WHEN: Today, Wednesday, March 23rd
WHERE: CNBC's "Closing Bell"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Gilead President and CEO John Milligan and Meg Tirrell on CNBC's "Closing Bell" (M-F, 3PM-5PM ET) today, Wednesday, March 23rd. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000504085.
All references must be sourced to CNBC.
KELLY EVANS: WELCOME BACK. SHARES OF GILEAD DOWN NEARLY 4% TODAY AFTER THE BIOTECH COMPANY LOST A PATENT LAWSUIT WITH RIVAL MERCK OVER NEW HEPATITIS C DRUGS. JOINING US NOW IN AN EXCLUSIVE INTERIVEW IS NEW GILEAD CEO JOHN MILLIGAN ALONG WITH OUR MEG TIRRELL. GO AHEAD, MEG.
MEG TIRRELL: DR. MILLIGAN THANKS FOR JOINING US.
JOHN MILLIGAN: THANKS FOR HAVING US HERE. IN FACT THANK FOR COMING HERE TO SEE US.
TIRRELL: OUR PLEASURE. I WANT TO START WITH JUST THE NEWS OF THIS WEEK OBVIOUSLY THE NEWS YESTERDAY WITH THE MERCK PATENT CASE YOU KNOW THAT SURPRISED A LOT OF PEOPLE WITH THE OUTCOME IN MERCK'S FAVOR. THEY'RE LOOKING FOR A 10 PERCENT ROYALTY. WHAT'S YOUR EXPECTATION AS TO THE OUTCOME OF THAT?
MILLIGAN: WELL FIRST OF ALL I CAN'T COMMENT ON THE TRIAL AS IT IS STILL ONGOING AS THE DAMAGES PHASE IS NOW IN SESSION. SO ALL I CAN TELL YOU IS WE STILL THINK THE MERCK PATENTS ARE INVALID, AND WE CONTINUE TO BELIEVE WE HAVE STRONG CASE FOR THATAND WE DO PLAN TO APPEAL THE CASE AGAIN END OF THE DAY.
TIRRELL: GOT IT AND I WANT TO TALK ABOUT THE HEPATITIS-C FRANCHISE. OBVIOUSLY IT'S BEEN THE BIGGEST DRIVER OF YOUR BUSINESS RECENTLY, AND I HAVE TO ASK YOU ABOUT THE PRICING CONTROVERSY. THIS HAS OBVIOUSLY BEEN SOMETHING THAT'S GAINED A LOT OF ATTENTION FROM CONGRESS FROM THE MASSACHUSSETS SECURITY GENERAL FOCUSING ON YOU GUYS. WERE YOU SURPRISED THAT THE PRICE OF THIS DRUG AND THE COMBINATION DRUG WAS SUCH A CONTROVERSY?
MILLIGAN: WELL, FIRST OF ALL WE PRICED IT IN ALIGNMENT WITH THE CURRENT STANDARD OF CARE AT THE TIME SO THAT TO US FELT LIKE A VERY NATURAL THING TO DO, EVEN THOUGH THE DRUG WAS CLEARLY GOING TO HAVE A GREATER BENEFIT TO A GREATER NUMBER OF PEOPLE. SUBSEQUENT TO THAT, THE SYSTEM HAS WORKED ACTUALLY QUITE WELL. WE HAVE PROVIDED ADDITIONAL REBATES, DISCOUNTS IN THE VARIOUS SEGMENTS OF THE MARKET, COMPETITION HAS FURTHER DRIVEN DOWN THE PRICES. WE'RE IN THIS UNFORTUNATE SITUATION WHERE THERE'S A HEADLINE OF A VERY HIGH PRICE. BEHIND THE SCENES THERE'S IN FACT QUITE LOW PRICES. IF YOU LOOK AT FOR EXAMPLE IN THE V.A., WE'VE BEEN WORKING CLOSELY WITH THE VA SYSTEM TO PROVIDE A BETTER BENEFIT FOR OUR VETERANS, THE PRICE IS WELL BELOW HALF. WELL BELOW HALF OF WHAT THE LIST PRICE IS, AND WE THINK IT'S A GOOD PRICE FOR THE V.A. AND OTHER PARTS OF THE SYSTEM. THE OTHER THING THAT'S SURPRISING IS THIS EMPHASIS ON PRICE WITHOUT A TALK ABOUT THE VALUE OR BENEFIT THAT WE BRING. WE SEEM TO FORGOT THIS IS A SHORT COURSE OF THERAPY, 12 WEEKS FOR MOST PATIENTS, EIGHT FOR SOME. THE FACT THAT THESE PATIENTS ARE CURED AND YOU DON'T HAVE TO GO ON LIFE-LONG TREATMENT, SO IT'S A VERY DIFFERENT KIND OF THING TO THINK ABOUT, ALSO VERY DIFFICULT FOR THE SYSTEM TO COMPREHEND THE FACT THAT IT'S A CURE THAT CAN AFFECT SO MANY PEOPLE.
TIRRELL: THAT'S RIGHT. WELL, I WANT TO ASK YOU ABOUT – JUST THE ARGUMENT THAT PEOPLE MAKE IS THAT YES IT'S CHEAPER THAN PREVIOUS THERAPIES, BUT A LOT MORE PEOPLE WANT IT BECAUSE IT IS SUCH A GREAT DRUG. AND SO THAT IS THE ARGUMENT PEOPLE MAKE IS HOW DO YOU CURE ALL OF THOSE PEOPLE? HOW DO WE CURE EVERYBODY IN THE SYSTEM? KNOWING WHAT'S HAPPENED, WOULD YOU HAVE DONE ANYTHING DIFFERENTLY OR IS THIS HOW IT SHOULD HAVE PLAYED OUT?
