Categories Earnings Call Transcripts, Health Care

Gilead Sciences Inc. (NASDAQ: GILD) Q1 2020 Earnings Call Transcript

GILD Earnings Call - Final Transcript

Gilead Sciences Inc. (GILD) Q1 2020 earnings call dated April 30, 2020

Corporate Participants:

Douglas Maffei — Investor Relations

Daniel O’Day — Chairman and Chief Executive Officer

Andrew Dickinson — Chief Financial Officer

Merdad Parsey — Chief Medical Officer

Johanna Mercier — Chief Commercial Officer

Diana Brainard — Senior Vice President, HIV and Emerging Viral

Analysts:

Michael Yee — Jefferies — Analyst

Cory Kasimov — JP Morgan — Analyst

Brian Abrahams — RBC Capital Markets — Analyst

Geoff Meacham — Bank of America — Analyst

Geoffrey Porges — SVB Leerink — Analyst

Matthew Harrison — Morgan Stanley — Analyst

Umer Raffat — Evercore — Analyst

Alethia Young — Cantor Fitzgerald — Analyst

Mohit Bansal — Citigroup — Analyst

Robyn Karnauskas — SunTrust — Analyst

Salim Syed — Mizuho — Analyst

Tyler Van Buren — Piper Sandler — Analyst

Phil Nadeau — Cowen & Company — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2020 Gilead Sciences Earnings Conference Call. [Operator Instructions] After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

It is now my pleasure to introduce, Senior Director of Investor Relations, Doug Maffei.

Douglas Maffei — Investor Relations

Thank you, Andrew and good afternoon, everyone. Just after market close today, we issued a press release with earnings results for the first quarter 2020. The press release and detailed slides are available on the Investor Relations section of the Gilead website. The speakers on today’s call will be Daniel O’Day, Chairman and Chief Executive Officer; and Andrew Dickinson, Chief Financial Officer. Also on the call will be Johanna Mercier, Chief Commercial Officer; Merdad Parsey, Chief Medical Officer; Christi Shaw, Chief Executive Officer of Kite; and Diana Brainard, SVP and Head of our HIV and emerging viruses therapeutic area.

Before we begin with our prepared comments, let me remind you that we will be making forward-looking statements, including risks and uncertainties related to the impact of the COVID-19 pandemic on Gileads business and results of operations. Plans and expectations with regards to products, product candidates, financial projections and the use of capital, and 2020 financial guidance, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause actual results to differ materially from these statements. A description of these risks can be found in the earnings press release and our latest SEC disclosure documents. All forward-looking statements are based on information currently available to Gilead, and Gilead assumes no obligation to update any such forward-looking statements. Non-GAAP financial measures will be used to help you understand the company’s underlying business performance The GAAP to non-GAAP reconciliations are provided in the earnings press release, as well as on the Gilead website.

I will now turn the call over to Dan.

Daniel O’Day — Chairman and Chief Executive Officer

Thank you very much, Doug and good afternoon, everyone. Well, as you can imagine, it’s been an extraordinary week for Gilead, given the terrific news on our investigation al Antiviral Drug Remdesivir. The news shared yesterday that the data show the potential of remdesivir to help ease some of the burden of the pandemic, is the outcome that we had all hoped would be possible. We’re incredibly humbled to think about what this news could mean for patients and communities.

I’d like to start by sharing my thanks to everyone, who has helped to bring remdesivir to this point, including all those involved in a collaborative clinical trials, the trial investigators, government, hospitals and above all the patients who participated. I want to acknowledge our internal teams that have been working day and night on remdesivir for the past three months, following many years of research long before the outbreak began. Because of the remdesivir news, the original focus for today’s call has somewhat shifted. I’m sure, we have a lot of questions on the results and the next steps. We’ll provide an overview of what was a strong first quarter for Gilead, but with an abbreviated set of opening comments, so we can leave more time for questions.

I’ll speak briefly about the quarter and remdesivir before turning the call over to Andy to discuss financial details and the impact of COVID-19 on our business. As Doug noted in the opening, Christi, Joanna, Merdad and Diana have joined us today to answer your questions at the end of the call. Gilead has been built to withstand significant challenges. There is a short-term uncertainty for all of us, but the solid foundations that Gilead has laid over the past 30 years and our focus on transformational therapeutics give us confidence in the long-term durability of the business. We will do our best to provide you with a clear picture of where we are and what we expect, as far as the near-term impact of COVID-19, while acknowledging that as we all know, these are uncertain times with many unknowns, not least of which is how long the epidemic will last.

So turning to the quarter, I’ll use the framework we introduced to the start of the year with the three pillars that will shape our future, a strong core business, our internal pipeline, and supplemental growth opportunities that are being enabled through our strategy. Our performance in the first quarter demonstrated the strength of our foundational business once again with double-digit growth in HIV. We reached and in fact exceeded all of our targets. Revenues for our HIV franchise were up 14% year-over-year. This was driven by both treatment and prevention. As Biktarvy remain the number one prescribed HIV regimen in the US during the quarter and approximately 38% of individuals on PrEP are now taking Descovy.

What I would say in general about where we stand in HIV is this. We are very confident in the underwriting competitiveness of our products and our position as the leader in HIV. Completing the picture in our core antiviral business, we saw sustained revenues from our HCV franchise in the last quarter. Since the introduction of authorized generics in the US, we’ve re-gained market share and now hold around 61% of share through Asegua and Gilead.

So moving from our core business to advance in our pipeline, I’ll provide just a brief overview. More detailed information is available as part of our first quarter earnings materials in the Investor Relations section of our website. Filgotinib, as you are aware is under regulatory review in the United States, Europe and Japan. It’s a potential treatment for rheumatoid arthritis. Our teams are preparing for a competitive launch and we remain in close contact with regulators to understand the effect COVID-19 could have on review timelines.

In HIV, we made progress across our pipeline, sharing important data at the Virtual CROI conference with our innovative long-acting antiviral and HIV cure programs, reinforcing our long term commitments to people living with HIV. In cell therapy, the FDA accepted Kite BLA for Kite-X19 as a treatment for relapse and refractory mantle cell lymphoma during the first quarter and granted a priority review designation. As you might recall, the European Medicines Agency valued our application in January. This represents really important progress, patients with relapsed and refractory, mantle cell lymphoma a rare form of non-Hodgkin’s lymphoma are in need of new therapies. If approved Kite would be the first company with two cell therapies on the market.

So I touched on our strong core business and advancing our pipeline, now I want to say a few words about the work we are doing to expand our pipeline through business development, including of course the acquisition of Forty Seven completed earlier this month. Acquiring Forty Seven is a great early example of our strategy in action. We said we would build on our core area of expertise, which, as you know, our virology and immunomodulation, that we would keep a high bar in that our business development efforts we had focused on clinical stage assets, such as magrolimab which we gain is a part of this acquisition.

