Company Reports

Gilead Sciences generates stellar profit margins with its HIV and hepatitis C virus, or HCV, portfolio, which requires only a small salesforce and inexpensive manufacturing. We think its portfolio and pipeline support a wide moat, but Gilead needs strong continued innovation in HIV, solid oncology launches, and smart future acquisitions to guarantee mid-single-digit growth over our 10-year forecast.

Gilead reported second-quarter revenue growth of 10%, but acquisition charges pushed the firm to a net loss. Management slightly raised its 2026 product sales guidance midpoint from $30.2 billion to $30.25 billion.

Gilead reported quarterly 4% revenue growth, including 10% HIV product growth. Management raised 2026 revenue guidance by $400 million, which implies 8% HIV therapy and prevention growth (up from 6%).

Gilead is acquiring partner Arcellx for $7.8 billion upfront, giving it full rights to multiple myeloma cell therapy anito-cel. The acquisition is expected to close in the second quarter.

Gilead reported 1% product sales growth in 2025 and a 44.8% non-GAAP operating margin. Management guidance for 2026 implies 3.1% product sales growth and a 46.9% operating margin at the midpoint. Shares were up 5% in trading on Feb. 11.

Gilead Sciences generates stellar profit margins with its HIV and hepatitis C virus, or HCV, portfolio, which requires only a small salesforce and inexpensive manufacturing. We think its portfolio and pipeline support a wide moat, and with the HCV market stabilizing, Gilead needs strong continued innovation in HIV, solid oncology launches, and smart future acquisitions to return to growth.

The Trump administration and several biopharma firms announced new drug pricing agreements on Dec. 19. While previous deals included US drug firms Pfizer (Sept. 30) and Eli Lilly (Nov. 6), the nine new deals included additional US firms Amgen, Bristol Myers Squibb, Gilead, and Merck.

Excluding a one-time $400 million boost to other revenue from a prior asset sale, Gilead reported results that were relatively in line with consensus, and management nudged its HIV sales growth forecast for 2025 up to 5% (from prior guidance of 3%).

Gilead announced a settlement on Oct. 6 with three generic manufacturers, securing an agreement for them not to launch a generic version of Gilead's HIV drug Biktarvy until at least April 1, 2036, in the US.

Gilead Sciences generates stellar profit margins with its HIV and hepatitis C virus, or HCV, portfolio, which requires only a small salesforce and inexpensive manufacturing. We think its portfolio and pipeline support a wide moat, and with the HCV market stabilizing, Gilead needs strong continued innovation in HIV, solid oncology pipeline data, and smart future acquisitions to return to growth.

Gilead Sciences generates stellar profit margins with its HIV and hepatitis C virus, or HCV, portfolio, which requires only a small salesforce and inexpensive manufacturing. We think its portfolio and pipeline support a wide moat, and with the HCV market stabilizing, Gilead needs strong continued innovation in HIV, solid oncology pipeline data, and smart future acquisitions to return to growth.

Gilead's total product sales grew 2% in the second quarter, with flat non-GAAP EPS. Management raised product sales guidance by $100 million and earnings guidance by $0.20 at the midpoint for the full year. The US Food and Drug Administration approved Yeztugo for HIV prevention in June 2025.

Gilead reported flat first-quarter 2025 revenue and cost discipline supported a mid-single-digit decline in operating expenses. Management's product sales and non-GAAP diluted EPS guidance for 2025 remain unchanged.

Gilead reported 6% product sales growth in 2024, and excluding a first-quarter charge for the CymaBay Therapeutics acquisition, saw a 43% non-GAAP operating margin and 15% non-GAAP EPS growth. Gilead guided for a flat to slight 1% drop in sales in 2025 with operating margins improving to about 45%.

Gilead Sciences generates stellar profit margins with its HIV and hepatitis C virus, or HCV, portfolio, which requires only a small salesforce and inexpensive manufacturing. We think its portfolio and pipeline support a wide moat, and with the HCV market stabilizing, Gilead needs strong continued innovation in HIV, solid oncology pipeline data, and smart future acquisitions to return to growth.

