Q3 2024 Earnings Summary
- Gilead is highly optimistic about the potential of lenacapavir for PrEP, seeing significant growth opportunities by expanding market size, reaching more consumers, and expanding globally beyond the U.S.
- The company's HIV business shows strong durability with no significant patent expiries until 2033, and multiple new long-acting treatment options in development, aiming to maintain leadership in HIV treatment and prevention well into the late 2030s.
- Gilead reported its strongest quarter of the year, highlighting both commercial success and promising clinical data on key products like lenacapavir and anito-cel, indicating strong commercial and clinical execution.
- Gilead's HIV business has significant exposure (mid- to high 20%) to Medicaid, and potential Medicaid cutbacks could negatively impact revenue.
- Lenacapavir for PrEP may cannibalize sales of Gilead's own product Descovy, which could impact overall HIV revenue.
- Gilead is delaying quantitative guidance on lenacapavir for PrEP, suggesting uncertainty about its commercial potential.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +7% | The increase to $7,545 was primarily driven by continued HIV and Veklury demand, as well as broader market recovery post-pandemic. Favorable pricing in key therapeutic areas also contributed to revenue expansion. |
HIV | +9% | Sales rose to $5,073, fueled by strong uptake of core regimens like Biktarvy and expanding prevention usage. Company initiatives emphasizing treatment adherence and broader geographic coverage further bolstered growth. |
Oncology | +6% | Revenue climbed to $816, driven by higher demand for cell therapies such as Yescarta and Tecartus, as well as market share gains for Trodelvy. Competitive pressures in certain indications slightly tempered the growth. |
Veklury | +9% | Sales reached $692, reflecting a modest resurgence in COVID-19-related hospitalizations and continued use in hospitalized patients. Improved procurement patterns in certain regions also contributed to higher sales. |
U.S. Region | +9% | The total of $5,450 was primarily driven by robust HIV portfolio performance and ongoing oncology launches. Market expansion and favorable patient access programs supported additional volume growth. |
Europe | +12% | Revenue rose to $1,167 on the back of strong HIV uptake, broader oncology reimbursement, and cell therapy rollouts. Currency fluctuations and continued market penetration helped offset competitive dynamics. |
Operating Income | -66% | Despite higher revenue, operating income fell to $888 mainly due to increased R&D spending and higher SG&A costs in preparation for new product launches. Additional one-time expenses, including possible settlement costs, further pressured margins. |
Net Income | -42% | Decreasing to $1,253, net income was impacted by elevated operating expenses and certain legal accruals. Unrealized losses on equity investments also contributed to the drop. |
EPS (Diluted) | -42% | EPS declined to $1.01, primarily reflecting the same factors that reduced net income, including higher operational costs. Share repurchases partly mitigated the effect but were insufficient to offset expense-driven pressures. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Product Sales (excl. Veklury) | FY 2024 | $25.8B to $26.2B | $26.0B to $26.3B | raised |
Total Product Sales | FY 2024 | $27.1B to $27.5B | $27.8B to $28.1B | raised |
Veklury Revenue | FY 2024 | no prior guidance | $1.8B | no prior guidance |
HIV Sales Growth | FY 2024 | 4% | 5% | raised |
Product Gross Margin (Non-GAAP) | FY 2024 | 85%-86% | 86% | raised |
R&D Expense | FY 2024 | Low to mid single-digit growth | Decline a low single-digit percentage | lowered |
Acquired IP R&D | FY 2024 | $4.7B | $4.7B | no change |
SG&A Expense | FY 2024 | Mid single-digit decline | Mid single-digit decline | no change |
Operating Income (Non-GAAP) | FY 2024 | $7.2B to $7.6B | $8.0B to $8.3B | raised |
Tax Rate | FY 2024 | no prior guidance | 27% | no prior guidance |
EPS (Non-GAAP) | FY 2024 | $3.60 to $3.90 | $4.25 to $4.45 | raised |
EPS (GAAP) | FY 2024 | no prior guidance | $0.05 to $0.25 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Operating Income | Q3 2024 | $7.2 billion to $7.6 billion for FY 2024 | $888 million | Missed |
R&D Expenses | Q3 2024 YoY | Increase by a low to mid-single-digit percentage vs. 2023 | Decreased from $1,456 in Q3 2023To $1,395 in Q3 2024(≈ -4.2% YoY) | Missed |
