Home / Business / Gilead Sciences Inc (GILD) Q1 2020 Earnings Call Transcript

Gilead Sciences Inc (GILD) Q1 2020 Earnings Call Transcript



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Gilead Sciences Inc. (NASDAQ: GILD)
Q1 2020 earnings call
April 30, 2020, 4:30 p.m. ET

Content:

  • Prepared comments
  • questions and answers
  • Call participants

Prepared comments:

operator

Dear Sir or Madam, Thank you for standing by and welcome to the Gilead Sciences earnings conference call for the first quarter of 2020. [Operator Instructions] After the presentation of the speakers there will be a question and answer session. [Operator Instructions]

I am now pleased to introduce Doug Maffei, Senior Director of Investor Relations.

Douglas Maffei ̵

1; – Investor Relations

Thank you Andrew and good afternoon everyone. Shortly after today’s market close, we released a press release with the results for the first quarter of 2020. The press release and detailed slides can be found in the Investor Relations section of the Gilead website. Speakers for today’s call are Daniel O’Day, Chairman and Chief Executive Officer; and Andrew Dickinson, chief financial officer. Also present is Johanna Mercier, Chief Commercial Officer; Merdad Parsey, Chief Medical Officer; Christi Shaw, Kite’s Chief Executive Officer; and Diana Brainard, SVP and head of our therapy area for HIV and emerging viruses.

Before we begin our prepared comments, I would like to remind you that we will make forward-looking statements, including risks and uncertainties related to the impact of the COVID-19 pandemic on Gileads’ business and earnings. Plans and expectations regarding products, product candidates, financial forecasts and the use of capital, as well as financial guidelines for 2020, all of which contain certain assumptions, risks and uncertainties that are beyond our control and may cause actual results to differ materially from these statements . For a description of these risks, see 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 such forward-looking statements. Non-GAAP financial measures are used to help you understand the underlying business development of the company. The reconciliation between GAAP and non-GAAP can be found in the earnings press release and on the Gilead website.

I will now forward the call 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 was an extraordinary week for Gilead, given the great news about our investigation into Antiviral Drug Remdesivir. The news shared yesterday that the data shows the potential of remdesivir to reduce the pandemic burden is the result we all hoped would be possible. We are incredibly humble to think about what this message could mean for patients and communities.

First of all, I would like to thank everyone who has contributed to getting Remdesivir to the point, including everyone involved in a joint clinical trial, investigators, the government, hospitals, and most importantly, the participating patients. I would like to acknowledge our internal teams that have been working on Remdesivir day and night for the past three months, after years of research long before the outbreak began. Due to the Remdesivir news, the original focus for today’s call has shifted somewhat. I am sure we have many questions about the results and the next steps. We’ll give an overview of the strong first quarter for Gilead, but with a short series of opening comments so we can leave more time for questions.

I’ll talk briefly about the quarter and Remdesivir before I call 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 joined us today to answer your questions at the end of the call. Gilead was built to withstand significant challenges. There is short-term uncertainty for all of us, but the solid foundation Gilead has laid over the past 30 years and our focus on transformational therapeutics give us confidence in the long-term consistency of the business. We will do our best to give you a clear picture of where we are and what we expect from the short term impact of COVID-19, while recognizing that, as we all know, this is an uncertain time with many Are unknown. Last but not least, how long the epidemic will last.

So, as we move into the quarter, I will use the framework we introduced earlier this year, with the three pillars that will shape our future, a strong core business, our internal pipeline, and additional growth opportunities that our strategy enables will . Our performance in the first quarter again demonstrated the strength of our core business with double-digit growth in HIV. We have all achieved and even exceeded our goals. Revenue for our HIV franchise grew 14% year over year. This was driven by both treatment and prevention. With Biktarvy remaining number one in the US for prescribed HIV therapies during the quarter and approximately 38% of PrEP patients taking Descovy.

