Gilead 1Q19 – NASH focus turns to phase 2b ATLAS combination therapy trial on heels of two negative phase 3 readouts for selonsertib; Partnerships with Novo Nordisk and others highlighted – May 2, 2019

Executive Highlights

• Gilead gave its 1Q19 updatetoday. In NASH, Gilead’s 1Q19 was marked first by negative phase 3 resultsfor selonsertib in the STELLAR 4trial (n=877) in F4 fibrosis (compensated cirrhosis) due to NASH, announced in February. Weeks later in April, Gilead also announced negative phase 3 resultsfor selonsertib in the STELLAR 3trial (n=802) of the ASK-1 inhibitor in F3 fibrosis due to NASH. In both trials, selonsertib missed the primary endpoint of ≥1 stage improvement in fibrosis without worsening of NASH at 48 weeks. Management has indicated that it will not further investigate selonsertib as monotherapy for NASH.
• 1Q19 was a watershed quarter in the NASH competitive landscape, and it seems most likely that Intercept’s obeticholic acidwill become the first-ever therapy approved for NASH. Also in February, Intercept announcedpositive interim results from the phase 3 REGENERATE study on one of two co-primary endpoints in F2/F3 fibrosis due to NASH: The 25 mg dose of OCA improved liver fibrosis with no worsening of NASH, while trending positively but not reaching superiority on NASH resolution with no worsening of fibrosis. The 10 mg dose achieved nominal significance on fibrosis. Intercept will file the FXR agonist with FDA and EMA in 2H19, setting OCA up to potentially become the first approved NASH therapy. Importantly, FDA has agreed that only one co-primary endpoint must be met for approval – and fibrosis is strongly regarded as the more important of the two. Of the phase 3 NASH trials scheduled to report in 2019, only Genfit’s RESOLVE-IT study for elafibranor (dual PPAR agonist) remains outstanding, with topline data scheduled for release late this year. 
• In Gilead’s own NASH pipeline (see below), the phase 2b ATLAS study is expected to complete in October 2019, and 24-week data are expected in 4Q19 (see the trial design just below). ATLAS is testing combinations of selonsertib, cilofexor (FXR agonist), and firsocostat (ACC inhibitor) in F3-F4 patients. Pending a positive readout from ATLAS, and possiblyeven once 24 week data is in hand, we expect the company to move a combination therapy into phase 3 – though we’re curious how partnerships may impact these plans. Of note, Gilead just presentedpositive proof-of-concept results for a firsocostat/cilofexor combination (n=20) at the International Liver Congress, demonstrating ≥30% reduction in hepatic fat (measured by MRI-PDFF) in 74% of treated patients at 12 weeks.
• Partnerships have also become a key part of Gilead’s NASH strategy: In January, Gilead announcedit had acquired, from Yuhan, global rights to develop and commercialize two undisclosed small molecules as potential NASH treatments. Moreover, an April partnershipwith Novo Nordisk will see combination trials of GLP-1 agonist Ozempic (semaglutide), FXR agonist cilofexor (GS-9674), and ACC inhibitor firsocostat (GS-0976) in NASH. Finally, a three-year collaborationwith insitro is focused on using machine learning and genomics to discover and develop new NASH therapies. The latter two were highlighted by CMO Dr. John McHutchison during prepared remarks.