We’re working to integrate the teams and the programs, a joint effort which I’m leading with Mark McCamish, the CEO of Forty Seven, with the objectives that keeping things moving smoothly with magrolimab and defining a working model that supports continued innovation. Next month, researchers will present data on our next-generation cancer therapies virtually at ASCO, including magrolimab and a number of abstracts that highlight the Kite cell therapy portfolio. The presentations at ASCO underscore the strength of our scientific approach in immuno-oncology and we looking forward to sharing this latest research.

Beyond Forty Seven, our business development team remains as active as ever. In the last month, we’ve announced three partnerships, a collaboration with second genome to identify biomarkers and potential new drug targets in inflammation, a licensing agreement between Kite and Teneobio covering a dual targeting CAR-T therapies and a three-year collaboration with Onko-Innate to discover cancer immunotherapy. Overall, we continue to maintain our momentum and I’m pleased with all the progress we’ve made this quarter.

I’ll now turn to remdesivir. The study results shared yesterday from the randomized placebo-controlled Phase 3 NIAID study, and from our own open label Phase 3 simple study in patients with severe disease, are important progress as we seek to understand the role that remdesivir might play in easing the burden of COVID-19 around the world. These trials are part of a suite of clinical trials investigating the effects of remdesivir. We design the clinical research program to ask multiple questions in parallel, including what groups of patients are most likely to respond and when to treat and for how long?

Various study designs were used from placebo control to open label to answer very specific questions in each case. We expect that the answers were emerge around the same time and that taken together, they would form a clear picture of how remdesivir might best be used for patients. Yesterday, we answered important questions with the initial results of the NIAID trial and simple trials. The NIAID data demonstrated the patients with COVID-19, who received remdesivir recovered faster than similar patients who received placebo. The results from the Gilead sponsored simple study address a critical question about dosing. The data from the first of the simple studies showed similar clinical improvements in patients with severe symptoms of COVID-19, regardless of whether they received five or 10 days of treatment.

The ability to shorten duration for severely ill patients is very important. It means patients can go home earlier, hospital resources can be freed up and it has a positive impact of course on our supply. We have calculated having 1.5 million doses by the end of May, amounting to 140,000 treatment courses at a 10-day treatment duration. The Gilead simple study suggest we may now be able to significantly increase the number of courses available with a five-day treatment duration for certain patients. As we announced previously, we are donating our entire existing supply, frankly, because this is the right thing to do at this time and the human health need in the pandemic.

As you know, we’ve been ramping up production since January, we’ve significantly reduced lead times and expanded our global network of partners. As additional raw materials come available, we’ll have an exponential increase in supplies towards the latter half of this year. We hope to have produced enough supply to treat over 1 million patients by year-end. We are also working to build a global consortium of pharmaceutical chemical manufacturers to expand global capacity and production. It will be essential for countries to work together to create enough supply for people all over the world and we look forward to these collaborative efforts.

For access and allocation, we work closely with governments and health-care system to provide access. We intend to allocate our available supply based on guiding principles that aim to direct global access for appropriate patients in urgent need of treatment. We recognize there is a lot of work left to be done and a long way to go and finding medical solutions to end the pandemic. And we’ll continue to work with regulatory authorities in the best path forward from remdesivir. At the same time, all of us at Gilead are relieved and grateful that our efforts on remdesivir have led — let this important progress at a time when we all need a beacon of hope.

Before I turn the call over to Andy, I want to reiterate how grateful we are for the partnership with many groups outside Gilead to support the work on remdesivir. The collaboration throughout this pandemic has been critical [Technical Issues]

Andrew Dickinson — Chief Financial Officer

It sounds like we’ve lost Dan. I’ll just finish Dan’s comments. We also want to say how proud we are of the way our employees have demonstrated such dedication to meeting the needs of patients. Those of COVID-19 as well as those with conditions including HIV, viral hepatitis and cancer, who depend on us for their medications. So with that I will turn to our financial comments and then we’ll move to Q&A.

Good afternoon, everyone. My name is Andy Dickinson, I’m the company’s CFO. Before I start, I’d also like to acknowledge the incredible work of our 12,000 employees and what they’re doing during these challenging times, their dedication and resilience is really inspiring. In addition from the outset, I’d like to emphasize that our core business is very strong, durable and provides a solid foundation to navigate the current environment. We continue to have confidence in 2020 and beyond. The pandemic has not diminished that view at all, and we remain confident in our long-term outlook.

I’d like to first briefly share some commentary on our very strong first quarter results, and I’ll remind you that the earnings materials posted on our website contain all of the details, including preliminary color on the impact of COVID-19 and our business to-date, as well as our preliminary expectations for the coming months. We are happy to walk through the results and the impact of COVID-19 and our business to-date in detail during the Q&A session.

Starting with our revenues for the quarter, total revenues for the first quarter were $5.5 billion with non-GAAP earnings of $1.68 per diluted share. This compares to revenue of $5.3 billion with non-GAAP earnings of $1.67 per diluted share for the same period last year. Product sales for the first quarter were $5.5 billion, down 6% sequentially and up 5% year-over-year. I’d like to call out that we believe approximately $200 million of revenues were pulled forward in Q1, primarily for our HIV franchise, due to the COVID-19 pandemic across the US and Europe. This was the result of payers and pharmacies providing greater access to medicines by allowing 90-day refills and in some cases, early refills among other offerings. We expect this to reverse itself out over subsequent quarters.

Now turning to our expenses. Non-GAAP R&D expense was $1 billion for the quarter, up 8% compared to the same period last year, primarily due to the ramp-up of remdesivir, including manufacturing scale-up and clinical trial costs. Non-GAAP SG&A expense was $1.1 billion, up 4% compared to the same period last year, primarily due to higher promotional expenses in the United States related to our HIV products. As Dan highlighted, we completed our acquisition of Forty Seven this month. We currently expect to incur approximately $120 million in expenses this year related to Forty Seven, primarily in research and development. In addition, I’d like to highlight that the acquisition qualifies as an asset acquisition and as a result, we currently expect to incur approximately $4.8 billion in GAAP R&D expense, primarily related to in-process research and development.

Turning to our strong balance sheet. During the quarter, we generated $1.4 billion in cash from operations. We ended the quarter with $24.3 billion in cash and marketable debt securities. We repaid $500 million of debt, paid cash dividends of $874 million and repurchased 19 million shares of stock for $1.3 billion. I want to note that we paid approximately $4.9 billion in cash upon closing of Forty Seven in April. Our strong balance sheet and disciplined allocation of capital has positioned us to continue to grow and build our business, despite current environment and associated risks. We remain very confident in the durability of our business and expect to generate significant operating cash flow during 2020.

I’ll turn now to COVID-19 and its impact on our business. Like others, we have anticipated that there could be a short-term financial impact to our company and to the sector as a whole. We continue to carefully review our results to assess the potential magnitude of that impact. Towards the end of the quarter end in April, we did begin to see some effects on our business, primarily as fewer patients access health care and the number of new starts in HCV and HIV prevention began to slow. However, to-date, the overall effect on our business has been modest, and it remains unclear what the ultimate impact will be. Given this significant uncertainty regarding the duration and magnitude of the COVID-19 pandemic, we are actively planning for a number of scenarios. And we’d like to focus on our base case assumptions today, which we are making from data drawn from a number of sources, including epidemiologist, economists and public health officials.