What I would say generally about where we are in HIV is this. We are very confident that our products are competitive and that we are leaders in HIV. In order to complete the picture in our core antiviral business, we were able to generate sustained sales with our HCV franchise in the last quarter. We have gained market share again since the introduction of approved generics in the USA and now hold around 61% of the shares through Asegua and Gilead.

So when I move from our core business to our pipeline, I will only give a brief overview. Further information can be found in the context of our earnings documents for the first quarter in the Investor Relations section of our website. As you know, filgotinib is under regulatory review in the U.S., Europe, and Japan. It is a possible treatment for rheumatoid arthritis. Our teams are preparing to start a competition and we stay in close contact with regulators to understand the impact that COVID-19 could have on review schedules.

In the area of ​​HIV, we made progress in our pipeline and shared important data at the Virtual CROI conference with our innovative, long-acting antiviral and HIV healing programs to strengthen our long-term commitment to people with HIV. In cell therapy, the FDA accepted Kite BLA for Kite-X19 for the treatment of relapses and refractory mantle cell lymphoma in the first quarter and gave a priority check. As you may recall, the European Medicines Agency evaluated our application in January. This is a really important step forward. Patients with relapsed and refractory mantle cell lymphoma, a rare form of non-Hodgkin’s lymphoma, need new therapies. If approved, Kite would be the first company with two cell therapies on the market.

I mentioned our strong core business and continued to develop 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, which was completed earlier this month. The acquisition of Forty Seven is a good 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, would set a high standard as we focused our business development efforts on clinical-grade assets such as Magrolimab that we are gaining as part of this acquisition .

We are working to integrate the teams and programs, a collaborative effort that I am leading with Mark McCamish, the CEO of Forty Seven, with the aim of ensuring a smooth process with Magrolimab and defining a working model that is continuous innovation supported. Next month, researchers will virtually share data on our next-generation cancer therapies at ASCO, including Magrolimab and a number of abstracts that highlight the kite cell therapy portfolio. The presentations at ASCO underline the strength of our scientific approach in immuno-oncology and we look forward to sharing these latest research results.

Beyond 47, our business development team remains active. Last month we announced three partnerships, a collaboration with the second genome to identify biomarkers and potential new drug targets in inflammation, a license agreement between Kite and Teneobio for dual CAR-T therapy, and a three-year collaboration with Onko-Innate that discovered Cancer immunotherapy. Overall, we are maintaining our momentum and I am happy with the progress we have made this quarter.

I will now contact remdesivir. Yesterday’s study results from the randomized, placebo-controlled, Phase 3 NIAID study and from our own open, simple, Phase 3 study in patients with severe disease are important advances as we try to understand the role remdesivir could play in the relief from COVID-19 around the world. These studies are part of a series of clinical trials to assess the effects of remdesivir. We design the clinical research program to ask multiple questions at the same time, including which patient groups are most likely to respond and when and for how long.

From the placebo control to the open label, different study designs were used to answer very specific questions. We expect the responses to be published around the same time and, taken together, to give a clear picture of how remdesivir can best be used in patients. Yesterday we answered important questions with the first results of the NIAID study and simple studies. The NIAID data showed that patients with COVID-19 who received remdesivir recovered faster than similar patients who received placebo. The results of the simple study sponsored by Gilead address a critical question about dosage. The data from the first of the simple studies showed similar clinical improvements in patients with severe COVID-19 symptoms, regardless of whether they received five or ten days of treatment.

The ability to shorten the duration for critically ill patients is very important. This means that patients can go home earlier, free up hospital resources and of course this has a positive effect on our care. We calculated to have 1.5 million doses by the end of May, which corresponds to 140,000 treatment courses over a 10 day treatment period. Gilead’s simple study suggests that we may now be able to significantly increase the number of courses available with five days of treatment for certain patients. As we have already announced, we are honestly donating all of our offerings as this is the right thing to do at this time and the human health needs are related to the pandemic.