MILLIGAN: NO, I DON'T THINK WE WOULD HAVE. IN FACT, IF YOU THINK ABOUT THE PROBLEM RIGHT NOW, IT'S REALLY THE CAPACITY OF THE SYSTEM AND IDENTIFYING NEW PATIENTS. WE DID HAVE – THAT WORKED THEIR WAY THROUGH LAST YEAR. IN FACT LAST YEAR, ABOUT 240,000 AMERICANS WERE TREATED WITH EITHER SOVALDI OR HARVONI, FAR MORE THAN EVER BEFORE. IN FACT, 100,000 MORE THAN THE PREVIOUS YEAR WHICH WAS THE LARGEST NUMBER OF PATIENTS EVER TREATED. SO THERE WAS PRETTY GOOD ACCESS TO TREAT THAT MANY PEOPLE. IN YOU THINK ABOUT THE CAPACITY OF THE SYSTEM, THAT'S HOW MANY HEPATOLOGISTS CAN TREAT IN THE YEAR, IT IS NOT THAT MUCH MORE THAN THAT. WE WERE REALLY UTILIZING A GREAT CAPACITY OF THE DOCTORS IN THE SYSTEM, WHICH IS NOW WHAT I THINK TO BE THE RIGHT LIMITING STEP. FOR THE FUTURE, IT'S GOING TO BE IDENTIFYING THOSE PATIENTS. THE BIG BARRIER TO TREATING EVREYBODY WILL BE IDENTIFYING THEM AND GETTING THEM INTO TREATMENT. AND THAT OF COURSE WILL TAKE MANY, MANY YEARS. BUT I THINK THE SYSTEM WORKED AND THAT WE SEEM TO HAVE GOTTEN THE MOST SEVERELY ILL PATIENTS THROUGH EARLY SO THAT THEY CAN GET CURED AND GET ON WITH THEIR LIVES.
TIRRELL: WELL A LOT MORE TO ASK YOU ON THAT, BUT I HAVE TO PIVOT INTO THE BIGGEST QUESTION FROM INVESTORS AND THAT IS WHAT IS THE NEXT DRIVER OF GROWTH FOR YOU GUYS? AND EVERYBODY SEEMS TO THINK YOU HAVE TO BUY SOMETHING IN ORDER TO GROW. DO YOU AGREE?
MILLIGAN: THERE ACTUALLY IS A WIDE RANGE OF OPINIONS. THERE IS NOTHING MORE FASCINATING THAN BEING IN AN INVESTOR DINNER WITH TWO GROUPS PAIRING OFF AGAINST EACH OTHER ABOUT WE DON'T NEED TO DO ANYTHING BECAUSE OUR PIPELINE IS SO RICH – AND WE DO HAVE A VERY GOOD PIPELINE – OR WE SHOULD DO SOMETHING NOW TO HELP INCREASE GROWTH IN THE SHORTER TERM. SOMETIMES I DON'T EVEN HAVE TO TALK IN THOSE MEETINGS. IT'S QUITE INTERESTING. LOOK, WE ARE A COMPANY THAT NEEDS TO INNOVATE. BIOTECH NEEDS TO INNOVATE. OUR PRODUCTS COME ON FOR AWHILE, THEN THE PATENTS GO AWAY AND THEN THE PRODUCTS ESSENTIALLY DISAPPEAR FROM OUR TOP LINE AND OUR BOTTOM LINE. SO WE CONSTANTLY NEED TO INNOVATE. WE HAVE BEEN SUCCESSFUL BOTH WITH INTERNAL INNOVATION AND WITH BUYING COMPANIES IN THE PAST TO AUGMENT THAT INNOVATION AND IT'S A STRATEGY THAT WE'RE GOING TO CONTINUE TO GO ALONG. WE ARE GOING TO CONTINUE TO WORK ON OUR THREE AREAS WHERE I THINK WE HAVE GOOD STRENGTH. PARTICULARLY OUR NASH FRANCHISE. SO WE'RE CONTINUING IN HELPING PEOPLE WITH LIVER DISEASE. NASH IS A VERY IMPORTANT AND GROWING PROBLEM IN THE UNITED STATES AND AROUND THE GLOBE. WE THINK WE HAVE SEVERAL DRUGS WHICH CAN POTENTIAL TREAT OR REVERSE THE SYMPTOMS OF THAT. WE ARE BUILDING A FRANCHISE IN INFLAMATORY DISEASES. WE BROUGHT IN A PRODUCT CALLED FILGOTINIB JUST LAST YEAR, WHICH I THINK CAN REALLY JUMP-START THAT PROGRAM. AND OF COURSE WE'VE BEEN WORKING IN ONCOLOGY AND WE SEEK TO BRING IN MORE PRODUCTS, MORE PROGRAMS TO AUGMENT WHAT WE'RE DOING INTERNALLY IN THOSE AREAS. SO DO I THINK WE NEED A BIG TRANSACTION TO SOLVE OUR PROBLEMS? I DON'T THINK WE NEED THAT. I DO RESERVE THE RIGHT TO CHANGE MY MIND IN THE FUTURE AND PERHAPS THERE WOULD BE THINGS THAT MAKE SENSE, BECAUSE YOU HAVE TO BE OPEN-MINDED AS A CEO AND AS A COMPANY ABOUT THE THINGS WHICH CAN BENEFIT THE COMPANY THE MOST AND PATIENTS THE MOST.
TIRRELL: WELL, A LOT MORE QUESTIONS FOR YOU, AND WE HOPE YOU'LL COME BACK AND JOIN US. BUT JOHN MILLIGAN, THANK YOU FOR JOINING US.
MILLIGAN: THANK YOU SO MUCH, MEG.
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