First, these base case assumptions suggest the pandemic will peak between March and July. We would point a recent data from Johns Hopkins, which show trends reflecting a slowing of the rate of new cases since late March in the United States and a declining number of new cases in some critically affected regions of the world. Second, if the virus returns in the fall or winter, the impact will be lessened due to preparedness and hopefully the emergence of therapeutics, including potentially our own remdesivir. Third, the global economy will begin in recovery late in Q2 and a return to the pre-COVID dynamics will be underway by year end. We have of course considered external views that anticipate more or and less favorable scenarios, but we believe this base case provides the best foundation at this time to plan in this uncertain situation.

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Let me share a few qualitative perspectives on potential business implications of this scenario. Please bear in mind the forward-looking statement disclosures we shared at the beginning of the call. I’d also like to highlight again that we have added significant commentary throughout the investor presentation that posted on our website and we would encourage you to review those materials. There are three key takeaways from our perspective. First, we had a very strong quarter. Second, to-date the impact on our business has been modest. And third, we remain very confident in our long-term outlook.

That said, on the commercial side, driven by lessened health care provider access and fewer patient visits, we may see revenues adversely impacted in Q2 and potentially beyond. This would likely be different across our franchises with our HCV franchise disproportionately affected due to the acute care nature of that therapy. We believe that the majority of any revenue decrease in HCV revenue, due to the pandemic could be recouped in a warehousing type effect later in 2020 or into 2021.

In HIV, early signal suggested switches both for the treatment and prevention patients may be impacted by COVID-19, as people differ health care visits. Specifically in April, we are observing reductions in Descovy for PrEP initiations and lower switch volume. PrEP refills may also be affected, but it’s still too early to fully understand any trends here. In contrast, our HIV treatment business is less likely to be significantly impacted as we believe patients will continue to prioritize, refilling their prescriptions and access their physicians through telemedicine. In cell therapy, reduced access to authorized treatment centers could unfortunately result in critically ill patients having access challenges, which would impact the business.

Turning to clinical development. Like many others in our industry, we are pausing enrollment for most trials. The exception of this is studies, where patient outcomes are critically impacted such as our — such as trials of our HIV capsid inhibitor, in heavily pretreated individuals, who have few other treatment options and some of our type programs that have enrolled patients with cancer who are critically ill. Enrollment in these studies is at the discretion of the investigators. Overall, we expect reduced clinical development expenses in the short term. In addition, the dynamic could lead to delays and potential approvals for pipeline assets over the longer run. With challenge brings opportunity to health and as Dan described earlier, we are excited by emerging results in remdesivir as a potential therapy for COVID-19.

As we ramp up further development and manufacturing of remdesivir, we will incur additional costs beyond those forecast at the beginning of the year. The magnitude of this investment is dependent on the continued evolution of the data, the duration of the pandemic and other factors. The potential range of this investment for 2020 is upto $1 billion in the accounting treatment of this investment is dependent upon a number of factor, including potential regulatory approvals.

We are authorized by regulator authorities Gilead will focus on making remdesivir both accessible and affordable to governments and patients around the world. Given the continued uncertainty in the trajectory of the pandemic and in remdesivir clinical data, it’s premature to define what the right post donation business model is to create a sustainable long-term supply for global needs. In the context of a strong underlying business in Q1 results, we will continue to monitor the situation and expect to provide additional insights and outlook on our Q2 earnings call.

I’d like to close by thanking our team for their extraordinary efforts and for delivering a very strong first quarter during these challenging time.

We can now turn the call over to Q&A. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Michael Yee with Jefferies.

Michael Yee — Jefferies — Analyst

[Technical Issues] and Dan, if you’re there, [Technical Issues].

Daniel O’Day — Chairman and Chief Executive Officer

Yeah, I’m back.

Michael Yee — Jefferies — Analyst

Yeah. Hi, Dan. So my question is for you guys on remdesivir as it relates to [Technical Issues] can you just describe the inputs and how to think about what revenue to the positive remdesivir could have this year? What have been the impacts on that inputs into that? On expenses, you guys obviously don’t expense guidance, you kind of walked through that. You described the approach dollars for remdesivir. Maybe just walk through the inputs there and how to think about why would it be on the lower end and comment on that because it makes the model. Yeah, so talk to that [Technical Issues] Thanks.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks, Michael. Appreciate the question and sorry, guys, that I got cut off there before. Thanks, Andy for picking up. The only thing, I want to conclude with this my comments is probably the most important comment is that, really thank the colleagues throughout Gilead, that are working remdesivir and non-remdesivir projects are like, they’ve really kept the momentum going in quarter one and I’m humbled and proud to be working with them.

So Michael, thank you for the call. On the revenue side, it is just as Andy mentioned also, and I mentioned it’s too premature. There is a lot of moving parts right now. Our focus will be on making sure we come up with a sustainable model that allows us to provide remdesivir to patients around the globe that — is intent on providing access and affordability. We’re just now going through the clinical data, the demand scenarios, the regulatory approvals, all these things are essential for us to inputs into our plan about how that will work post the donation. So we can’t really give more insight into that at this stage, but certainly when we can, we will.

On the expense side, Andy, I mean, obviously you had mentioned already that up to $1 billion and I’m clear on how the accounting will occur, but perhaps you want to add something else to Michael’s question?

Andrew Dickinson — Chief Financial Officer

Sure, Michael. At this point, it’s too early to tell you where that’s going to fall in the P&L during number of scenarios. It could — those expenses could fall into cost of goods sold. As you know, there could be R&D expenses and in some scenarios, a portion of them could also be SG&A expenses. So at a high level, the expenses that we’re referencing as you would expect come from manufacturing predominantly into a lesser extent clinical trials. And I think that’s our best — best good faith estimate at this time based on what we know in terms of the expenses that we see, as we ramp up over the year and we’ll do everything we can to provide more color and commentary in particular on our Q2 earnings call.

Michael Yee — Jefferies — Analyst

I appreciate it. Up $1 billion of expenses and not knowing the revenue. It’s an interesting position. Appreciate it. Thank you.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks, Michael. We have the next question please.

Operator

Certainly, our next question comes from the line of Cory Kasimov with JP Morgan.

Cory Kasimov — JP Morgan — Analyst

Hey. Good afternoon, guys. Thank you for taking my question. Wanted to also ask on remdesivir, no surprise. I was wondering if you could talk about the formulation work that’s underway to potentially develop an oral and/or an inhaled version of the product like, how far along might you be in this front and when can we expect to see something more there?

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. Thanks, Cory. I’ll start out and maybe others on the call who want to add, but our focus as you can imagine, since January has been on ramping up the supply, particularly, so that we have a lyophilized [Phonetic] version that’s appropriate for intravenous administration, the clinical program all of that, so that’s really where we’ve been. At the same time though we have had a team just as with everything with this program, including the supply. We’ve had teams that have been really since the very day one in January been focusing on success. And so if successful, what — how else could we potentially develop this medicine. I think that’s been taken into account from the totality of the clinical trial program, looking at both critical, severe and moderate patients.

