“`html
Image source: The Motley Fool.
Gilead Sciences (NASDAQ: GILD)
Q4 2024 Earnings Call
Feb 11, 2025, 4:30 p.m. ET
Gilead Sciences Reports Strong Q4 2024 Earnings with Promising Future Ahead
Key Highlights from the Earnings Call
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, everyone, and welcome to Gilead’s fourth quarter and full year 2024 earnings conference call. My name is Rebecca, and I will be your host today. We’ll start with prepared remarks, followed by a Q&A session. [Operator instructions] Now, I’ll hand the call over to Jacquie Ross, senior vice president of treasury and investor relations.
Jacquie Ross — Vice President, Investor Relations
Thank you, Rebecca. After the market closed today, we released our financial results for Q4 and the full year of 2024. The press release, slides, and additional information can be found in the investor section of our website at gilead.com. Today’s speakers will include our chairman and CEO, Daniel O’Day; our chief commercial officer, Johanna Mercier; our chief medical officer, Dietmar Berger; and our chief financial officer, Andrew Dickinson.
We will also have a Q&A session with our team, including Cindy Perettie, executive vice president of Kite. Please note there will be forward-looking statements. Refer to Slide 2 for the risks and uncertainties that may cause our actual results to differ. With that, I will turn the call over to Dan.
Strong Performance and Future Prospects
Daniel O’Day — Chairman and Chief Executive Officer
Thank you, Jackie, and good afternoon, everyone. I’m excited to present Gilead’s strong fourth quarter and full year results, which reflect increased revenues and significant profit growth. Looking at our overall performance, total product sales, excluding Veklury, rose by 8% year-over-year to $26.8 billion. For Q4 2024, these sales grew 13% year-over-year, totaling $7.2 billion. Our HIV sales increased by 8% in 2024, reaching $19.6 billion, surpassing our forecast of 5% growth for the year.
Full-year sales for Biktarvy, our leading HIV treatment, jumped 13%. Our HIV business has consistently shown impressive growth, with 5% in 2022, 6% in 2023, and now 8% in 2024. This success is largely due to our innovative approach and our team’s strong performance. However, we anticipate that Medicare Part D reform will affect revenue growth in 2025.
Despite this, we expect our leadership in the HIV market to continue well into the 2030s, thanks to our long-acting treatment options, such as lenacapavir. In December, we filed for U.S. approval of lenacapavir, designed for twice-yearly HIV prevention, benefiting from breakthrough therapy status. We are also moving forward with global submissions, including a recent application to the European Medicines Agency, which will undergo an expedited review.
This promising data from our phase 3 PURPOSE trials underscores our confidence in advancing our treatment solutions for HIV in 2025 and beyond. Our extensive clinical program aims to deliver up to seven new treatment options and two preventative options by 2033, in various forms including oral tablets and injectables. This year, we plan to share updates from significant clinical trials also targeting specific patient needs.
On another note, the fourth quarter also marked the first full quarter since Livdelzi was commercially launched in the U.S. We are pleased to report sales of about $30 million, demonstrating its vital role for patients with primary biliary cholangitis. We anticipate a decision from the European Commission regarding Livdelzi’s approval following positive recommendations.
Our liver portfolio today is worth approximately $3 billion, contributing steadily to Gilead’s growth, and we expect further developments with Livdelzi. We continue to make headway in our inflammation pipeline, with new programs that show promise for treating complex diseases.
In oncology, we are progressing with cell therapies to benefit more patients facing severe blood cancers. Collaborations, including our work with Arcellx on anito-cel, are showing encouraging results. We shared data from our iMMagine-1 trial at the ASH meeting in December, showcasing anito-cel’s potential as a leading BCMA CAR T therapy. We aim for a commercial launch in 2026 and have initiated our Phase 3 iMMagine-3 trial.
Trodelvy also remains a key player, being the only Trop-2 ADC that shows overall survival benefits in certain breast cancer patients, and it is part of six ongoing phase 3 trials with updates expected soon.
“`
Gilead Sciences Prepares for Growth with Leadership Transition and Robust Sales Performance
Gilead Sciences is on track to initiate a new phase 3 trial for Trodelvy targeting extensive-stage small cell lung cancer patients later this year. The company foresees significant growth ahead across its sectors, including HIV, oncology, and inflammation. Notably, Gilead holds no major loss of exclusivity until late 2033, emphasizing the potential within its diversified portfolio. With that context, I am pleased to introduce our new Chief Medical Officer, Dietmar Berger, who came aboard in January.
