Gilead Sciences, Inc. (GILD) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reflects positive sentiment, with robust financial performance, strategic product launches, and optimistic future guidance. Yeztugo's launch success and anticipated revenue growth, along with strong adherence and coverage, are promising. The Q&A section further supports this sentiment, highlighting management's confidence in their strategic initiatives, particularly in HIV and oncology segments. Despite some uncertainties in trials and adherence data, the overall outlook remains positive, driven by innovative products and strategic market expansion. The absence of significant negative news or guidance reinforces a positive stock price prediction.
Key Financial Performance
HIV Business Growth Grew 10% year-over-year, driven by 7% growth for Biktarvy and 87% growth for U.S. PrEP business. Reasons include the success of the Yeztugo launch, which saw first-quarter sales grow 72% sequentially.
Trodelvy Sales Increased 37% year-over-year, reflecting growing demand for Trodelvy in oncology.
Livdelzi Revenue More than tripled year-over-year in second-line primary biliary cholangitis (PBC). Growth driven by expansion in prescriber adoption and broader utilization among appropriate patients.
Total Product Sales (Excluding Veklury) $6.8 billion, up 8% year-over-year, driven by growth in HIV, breast cancer, and PBC products, partially offset by declines in HCV and cell therapy.
Total Product Sales (Including Veklury) $6.9 billion, up 5% year-over-year. Sequentially down 12% due to normal first-quarter seasonality.
HIV Sales $5 billion, up 10% year-over-year, driven by strong demand for Biktarvy, Yeztugo, and Descovy, as well as pricing favorability. Sequentially down 13% due to seasonality.
Biktarvy Sales $3.4 billion, up 7% year-over-year, driven by higher demand and average realized price. Sequentially down 15% due to inventory drawdown and seasonality.
Descovy Sales $807 million, up 38% year-over-year, driven by higher average realized price and demand growth. Sequentially down 1% due to seasonality.
Yeztugo Sales $166 million, up 72% sequentially, driven by strong launch metrics including access, market share, and persistency.
Trodelvy Sales (Detailed) $402 million, up 37% year-over-year and 5% sequentially, driven by growing demand across breast cancer indications.
Cell Therapy Sales $407 million, down 12% year-over-year and 11% sequentially, reflecting competition across regions.
R&D Expenses $1.4 billion, relatively flat year-over-year, reflecting higher investments in virology clinical manufacturing offset by lower oncology clinical study activity.
SG&A Expenses Up 12% year-over-year, primarily due to higher selling and marketing expenses related to the Yeztugo launch.
Operating Margin 47%, reflecting focus on operating expense discipline.
Non-GAAP Diluted EPS $2.03, up 12% year-over-year, driven by higher product sales and lower IPR&D expenses.
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Operating Highlights
HIV Business Growth: The HIV business grew 10% year-over-year, with Biktarvy growing 7% and the U.S. PrEP business growing 87%. The Yeztugo launch contributed significantly, with first-quarter sales growing 72% sequentially. Up to 7 potential new HIV product launches are expected by 2033, including bictegravir plus lenacapavir, which is under FDA priority review with a decision expected in August.
Oncology Expansion: Trodelvy sales increased 37% year-over-year, with regulatory decisions expected for first-line metastatic triple-negative breast cancer in the second half of 2026. The acquisition of Tubulis adds TUB-040, a potential leading ADC for ovarian cancer, with Phase I data to be presented at ASCO. Anito-cel, a BCMAxCAR-T therapy for multiple myeloma, is expected to launch in early 2027.
Liver Disease and Inflammation: Livdelzi revenue tripled year-over-year, driven by second-line primary biliary cholangitis. A Phase III IDEAL study update is expected in the second half of 2026. Hepcludex for chronic hepatitis delta virus infection is awaiting a regulatory decision later this quarter. The Ouro Medicines acquisition adds gamgertamig, a BCMAxCD3 T cell engager for autoimmune diseases.
HIV Market Leadership: Biktarvy holds over 52% market share in the U.S. HIV treatment market. Yeztugo is now the leading long-acting injectable in the HIV prevention market, with 95% of individuals covered in the U.S. and strong adoption among naive PrEP users.
Oncology Market Position: Trodelvy is the leading ADC in second-line metastatic TNBC treatment and has received NCCN Category 1 recommendations for first-line metastatic TNBC. The Tubulis acquisition strengthens Gilead's position in ovarian cancer treatment.
Financial Performance: First-quarter total product sales, excluding Veklury, were $6.8 billion, up 8% year-over-year. Including Veklury, sales were $6.9 billion, up 5%. HIV sales grew 10%, driven by Biktarvy and Yeztugo. Trodelvy and Livdelzi also contributed to growth.