As you know, we have ramped up production since January, significantly reduced lead times, and expanded our global partner network. As additional raw materials become available, we will see an exponential increase in supply in the second half of this year. We hope to have produced enough care for more than 1 million patients by the end of the year. We are also working to build a global consortium of pharmaceutical chemical manufacturers to expand global capacity and production. It is imperative that countries work together to ensure adequate care for people around the world, and we look forward to this joint effort.

For access and allocation, we work closely with governments and the health system to provide access. We intend to assign our available offerings based on guiding principles that aim to provide worldwide access for eligible patients who are in urgent need of treatment. We are aware that there is still a long way to go to find medical solutions to end the pandemic. And we will continue to work with regulators to find the best way of remdesivir. At the same time, we all at Gilead are relieved and grateful that our efforts have led to remdesivir – let this important advance come at a time when we all need a beacon of hope.

Before passing the call on to Andy, I would like to emphasize again how thankful we are for partnering with many groups outside of Gilead to support the work on Remdesivir. Cooperation during this pandemic was crucial [Technical Issues]

Andrew Dickinson – – CFO

It sounds like we lost Dan. I’m just going to end Dan’s comments. We also want to say how proud we are of how committed our employees are to the needs of patients. Those of COVID-19, as well as those with diseases such as HIV, viral hepatitis and cancer, whose medications depend on us. With that, I will turn to our financial comments and then move on to questions and answers.

Good evening everyone. My name is Andy Dickinson, I am the company’s CFO. Before I start, I also want to acknowledge the incredible work of our 12,000 employees and what they do in these challenging times. Their commitment and resilience are really inspiring. In addition, I would like to emphasize from the start that our core business is very strong and long-lasting and offers a solid basis for navigation in the current environment. We continue to have confidence in 2020 and beyond. The pandemic has not diminished this view at all, and we remain confident in our long-term outlook.

I would like to start by briefly commenting on our very strong first quarter results, and I would remind you that the earnings materials published on our website contain all the details, including the preliminary color on the effects of COVID-19 and our business to date as well as our preliminary expectations for the coming months. We are happy to review the results and impact of COVID-19 and our previous business during the Q&A session.

Starting with our quarterly sales, total sales for the first quarter were $ 5.5 billion with a non-GAAP profit of $ 1.68 per diluted share. This corresponds to sales of $ 5.3 billion with a non-GAAP profit of $ 1.67 per diluted share in the same period last year. Product sales in the first quarter were $ 5.5 billion, a 6% decrease from the previous quarter and an increase of 5% from the previous year. I would like to point out that we believe that the COVID 19 pandemic in the United States and Europe generated approximately $ 200 million in revenue in the first quarter, particularly for our HIV franchise. This was the result of payers and pharmacies who provided better access to medicines by, among other things, enabling 90-day refills and, in some cases, early refills. We assume that this will reverse in the following quarters.

Let us now turn to our expenses. Non-GAAP R&D expenses for the quarter were $ 1 billion, an 8% increase over the same period last year. This is mainly due to the increase in remdesivir, including manufacturing costs and clinical trial costs. Non-GAAP SG&A expenses were $ 1.1 billion, an increase of 4% over the same period last year. This is mainly due to higher advertising costs in the United States related to our HIV products. As Dan highlighted, we completed our Forty Seven acquisition this month. We currently expect Forty Seven to spend approximately $ 120 million this year, primarily on research and development. I would also like to emphasize that the acquisition qualifies as an asset acquisition. Therefore, we currently expect GAAP R&D expenses of approximately $ 4.8 billion, primarily related to ongoing research and development.

Let us turn to our strong balance sheet. During the quarter, we generated cash from operations of $ 1.4 billion. We ended the quarter with $ 24.3 billion in cash and marketable debt. We repaid $ 500 million in debt, paid cash dividends of $ 874 million, and bought back 19 million shares for $ 1.3 billion. I want to point out that after we closed 47 in April, we paid around $ 4.9 billion in cash. Our strong balance sheet and disciplined capital allocation have enabled us to continue growing and expanding our business despite the current environment and the associated risks. We remain very confident in the continuity of our business and expect a significant operating cash flow for 2020.