But likewise, we’ve done the same thing with other alternative delivery mechanisms, presuming success that might make it more convenient for patients or allowed us to broaden the patient groups that could benefit from a successful antiviral. And that work is — as you can imagine, still early, but we can say a couple of things. It’s not — this particular medicine, because it’s heavily first pass metabolized in the liver, is not really appropriate as an oral formulation. We’ve known that for years, probably a decade. But we are looking into things like subcutaneous formulation and potentially inhaled formulations.

And although it’s too premature to give you timelines on that, rest assured that we are — we’ve been actively working on those. And as soon as we can give some timelines, we will, to see now, particularly because of the efficacy that we’ve seen this week. We’ll continue to pursue those with a great sense of urgency. But timeline is a little premature, just know that we’ve been working on it now for several months. I don’t know Merdad, if you want to add anything? You’re, okay. Good. Merdad, is okay. Okay, Cory. I know you need more, but we’ll give you more as soon as we can.

Cory Kasimov — JP Morgan — Analyst

No, no. Fair enough. I appreciate you answering the question and good luck with continued progress there.

Daniel O’Day — Chairman and Chief Executive Officer

Thank you, Cory.

Operator

Thank you. And our next question comes from the line of Brian Abrahams with RBC Capital Markets.

Brian Abrahams — RBC Capital Markets — Analyst

Hey, guys. Thanks for taking my question. Two questions on remdesivir, if I could and I appreciate all the work that you guys are doing to bring this treatment to patients. First off, on the NIAID study, can you give us any sense of the proportion of patients who were involved in the interim? Is there any additional update now we should be expecting that could be a gating factor to availability and your level of confidence that differences in baseline risk factors, didn’t influence those results as may have happened in the China study. And then just secondly related to supply, any particular subsets of patients across the studies, where you may be seeing the most optimal benefits we might consider working with regulators to direct the AGEN2, while you’re scaling up? Thanks.

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. Thanks, Brian. Sorry, just to be clear on your second one related to supply. You said, is there any subset of patients? Can you just complete that one more time?

Brian Abrahams — RBC Capital Markets — Analyst

Yeah. Any subset of patients where you might be seeing more benefits — more optimal benefits across the study, where you might consider working with regulators to try and direct the agent to initially, as supply get [Speech Overlap].

Daniel O’Day — Chairman and Chief Executive Officer

In terms of like an allocation. Yeah, with limited allocation or limited. Yeah. Got it. Got it. Okay. I’m going to turn it over to Merdad and I’ll let Merdad take a stab at both of us please.

Merdad Parsey — Chief Medical Officer

Hi, Brian. On the first question, I — this is Merdad. On the first question, we have not seen a lot of the baseline demography in the sorts of data that would help in terms of answering your question on the NIAID study. So I think, we’re all going to have to wait for those data to get published and yet put out for us all to review. So I think that’s pending and we’ll look for that to come out.

In terms of patient subsets, I think our data and if you look at who’s been enrolled in the trials overall, I think we’re clearly looking at the hospitalized patient population. And we’re looking at patients who are requiring supplemental oxygen is the primary population that we’re after, including those that may either become ventilator or may start out mechanically ventilated. Certainly our data support that from our open-label trials. The NIAID study enrolled that breadth of patients. But we have not seen subgroup analysis of the different, different patient populations to give you clarity there. But we believe it will be in that fairly broad population early on.

Brian Abrahams — RBC Capital Markets — Analyst

Got it. Thanks for that.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks, Brian.

Operator

Thank you. And our next question comes from the line of Geoff Meacham with Bank of America.

Geoff Meacham — Bank of America — Analyst

Good afternoon, guys. I just want to say great job on the whole — to the whole team really for the remdesivir development. A couple of points here, on COVID-19, have you guys looked at other nukes for earlier stage patients? Just thinking about [Indecipherable] or I know you guys have a lot probably that is there that could be more applicable to, it’s a mild to moderate patients. And then on remdesivir access, is there a model to license out IP and our manufacturing. I’m just thinking about how to accelerate perhaps broader access outside the US. Thank you.

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. Thanks so much, Geoff for the thoughts, everybody at Gilead will appreciate your sentiments. Let’s start with COVID and the other nukes, I didn’t know other whether Merdad or Diana, you want to handle that? Not sure, how you going to.

Merdad Parsey — Chief Medical Officer

Sure. I think right now, this is Merdad again, Geoff. Thanks for the question. Right now, we do believe that remdesivir is the best molecule has the best potency against the coronavirus. Anything we do we look at and you know both we and others have been looking for other molecules that could have potency here. But remdesivir is certainly the most potent molecule that we have and that’s been our focus. We’ll certainly keep looking there. One of the reasons, we are focused on looking at alternative formulations for Remdesivir is to address the question that you asked, which is, how can we get to other patient populations, who may benefit from the drug as outpatients for example. And I think in the short run, I believe that, that’s going to be the best — the short to medium term, I think that will be the best approach for us to go. And then I think your second question was about manufacturing right?

Geoff Meacham — Bank of America — Analyst

Yeah.

Daniel O’Day — Chairman and Chief Executive Officer

I mean, Andy, maybe you want to — do you want to take this question as well and because you’re leading a group on this.

Andrew Dickinson — Chief Financial Officer

Yeah. And I’d be happy too. Hi, Geoff. Thanks for your comments. Look, on the manufacturing side, I’d say a couple of things at a high level. Is it again, our primary focus is on providing access to patients around the world. So just like we did with our HIV medicines and HCV medicines, we are deeply focused on this. We are — we have two separate work streams, one is working on our internal supply chain and making sure that we have a robust supply of starting materials intermediates and a strong manufacturing consortium with companies around the world. You’ve seen some of the references to that and Dan’s CEO letters and I would expect that will provide some additional information over the coming weeks and months.

We do have a second work stream where we are in discussions with large sophisticated companies around the globe, exploring the potential for other companies to help establish separate end-to-end manufacturing supply chains. The difficulty there is, you might imagine is, given the scarcity of some of the starting materials. We want to make sure that we don’t do anything to impact our supply chain given that, that is the quickest route be getting product to patients who needed all around the world. But we are looking at alternatives. It’s too early to give you any specific guidance or to tell you where we’re going to land on it. But we are working with a number of companies around the world that you and others know well to see what we can do together and if there is an opportunity to benefit patients in that way. So I’ll leave it at that and then you see.

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. That’s great Andy and appreciate your leadership there with your Business Development Head on working with manufacturing. I would just add that we’ve been a student of other small molecules in this type of setting whether it’s Tamiflu in the past and some of — in terms of some of the scale up and stockpiling that occurred there. Our students of our own work if you like within our HIV portfolio between the developed and the developing world. So we’re putting all that knowledge to work as we think about moving fast and wide in terms of our ability to produce supply but also thinking very thoughtfully about a global footprint here, which would allow for this to — as Andy, said have different geographic representation, which we think is going to be really important. So more to come on that, but we’ve had teams really focused on that day and night for the past several months, just to give you an idea of that. Thanks, Geoff.