Dietmar brings invaluable experience in drug development and a strong history of delivering transformative therapies, making him well-suited to guide Gilead’s next chapter. I would also like to express gratitude to Merdad Parsey for his five years of dedicated service to Gilead and extend our best wishes for his retirement. Under Merdad’s leadership, the clinical team matured considerably, expanding our pipeline to 54 ongoing clinical programs, a notable rise from 32 in 2019.
Johanna Mercier — Chief Commercial Officer
I appreciate the introduction, Dan. Good afternoon, everyone. The year 2024 was highlighted by exceptional commercial achievements for Gilead, marking our third consecutive year of high single-digit percentage growth in our base business, with an 8% increase in sales year over year. This success reflects the commitment of our teams, and I commend everyone involved in delivering another strong quarter and a successful year overall. Moving on to Slide 7, total product sales, excluding Veklury, amounted to $7.2 billion, demonstrating a 13% year-over-year increase, largely driven by rising HIV product sales, along with growth in our oncology and liver disease sectors.
When Veklury is included, total product sales saw a 7% rise year over year, influenced by a decline in COVID-related hospitalizations. Considering the full year results on Slide 8, total product sales, minus Veklury, reached $26.8 billion—well exceeding our growth guidance range of 5% to 6%. Including Veklury, total sales were $28.6 billion, reflecting a 6% increase from the previous year. Moving to Slide 9, our HIV segment posted remarkably strong results for the fourth quarter, with sales hitting $5.5 billion—a 16% year-over-year rise—primarily fueled by increased demand and favorable pricing trends.
Sequentially, HIV sales rose by 7%, reflecting usual seasonal inventory fluctuations and heightened demand, which was partly countered by lower average prices. Biktarvy showcased a solid year with 21% sales growth over the past year, claiming over 50% of the U.S. market share while continuing its popularity in other key regions. Descovy, too, achieved 21% year-over-year growth while maintaining over 40% market share in PrEP, despite the presence of competing generics. It’s encouraging to see payers increasingly recognizing the advantages of Descovy as barriers to its coverage diminish, with over 85% of lives now covered without additional requirements.
On Slide 10, we note that full-year sales reached $19.6 billion, yielding an 8% increase year over year, predominantly because of rising demand and improved pricing. Overall, the HIV treatment market expanded about 3% in 2024, aligning with our projected annual growth rate of 2% to 3%. However, the prevention market experienced accelerated growth, exceeding 16% in the fourth quarter—indicative of increasing demand for HIV prevention options ahead of our anticipated lenacapavir launch in the summer. Preparatory activities for the U.S. launch are progressing well, and we have also submitted marketing applications to the European Medicines Agency for lenacapavir for PrEP in the EU.
Slide 11 outlines the anticipated changes in Medicare Part D for 2025. These changes will require manufacturers to offer discounts for drugs during specific coverage phases and introduce additional discounts for low-income patients. This will significantly affect our HIV business, with an estimated impact of about $1.1 billion on revenue, nearly $900 million of which is related to HIV. Consequently, we predict that HIV revenue will remain flat in 2025, which may obscure the strong volume growth we’ve consistently achieved in recent years. Unless affected by this transition and currency fluctuations, we anticipated at least a 5% growth in HIV revenue, driven by robust demand.
As for the first quarter of 2025, we expect the usual seasonal inventory reduction in HIV, combined with the influence of reset patient copays on pricing. Alongside anticipated IRA effects, we foresee a mid-teen percentage decline in HIV revenue from the robust figures achieved in the fourth quarter. Overall performance from Biktarvy and Descovy reinforces Gilead’s strong standing in the HIV market, showcasing both our clinical strengths and our leading commercialization team. In liver disease, as illustrated on Slide 12, fourth quarter sales reached $719 million—a year-over-year gain of 4%—driven by our successful Livdelzi launch for PBC and increasing demand in HBV and HDV, though HCV sales saw a decline due to fewer patient starts.
For the full year, sales stood at $3 billion, climbing 9% year over year thanks to heightened demand across our liver disease product line. Our viral hepatitis treatments remain a steady revenue source, with solid market shares maintained. I’m also pleased to report on Livdelzi’s early launch progress on Slide 13, which gained accelerated approval for PBC treatment in the U.S. last August. In its first complete quarter of availability, Livdelzi generated $30 million in sales, surpassing expectations and establishing a strong early brand presence. As the only approved therapy demonstrating statistically significant improvements in both ALP and pruritus, we look forward to seeing continued strong performance as we move into 2025.
Additionally, Livdelzi received approval from the MHRA in the U.K. for PBC, including pruritus, and is awaiting a final decision from the European Commission following a favorable CHMP opinion in December. We are optimistic about the future of this promising treatment.