I will now turn to COVID-19 and its impact on our business. Like others, we expected short-term financial implications for our company and the industry as a whole. We continue to carefully review our results to assess the potential magnitude of these effects. Towards the end of the quarter in April, we saw some impact on our business, primarily because fewer patients had access to healthcare and the number of new starts in HCV and HIV prevention slowed. So far, however, the overall impact on our business has been small and it remains unclear how this will ultimately impact. Given this considerable uncertainty regarding the duration and extent of the COVID-19 pandemic, we are actively planning a number of scenarios. And today we want to focus on our basic assumptions that we draw from data that come from a number of sources, including epidemiologists, economists, and public health officials.

First, these basic assumptions indicate that the pandemic will peak between March and July. We would like to refer to recent Johns Hopkins data showing trends that reflect a slowdown in the rate of new cases since the end of March in the United States and a decline in the number of new cases in some critically affected regions of the world. Second, when the virus returns in the fall or winter, the effects are reduced due to the willingness and hopefully the emergence of therapeutic agents, including possibly our own remdesivir. Third, the global economy will recover at the end of the second quarter, and the dynamic before COVID will return by the end of the year. We have of course considered external views that anticipate more or less favorable scenarios, but we believe that this base case is currently the best basis for planning in this uncertain situation.

Let me share some qualitative perspectives on the potential business impact of this scenario. Please note the forward-looking information we shared at the beginning of the call. I would also like to reiterate that we added important comments during the investor presentation that was published on our website and we encourage you to review these materials. In our view there are three important aspects. First, we had a very strong quarter. Second, the impact on our business has been minimal so far. And third, we remain very confident about our long-term prospects.

On the commercial side, however, with less access to healthcare providers and fewer patient visits, we may adversely affect sales in the second quarter and possibly beyond. This would probably be different in our franchise companies, as our HCV franchise company is disproportionately affected due to the acute care of this therapy. We believe that the majority of a drop in HCV revenue due to the pandemic could be offset by a inventory effect later in 2020 or by 2021.

In HIV, early signal changes for both treatment and prevention patients can be affected by COVID-19 because patients have different health care visits. In April in particular, we see a decrease in Descovy for PrEP initiations and a lower switch volume. PrEP refills can also be affected, but it’s too early to fully understand trends here. In contrast, our HIV treatment business is less likely to be significantly impacted as we believe patients will continue to prioritize, refill their prescriptions and access their doctors through telemedicine. In cell therapy, unfortunately, restricted access to authorized treatment centers could lead to critically ill patients having access problems that would affect business.

Let us turn to clinical development. Like many others in our industry, we interrupt registration for most studies. An exception are studies in which patient results are critically influenced, such as: B. Studies with our HIV capsid inhibitor in heavily pretreated people who have few other treatment options and some of our type programs in which cancer patients who are seriously ill have participated. Participation in these studies is at the discretion of the examiners. Overall, we expect lower clinical development costs in the short term. In addition, the dynamic could lead to delays and potential approvals for pipeline assets in the long term. The challenge brings health opportunities, and as Dan has already described, we’re excited about new results from Remdesivir as a potential therapy for COVID-19.

If we drive the further development and manufacture of Remdesivir, we will incur additional costs that go beyond those forecast at the beginning of the year. The extent of this investment depends on the evolution of the data, the duration of the pandemic and other factors. The potential range of this investment for 2020 is up to $ 1 billion. The accounting for this investment depends on a number of factors, including potential regulatory approvals.

We are authorized by the regulatory authorities. Gilead will focus on making Remdesivir accessible and affordable to governments and patients around the world. Given the ongoing uncertainty surrounding the course of the pandemic and clinical data on remdesivir, it is premature to define which post-donation business model is the right one to create sustainable long-term care for global needs. In the context of strong underlying business in the first quarter results, we will continue to monitor the situation and expect to provide additional insights and prospects for our second quarter earnings statement.