Following President-elect Donald Trump’s Nov. 14 announcement of the nomination of Robert F. Kennedy Jr. as secretary of the US Department of Health and Human Services, there have seen several more nominations for leadership in the 13 HHS divisions, including Dr. Mehmet Oz (Centers for Medicare and Medicaid Services) on Nov. 19, Dr. Marty Makary (US Food and Drug Administration) and Dr. Dave Weldon (Centers for Disease Control and Prevention) on Nov. 22, and Dr. Jay Bhattacharya (National Institutes of Health) on Nov. 26. Overall, we think these selections show a consistent theme of introducing potential disruptive forces to US healthcare, although their lack of experience and the power of career staffers in these agencies could serve to blunt any significant proposed changes. We continue to see obesity drugs and vaccines as areas of potential scrutiny, although without any clarity on proposals, we’re not making any changes to our fair value estimates following these announcements.

President-elect Donald Trump announced on Nov. 14 that he is nominating Robert F. Kennedy Jr. to be secretary of the Department of Health and Human Services under his new administration in 2025. RFK Jr. has strong views on public health and, if confirmed, could use his position to make changes at several of the 13 HHS divisions. In our Nov. 8 note, we discussed the potential tailwinds of a Trump administration, including possible repeal of the Medicare negotiation provision in the Inflation Reduction Act, less Federal Trade Commission scrutiny of acquisitions, and a likely continuation of lower corporate taxes. However, if RFK’s nomination is confirmed, we expect more “wild card” headwinds to the industry will come to fruition. As the HHS covers the US Food and Drug Administration and the Centers for Disease Control and Prevention, an HHS secretary skeptical of vaccine and obesity drug benefits could work to erode public trust, put up roadblocks for approval of new vaccines, and prevent the CDC from recommending any vaccines that make it through the approval process. With less federal guidance, we think it is possible certain states could waver in support of broad mandates for childhood vaccines. All of these could weigh on sales of vaccines in the US, including covid vaccine makers Moderna and BioNTech and big biopharma vaccine makers like GSK (we model 14% of GSK revenue from US vaccine sales in 2024), Pfizer (12%), Merck (9%), and Sanofi (6%).

We think that President-elect Donald Trump brings a mix of potential headwinds and tailwinds to the biopharma industry, and we’re not making any adjustments to our fair value estimates at this time. We had previously assumed that the most likely case was split control of the presidency and Congress by Democrats and Republicans. However, with Republicans locking in control of the Senate and holding a lead in elections in the House, we think it looks increasingly likely that Trump and his party could have control across both branches of government, making any potential policy priorities more likely to be implemented.

Gilead's third-quarter results were significantly higher than our expectations, including 7% top-line growth largely due to 9% growth for covid drug Veklury due to higher covid hospitalizations in the quarter as well as solid demand for Gilead’s key HIV products, Biktarvy (13% growth) and Descovy (15% growth). Management raised its 2024 guidance, implying HIV sales growth for the year of roughly 5% (up from 4%), and also lower research and development spending due to failed trials of blood cancer drug magrolimab and covid drug obeldesivir. However, sales of Gilead’s cell therapies were essentially flat due to increased competition in the US from other cell therapies as well as new bispecific antibody lymphoma therapies, and we’ve slightly reduced our long-term expectations for Yescarta as a result. We’re maintaining our $97 fair value estimate for Gilead and continue to see Biktarvy’s long patent life (2033) and Gilead’s innovation in HIV as the most encouraging supports for the firm’s wide moat. We think the shares are fairly valued after rising with recent impressive HIV prevention data for lenacapavir and a large opportunity to help a broader group of individuals prevent infection.

We’re maintaining our $97 fair value estimate for wide-moat Gilead following second-quarter results that were in line with our expectations on the top line, but exceeded our expectations on the bottom line as a result of significantly lower clinical trial costs and discontinued clinical programs. Gilead’s revenue grew 5% with broad-based growth from HIV (3%), liver disease (17%), and oncology (15%). HIV treatment regimen Biktarvy grew 8% as it continues to dominate the market and remains the biggest driver of Gilead’s sales (46% of product revenue). We think Biktarvy’s long patent life (2033) and Gilead’s innovation in HIV offer the most encouraging support for the firm’s wide moat, with further potential from higher-risk programs in oncology as well as some smaller potential sales from effective hepatitis D and liver autoimmune disease. We think shares look undervalued, particularly given the impressive recent HIV prevention data for lenacapavir and a large opportunity to help a broader group of individuals prevent infection.