Gilead Reports Mixed Sales Figures Amid Developing Treatment Innovations
In the latest earnings call, Gilead Sciences revealed significant updates regarding its product line and sales performance. Notably, Livdelzi, a promising treatment for primary biliary cholangitis, achieved marketing authorization in the U.K., marking an important milestone for Gilead’s global outreach. As we analyze Gilead’s financial results, we observe a notable decline in COVID-19 therapy sales alongside growth in oncology.
COVID-19 Treatment Sales Decline Significantly
Transitioning to Slide 14, Veklury’s fourth quarter sales totaled $337 million, down 53% year-over-year and 51% sequentially. This drop stemmed from lower COVID-19 hospitalization rates, a trend consistent with quarterly fluctuations experienced throughout the pandemic. For the full year, Veklury sales reached $1.8 billion, representing an 18% decrease from 2023 and aligning with Gilead’s projections.
Oncology Sales Highlight Growth and Patient Impact
Shifting focus to oncology on Slide 15, Gilead reported full-year sales of $3.3 billion, a 12% increase from last year. This growth underscores the company’s expanding role in addressing high unmet needs. Since the introduction of Trodelvy and their cell therapies, Gilead has treated over 80,000 patients, demonstrating the impact of their contributions in this critical field.
Trodelvy Sales Surge, Solidifying Market Leadership
Moving to Slide 16, Trodelvy’s fourth quarter sales amounted to $355 million, reflecting a 19% growth from the previous year and a 7% increase sequentially. For the full year, Trodelvy achieved sales of $1.3 billion, up 24% year-over-year. This upward trend is attributable to heightened demand across various regions, especially for metastatic breast cancer treatments, highlighting Trodelvy’s pivotal role in managing second-line metastatic triple-negative breast cancer.
Kite’s Leadership in Cell Therapy Remains Strong
On Slide 17, the Kite division reported yearly sales of $2 billion, reflecting over 7,000 patients treated in 2024, which demonstrates their leadership in CAR T therapies. The fourth quarter brought in $488 million in cell therapy sales—flat sequentially but a 5% year-over-year increase. Despite these achievements, challenges remain as new competitors enter the market and uptake of the therapy is slower than anticipated. Gilead is committed to improving access to CAR T treatments, especially in community oncology practices.
Catalysts for Growth in 2025 and Beyond
As Johanna wrapped up her presentation, she expressed pride in Gilead’s substantial impact through its portfolio and excitement for future launches, notably lenacapavir for PrEP, expected in the summer. The commercialization team’s initiatives aim to broaden access to transformative medications.
Innovation in Research Marks a New Era
Dietmar Berger, Gilead’s Chief Medical Officer, began his comments by noting his enthusiasm for Gilead’s research capabilities. He spotlighted lenacapavir, a groundbreaking capsid inhibitor acknowledged by Science as 2024’s breakthrough of the year. This recognition positions lenacapavir alongside significant HIV advancements and reflects Gilead’s dedication to combating the epidemic.
New Approaches in HIV Treatment and Global Health Equities
On Slide 19, Dietmar outlined the progress with lenacapavir’s FDA breakthrough therapy designation and the recent New Drug Application filing. Gilead is also involved with the EMA and the EU Medicines for All initiative, aiming to expedite the drug’s approval in up to 138 countries, focusing on global health access.
Expanding Treatment Options for Patients
As presented on Slide 20, Gilead is exploring innovative treatment options based on lenacapavir, with trials slated for updates in 2025. The commitment to offering more flexible treatment regimens is essential for patients who struggle with existing therapies.
Advancements in Liver Disease Treatments
On Slide 21, the recent approval of Livdelzi in the U.K. for primary biliary cholangitis shows promise, with the firm addressing crucial clinical trials to support broader FDA approval. The ongoing development work includes trials like the phase 3 IDEAL trial targeting previously understudied patient groups, aiming to normalize disease activity markers.
Continued Focus on Oncology Trials
Finally, on Slide 22, Gilead remains dedicated to its eight ongoing phase 3 trials for Trodelvy and Domvanalimab across various tumor types. Anticipated results from these trials in 2025 will provide valuable insight into the efficacy of Gilead’s oncology offerings. As the company looks ahead, maintaining a robust pipeline will be crucial for addressing patient needs and enhancing patient outcomes.
