Executive Summary / Key Takeaways

• Gilead Sciences is demonstrating robust growth driven by its HIV and Liver Disease portfolios, notably Biktarvy, Descovy, and the strong launch of Livdelzi, despite significant headwinds from Medicare Part D redesign and declining Veklury sales.
• The company's innovative pipeline, particularly in HIV (lenacapavir for PrEP and treatment) and Oncology (Trodelvy in breast cancer, anito-cel in multiple myeloma, and next-generation cell therapies), is poised to drive future expansion with multiple potential launches in 2026 and beyond.
• Strategic acquisitions and collaborations, coupled with a planned $32 billion investment in U.S. R&D and manufacturing, underscore Gilead's commitment to long-term leadership and diversification across its therapeutic areas.
• Gilead maintains a strong financial position, evidenced by consistent operating expense discipline, healthy cash flow generation, and an extended patent exclusivity for its flagship HIV product, Biktarvy, until 2036.
• Investors should monitor the successful integration and market penetration of new launches, the impact of evolving drug pricing policies, and the competitive dynamics in the rapidly advancing cell therapy and oncology spaces.

A Legacy of Breakthroughs and Strategic Evolution

Gilead Sciences, Inc. has forged a distinguished legacy over three decades, consistently delivering groundbreaking medicines in areas of critical unmet medical need. From its inception in 1987, the company has been a pioneer, particularly in HIV, a leadership position recognized by scientific milestones such as the discovery of HIV treatment as prevention in 2011 and the recent "breakthrough of the year" acknowledgment for lenacapavir in 2024. This historical commitment to innovation forms the bedrock of Gilead's current strategy, which has seen a significant pivot towards diversification and pipeline expansion since 2020.

The company's strategic evolution is marked by a series of targeted acquisitions and collaborations designed to bolster its presence in oncology and liver diseases. Key moves include the 2020 acquisition of Immunomedics, Inc., the 2021 acquisition of MYR GmbH, and the substantial $3.90 billion acquisition of CymaBay Therapeutics, Inc. in March 2024, which brought the promising seladelpar (now Livdelzi) into its liver disease portfolio. These strategic investments are complemented by a planned $32 billion capital allocation in U.S. manufacturing and R&D through 2030, reinforcing Gilead's long-term commitment to its domestic footprint and innovation engine.

Technological Edge: The Engine of Differentiation

Gilead's competitive strength is deeply rooted in its differentiated technological platforms across its core therapeutic areas. In HIV, lenacapavir (marketed as Yeztugo for PrEP and Sunlenca for treatment) represents a significant leap forward as the first and only twice-yearly injectable HIV-1 capsid inhibitor. Clinical trials demonstrated its unprecedented efficacy, virtually eliminating new HIV infections and reducing the risk of acquisition by 96% compared to placebo, proving 89% more effective than the daily pill Truvada. This long-acting profile offers tangible benefits in patient adherence and privacy, addressing critical barriers to prevention. The company is further advancing this technology with a Phase III trial (PURPOSE-365) for once-yearly lenacapavir for HIV prevention, targeting potential approval in 2028, and is developing a next-generation daily oral regimen (BIC/LEN) with a target launch in early 2027.

In oncology, Trodelvy (sacituzumab govitecan-hziy) stands out as a TROP2-directed antibody-drug conjugate. In the Phase III ASCENT-03 study for first-line metastatic triple-negative breast cancer (mTNBC) patients not candidates for PD-1/PD-L1 inhibitors, Trodelvy demonstrated a median progression-free survival (PFS) of 9.7 months, a 38% reduction in disease progression or death compared to 6.9 months for chemotherapy. Similarly, the ASCENT-04 trial showed a 35% reduction in disease progression or death with Trodelvy plus Keytruda in first-line PD-L1+ mTNBC, achieving a median PFS of 11.2 months. These results position Trodelvy as a potential backbone treatment in earlier lines of mTNBC, a highly aggressive cancer.

