug, Descovy, in HIV pre-exposure prophylaxis (PrEP). Gilead's Truvada is already approved for PrEP, but the biotech hopes that Descovy could be an effective therapy as well.
The most excitement, though, is for Gilead's new experimental drugs. Gilead expects to report results from a late-stage study of filgotinib in treating rheumatoid arthritis in the first quarter of 2019. The company also plans to announce results from two late-stage studies of selonsertib in treating nonalcoholic steatohepatitis (NASH) in the first half of the year. McHutchison exclaimed that he is "confident" about the prospects of success for Gilead's promising NASH drug.
When asked about Gilead's capital allocation strategy, Washington responded that the No. 1 priority is mergers and acquisitions. She said that the company's approach is to "follow the science."
Expect Gilead to primarily make deals in the core therapeutic areas where it currently focuses, particularly cell therapy and NASH. Washington said that the biotech is "looking at lots of opportunities," so 2019 could be a busy year for Gilead on the business development front.
Check out the latest Gilead Sciences earnings call transcript.