Trodelvy Shows Promise in Both Breast and Lung Cancer Trials
Trodelvy could expand its use to first-line treatment for metastatic triple-negative breast cancer by 2026. The drug is also being tested in the phase 3 ASCEND-07 trial for chemotherapy-naïve hormone receptor-positive, HER2-negative metastatic breast cancer, which completed enrollment in August of last year. Additionally, Trodelvy is under evaluation in combination with pembrolizumab for first-line PD-L1 high metastatic non-small cell lung cancer as part of the phase 3 EVOKE-03 study.
The FDA has awarded Trodelvy a breakthrough therapy designation for patients with extensive-stage small cell lung cancer who have experienced disease progression following platinum-based chemotherapy. Given the aggressive nature of small cell lung cancer, most cases are diagnosed at advanced stages, leading to a median overall survival rate typically between eight and twelve months. However, data from the small cell lung cancer cohort in the phase 2 TROPiCS-03 trial, shared at the World Lung event last year, indicated a promising median overall survival of 13.6 months with Trodelvy. The initiation of the phase 3 EVOKE SCLC trial is planned for the first half of 2025.
Turning to Slide 23, we have exciting updates from Kite, particularly from the ASH Congress held in December. Preliminary results from the phase 2 iMMagine-1 trial, which evaluates anito-cel for patients with fourth-line or later relapsed or refractory multiple myeloma, indicate competitive efficacy and safety. Among 86 evaluable patients with a median follow-up of 9.5 months, an overall response rate of 97% was observed, with 62% achieving a complete response. Expectations suggest that these responses may continue to deepen over time.
Of note, minimal residual disease negativity was found in 93% of evaluable patients, and the safety profile of anito-cel has been manageable. As of the ASH presentation, delayed neurotoxicities, including Parkinsonism, cranial nerve palsies, and Guillain-Barre syndrome, were not reported in the more than 150 patients involved in anito-cel trials. Kite remains optimistic about anito-cel’s best-in-class potential and aims for a commercial launch in 2026.
Data from the iMMagine-1 trial will continue to be shared throughout 2025. The phase 3 iMMagine-3 trial for second- to fourth-line relapsed or refractory multiple myeloma has initiated patient dosing. Updates on anito-cel’s development are anticipated. Kite also provided information on Yescarta and Tecartus, including follow-up data from the ZUMA-5 trial, showing a 69% overall survival rate for patients at five years.
The enduring responses from Yescarta and Tecartus reinforce their potential as curative options. Additionally, Kite has filed an IND application with the FDA to evaluate KITE-363 in autoimmune conditions. KITE-363 targets CD19 and CD20, offering possibilities for addressing unmet medical needs in a sizable patient population. The team is eager to move forward with clinical research.
As we continue to further our research and developments, I, along with Flavius Martin, the executive vice president of research, look forward to working on some of the industry’s most innovative science. Slide 24 outlines our extensive pipeline of over 100 pre-IND and clinical stage programs. We expect several milestones this year, including decisions on lenacapavir and seladelpar, updates regarding the phase 3 trials for our bictegravir and lenacapavir combination, Trodelvy, the phase 2 updates for anito-cel, and our weekly oral HIV treatment.
New phase 3 trials will also begin for extensive-stage small cell lung cancer and across our long-acting HIV prevention programs, paving the way for further developments in the upcoming years. I’ll now pass the call to Andy.
Andrew D. Dickinson — Chief Financial Officer
Thank you, Dietmar, and good afternoon, everyone. As seen on Slide 27, we wrapped up the year with total product sales reaching $28.6 billion, marking a 6% increase from 2023 and exceeding our prediction range of $27.8 billion to $28.1 billion due to higher-than-expected contributions from HIV. Excluding Veklury, total product sales rose by over $2 billion or 8% year-over-year, surpassing our 5% to 6% growth expectation, driven primarily by increases in HIV, oncology, and liver treatments. HIV sales rose 8%, or $1.4 billion, to $19.6 billion, largely due to a 13% growth in Biktarvy.
In oncology, sales saw a 12% increase to $3.3 billion, led primarily by Trodelvy’s market presence and moderate contributions from cell therapy. Liver treatment sales grew by 9% to $3 billion across our portfolio. Revenue from Veklury totaled $1.8 billion, aligning with our expectations, but showed an 18% decline from 2023, reflecting ongoing trends in pandemic-related hospitalizations. Transitioning to Slide 28, the non-GAAP results for the full year indicate maintained expense discipline in 2024.
R&D expenses stood at $5.7 billion, consistent with 2023 figures. IPR&D spending of $4.7 billion included $3.9 billion tied to the CymaBay acquisition in the first quarter, as well as our regular IPR&D costs. SG&A costs fell by 3% from 2023 to $5.9 billion. Overall, operating income for 2024 came in at $8.5 billion, exceeding our guidance of $8 billion to $8.3 billion.