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Geoff Meacham — Bank of America — Analyst

Okay. Thanks.

Operator

Thank you. And our next question comes from the line of Geoffrey Porges with SVB Leerink.

Geoffrey Porges — SVB Leerink — Analyst

Thank you very much and I can’t help echo the comments and appreciate all the great communication as well from down on down. So on remdesivir, I’ll ask a controversial question that’s no surprise. But Dan, Gilead has generated attractive returns for our investors and effective return on capital from treating hepatitis C and potentially nearly eliminating hepatitis C from treating HIV and turning it into a chronic disease and building a really important global stockpile, an anti-viral for influenza. So what’s special about COVID? Should we assume that the capital returns and the profitability for providing a global treatment for COVID long-term, after the first 200,000 or 300,000 courses are provided donation basis. Should we assume the returns are going to be similar to the returns that you’ve generate in other parts of the business? And then just quickly, can you give us an update on filgotinib and can you launch this on a virtual basis or do you expect to be out of the virtual basis by the time that approval comes?

Daniel O’Day — Chairman and Chief Executive Officer

Terrific. So, Johanna, I’ll let you handle the filgotinib, but let me start with your first question, Geoff, and thanks again. And obviously, we are conscious of the fact that this is unique, and this is different. You mentioned some parallels to HIV, HCV even Tamiflu. But there’s been no other time like this in the history of the planet that any of us been a lot. In terms of the far-reaching effects of this pandemic, both medically from the patient perspective, most importantly but also economically. And so I think there is no guide book out there, there is no rule book out there, other than that we need to be very thoughtful about how we can make sure we provide access of our medicine to patients around the globe.

And do that in a sustainable way for the company, for US shareholders and we acknowledge that. And so point’s well taken and I would — I guess the short answer to your question is, I don’t think there is a precedent for this. And so, we understand that our responsibility and we understand our responsibility to a variety of different audiences as we approach this. So we’ll be working back with you and we will certainly be getting feedback from different individuals as we evolve this and as we understand more data around this. But rest assured, we understand our responsibility.

With that I’m going to turn it over to Johanna, pleased to talk a little bit about filgotinib.

Johanna Mercier — Chief Commercial Officer

Sure. So, Geoffrey. I think just a quick update on filgo. We basically have hired all of our home office personnel, both in the commercial, medical standpoint. We’ve hired our sales leadership, field leadership as well and we’re monitoring the situation really closely, to be honest with you, because nobody really knows when it ends or what’s the new normal and we’re not begin. And so we’re just kind of monitoring that and planning for success to be honest with you, to make sure that we are ready for launch for the second half of 2020, across all of the market where we will get — we hope to get regulatory approval with the US, Japan, as well as Europe towards the end of this year.

I think from a virtual launch standpoint, I think those are considerations that we’re looking at in scenario planning. And we haven’t made a decision, obviously that will be linked to the timing of this pandemic. Having said that, I will also tell you that a lot of our teams are doing virtual right now. Many of the markets are doing remote detailing, virtual speaker programs, etc., and working through this environment despite obviously the offices and patients not being open at this point in time. So we’re working through all that and looking at the different scenarios. But I think we need to know a little bit more information on the timing of this pandemic and how that plays out towards the end of this year.

Geoffrey Porges — SVB Leerink — Analyst

Great. Thanks very much for the answers.

Daniel O’Day — Chairman and Chief Executive Officer

Thank you, Geoff.

Operator

Thank you. And our next question comes from the line of Matthew Harrison with Morgan Stanley.

Matthew Harrison — Morgan Stanley — Analyst

Great. Good evening. Thanks for taking the questions and thanks for all your work with remdesivir. I’m going to ask you on HIV. One, can you just talk a little bit about PrEP conversion with Descovy. I think you said you’re at 38%, which is actually fairly close to the target you guys were talking about. Do you think, you can do better than that or not this year. And then I also noticed, in the back of the slides, you were talking about a long-acting bictegravir that you’re putting in the clinical studies maybe you could comment on that. Thanks

Daniel O’Day — Chairman and Chief Executive Officer

Terrific. Thank you so much Matthew for the comments. So, Johanna, yeah, why don’t you start and perhaps Diana can add on the development side.

Johanna Mercier — Chief Commercial Officer

Okay. Great. Thanks for the question, Matt. So HIV overall businesses, of course, another quarter, solid quarter again this year. It’s the 8th consecutive quarter of double-digit growth and that obviously driven by both the treatment and the PrEP business. So your question specific to Descovy, yeah, so we just hit 38% and so tracking exactly to our plan, right. We had said anywhere between 40% to 45% towards the end of this year. So we feel confident with that number.

Obviously, as Andy mentioned in his opening comments, there has been a little bit of a slowdown from a switch standpoint in the PrEP market for obvious reasons, because patients are not going to the physician’s offices. But it’s modest thus far and we think a lot of those will be able to recoup towards the end of this year when a pandemic got lift. So we feel, still very confident that, yeah, we think we’re going to be in the range of the 40%, 45% that we had originally set out and maybe even, if all goes well, and we can get out of pandemic a little bit earlier maybe a little bit north of that.

So Diana, maybe to address the long acting?

Diana Brainard — enior Vice President, HIV and Emerging Viral

I’d be happy to. Hi, Matt. So, as you probably know, we’re really pursuing multiple short-term goals for developing a partner for our capsid inhibitor. We are looking at molecules across different classes and part of that is looking at the integrase [Phonetic] inhibitor class and we’ve got really what’s the best in class ideal integrase inhibitor right now with bictegravir. And so we’ve — one of our efforts has been in formulating that such that it could be a long-acting injectable and potential sort of first generation partner for our capsid inhibitor. We’ve made a lot of progress as you know, we’ve got great formulation team here. And we’re on the verge of getting that into the clinic now most Phase 1 centers globally really have been shut down or pause, so the timing there is a little bit uncertain, but we’re ready and helping to have data by the end of the year.

Daniel O’Day — Chairman and Chief Executive Officer

Right. Thank you, Diana. So why don’t we go to the next question. Thanks, Matt.

Operator

Our next question comes from the line of Umer Raffat with Evercore.

Umer Raffat — Evercore — Analyst

Hi. Thanks so much for taking my question. Dan, we really admired Gilead’s efforts during the pandemic and the drug donation etc. But as we go beyond that, it does seem like there will be a commercial business in the broader COVID landscape. And I don’t want to peg you to $1 number. But I do want to ask this, do you envision Gilead’s product offerings for COVID being beyond remdesivir. For example, PI combinations and/or even partnering with the vaccine companies of sorts. I’m just trying to understand how you envision this category for Gilead, if I may.

