UBS: $GILD #CROI19 DISCOVER Comes Early; Setup into Next Week's
Descovy PrEP Read-out
DISCOVER Reading Out Next Week, Ahead of Prior Guidance
Gilead disclosed today its abstracts ahead of next week's CROI meeting (March 6th).
Notably, those abstracts unexpectedly included a presentation on the phase 3
DISCOVER study – likely setting up for release of those data, ahead of prior company
guidance (2Q). Recall, DISCOVER is a phase 3 study of Descovy vs. Truvada, offering a
path for Descovy to expand its label into the HIV Pre-exposure Prophylaxis (PrEP) setting
and for Gilead to maintain some portion of its PrEP franchise until the mid-2020s. This
is increasingly important to Gilead's HIV franchise as Truvada PrEP use has grown
rapidly ($2B in 2018; patients grew +32% y/y to ~202K), but faces the prospect of
genericization in 2021.
Expectations for DISCOVER – Match on Efficacy, Differentiate on Bone/Renal
The CROI meeting (Conference on Retroviruses and Opportunistic Infections; Seattle)
begins next week with the relevant presentation set for Wednesday at 11am PT (Oral
104LB). The trial is designed to demonstrate non-inferiority of Descovy vs. Truvada on
the rates of HIV-infection (likely in the range of 0.9-2.4% per 100-patient years), with
the goal of differentiating on the various bone and renal measurements – a strategy
that was successful for original approval in HIV treatment. Recall, Descovy
demonstrated stat. sig. changes in (1) spine (-1.3% vs. -2.9%) and hip bone mineral
density (-0.7% vs. -3.0%) in addition to (2) various renal biomarkers. Based on those
data, we are positively biased DISCOVER will recapitulate those findings.
Peak PrEP Descovy Sales of $1.5-1.8B vs. Implied Consensus of $300-500M
Consensus U.S. Descovy sales are expected to grow from ~$1.4B/$1.7B in 2019/20 to
$2.1B at peak (2022) – implying fairly modest contributions ($300-500M) from PrEP.
Based on our assumptions around broader PrEP utilization growth (10% CAGR 2018-
2025) and conversion rates to Descovy (50%), we think Descovy PrEP sales alone could
reach $1.5-1.8B by 2024 – potentially pushing total 2024 Descovy sales closer to ~$3B.
Under various scenarios – 30-70% conversion, 10-15% growth in treatment rates, we
model a $2-4/sh benefit to GILD shares on positive data.

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