The annual operating margin of 30% reflects the CymaBay acquisition, but without this, the actual margin would have been 43%. Non-GAAP EPS for the year was $4.62, largely affected by the CymaBay transaction, which had a $3.14 per share impact. Excluding this, non-GAAP EPS would have been $7.75, increasing by 15% from $6.72 in 2023.
Now, let’s look at our fourth quarter results, starting with Slide 29. Total product sales, excluding Veklury, amounted to $7.2 billion, which is a 13% rise from Q4 2023. Including Veklury, total sales reached $7.5 billion, resulting in a 7% increase year-over-year, although this was partially offset by declining sales of Veklury. Slide 30 provides a comparison of the product gross margin on a non-GAAP basis, which sits at approximately 87%, up from 86% in the same period a year earlier.
Research and development expenses for the fourth quarter were $1.6 billion, a slight increase from $1.5 billion in Q4 2023, reflecting our investment in clinical activities. Acquired IPR&D recorded a negative $11 million, impacted by the Terray and Tubulis collaborations, but improved by a favorable adjustment from the CymaBay acquisition. It is also worth noting that the acquisition of rights from LEO’s STAT6 program will be noted in our first-quarter 2025 results. SG&A costs rose by 16% to $1.9 billion compared to prior year figures, driven partly by a litigation accrual for a proposed settlement concerning our promotional speaker programs for HIV treatments.
In addition, increased spending on sales and marketing was noted as we prepared for the launch of lenacapavir for HIV prevention and Livdelzi for PBC. The operating margin increased to 41%, up from 39% in Q4 2023. The effective tax rate for the fourth quarter was 19.2%, a slight rise from 17.1% in the same quarter of 2023 due to prior-year settlements.
“`html
Gilead Sciences Sets 2025 Revenue Guidance Amid Market Challenges
Key Financial Metrics and Guidance Overview
In the fourth quarter, Gilead Sciences reported a non-GAAP diluted earnings per share of $1.90, increasing from $1.72 in the same quarter of 2023.
As we look ahead to 2025, it is important to note several factors that may influence our revenue expectations. As previously highlighted, the reform of Medicare Part D is projected to decrease our revenue by roughly $1.1 billion, which includes about $900 million linked to HIV treatments. This year’s changes obscure robust volume growth that we have experienced over the past several years and anticipate will continue through 2025 and into 2026 and beyond. Overall, this represents around a 4% impact on our expected revenue growth in 2025.
Additionally, we expect revenues from Veklury to drop by about $400 million in 2025 compared to 2024, presenting another growth challenge of approximately 1%. A further $250 million decline in revenues is anticipated due to foreign exchange (FX) fluctuations, as the U.S. dollar has strengthened against major currencies, affecting roughly 1% of growth expectations. Notably, excluding impacts from the Inflation Reduction Act (IRA), FX, and Veklury, our guidance would indicate a potential product revenue growth of around 5% to 6%.
Revenue Projections and Operational Expectations for 2025
Projected guidance for 2025 indicates total product sales to range between $28.2 billion and $28.6 billion. Excluding Veklury, we expect total product sales to be between $26.8 billion and $27.2 billion, with Veklury sales anticipated to reach about $1.4 billion, though this estimate may vary. Similar to the previous year, we do not plan to update our Veklury guidance until our third quarter earnings call, unless significant upward trends in COVID-19 cases become evident.
On a non-GAAP basis, product gross margins are expected to be between 85% and 86%. We anticipate research and development expenses to remain stable compared to 2024, reflecting an adequate scale of investment to support our diverse pipeline. We also expect acquired in-process research and development (IPR&D) to be around $400 million, including approximately $250 million for LEO Pharma’s STAT6 program that we announced in January.
The remaining $150 million in our guidance reflects known commitments and anticipated milestone payments. Continuing our approach from the past two years, we will disclose any new incremental IPR&D expenses as they arise and adjust guidance each quarter. Furthermore, we expect selling, general, and administrative (SG&A) expenses to decline by a high single-digit percentage compared to 2024. When excluding the litigation accrual from 2024, SG&A is projected to decrease by a mid-single-digit percentage in 2025, underscoring our focus on expense management.
This approach leads us to an expected operating income for 2025 between $12.7 billion and $13.2 billion. Our effective tax rate is projected to be about 19%. For non-GAAP diluted EPS, we forecast a range of $7.70 to $8.10 for the full year, while GAAP diluted EPS is estimated between $5.95 and $6.35. It is important to note that for the first quarter of 2025, we expect HIV revenue to decrease in the mid-teens percentage range compared to the exceptionally strong revenue achieved in the fourth quarter, largely due to normal inventory adjustments alongside the IRA’s impact.
