Gilead Sciences Q1 2025 Results: Navigating Near-Term Headwinds with a Focus on Long-Term Innovation

Gilead Sciences (NASDAQ: GILD) reported its first-quarter 2025 financial results, revealing a mixed performance driven by persistent headwinds in its pandemic-era drug Veclury, while its core HIV and oncology franchises showed resilience. Despite a 1% year-over-year decline in total product sales to $6.6 billion, the company’s disciplined cost management and promising pipeline developments underscore a strategic pivot toward long-term growth. Non-GAAP diluted EPS of $1.81, supported by a robust 43% operating margin, highlights Gilead’s focus on profitability amid evolving market dynamics.

HIV Dominance and Pipeline Catalysts

Gilead’s HIV franchise remains its cornerstone, with sales rising 6% YoY to $4.6 billion. Biktarvy, the company’s leading HIV treatment, grew 7% to $3.1 billion, maintaining its dominance in the U.S. and key international markets like Germany. Meanwhile, Descovy’s 38% YoY jump to $586 million—particularly in HIV prevention (PrEP)—reflects its 40% share of the fast-growing PrEP market. With the FDA’s decision on Lenacapavir, a twice-yearly injectable HIV PrEP, looming by June 19, Gilead is positioned to further cement its leadership. If approved, Lenacapavir could generate up to $1 billion annually by 2030, transforming the prevention landscape.

Ask Aime: How will Gilead's pipeline developments and cost management impact its long-term growth strategy?

Oncology Challenges and Opportunities

In oncology, Trodelvy sales dipped 5% YoY to $293 million due to inventory adjustments and pricing pressures. However, Phase III ASCENT-04 data showing improved outcomes in first-line TNBC patients signals potential for label expansion. Positive ASCENT-03 results expected by late Q2 could further bolster Trodelvy’s addressable market. Meanwhile, cell therapy sales fell 3% to $464 million, with Yescarta’s 2% growth in international markets offsetting Tecartus’ struggles. Gilead’s pipeline in this segment includes ETOcell for multiple myeloma, set for a 2026 launch, and next-gen CAR-T candidates like KITE-363, which could reinforce its oncology portfolio.

Near-Term Headwinds and Strategic Responses

Gilead faces near-term challenges, including Medicare Part D’s low-income subsidy reforms, which are expected to suppress 2025 HIV sales growth. However, management anticipates a rebound in 2026 as the policy stabilizes. The company is also navigating Veclury’s decline, projecting $1.4 billion in 2025 sales as pandemic demand wanes. To mitigate these pressures, Gilead has slashed R&D and SG&A expenses by 5% and 6% YoY, respectively, while maintaining investments in critical programs like Lenacapavir and ETOcell.

Financial Outlook and Valuation Considerations

Gilead’s full-year 2025 guidance calls for $28.2–$28.6 billion in total product sales, with base business growth (excluding Veclury) of 4–5%. Non-GAAP EPS is projected at $7.70–$8.10, reflecting its cost discipline. At current valuations, GILD’s forward P/E of ~12x (based on $8.00 EPS midpoint) appears reasonable, especially if upcoming catalysts like Lenacapavir’s approval and ETOcell’s data deliver on expectations. The company’s $12.7–$13.2 billion operating income target underscores its ability to navigate near-term hurdles without sacrificing profitability.

Conclusion: A Strategic Play for the Long Run

Gilead’s Q1 results reveal a company navigating transitional challenges with a clear path forward. While Medicare Part D reforms and post-pandemic demand shifts present short-term headwinds, the HIV franchise’s strength, oncology pipeline progress, and cost discipline position Gilead to outperform in the years ahead. With key catalysts—including Lenacapavir’s FDA decision, ETOcell’s 2026 launch, and Trodelvy’s label expansion—on the horizon, investors should view the current dip as a buying opportunity. Gilead’s 43% operating margin, robust cash flow, and focus on high-margin therapies suggest it is well-equipped to capitalize on its $45 billion addressable market in HIV, oncology, and inflammation. For long-term investors, the fundamentals remain compelling, even as near-term volatility persists.

As Gilead transitions from a pandemic-era revenue model to one anchored in sustainable innovation, its ability to execute on its pipeline and adapt to regulatory shifts will determine its trajectory. With a balanced mix of defensive cash flows and high-growth opportunities, GILD offers a compelling risk-reward profile for those willing to look past the noise of the present.