And Merdad, if I may ask you a quick two part question. First, do you have a certain long concentration in mind that you’re targeting. And is that much less than the 20 micro-molecules those laid it out in the New England Journal paper. And do we have any data from human on what long concentrations are we actually seeing with remdesivir, with the dose that’s in the clinic. Thank you so much.

Daniel O’Day — Chairman and Chief Executive Officer

Thank you, Umer. Thank you for your comments. Thank you for your thoughtful work. Yeah. Getting back to remdesivir, and how do we see this playing out over time. Again, I’m going to have to come back to some of the basis of what I said before, which is we really need some time now to reflect upon a very volatile changing situation to determine both on a clinical side, regulatory side, pandemic side, epidemiology. What’s the right sustainable model is, rest assured that we will come back to you as soon as we can digest that and as soon as actually a little bit more time passes, which was also one of the important reasons for the donation to allow us to attain more information as well. What that’s sustainable plan and model is.

But I’ll just make a couple of comments on what you said and results have echoed by Dr. Fauci, yesterday, which is with NIH [Phonetic] to be results and the highly statistically significant reduction in time to recovery. This now changes the landscape if you like for drug development within COVID-19. Being that one has to now think about comparing to remdesivir and/or looking at adding to remdesivir, which I think is exactly what the NIH is going to do now.

And I’m sure all of our collaborators within the drug development space, we have been working with them, we’re going to continue to work with them, and the most thoughtful hypotheses around how we might be consider just as one reflects upon the HIV building decades ago that remdesivir become kind of the base therapy and one looks to try to improve symptomatology improvement, mortality improvement, expanding patient populations. And so that is yet another factor that will go into how we determine — how best to create a sustainable solution for remdesivir. But clearly, all those things we have been thinking about and now we have to accelerate, now that we have these trial results, so more to come on that.

I will have Merdad you answer the lung question, if you could please, Merdad?

Merdad Parsey — Chief Medical Officer

Yeah. Thanks, Dan. Hi, Umer. So what I would say is the concentration that we’re looking for, as you know, we think our EC50 in human cells is in the 10s of nanomolar range. And we know our serum concentration gets in the micromolar range. And so we should be more than adequately covered or by achieving those levels with the current dosing paradigm that we have probably by an order of magnitude or two. Certainly, in the serum and based on model data in non-human primates as well as mice, we see more than adequate concentrations getting into the lung of those animals and in vivo efficacy in those animals. And I think the clinical benefits, we’re seeing suggest that that’s exactly what, what’s happening in humans as well. So I think, we’re pretty comfortable with where we are in terms of both dosing and exposure, including in the lung.

Umer Raffat — Evercore — Analyst

Thank you very much.

Daniel O’Day — Chairman and Chief Executive Officer

Thank you, Umer. Okay. We have the next question please.

Operator

Our next question comes from the line of Alethia Young with Cantor Fitzgerald.

Alethia Young — Cantor Fitzgerald — Analyst

Hey, guys. Thanks for taking my question and thank you for your contribution and solving the world’s problem. Maybe just one and half for me. Were you surprised, I guess with the severe kind of working as it did with an anti-retroviral that you kind of think that you might need to have people kind of earlier. And the virus for it to work and do you think it works better there. And then the second question is just a little bit around HIV. Are you seeing buying patterns changing in the public markets like the Medicaid, the presence, etc., etc. Thanks.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks a lot, Alethia, again for your comments. I’m going to turn the first question over to Merdad and the second one over to Johanna. But just as I do on your first question. And I think Merdad can fill in the details here. But there’s been a surprising consistency across all the different data elements in our clinical program, from compassionate use to interrogating what we know about the China trial to the severe trial to the NIAID trial. And I think that is maybe not something that’s completely well understood out there and I think Merdad as a part of your response. I think it’d be helpful for you to reflect upon that as well. If it’s okay.

Merdad Parsey — Chief Medical Officer

Yeah. I know, of course, I think Alethia, we all — we’re using the parallel constructive influenza for our thinking around remdesivir, right, which was — you got to get in really early given the viral kinetics in influenza and getting into a probably won’t have much of an impact. And I remember in investor call a couple of months ago, where I said that as well and that is certainly our expectation. However the wildcard here and I think we’re still learning is what are the viral kinetics in patients with this virus. How long does that last and how quickly does it go up, and how quickly can we have an impact on it.

So I think the data or the data essentially, we are seeing efficacy across both patient populations. But also across trials that are really all tracking in the same direction as Dan alluded to. So even if you look at the China data, the hazard ratios for improvement are consistently positive. The study was under powered and I think the hazard ratios will probably see from the NIAID study, you’re going to be in the same ballpark. But with the an appropriate sample size, they’re highly statistically significant. Same — similarly, I think when we look at the mortality data, when we look at all of those different factors. This virus seems to be behaving differently. remdesivir seems to be having efficacy and relatively broad patient population and so I think we’re learning as we go.

We’ll learn more as more data are generated, right? We have our moderate data coming up, where it will be — we’ll be looking at it and even less severely ill patient population. So, there’ll be more data coming out in that population that may add to our knowledge base here to understand the spectrum. And as we talked about earlier, understanding the efficacy in the subgroups in the NIAID study will be really interesting in this and we don’t have that information yet. So I think all of those data will contribute to our overall understanding of — do you — how early do you need to be in, to patients who have symptoms for less time do better. Those are certainly the trends, but there certainly seems to be benefit even in patients who have longer duration of symptoms, right now.

Maybe I’ll hand it out to Johanna for the HIV question.

Johanna Mercier — Chief Commercial Officer

Yeah. Thanks, Merdad. So Alethia, just a couple of things. We have a couple of moving pieces in the first quarter for HIV. So I just want to — because it’s not just one piece that’s making the difference here. And so the first one is obviously the seasonal inventory, right. There’s a Q4 load up and then Q1 draw-down. So that definitely happening in Q1. Then, we also had towards late March like I’m sure many did as well. The prescription number of days per prescription rise and inventories rise towards end of March. So had a bit of a mix of those two things. And specifically to government channels that you’re acting the buying pattern. We do normally see in Q1, a little bit more of a higher mix towards government channels in the first quarter, and that obviously negatively impacts our payer mix. So that is definitely happening in the first of this year.

Daniel O’Day — Chairman and Chief Executive Officer

Right. Thank you, Johanna. Thank you, Alethia. Can we have the next question please.

Operator

Yes. Our next question comes from the line of Mohit Bansal with Citigroup.

Mohit Bansal — Citigroup — Analyst

Great. Thanks for taking my question. And I would also add my appreciation for your efforts against COVID-19. A quick one from my side, if you can help me. If you can — can you please update us on your collaboration programs Galapagos timelines at this point, both for IPF as well as osteoarthritis. And specifically on osteoarthritis program, how important is it for Gilead to see the improved — see improvement in pain when we see the data for you to take a decision to opt in there. Thank you.

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Daniel O’Day — Chairman and Chief Executive Officer

Thank you. Mohit. I’m going to turn it over to Merdad. Thank you, Merdad.