Our capital allocation priorities remain consistent. In 2024, we returned $5.1 billion to shareholders, which includes $3.9 billion in dividends and $1.2 billion in share repurchases. For 2025, we announced a 2.6% increase in our quarterly cash dividend to $0.79 per share, demonstrating our commitment to continuous dividend growth.
Investments in our business will persist, both internally and externally through selective partnerships and business development transactions. We will also continue share repurchases to mitigate equity dilution, as well as pursue additional repurchases when opportunistic. With that, I invite Rebecca to initiate the Q&A session.
Questions & Answers:
Operator:
Thank you, Andy. At this point, we welcome your questions. [Operator instructions] Our first question comes from Geoff Meacham at Citigroup. Geoff, your line is now open.
Geoff Meacham — Analyst:
Thank you. Good afternoon, everyone. Regarding HIV, I know you view lenacapavir and PrEP as significant growth drivers moving forward. However, I’d like to ask about the HIV treatment options you discussed on Slide 20. Do you anticipate these new len options will eventually replace Biktarvy? I’m curious about your strategies for lifecycle management and how this will play out considering Biktarvy’s upcoming loss of exclusivity. Thank you.
Daniel O’Day — Chairman and Chief Executive Officer:
Thank you for that question, Geoff. I would like to welcome everyone once again to the call. I will pass it to Johanna, and I ask the speakers to introduce themselves as they respond. Johanna, please take it away.
Johanna Mercier — Chief Commercial Officer:
Hi, Geoff, thanks for your question. I absolutely agree; our strategy is focused on meeting patient needs. With Biktarvy having set the standard for HIV treatment, we see opportunities emerging through long-acting oral and injectable therapies. As we consider potential alternatives like the Bik-len daily oral or longer-acting options, we recognize that these will naturally cannibalize some of Biktarvy’s market share. Biktarvy holds a market-leading share above 50%, and there is potential for our total portfolio with these new products, even before Biktarvy’s loss of exclusivity in late 2033. This opens many pathways for us moving forward, all aimed at enhancing patient care.
Operator:
The next question comes from Terence Flynn at Morgan Stanley. Terence, your line is open.
Terence Flynn — Analyst:
Thank you for taking my question. I have two parts regarding your guidance. What, if anything, is included for lenacapavir for PrEP in your 2025 revenue outlook? Also, it’s good to see margin expansion projected for 2025. Based on your comments, should we expect this level to remain steady as we consider 2026 as well? Thanks.
Andrew D. Dickinson — Chief Financial Officer:
Thank you for your questions, Terence. To clarify, we have accounted for lenacapavir’s launch in our mid-year guidance. As Johanna mentioned, we expect substantial access to grow progressively. At launch, we aim for around 75% access in the U.S. within six months.
“““html
Gilead’s Financial Outlook: Strategic Expense Management and Upcoming Product Launches
After completing nine months and moving into the next fiscal year, Gilead Sciences remains optimistic about its financial strategy. The company anticipates a launch in the middle of 2025, and although concrete details are scarce, the robust expense management in 2024 has laid solid groundwork for future growth.
During the discussion about expenses, the leadership highlighted the company’s strong control over costs. There were unexpected financial hits early in 2024, including a litigation reserve noted in Q4 and the operational costs incurred from the Livdelzi acquisition. Despite these increases, Gilead demonstrated impressive expense management throughout the year.
Moving forward, Gilead aims to maintain flat expenses while allowing the profitability of its model to flourish. Specific financial guidance for 2026 and 2027 will be provided later, but initial indications show a favorable start to the year, with anticipation building for updates as progress continues.
Operator:
Our next question comes from Tim Anderson at Bank of America. Tim, go ahead. Your line is open.
Tim Anderson — Bank of America Merrill Lynch — Analyst
Thank you for taking my question. As we approach the launch of lenacapavir and PReP, there are often concerns about whether consensus expectations might be too high compared to actual performance in the early quarters. Based on your insights, how do you view this situation? Can you also elaborate on the ramp-up dynamics that we should consider? Will this launch be fast, moderate, or slow compared to previous ones?
Johanna Mercier — Chief Commercial Officer
Thank you for your question, Tim. We share your excitement about the expected launch of lenacapavir this summer. While we usually do not provide product-specific projections, we believe access will progressively increase—aiming for roughly 75% within six months and around 90% within a year after launch. Since lenacapavir is an injectable, the administration process may require coordination through specialty pharmacies, which could affect the initial rollout speed. However, we are confident that lenacapavir will significantly benefit our communities by 2025 and continue to grow in impact into 2026 and beyond.