Gilead's cell therapy arm, Kite, continues to push boundaries with its CAR T-cell therapies, Yescarta and Tecartus. The company is actively developing next-generation constructs like KITE-363, a bicistronic CD19/CD20 CAR T designed to offer deeper, more sustained responses by targeting multiple antigens and potentially overcoming resistance mechanisms. Anito-cel, a BCMA CAR-T therapy for multiple myeloma, has shown compelling efficacy and safety in the iMMagine-1 trial, with a 97% overall response rate and 93% minimal residual disease negativity. Furthermore, Gilead's recent acquisition of Interius BioTherapeutics and collaboration with Pregene Biopharma are accelerating its exploration of in vivo cell therapies, which promise off-the-shelf, simplified manufacturing and broader patient access compared to current autologous CAR-T approaches. These technological advancements are critical to Gilead's competitive moat, driving higher average selling prices, potentially better margins, and solidifying its market leadership in specialized therapeutic areas.

Competitive Landscape and Market Positioning

Gilead operates within a highly competitive biopharmaceutical landscape, facing both diversified pharmaceutical giants and specialized biotech firms. In HIV, Gilead maintains a dominant position, with Biktarvy holding approximately 52% of the U.S. market share and Descovy for PrEP capturing over 45% of the U.S. PrEP market. The recent settlement of Biktarvy patent litigation, extending generic entry in the U.S. to 2036, significantly reinforces this leadership and provides a long runway for its flagship product. The launch of Yeztugo is expected to further differentiate Gilead in the HIV prevention market, offering a unique twice-yearly dosing advantage over existing daily oral and less frequent injectable options.

In oncology, particularly with Trodelvy, Gilead competes against other antibody-drug conjugates (ADCs) and immunotherapies. Trodelvy's demonstrated overall survival benefit in pre-treated HR+/HER2- metastatic breast cancer and its strong PFS data in mTNBC position it favorably against rivals. However, the cell therapy segment, encompassing Yescarta and Tecartus, faces "ongoing competitive headwinds" from both in-class CAR T-cell therapies and out-of-class bispecific antibodies. While Gilead's Kite unit is expanding its authorized treatment centers and developing next-generation CAR-Ts with improved safety profiles for enhanced outpatient usage, this segment is experiencing a projected 10% decline in sales for 2025. In liver disease, Livdelzi has rapidly become the #1 treatment for second-line PBC in the U.S., demonstrating strong market penetration and differentiation.

Compared to diversified competitors like Pfizer (PFE) and Johnson & Johnson (JNJ), Gilead's strategy is more focused on specialized therapeutic areas. While these larger players benefit from broader portfolios and greater scale, Gilead's deep expertise in antivirals and cell therapy allows it to achieve superior efficacy and market share in its niche segments. Against specialized oncology rivals like Merck (MRK) and Bristol-Myers Squibb (BMY), Gilead's proprietary cell therapy technologies and TROP2 ADC platform provide a competitive edge in targeted treatments. However, the company's reliance on a few blockbuster drugs and ongoing R&D dependencies through partnerships present vulnerabilities, particularly against rivals with broader pipelines and internal R&D capabilities.

Financial Performance and Liquidity

Gilead's recent financial performance underscores its operational effectiveness and strategic execution. For the three months ended September 30, 2025, total revenues increased 3% year-over-year to $7.77 billion, and for the nine months ended September 30, 2025, they rose 2% to $21.52 billion. This growth was primarily fueled by higher royalty, contract, and other revenues (including a non-recurring $400 million from an IP asset sale), alongside robust HIV and Liver Disease product sales. Net income attributable to Gilead saw a significant increase, reaching $3.05 billion for the third quarter and $6.33 billion for the nine-month period, largely due to lower IPR&D impairment charges compared to the prior year.

The HIV franchise remains a powerhouse, with product sales growing 4% year-over-year to $5.28 billion in Q3 2025 and 6% to $14.95 billion for the nine-month period. This impressive growth was driven by strong demand for Biktarvy (up 6% in Q3 to $3.69 billion) and Descovy (up 20% in Q3 to $701 million), even as the company absorbed a $900 million headwind from the U.S. Medicare Part D redesign. Liver Disease product sales also contributed positively, increasing 12% year-over-year to $819 million in Q3, with Livdelzi exceeding $100 million in quarterly sales for the first time. Conversely, Veklury sales continued their decline, falling 60% in Q3 to $277 million due to reduced COVID-19 hospitalizations, and Cell Therapy sales decreased 11% to $432 million due to competitive pressures. Trodelvy, however, maintained its growth trajectory, with sales up 7% to $357 million in Q3.