Merdad Parsey — Chief Medical Officer

Yeah. Thanks for the question, Mohit. So with the IPF program, there is a scheduled interim analysis that will be coming up early next year, and we think things will stay on track again, I’ll put some error bars around the pandemic. But I don’t think that should be impacted at least today. So that will be something that will be clearly looking forward to and will be important to how we proceed there. In terms of the osteoarthritis, it’s a great question, I think while seeing structural improvement is going to be really important and interesting, certainly thus far the regulatory guidance has included, looking at symptoms like pain for improvement. So we can push on that.

Obviously, if we see structural improvement and we haven’t been powered for example for pain, then we’ll have to look at that and think about what the implications of that are and discuss it with the regulators. So I think what we’ll be looking for is directionality on all the endpoints that we will be measuring to make the smart decision in terms of moving forward with that program.

Mohit Bansal — Citigroup — Analyst

Okay. Thank you.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks, Mohit. So let’s go to the next question, please.

Operator

Our next question comes from the line of Robyn Karnauskas with SunTrust.

Robyn Karnauskas — SunTrust — Analyst

Hi, guys. Thanks for taking my questions. And again, great work on all the things that you’re doing to help us with COVID. So there’s a lot of talk about remdesivir being approved for emergency use. And can you just clarify, does that mean at that point in time versus now or its compassionate use you actually could charge for the drug. And when you say affordable, does that mean positive margin for the product? And lastly, from a sales point of view, help me understand what would it take for some of these drugs are — your drug on top of other drugs to work in a ventilator patient, do you stick theoretically? Thank you.

Daniel O’Day — Chairman and Chief Executive Officer

Great. So I’ll turn the ventilator question over to Merdad and just a second, but thanks so clarify the EUA. So yes, I mean under emergency use authorization, one could charge for the product. We made a decision as you know to donate 1.5 billion files, which is the entirety of our supply through the early summer. And that’s for a variety of uses, right. I mean that’s for clinical trials, as one would expect not to charge for those of course compassionate use, EAP and other countries, but also available is that supply for regulatory approvals around the world. And we’ll allocate accordingly and so as regulatory approvals come online. So yes, it is possible to charge.

I would just say that our goal here is to get a full approval for remdesivir. We feel the data supports that and in EUA therefore is a step to really a more formalized approval. The reason the agency and we are talking about that is these are extraordinary times right. So weeks would make a difference to be able to get medicine to the patients by an acting in the EUA, if that’s what the FDA chooses to do, prior to another form of approval. And so it’s a step-wise approach which allows us to immediately address humanitarian need, while still pursuing all the aspects of a normal approval, which we are doing with the FDA. So I think that’s probably the most important point.

And again, I know Robyn and trust us, we will be answering your questions and the sustainable model for remdesivir in the future, in the near future. We just don’t have the answers yet and we probably — we deeply respect and appreciate the fact that when we get into millions of doses, we have to have a sustainable economic model that works here and that achieves access to — affordability to patients around the world. So more to come on that. If I could turn it over to Merdad on the ventilated treatment approach.

Merdad Parsey — Chief Medical Officer

Yeah, Robyn. Excellent question, thanks. The criticality of this comes down to a timing question, right? It really comes down to how long is viral replication ongoing in the lungs of patients and how quickly do patients deteriorate to needing mechanical ventilation. Certainly, what we are seeing is that patients are very, very rapidly deteriorating, some patients deteriorate rapidly well. And so, getting them antiviral therapy in that timeframe, where it seems that there is still viral replication going on, certainly seems to be benefiting those patients. And probably what’s going on in this speculation on my part is, by limiting the viral replication, you’re going to limit the inflammation, you’re going to reduce the number of people who develop lung injury and you’re going to get them off the ventilator faster.

So the discharge rates that we’re seeing where the people are being discharged four days earlier for example in the NIAID study, underlying that are patients who are de-escalating need for oxygenation. And that leads them to getting on [Indecipherable] more quickly. And I think there is a time element in all of this that I think is probably where were benefiting these patients. Certainly, if you talk about people who’ve been ventilated for a week or two weeks, there the question of whether an antiviral would be beneficial. I think seems more difficult to tie into what’s going on. But again, it comes down to understanding the viral kinetics here and that’s a work in progress, I think for all of us.

Robyn Karnauskas — SunTrust — Analyst

Thank you.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks a lot, Robyn. Can we have the next question please?

Operator

Our next question comes from the line of Salim Syed with Mizuho.

Salim Syed — Mizuho — Analyst

Hey, guys. Thanks so much for the question. And I echo all my peers comments on the great work you guys have done on remdesivir. Dan, maybe just one for me, high-level question here around your involvement, maybe with folks in Washington, your discussions there. So obviously like biotech for some time has been about, from a Washington perspective, drug pricing and the rhetoric has been pretty negative. I’m wondering if the rhetoric has changed at all in your view, when you’re dealing with folks there. How it’s particularly changed given you guys are so key to this remdesivir and the solution to COVID19.

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. Thanks, Salim. Yeah, these are unusual times for all of us. I’m sure all of your areas of interests, as well as ours. And so, what I can say is that, I think people have come together in a variety of ways and certainly that’s also occurred to a certain degree in Washington. And I have spend a decent amount of time in Washington over the past several months, certainly before the shelves are in place. And I think even then, there is some change in the rhetoric. I think for highly innovative research-based companies that have immediately kind of shifted their efforts to solutions in the coronavirus. It’s pretty impressive actually to many of the peers in the industry that I stay in very close touch with, have spared no expense to kind of pivot and shift.

So I think at the end of the day, I think this will certainly help the industry’s reputation. I think the ability to solve a human crisis like this, because of the decades of investment and the at-risk investment that’s done by so many companies. People I think will — and the general public will see that and whether that’s treatment different types of treatments or vaccines. I think that it will be the case. But certainly, to your point, I think the tone is different in Washington. I think people are very appreciative and concerned about finding solutions here. And it’s brought us all together, which I think is a good thing.

I’m not suggesting that, there won’t continue to be focus and pressure on drug pricing, of course, there will be. And we continue to work appropriately to make sure that in particular, the patients that are bearing the brunt sometimes of some of the pharmaceutical pricing that legislation has put into place that supports that. And improves that for patients and that we lean in as an industry and as a company to give more that flows through to patients. So all of those principles, I think still apply. But it’s been done now in a way, where we can have an appreciation for the innovation the industry brings.

So more to come and a lot’s of lot still to happen this year with the election coming up and with other things. But I think from a Gilead perspective we stay focused on innovative medicines and making sure we have access programs on leaning into legislation that supports the innovative industry and that supports reducing patient out of pocket costs and that will be our focus accordingly, Salim, so hope that gives a little bit of an insight.

Salim Syed — Mizuho — Analyst

Super helpful, thanks. Thanks, Dan.

Daniel O’Day — Chairman and Chief Executive Officer

Thank you. Can we have the next question please?

Operator

Thank you. Our next question comes from the line of Tyler Van Buren with Piper Sandler.