R&D Investments: The pipeline now includes 47 clinical programs, with significant investments in HIV, oncology, and inflammation. Acquisitions of Arcellx, Ouro Medicines, and Tubulis are expected to enhance capabilities in CAR-T, ADCs, and autoimmune therapies.
Acquisitions and Pipeline Expansion: The acquisitions of Arcellx, Ouro Medicines, and Tubulis add innovative assets and technologies, including anito-cel for multiple myeloma, gamgertamig for autoimmune diseases, and TUB-040 for ovarian cancer. These moves aim to strengthen Gilead's position in oncology and inflammation.
HIV Product Development: Gilead is advancing its HIV pipeline with potential launches of bictegravir plus lenacapavir in 2026 and other long-acting treatments by 2033. The company is also focusing on expanding its PrEP portfolio with Yeztugo and lenacapavir-based regimens.
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Risk or Challenges
Drug Pricing Agreement and Affordable Care Act Changes: The company faces a 2% growth headwind in 2026 due to policy-related changes, including the drug pricing agreement announced in December 2025 and the Affordable Care Act. These changes could impact revenue growth and profitability.
Cell Therapy Sales Decline: First quarter cell therapy sales were down 12% year-over-year and 11% sequentially, reflecting ongoing competition across regions. This decline could affect the company's ability to maintain its market position in cell therapy.
HCV Sales Decline: Lower HCV patient starts and inventory drawdowns contributed to a decline in liver disease sales, which were down 9% sequentially. This trend could impact the company's revenue from its liver disease portfolio.
Regulatory and Approval Risks: The company is awaiting multiple regulatory decisions for key products, including BIC/LEN, anito-cel, and Hepcludex. Delays or negative outcomes in these approvals could hinder product launches and revenue growth.
Competition in Oncology and Cell Therapy: The company faces significant competition in oncology and cell therapy markets, which could impact the adoption and sales of its products like Trodelvy and anito-cel.
Seasonal Sales Variability: Sales for key products like Biktarvy and Descovy experienced typical first-quarter seasonality, including inventory drawdowns and lower average realized prices. This variability could affect quarterly financial performance.
Integration Risks from Acquisitions: The company has recently acquired Arcellx, Ouro Medicines, and Tubulis. Successfully integrating these acquisitions and realizing their potential benefits pose operational and strategic challenges.
Economic and Policy Uncertainties: The company highlighted uncertainties related to economic conditions and policy changes, which could impact its financial performance and strategic objectives.
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Guidance & Outlook
HIV Business Growth: Gilead's HIV business is expected to grow strongly with no major LOEs until 2036. Up to 7 potential new HIV product launches are anticipated by 2033, including bictegravir plus lenacapavir (FDA decision expected in August 2026) and other long-acting treatments targeting launches between 2031 and 2033.
Yeztugo Guidance: Yeztugo's 2026 sales guidance has been increased to $1 billion, potentially achieving blockbuster status in its first full year. Long-term growth is expected as stigma around HIV PrEP is reduced and adoption expands.
Trodelvy in Oncology: Regulatory decisions for Trodelvy in first-line metastatic triple-negative breast cancer are anticipated in the second half of 2026. Phase III updates for other oncology indications are expected later this year.
Livdelzi in Liver Disease: Phase III IDEAL study updates for Livdelzi in second-line primary biliary cholangitis are expected in the second half of 2026. Positive results could support a label update and expand the addressable population.
Hepcludex Launch: A regulatory decision and potential U.S. launch of Hepcludex for chronic hepatitis delta virus infection are expected later this quarter.
Anito-cel in Cell Therapy: Regulatory decision for anito-cel, a BCMAxCAR-T therapy for multiple myeloma, is expected in December 2026. Revenue generation is anticipated to begin in early 2027.
Tubulis Acquisition: The acquisition of Tubulis brings TUB-040, a potential leading ADC for ovarian cancer, with Phase I data to be presented in June 2026. Registrational Phase III studies are planned for 2027.
Ouro Medicines Acquisition: The acquisition of Ouro Medicines adds gamgertamig, a BCMAxCD3 T cell engager for autoimmune diseases, with Phase III trials targeted for 2027.
2026 Financial Guidance: Total product sales for 2026 are expected to range between $30 billion and $30.4 billion, reflecting a $400 million increase from prior guidance. HIV sales are projected to grow 8% year-over-year, driven by Yeztugo and other key products.
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Shareholder Return Plan
Dividend Payments: Gilead returned greater than $1.4 billion to shareholders in the first quarter of 2026, which includes dividend payments.