Operator:
Our next question comes from Umer Raffat at Evercore ISI. Go ahead, your line is open.
Umer Raffat — Analyst
Hello, and thank you for taking my question. Congratulations to Dietmar on joining the team! I would like to discuss the anti-cel data shared earlier. Particularly, I’m interested in the nine cases of ICANS observed during the iMMagine-1 trial. How many of those cases showed symptoms like tremors, bradykinesia, or other motor dysfunctions? Did any of these cases occur several weeks post-treatment?
Cindy Perettie — Executive Vice President, Kite
Thanks, Umer, for your question. I may not have all the specifics you’re looking for at this moment. However, I can confirm that we did not observe any cases of tremors among those patients. I’ll follow up with additional details on the other symptoms you mentioned.
Operator:
Our next question comes from Michael Yee at Jefferies. Go ahead, your line is open.
Michael Yee — Analyst
Thanks for taking my question. Regarding the upcoming approval of lenacapavir for PReP, can you share insights about your recent communications with the FDA and the perspectives held by both the FDA and HHS under the new administration? Are you optimistic about a fast-track approval? Additionally, how do you view the revenue prospects in Europe for this product?
Daniel O’Day — Chairman and Chief Executive Officer
Thank you for your question, Michael. We remain on track for lenacapavir’s approval in the summer, with ongoing discussions with the FDA and HHS guiding our preparation.
Johanna Mercier — Chief Commercial Officer
Further to Daniel’s comments, we are excited about the FDA breakthrough designation for lenacapavir in the U.S. and are busy preparing for the upcoming launch. Our strategy in Europe involves a selective approach, ensuring we address the specific regulatory environments in various markets. We are currently engaged with key stakeholders, including government health officials, to bolster the product’s presence, particularly with our ongoing PURPOSE 5 trial in the U.K. and France. Access to lenacapavir is a priority, especially for low- and middle-income countries, aligning with our global access initiatives.
Operator:
Our next question comes from Daina Graybosch at Leerink Partners. Daina, go ahead. Your line is open.
Daina Graybosch — Leerink Partners — Analyst
Hi, thank you for the opportunity to ask a question. Dietmar, as you integrate into the organization, what impressions do you have regarding the competitiveness of Gilead’s late-stage oncology portfolio, particularly with respect to TIGIT and Trodelvy as we anticipate more phase 3 results?
Dietmar Berger — Chief Medical Officer
Thank you, Daina. Gilead is in a strong position with a well-diversified clinical pipeline, especially with no major loss of exclusivity anticipated before 2033. We have key launches ahead, and I’m looking forward to the forthcoming developments in our portfolio.
“`
Gilead Sciences Prepares for Growth with Promising Oncology and HIV Developments
Gilead Sciences continues to build a robust portfolio, particularly in oncology and HIV therapies. Key studies for their treatment Trodelvy are underway, and the company is optimistic about their upcoming clinical trial results.
Advancements in Trodelvy Research
Gilead is keenly observing progress in their later-stage portfolio. The ASCENT-03 and ASCENT-04 studies for Trodelvy in triple-negative breast cancer are on track. This year, results from these trials are anticipated, which could provide critical insights into the drug’s effectiveness. Trodelvy stands out as the only Trop-2 antibody-drug conjugate (ADC) shown to improve overall survival in certain studies, marking it as a significant therapy in development for patients.
Additionally, early phase trials for lung cancer treatments in first-line settings are also set up. A lot of anticipation surrounds the potential of Domvanalimab, a TIGIT immuno-oncology target featuring a novel FC silent design. While early data from studies like ARC-7 and ARC-10 showed promise, a broader understanding will emerge as phase 3 trials STAR-121 and STAR-221 progress.
HIV Sales Growth & Inventory Trends
Mohit Bansal from Wells Fargo raised a question about HIV sales growth, highlighting inventory dynamics. Johanna Mercier, Gilead’s Chief Commercial Officer, clarified that the company has experienced substantial demand year-over-year. In particular, the sales for therapies like Biktarvy and Descovy showed growth despite seasonal inventory influences in 2023. The buildup of inventory was more concentrated in the fourth quarter this year compared to the gradual increase in previous periods, driven primarily by strong therapeutic demand.
Livdelzi Observed Adoption Surge
The company also noted positive trends for Livdelzi, a new treatment for patients with liver diseases. Johanna shared insights describing a strong uptake exceeding internal expectations, with encouraging feedback regarding its efficacy and safety. The product has shown consistent week-over-week growth, with the trajectory anticipated to strengthen as 2025 approaches. Livdelzi is primarily used for second-line patients who have not responded adequately to previous treatments.