Tyler Van Buren — Piper Sandler — Analyst

Hey. Good afternoon. Thanks for everything that you’re doing and have a couple of more remdesivir questions, of course. Given your experience — your expertise in viral infections and all the natural history that you guys are collecting in real time. Wanted to ask you about your best — latest thoughts on the nature of COVID-19 recurrence. Your base case assumes a peak potentially by July, return in the fall and winter, but a lowered impact. So is it possible to provide a rough quantification of what that lower impact might be? And then also and subsequent years, is this something that you would expect in that base case to peter out or to be with us for potentially the next decade or two.

And then the second question is just following up on your earlier comments on FDA interactions and potential pathways to approval, which was helpful. Have you guys had labeling discussions? Is there any color you could provide there?

Daniel O’Day — Chairman and Chief Executive Officer

On remdesivir?

Tyler Van Buren — Piper Sandler — Analyst

Yeah.

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. Okay. Sure. Thanks, Tyler again for the comments and I might ask if Andy and Merdad want to comment on the first question. Let me start with the second. So yeah, we’ve been in constant dialog with the agency on remdesivir. I just have to really also say how thankful we are for the FDA and other members of the government the coronavirus task force that have really made themselves available, really literally all the time, when we need them and vice versa so it’s been a very good collaborative relationship.

In terms of remdesivir, and the interactions with the FDA, I mean, we have been working with them on the submission. They’ve been open to receiving parts of the submission, which has been very helpful under a normal process, plus is the whole EUA process that kind of goes on top of that. So yes, the answer is and you can imagine that obviously — that’s been going on for weeks and actually a couple of months now. But in the past 48 hours, it’s increasing essentially. So we are — and the team is in constant kind of Information Exchange with the agency right now and they’re getting information from us, obviously from NIH and the NIAID trial and there’s a big sense of urgency here. I think FDA understands the importance of reacting quickly to this. And so it’s intense right now and we think the FDA will move quite quickly on the decision — on the labeling side.

So back to the lower impact in the base case, I don’t know Merdad from a scientific perspective or Andy, if you want to provide any other — I think we don’t have a crystal ball I guess.I would say,

Merdad Parsey — Chief Medical Officer

Yeah, I think, as you know, Tyler, we are as much a consumer as others. I think we are obviously our data, our snapshot into what’s going on. But we use for our modeling, we use the external epidemiology data and use that right now to get the broader picture. So I don’t think we have any unique insights today that don’t rely on the same sources that everyone else. So that’s I think where we are, obviously as we capture more data and maybe that will change. But today I think that’s where we are.

And I’ll just echo what Dan said, this has been an unprecedented time in terms of our interactions with the regulators, both here in the US as well as outside the US. It’s been really impressive and truly collaborative, working with NIH and the FDA in parallel over the past couple of months. We talk constantly and the same is true with the EMA, same is true with Japan. We’re talking to all the regulators in parallel. So it’s been a pretty unique situation and I think everyone understands the gravity, so that’s been very helpful in moving forward collaboratively.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks, Merdad.

Tyler Van Buren — Piper Sandler — Analyst

Thank you very much for taking the questions.

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. Thanks, Tyler. Appreciate it. So, we have time for one last question. Operator, we can have the last question that would be terrific.

Operator

Our last question comes from the line of Phil Nadeau with Cowen & Company.

Phil Nadeau — Cowen & Company — Analyst

Good afternoon. Thanks for fitting me in. And let me add my appreciation for your diligence in attacking COVID. Just two more questions on remdesivir. The first is on the upcoming data from the simple trial, the model trial due in May. Can you remind us how the enrollment criteria endpoint definitions differed between the NIAID trial and that upcoming dataset in differ should we expect similar data or are there notable differences? And then second, just a follow-up question on Tyler’s, on the FDA approval pathway, Dan your answered to Taylor’s question suggests that you may not need any more data to get a formal FDA approval, the NIAID trial might be sufficient. Is that your current understanding of your FDA dialog?

Daniel O’Day — Chairman and Chief Executive Officer

Yeah. I’ll let Merdad also discuss. So yeah, I’m just — look the discussions are still ongoing in terms of what’s required for formal approval. But I meant to infer earlier is that the NIAID data or demonstrate safety and efficacy at a highly statistical level, right, which is usually the barrier for a full approval. So that’s what we’re working with them on and I don’t want to get ahead of the agency on that, if that’s, okay. So, but again I do believe that there is most likely kind of a two-step process, the potentially in EUA being granted and then moving on to the full approval. Having said that, can I turn to Merdad or Diana? It’s Merdad, okay, on the first question.

Merdad Parsey — Chief Medical Officer

Yeah, I was actually going to see if Diana wanted to answer that question.

Daniel O’Day — Chairman and Chief Executive Officer

Okay. Yeah. That’s great. Diana. Thank you.

Diana Brainard — enior Vice President, HIV and Emerging Viral

Sure, okay. Yeah, so in terms of endpoints, the NIAID study looked at time to clinical recovery. You said the [Indecipherable] retinal scale and the ordinal scale is really tracking for most of the major clinical trials right now, but as our understanding of the disease has evolved. The types of endpoints using that scale has evolved. And so NIAID changed to time to clinical recovery, which basically means no longer requiring medical care within the hospital getting off of oxygen or largest charge. In our moderate study, we’re looking — we’re using the ordinal scale as well. But we’re looking at the day 11 distribution along that ordinal scale.

So similar to what we did in our severe study, but looking at day 11 instead of day 14, recognizing that we’re looking at our population that’s less sick. So the moderate study is looking at patients who are hospitalized, but they’re not hypoxic, they’re not requiring oxygen. The NIAID study enrolled patients from starting there, but all the way through mechanical ventilation. So slightly different endpoints or slightly different patient populations and most importantly, really looking at different questions, we’re looking at treatment duration, they’re looking at primary safety and efficacy with the placebo control.

Phil Nadeau — Cowen & Company — Analyst

That’s helpful. Thank you.

Daniel O’Day — Chairman and Chief Executive Officer

Thanks a lot, Phil. So with that, I think we’ll turn the call over to Doug to close. But, let me just say, thank you very much to all of you and we really appreciate your trust and confidence in Gilead and we’ll continue to do our best throughout what we do for patients and certainly for COVID-19. So with that Doug, do you have a last word?

Douglas Maffei — Investor Relations

Thank you, Dan. And thank you all for joining us today. We appreciate your continued interest in Gilead and the team here looks forward to providing you with updates on our future progress.

Operator

[Operator Closing Remarks]

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Earnings reports to watch for the week of Nov. 23

After starting the week on a positive note, major stock indexes witnessed volatility and slipped mid-week. Meanwhile, the S&P 500 index regained a part of the lost momentum and closed

US retailers and the holiday season – TJX Companies (TJX)

The TJX Companies Inc. (NYSE: TJX) saw sales slightly drop during the third quarter of 2021 while earnings benefited from lower tax rates. Open-only comp store sales were down 5%

Usio: An under-the-radar fintech firm

Value investors have long viewed the fintech industry as a gold mine of opportunities in the years to come, with payment processing services carrying a fair share of interest. Those

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