Share Repurchase Program: Over $400 million of share repurchases were conducted in the first quarter of 2026, as part of returning approximately 60% of free cash flow to shareholders.
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Key Q&A
Q:Can you talk more about the Tubulis deal, including the NPV driven by ovarian cancer and potential for lung cancer, and your view on PD-1 VEGF combinations?
A:Management highlighted the value of the Tubulis platform, particularly TUB-040 and TUB-030, with strong data in ovarian cancer and potential in lung cancer. They emphasized the platform's unique technologies, such as P5 and Alco5, which enhance payload delivery and stability. Regarding PD-1 VEGF combinations, they are monitoring data closely and evaluating tumor-specific mechanisms.
Q:Can you provide the latest mix of Switch versus naive buy and bill for the Yeztugo launch and updates on adherence assumptions?
A:Management reported strong performance for Yeztugo, with 95% coverage and $0 co-pay for most patients. Switch share is higher than naive, but naive prescriptions are growing. Persistency is encouraging, with expectations for Yeztugo to achieve the highest adherence in the HIV prevention market.
Q:What is driving users not returning for a second dose of Yeztugo, and what are the DTC efforts?
A:Management is tracking claims data but lacks detailed insights. They see positive trends in second-dose adherence and are leveraging specialty pharmacies and DTC campaigns to improve persistency. DTC efforts have increased brand awareness, but results will take 6-12 months to materialize.
Q:What is the opportunity for BIC/LEN treatment in the HIV market, particularly in the Switch market?
A:Management sees opportunities in simplifying regimens for patients on multiple pills and capturing a share of the dynamic Switch market. They expect modest revenues in 2026 with a ramp-up in 2027 and beyond, emphasizing the innovative combination of bictegravir and lenacapavir.
Q:Can you discuss Yeztugo adherence and whether the greater than 80% adherence target is still achievable?
A:Management believes adherence remains strong, with persistency improving over time. They are optimistic about achieving high adherence levels, supported by logistics and specialty pharmacy efforts.
Q:What is the safety advantage of anito-cel among CAR-Ts as it moves to earlier lines of treatment?
A:Management expects the safety advantage to remain significant, particularly in earlier lines of treatment. They are designing trials for newly diagnosed multiple myeloma and smoldering cases, emphasizing both efficacy and safety.
Q:How should we think about margins in the near and long term given recent acquisitions and launches?
A:Management reported a 47% operating margin in Q1 and expects to manage incremental expenses from acquisitions and launches. They anticipate room for margin expansion beyond 2027 as Phase III trials conclude and high-quality assets are added to the portfolio.
Q:What is the status of the Phase II ulcerative colitis trial of the oral alpha 4 beta 7?
A:Management is reviewing the data and plans to provide updates soon, emphasizing their excitement about the program.
Q:What regions in the U.S. are seeing the greatest uptake for Yeztugo, and how do you expect this to evolve?
A:The greatest uptake is in areas with established HIV PrEP markets, such as San Francisco, L.A., and New York. Efforts are also focused on naive markets with high HIV incidence, like the rural South.
Q:What is the timeline for GS-3242, and how does it compare to competitors?
A:Management is in the dose escalation phase and aims for once every 6-month dosing. They estimate a market entry between 2031 and 2033, reflecting conservative trial design timelines.
Q:How will Astra and Daiichi's Datroway approval impact Trodelvy sales in triple-negative breast cancer?
A:Management remains confident in Trodelvy's performance, citing strong growth and its established position as the standard of care in second-line metastatic TNBC. They anticipate continued uptake in earlier lines.
Q:Will anito-cel require second-line iMMagine-3 data for broader adoption, or can it ramp based on later-line approvals?
A:Management is confident in anito-cel's launch potential, emphasizing its efficacy and safety profile. They expect strong adoption in fourth-line settings and rapid activation of treatment centers.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct update on the Phase II ulcerative colitis trial of the oral alpha 4 beta 7, stating only that they are reviewing the data and will update soon. They also lacked detailed insights into why some Yeztugo users are not returning for a second dose, citing limitations in claims data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ADC platform
ADCs
ASCENT GYN
Arcellx acquisition
BIC LEN
Biktarvy
CROI
FDA decision
HCV
IDEAL study
III update
ISLEND
PD patient
TUB
acquisition Arcellx
acquisition Medicines
anito cel
array
asset
cancer decision
cel disease
cell engager
close
domain binder
gamgertamig
generation ADC
inflammation
integrase inhibitor
molecule
platinum cancer
sale launch
sale seasonality
track record
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