PrEP Market Insights
Another vital area of growth is the PrEP (pre-exposure prophylaxis) market, seeing a 16% year-over-year increase. Johanna attributed this growth to heightened awareness and ongoing market development efforts. Gilead is keenly focused on strategies to ensure a successful launch for its upcoming lenacapavir treatment.
Growth in Patient Population Opportunities
Ellie Merle from UBS inquired about the IDEAL study tracking enrollment for Livdelzi among partial responders to UDCA (Ursodeoxycholic acid). Dietmar Berger, Chief Medical Officer, confirmed that the study is progressing as planned. This study could potentially expand Livdelzi’s patient population, especially in the U.S., as they assess a subgroup that currently has around 20,000 to 25,000 patients eligible.
The updates from Gilead Sciences reflect a forward-looking strategy as they navigate and capitalize on significant opportunities in oncology and HIV treatment segments. With promising trial results on the horizon, the company is well-positioned for sustained growth.
“`html
Gilead’s Promising Pipeline: Insights on Small Cell Lung Cancer Treatment
Operator
Our last question comes from Courtney Breen at Bernstein. Courtney, go ahead. Your line is open.
Courtney Breen — Bernstein — Analyst
Hi, everyone. Thanks for taking my question today. I want to discuss small cell lung cancer and the Trodelvy study you’ve initiated.
Dietmar, could you share your views on how Trop-2, DLL3, B7-H3, and other targets in this field compare with one another? What are your thoughts on how this market will develop over time?
Dietmar Berger — Chief Medical Officer
Thanks, Courtney. I’m pleased to see advancements in small cell lung cancer. For over three decades, treatment largely revolved around chemotherapy, with little progress. We now have various treatment options available.
The phase 2 data for Trop-2 has been impressive, showing clear expression. We received breakthrough therapy designation from the FDA and plan to begin the study in the first half of the year.
I believe Trop-2 can become a significant treatment option through its antibody-drug conjugate (ADC) targeting. Other targets like B7-H3 and DLL3 also show promise, although competition exists. I expect these developments to benefit patients overall. Trop-2 may well become foundational in the second-line treatment setting, but we’ll need to see further data.
There has been some mixed data concerning B7-H3, while DLL3 remains an intriguing target.
Operator
That concludes the Q&A segment. Dan, please share any closing remarks.
Daniel O’Day — Chairman and Chief Executive Officer
Thank you, Rebecca. I appreciate everyone’s participation today. I want to thank the Gilead teams for another strong quarter and for the momentum we are carrying into 2025. The consistent revenues and strong demand across all three therapeutic areas underlie our foundation for success as we meet our goals in the coming months and years.
This potential stems from our most robust and diverse pipeline in Gilead’s history. With several recent and upcoming launches, a lack of major loss of exclusivity (LOE) events, and careful expense management, we are poised to enhance our impact on patients and deliver substantial returns for our shareholders. We look forward to updating you on our progress in the coming months.
Now, I’ll hand it back to Jacquie.
Jacquie Ross — Vice President, Investor Relations
Thank you, Dan, and thank you all for being here today. Just a quick note: we are tentatively planning to release our first quarter 2025 earnings results on April 24, 2025. Please keep in mind that this date is subject to change based on potential scheduling conflicts. As always, we will announce the confirmed date after the close of the quarter.
We appreciate your ongoing interest in Gilead and anticipate sharing updates on our developments throughout 2025. Thank you.
Duration: 0 minutes
Call participants:
Jacquie Ross — Vice President, Investor Relations
Daniel O’Day — Chairman and Chief Executive Officer
Johanna Mercier — Chief Commercial Officer
Dietmar Berger — Chief Medical Officer
Andrew D. Dickinson — Chief Financial Officer
Geoff Meacham — Analyst
Dan O’Day — Chairman and Chief Executive Officer
Terence Flynn — Analyst
Andy Dickinson — Chief Financial Officer
Tim Anderson — Bank of America Merrill Lynch — Analyst
Umer Raffat — Analyst
Cindy Perettie — Executive Vice President, Kite
Michael Yee — Analyst
Daina Graybosch — Leerink Partners — Analyst
Mohit Bansal — Analyst
Brian Abrahams — Analyst
Tyler Van Buren — Analyst
Ellie Merle — Analyst
Courtney Breen — Bernstein — Analyst
More GILD analysis
All earnings call transcripts
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
The Motley Fool has positions in and recommends Gilead Sciences. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
“`