SG&A Expenses | Q3 2024 YoY | Decline by a mid-single-digit percentage vs. 2023 | Increased from $1,314 in Q3 2023To $1,432 in Q3 2024(≈ +9% YoY) | Missed |
Total Product Sales | Q3 2024 | $27.1 billion to $27.5 billion for FY 2024 | ~$7,515 million (derived from $7,545 total revenueMinus $30 Royalty/Other), indicating on-track full-year run rate | Met |
HIV Product Sales Growth | Q3 2024 YoY | ~4% growth for FY 2024 | Increased from $4,667 in Q3 2023To $5,073 in Q3 2024, ~8.7% YoY | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
HIV franchise expansion (lenacapavir) | Discussed consistently in Q2, Q1, and Q4 2023 with focus on daily oral and long-acting regimens, including bictegravir combos and global rollout. | Maintains strong emphasis on lenacapavir for prevention and treatment, targeting broad access and regulatory submissions. | Consistently emphasized each quarter, no major shift in sentiment. |
Trodelvy (EVOKE-01, ASCENT-03/-04) | Evolving sentiment: EVOKE-01 trial failure mentioned in Q4 2023; Q2 and Q1 2024 discussed potential market expansion in TNBC. | Discontinued 2L+ metastatic NSCLC development after regulators’ feedback; pivot to TNBC expansion with ASCENT-03/-04. | Shift from NSCLC challenges toward optimism in triple-negative breast cancer. |
Cell therapy performance | Q2 2024 highlighted $521M with growth yet acknowledged rising competition; similar optimism vs. constraints references in Q1 and Q4 2023. | Sales were flat YoY at $485M with a 7% sequential decline, citing competitive headwinds likely to persist. | Momentum tapering from prior optimism, competition increasingly recognized. |
Medicaid/Medicare reimbursement risk | Mentioned in Q1 2024 regarding Medicare Part D redesign impacting 2025 HIV sales; not reiterated in Q2 or Q4. | Potential Medicaid risk (mid-high 20% of HIV business), though no immediate cutbacks announced. | Re-emerges in Q3 after earlier Q1 discussion. |
Oral GLP-1 (GS-4751) | Introduced in Q2 2024 as a Phase I obesity/metabolic pipeline opportunity; absent in Q1 and Q4. | Not mentioned in Q3. | New in Q2, then no further updates. |
Lenacapavir commercial rollout | Q2 2024 highlighted complexities (pharmacy vs. medical benefit, injection site reactions) but no Q1 or Q4 mention. | Emphasis on seamless access and reimbursement setup; no major injection site discussion. | Continued reimbursement focus, less mention of injection site concerns. |
ex-Veklury references & EVOKE-01 details | Historically noted YoY ex-Veklury growth in prior quarters; EVOKE-01 details more thoroughly discussed in Q4 2023. | Reported $6.8B ex-Veklury (7% YoY growth); EVOKE-01 mentioned only to note discontinued Trodelvy in NSCLC. | Fewer references to ex-Veklury’s growth specifics; minimal EVOKE-01 details now. |
Acquisition regulatory risks (CymaBay/seladelpar) | Highlighted in Q1 2024 regarding pending regulatory decisions and potential approval timelines ; not repeated in Q2 or Q4. | No mention of CymaBay or seladelpar in Q3. | Dropped off after initial Q1 disclosure. |
Operating margin expansion | Q2 reported 47%, Q1 and Q4 showed steady improvement (e.g., 39% in Q4 2023). | 43% margin (47% excluding seladelpar royalty), reinforcing focus on margin leadership. | Consistent across quarters, margins trending upward. |
Oncology revenue pipeline risk | Q2 noted aim for one-third revenue from oncology by 2030 with inherent pipeline uncertainty; Q4 2023 conceded risk balanced by a robust portfolio. | No direct mention this quarter of pipeline-driven oncology revenue risks. | Not repeated in Q3; recognized in Q2 and Q4 as a significant but manageable risk. |
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Lenacapavir Launch
Q: Thoughts on lenacapavir PrEP launch next year?
A: We are very excited about the potential launch of lenacapavir for PrEP. Growth opportunities include expanding market size with more consumers using PrEP, more prescribers, and expanding beyond U.S. markets. Lenacapavir's twice-daily subcutaneous profile offers significant benefits, and we expect it to impact both Descovy and the generic oral market, which makes up 55% of the market today. Commercialization plans are well underway to ensure a seamless experience for providers and consumers. We will share more details at the HIV analyst event in December. -
Operating Margin Expansion
Q: Confident you can drive operating margin expansion in 2025?