Finally, I would like to thank our team for their extraordinary efforts and for the very strong first quarter in this challenging time.

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

Questions and answers:

operator

Thanks a lot. [Operator Instructions] And our first question comes from Michael Yee with Jefferies.

Michael Yee – – Jefferies – analyst

[Technical Issues] and Dan when you are there [Technical Issues].

Daniel O’Day – – Chairman and chief executive officer

Yes I am back.

Michael Yee – – Jefferies – analyst

Yes. Hi Dan. So my question to you is about remdesivir, how it relates [Technical Issues] Can you just describe the inputs and think about what earnings the positive remdesivir could generate this year? What was the impact on this input? As far as expenses are concerned, you obviously do not cost any instructions, you somehow went through it. You described the dollar approach for remdesivir. Maybe you just go through the inputs there and how you think about why it should be at the bottom and comment on this because it does the model. Yes, so talk to it [Technical Issues] Thanks a lot.

Daniel O’Day – – Chairman and chief executive officer

Thank you, Michael. Appreciate the question and excuse me people that I have been cut off there before. Thank you Andy for picking you up. The only thing I want to end with my comments is probably that the most important comment is that I really thank the colleagues across Gilead who are working on Remdesivir and non-Remdesivir projects that they really keep the momentum going in the quarter have maintained one and I am humble and proud to work with them.

So Michael, thanks for the call. On the revenue side, it’s exactly as Andy mentioned, and I mentioned that it’s too premature. There are many moving parts at the moment. Our focus will be to ensure that we develop a sustainable model that enables us to offer patients around the world remdesivir that is designed to provide access and affordability. We are currently going through the clinical data, the demand scenarios, the regulatory approvals. All of these things are important for us to include in our plan how this will work after the donation. We can’t really give more insight at the moment, but if we can, we will surely do it.

On the cost side, Andy, I mean, obviously you mentioned that up to $ 1 billion and I know how the bookkeeping will work, but maybe you want to add something to Michael’s question?

Andrew Dickinson – – CFO

Sure, Michael. At this point it is too early to tell you where this will fall into the income statement in a number of scenarios. It could – this expenditure could fall within the cost of the goods sold. As you know, there may be R&D costs, and in some scenarios part of them may also be SG&A costs. At a high level, the costs we relate to, as you would expect, come mainly from the production of clinical trials to a lesser extent. And I think this is our best best estimate right now based on what we know about the expenses we see over the year and we will do everything we can to provide more color and comments especially when it came to our earnings call for the second quarter.

Michael Yee – – Jefferies – analyst

I appreciate it. Up to $ 1 billion in spending without knowing the revenue. It’s an interesting position. Am grateful. Thanks a lot.

Daniel O’Day – – Chairman and chief executive officer

Thank you, Michael. We have the next question please.

operator

Our next question surely comes from Cory Kasimov with JP Morgan.

Cory Kasimov – – JP Morgan – analyst

Hi. Good afternoon people. Thank you for answering my question. Also wanted to ask about Remdesivir, no surprise. I was wondering if you could talk about the formulation work currently underway to potentially develop an oral and / or inhaled version of the product. How far could you be in this area and when can we expect more?

Daniel O’Day – – Chairman and chief executive officer

Yes. Thanks, Cory. I’ll start and maybe others on the call who want to add, but as you can imagine, our focus since January has been on increasing the offer, especially so we have a lyophilized one [Phonetic] Version suitable for intravenous administration, the clinical program all of that, so we were really there. At the same time, we had a team like everything with this program, including delivery. We had teams that have really focused on success since the first day of January. And if successful, what – how else could we develop this drug? Ich denke, dies wurde bei der Gesamtheit des klinischen Studienprogramms berücksichtigt, bei dem sowohl kritische als auch schwere und mittelschwere Patienten untersucht wurden.

