Gilead’s Q1 Revenue Miss Highlights Trodelvy Challenges, but Hope Lingers in Pipeline

Gilead Sciences (NASDAQ: GILD) reported first-quarter 2025 revenue of $6.67 billion, a 1% year-over-year decline and a miss against Wall Street’s $6.81 billion consensus. The results underscored mixed performance across its portfolio, with Trodelvy, its breast cancer drug, falling short of expectations amid supply-chain and pricing headwinds. Yet, Oppenheimer’s upgraded stock target to $132 signals optimism about Trodelvy’s long-term potential and Gilead’s robust pipeline. Here’s what investors need to know.

Trodelvy’s Struggles, but Clinical Momentum Ahead

Trodelvy’s Q1 sales dropped 5% to $293 million, significantly below the $353 million estimate, driven by lower average pricing and inventory adjustments. Gilead attributed the shortfall to “temporary dynamics,” emphasizing that demand for the drug remains strong. Clinical data supports this view: in the Phase 3 ASCENT-04 trial, Trodelvy showed statistically significant improvements in progression-free survival (PFS) for first-line PD-L1+ metastatic triple-negative breast cancer (TNBC), a large and underserved population. Positive results from the broader ASCENT-03 trial—expected by late Q2—could further expand its use, potentially adding $1 billion in annual sales and justifying its $21 billion acquisition price.

Pipeline Catalysts and Analyst Optimism

Oppenheimer’s $132 price target (up from $115) reflects confidence in Trodelvy’s trajectory and Gilead’s broader pipeline. Key drivers include:
- Lenacapavir: A twice-yearly HIV preventive drug with a June 19 FDA decision (PDUFA date). If approved, it could revolutionize HIV prevention, targeting a market projected to hit $2.5 billion by 2030.
- Trodelvy’s Competitive Edge: Its unstable linker technology—once a liability—may enhance tumor targeting, contrasting with rivals like Dato-DXd (which missed its overall survival endpoint in HR+ breast cancer).
- HIV Franchise Resilience: Biktarvy’s 7% sales growth ($3.15 billion) and Descovy’s 38% surge ($586 million) highlight ongoing demand, despite Medicare Part D headwinds.

Near-Term Risks and Financial Position

Gilead’s Q1 results also revealed vulnerabilities:
- Cell Therapy Declines: Sales fell 22% for Tecartus and 3% overall, reflecting competition in CAR-T therapies.
- Veklury’s Fade: Its $302 million sales (down 45%) highlight the fading pandemic-era tailwinds.
- Part D Pricing Reforms: Medicare’s new payment model could pressure HIV sales through 2026, though Gilead’s strong $7.9 billion cash balance and disciplined financial management (including $730 million in Q1 share repurchases) provide a cushion.

Guidance and Stock Reaction

Gilead maintained its full-year outlook:
- Product sales: $28.2–28.6 billion (vs. consensus $28.57 billion).
- EPS: $7.70–8.10, with the midpoint slightly below estimates.

Shares dipped 3.4% post-earnings, but remain up 16% year-to-date, reflecting optimism around upcoming catalysts. The stock’s 2.97% dividend yield adds further appeal.

Conclusion: Navigating Headwinds for Long-Term Growth

Gilead’s Q1 miss was a reminder of Trodelvy’s execution challenges, but its pipeline and clinical wins position it for a rebound. With ASCENT-03 results, lenacapavir’s FDA decision, and Biktarvy/Descovy’s dominance in HIV, the company is well-equipped to drive growth. While risks like pricing reforms and competition linger, the $132 price target—implying a 20% upside from current levels—suggests investors are betting on Gilead’s ability to leverage its innovations. For now, patience remains key: the next few months could redefine Gilead’s trajectory.

In summary, Gilead’s Q1 stumble is temporary, but its long-term story hinges on Trodelvy’s clinical success and lenacapavir’s approval. Investors who can tolerate near-term volatility may find value in a company primed to lead in oncology and HIV.