A: We have made real progress in letting the operating margin expand in the last two quarters. We are focusing on expense management and have seen strong operating margins in both the second and third quarters. The operating margin would have been 47% this quarter if we exclude the impact of the royalty purchase from Janssen on seladelpar. Our ambition is to have an industry-leading operating margin over time. It's too early to give specific guidance on 2025, but we are pleased with the progress and will provide more details at our year-end call ,. -
PrEP Market Growth
Q: Is 600,000 on PrEP by 2030 still fair? Where will growth come from?
A: We believe at least 600,000 people on PrEP by 2030 is a fair assumption, possibly beyond. Most of the growth will come from expanding to different consumers, including Black and Latino individuals, cisgender women, transgender people, and young adults. The introduction of lenacapavir for prevention, which doesn't require daily dosing, offers a significant differentiation and will drive growth. More details will be shared at the HIV analyst event in December. -
Trodelvy in TNBC Frontline
Q: How much larger is the frontline opportunity in TNBC?
A: Moving into earlier lines of therapy in triple-negative breast cancer, the market is quite large—probably about double the current size. We believe that our ASCENT-03 and ASCENT-04 studies can make a significant difference for patients, especially if we can show overall survival benefits. This would allow us to move up from second-line plus, where we are the standard of care, and impact patients earlier in their metastatic disease. -
Oral vs. Subcu HIV Treatments
Q: Importance of subcutaneous injectables vs. weekly oral options?
A: We are taking a broad approach by developing both oral and injectable options. There is sufficient demand in both areas. For orals, we see opportunities for weekly or monthly dosing, potentially entering the treatment market. Subcutaneous injectables offer greater durability, aiming for dosing every three months, up to six months or beyond. Our goal is to provide options that meet different patient needs, ensuring we remain leaders in HIV treatment and prevention ,. -
Seladelpar Launch Insights
Q: Early insights on seladelpar launch and payer coverage?
A: We are very pleased with the initial launch of seladelpar since mid-August, exceeding internal expectations for patient demand. From day one, we enabled direct purchasing with a specialty distributor, which was pivotal for key academic centers. Payer coverage is in line with expectations for rare diseases, with no major barriers to access. For appropriate patients, it takes a little more time due to step edits and prior authorizations, but patients are getting access. We expect modest contribution in 2024 and more meaningful sales in 2025. -
Medicaid Exposure in HIV Franchise
Q: How might potential Medicaid cuts affect your HIV franchise?
A: Medicaid patients make up about mid- to high 20% of our total HIV business, a percentage we watch closely. Patients always have fallback options like ADAP and 340B programs, so access is not an issue. We are monitoring potential Medicaid cutbacks closely, but nothing has been announced yet. -
Anito-cel Neurotoxicity Data
Q: Is lack of delayed neurotoxicity due to construct, and is data sufficient?
A: We believe the lack of delayed neurotoxicity with anito-cel is due to its construct—a very compact DD domain. We have data on over 100 patients without observing neurotoxicity, increasing our confidence that it's the construct. We will present a larger data set at ASH, reinforcing that we have a best-in-class construct. -
Yescarta Competition
Q: Impact of in-class and out-of-class competition on Yescarta?
A: Yescarta faces in-class competition from two new indications in follicular lymphoma and mantle cell lymphoma, and increased manufacturing capacity. Out-of-class competition comes from bispecifics, accounting for about 50-50 impact. We do not believe we need to revisit our commercial strategy and are confident in our plans to build on our leadership with Yescarta and the upcoming anito-cel in 2026. -
Anito-cel Regulatory Filing
Q: What's gating anito-cel regulatory filing, and how to increase penetration?
A: Regulatory filing requires 12 months of data, as per FDA expectations. We believe we have a differentiated safety profile and will discuss the review cycle with the FDA. Currently, only 2 out of 10 patients receive CAR-T therapy, and 1 out of 10 in multiple myeloma. We need to address reimbursement and access challenges, particularly in community practices, to increase penetration. Our efforts over the next 12 to 18 months are critical to bringing anito-cel to more patients. -
Anito-cel Clinical Sites and Outpatient Use
Q: How many clinical sites are enrolling, and is outpatient use expected?
A: While we don't share the number of recruiting sites, we are working to have all 130 clinical trial sites up and running. We believe anito-cel has an outpatient profile, supported by the low rates of ICANS and CRS we're seeing. Our IMAGINE-3 Phase III program includes data generation in the outpatient setting, which we've designed into the trial.
Research analysts covering GILEAD SCIENCES.