Aber ebenso haben wir dasselbe mit anderen alternativen Verabreichungsmechanismen gemacht, wobei wir davon ausgegangen sind, dass der Erfolg es für Patienten bequemer macht oder es uns ermöglicht, die Patientengruppen zu erweitern, die von einem erfolgreichen antiviralen Mittel profitieren könnten. Und diese Arbeit ist – wie Sie sich vorstellen können – noch früh, aber wir können ein paar Dinge sagen. Dies ist nicht der Fall – dieses spezielle Arzneimittel ist als orale Formulierung nicht wirklich geeignet, da es stark in der Leber metabolisiert wird. Wir wissen das seit Jahren, wahrscheinlich seit einem Jahrzehnt. Aber wir untersuchen Dinge wie subkutane Formulierungen und potenziell inhalative Formulierungen.

Und obwohl es zu verfrüht ist, Ihnen Zeitpläne dafür zu geben, können Sie sicher sein, dass wir es sind – wir haben aktiv daran gearbeitet. Und sobald wir einige Zeitpläne geben können, werden wir dies jetzt sehen, insbesondere aufgrund der Wirksamkeit, die wir diese Woche gesehen haben. Wir werden diese weiterhin mit großer Dringlichkeit verfolgen. Aber die Zeitleiste ist etwas verfrüht. Wissen Sie nur, dass wir jetzt seit mehreren Monaten daran arbeiten. Ich kenne Merdad nicht, wenn Sie etwas hinzufügen möchten? Du bist ok. Good. Merdad, ist in Ordnung. Okay, Cory. Ich weiß, dass Sie mehr brauchen, aber wir werden Ihnen so schnell wie möglich mehr geben.

Cory Kasimov – – JP Morgan – Analyst

No no. Because of me. Ich weiß es zu schätzen, dass Sie die Frage beantwortet haben, und viel Glück bei den weiteren Fortschritten.

Daniel O’Day – – Vorsitzender und Chief Executive Officer

Danke, Cory.

Operator

Thanks a lot. Und unsere nächste Frage stammt von Brian Abrahams von RBC Capital Markets.

Brian Abrahams – – RBC Capital Markets – Analyst

Hallo Leute. Danke, dass du meine Frage beantwortet hast. Zwei Fragen zu Remdesivir, wenn ich könnte und ich schätze all die Arbeit, die ihr tut, um diese Behandlung für Patienten bereitzustellen. Können Sie uns zunächst in der NIAID-Studie einen Eindruck vom Anteil der Patienten geben, die an der Zwischenzeit beteiligt waren? Gibt es jetzt ein zusätzliches Update, von dem wir erwarten sollten, dass es ein entscheidender Faktor für die Verfügbarkeit sein könnte, und Ihr Vertrauen, dass Unterschiede bei den Basisrisikofaktoren diese Ergebnisse nicht beeinflusst haben, wie dies möglicherweise in der China-Studie geschehen ist. Und dann nur zweitens in Bezug auf die Versorgung, eine bestimmte Untergruppe von Patienten in den Studien, bei denen Sie möglicherweise die optimalen Vorteile sehen, die wir in Betracht ziehen könnten, mit Regulierungsbehörden zusammenzuarbeiten, um die AGEN2 zu steuern, während Sie skalieren? Thanks a lot.

Daniel O’Day – – Vorsitzender und Chief Executive Officer

Yes. Danke, Brian. Entschuldigung, nur um Ihre zweite Frage im Zusammenhang mit der Lieferung zu klären. Sie sagten, gibt es eine Untergruppe von Patienten? Können Sie das noch einmal abschließen?

Brian Abrahams – – RBC Capital Markets – Analyst

Yes. Jede Untergruppe von Patienten, bei denen Sie möglicherweise mehr Vorteile sehen – optimalere Vorteile in der gesamten Studie, bei denen Sie möglicherweise in Betracht ziehen, mit den Aufsichtsbehörden zusammenzuarbeiten, um zu versuchen, den Wirkstoff anfangs zu leiten, sobald die Versorgung erfolgt [Speech Overlap].

