Profit and Peril: Gilead’s Q1 Report Highlights HIV Strengths and Cancer Challenges

Gilead Sciences’ first-quarter 2025 earnings underscored a familiar paradox: robust performance in its core HIV franchise contrasts sharply with declines in cancer therapies and pandemic-era drugs. While non-GAAP earnings beat expectations, flat revenue of $6.7 billion and missed sales targets for key products like Trodelvy and Veklury left investors grappling with a mixed outlook. Here’s what the numbers mean for shareholders.

The HIV Engine Keeps Churning

Gilead’s dominance in HIV remains its financial backbone. Biktarvy, its top-selling HIV treatment, grew 7% to $3.15 billion in sales, narrowly meeting estimates. Meanwhile, Descovy—positioned for both HIV treatment and prevention—surged 38% to $586 million, outpacing forecasts. These gains reflect expanding demand and price hikes, though competition looms as rivals like Merck’s Lynretx and ViiV’s Cultra threaten to erode margins over time.

The company also highlighted progress in its HIV pipeline, including the eagerly awaited FDA decision on lenacapavir, a twice-yearly injectable preventive therapy. If approved by June 19, it could solidify Gilead’s leadership in a market expected to hit $30 billion by 2030.

Cancer Drugs: A Tale of Two Products

The starkest underperformance came from Gilead’s oncology division. Trodelvy, a breast cancer treatment, saw sales drop 5% to $293 million—a $60 million shortfall versus estimates. Pricing pressures and supply chain issues were cited, but the broader concern is Tecartus, whose sales collapsed 22% to $78 million. Its struggles contrasted with Yescarta, which grew 2% to $386 million, benefiting from international expansion and price adjustments.

The decline in cancer therapies reflects not just execution challenges but also a crowded field. CAR-T cell therapies like Yescarta face competition from Novartis’ Kymriah and Bristol-Myers’ Breyanzi, while smaller biotechs are advancing targeted therapies. Gilead’s hope here hinges on Trodelvy’s Phase 3 data combining it with Merck’s Keytruda, which showed promise in triple-negative breast cancer.

Veklury’s Pandemic Hangover

The sharpest drop came from Veklury, Gilead’s $3 billion pandemic winner, which saw sales plummet 45% to $302 million as hospitals reduced antiviral use. While this decline was anticipated, it underscores the risks of relying on one-time windfalls. CEO Daniel O’Day emphasized shifting focus to “chronic care” markets, but investors remain wary of reliance on a shrinking HIV cash cow.

Cost Cuts and Pipeline Pivots

Gilead’s cost discipline shone through: R&D expenses fell 6% to $1.4 billion, and SG&A dropped 7% to $1.3 billion. However, a rising tax rate (20.2%) and lingering pandemic-era charges highlight lingering fiscal headwinds.

The company reaffirmed its 2025 guidance ($28.2–28.6 billion in sales, $7.70–8.10 EPS), betting on regulatory wins and pipeline momentum. With $6.5 billion in cash and a 1.7% dividend yield, Gilead retains financial flexibility—but execution must follow.

Conclusion: A Buy at a Crossroads?

Gilead’s Q1 results paint a company at a critical juncture. Its HIV franchise remains a cash machine, but oncology’s stumble and Veklury’s fade demand a strong pipeline response. Lenacapavir’s approval is a binary event: success could propel stock appreciation, while delays might prolong stagnation.

Investors should weigh these risks against Gilead’s valuation. At a current P/E of 13.2x (vs. its 5-year average of 15.6x), shares appear undervalued if pipeline wins materialize. However, with the stock hovering near $120—below its 50-day moving average—and oncology sales declining, patience is required.

The verdict? Hold for now. Gilead’s HIV dominance and near-term catalysts (lenacapavir, Trodelvy combo data) justify cautious optimism, but cancer’s struggles and competition mean this isn’t a “buy and forget” stock. Investors should monitor the June 19 FDA decision closely—and brace for volatility ahead.