Gilead demonstrates strong profitability, with a product gross margin of 78.6% in Q3 2025 and an operating margin of 50%, reflecting disciplined operating expense management. R&D expenses decreased 4% in Q3, and SG&A expenses declined 5%, showcasing the company's ability to leverage its business model.

The company's liquidity position remains solid, with $7.30 billion in cash and cash equivalents and $2 billion in marketable debt securities as of September 30, 2025. While net cash provided by operating activities decreased due to inventory build-up and collection timing, Gilead's capital priorities include continued investment in its pipeline, strategic partnerships, growing its dividend, and opportunistic share repurchases. The recent upgrade of its long-term debt rating to A- by S&P further affirms its financial health.

Outlook and Forward Momentum

Gilead's outlook for 2025 reflects a confident stance on its core business, despite acknowledging ongoing challenges. The company has raised the low end of its full-year product sales guidance to $28.4 billion - $28.7 billion, with HIV revenue growth expectations increasing to approximately 5% year-over-year. This revised guidance underscores the underlying demand-led volume growth in HIV, which is expected to continue into 2026 and beyond, effectively resetting the base after absorbing the Medicare Part D redesign impact. Veklury sales are projected to be around $1 billion, while Cell Therapy sales are anticipated to decline by approximately 10% for the full year due to competitive headwinds.

The pipeline is a key driver of future growth. Yeztugo, the twice-yearly HIV PrEP injection, is off to a strong start, having achieved 75% payer coverage in the U.S. almost three months ahead of target, with a goal of 90% by mid-2026. This rapid access is expected to translate into significant pull-through in 2026. In oncology, regulatory decisions for Trodelvy in first-line metastatic TNBC are expected in 2026, following positive Phase III data. The potential commercial launch of anito-cel for multiple myeloma is also targeted for 2026, with pivotal data updates anticipated soon. Furthermore, the BLA filing for bulevirtide in chronic HDV in the U.S. is complete, with a potential regulatory decision in 2026. These imminent launches and pipeline advancements are critical to Gilead's strategy of delivering up to nine new HIV treatment and prevention options by 2033 and expanding its oncology and liver disease franchises.

Risks and Challenges

Despite a strong outlook, Gilead faces several pertinent risks. Regulatory and policy changes, particularly the Inflation Reduction Act (IRA) and the One Big Beautiful Bill (OBBB) Act, pose ongoing challenges to drug pricing and reimbursement. While Gilead's U.S.-centric intellectual property and manufacturing footprint may mitigate some tariff impacts, the full scope of these legislative changes remains uncertain and could negatively affect profitability. Competitive pressures are intense across all therapeutic areas, with generic challenges in HIV and increasing competition from in-class and out-of-class therapies in cell therapy. Clinical trial failures, such as the ASCENT-7 study for Trodelvy in HR+/HER2- metastatic breast cancer not meeting its primary endpoint, and the clinical hold on certain HIV treatment trials (GS-1720 and GS-4182), highlight the inherent uncertainties in drug development. Operational risks, including supply chain disruptions, cybersecurity threats, and the complexities of integrating new acquisitions and ERP systems, also warrant close monitoring.

Conclusion

Gilead Sciences stands at a pivotal juncture, leveraging a rich history of innovation to propel future growth. The company's strategic diversification into oncology and liver diseases, underpinned by a robust pipeline and significant U.S. investments, positions it for sustained expansion. Despite navigating near-term headwinds from evolving drug pricing policies and competitive pressures in certain segments, Gilead's core HIV franchise continues to demonstrate remarkable resilience, further bolstered by the extended patent exclusivity for Biktarvy until 2036. The transformative potential of lenacapavir in HIV prevention, coupled with promising advancements in Trodelvy and next-generation cell therapies, underscores a compelling investment thesis. Investors should recognize Gilead's commitment to disciplined execution and technological leadership as key indicators of its ability to deliver long-term value and deepen its impact on global health.