Daniel O’Day – – Vorsitzender und Chief Executive Officer

In Bezug auf eine Zuordnung. Ja, mit begrenzter Zuweisung oder begrenzt. Yes. I have it. I have it. OK. Ich werde es Merdad übergeben und ich werde Merdad bitte einen Stich auf uns beide machen lassen.

Merdad Parsey – – Chefarzt

Hallo Brian. Bei der ersten Frage bin ich – das ist Merdad. Bei der ersten Frage haben wir nicht viel von der Basisdemographie in den Arten von Daten gesehen, die bei der Beantwortung Ihrer Frage zur NIAID-Studie hilfreich wären. Ich denke, wir müssen alle warten, bis diese Daten veröffentlicht und dennoch für uns alle zur Überprüfung freigegeben werden. Ich denke, das steht noch aus und wir werden darauf achten, dass das herauskommt.

In Bezug auf Patientenuntergruppen denke ich, dass unsere Daten und wenn Sie sich ansehen, wer insgesamt an den Studien teilgenommen hat, ich denke, wir sehen uns eindeutig die Patientenpopulation im Krankenhaus an. Und wir betrachten Patienten, die zusätzlichen Sauerstoff benötigen, die primäre Population, nach der wir suchen, einschließlich solcher, die entweder beatmet werden oder mechanisch beatmet werden können. Sicherlich unterstützen unsere Daten dies aus unseren Open-Label-Studien. Die NIAID-Studie umfasste diese Patientenbreite. Wir haben jedoch keine Untergruppenanalyse der verschiedenen Patientenpopulationen gesehen, um Ihnen dort Klarheit zu verschaffen. Aber wir glauben, dass es schon früh in dieser ziemlich breiten Bevölkerung sein wird.

Brian Abrahams – – RBC Capital Markets – Analyst

I have it. Dank dafür.

Daniel O’Day – – Vorsitzender und Chief Executive Officer

Danke, Brian.

Operator

Thanks a lot. Und unsere nächste Frage kommt von Geoff Meacham mit der Bank of America.

Geoff Meacham – – Bank of America – Analyst

Guten nachmittag Leute. Ich möchte im Großen und Ganzen nur großartige Arbeit leisten – dem gesamten Team wirklich für die Remdesivir-Entwicklung. Ein paar Punkte hier, auf COVID-19, habt ihr euch andere Atomwaffen für Patienten im Frühstadium angesehen? Ich denke nur daran [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. Thanks a lot.

Daniel O’Day – – Chairman and Chief Executive Officer

Yes. 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

For 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

Yes.

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

Yes. 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

Yes. 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.

Geoff Meacham – – Bank of America — Analyst

OK. Thanks a lot.

Operator

Thanks a lot. 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

For 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 toward 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 toward 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

Thanks a lot. 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 a lot

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

OK. 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% toward 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 toward 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

Law. 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

Hallo. 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. Yes. 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

Yes. 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. OK. 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 OK.

Merdad Parsey – – Chief Medical Officer

Yes. 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

Yes. 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 toward late March like I’m sure many did as well. The prescription number of days per prescription rise and inventories rise toward 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 toward 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

Law. 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. Thanks a lot.

Daniel O’Day – – Chairman and Chief Executive Officer

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

Merdad Parsey – – Chief Medical Officer

Yes. 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

OK. Thanks a lot.

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? Thanks a lot.

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

Thanks a lot.

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

Yes. 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

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

Operator

Thanks a lot. Our next question comes from the line of Tyler Van Buren with Piper Sandler.

Tyler Van Buren – – Piper Sandler — Analyst

Hallo. 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

Yes.

Daniel O’Day – – Chairman and Chief Executive Officer

Yes. OK. For 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

Yes. 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

Yes. 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, OK. 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, OK, 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

OK. Yes. That’s great. Diana. Thanks a lot.

Diana Brainard – – enior Vice President, HIV and Emerging Viral

Sure, OK. 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. Thanks a lot.

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]

Duration: 75 minutes

Call 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 – – enior Vice President, HIV and Emerging Viral

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

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