• Total Product Sales (Excluding VEKLURY): $6.7 billion, up 6% year over year.

• Total Product Sales (Including VEKLURY): $6.9 billion, up 5% year over year.

• HIV Sales: $4.7 billion, up 3% year over year.

• BIKTARVY Sales: $3.2 billion, up 8% year over year.

• DESCOVY Sales: $485 million, down 6% year over year.

• Liver Disease Sales: Up 17% year over year.

• Oncology Sales: $841 million, up 15% year over year.

• TRODELVY Sales: $320 million, up 23% year over year.

• Cell Therapy Sales: $521 million, up 11% year over year.

• Product Gross Margin: 86%, down 84 basis points from last year.

• Operating Margin: 47%, strongest since Q3 2022.

• Non-GAAP Diluted EPS: $2.01, up 50% year over year.

• SG&A Expenses: Down 27% year over year.

• R&D Expenses: Down 3% year over year.

• Effective Tax Rate: Approximately 18%.

• Warning! GuruFocus has detected 9 Warning Signs with GILD.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gilead Sciences Inc (NASDAQ:GILD) reported strong commercial execution with growth across HIV, liver disease, and oncology, with BIKTARVY for HIV treatment up 8% year over year.

• The company raised its non-GAAP operating income and EPS guidance for the full year, reflecting strong financial performance.

• The Phase 3 PURPOSE 1 trial for lenacapavir in HIV prevention showed 100% efficacy, generating excitement and potential for a broader population reach.

• Gilead's oncology segment showed strong growth, with TRODELVY sales up 23% year over year, and continued progress in multiple cancer indications.

• The company demonstrated disciplined operating expense management, contributing to exceptional bottom-line growth and a strong operating margin of 47%.

Negative Points

• VEKLURY sales were down 16% year over year and down 61% sequentially, reflecting the expected decline in COVID-19 related treatments.

• The company faces near-term headwinds in the US cell therapy market due to in-class and out-of-class competition.

• There is uncertainty associated with TRODELVY bladder revenue following the TROPiCS-04 trial results.

• Gilead's product gross margin decreased by 84 basis points from the previous year.

• The company anticipates potential incremental FX headwinds in the second half of the year, which could impact financial performance.

Q & A Highlights

Q: Evan Seigerman from BMO Capital Markets asked about the opportunity for TIGIT and what good safety and efficacy would look like for the STAR-121 program. A: Merdad Parsey, Chief Medical Officer, explained that Gilead's approach is differentiated with an Fc-silent molecule, which shows a different adverse event profile. The focus is on areas with the best chance of activity, such as non-small cell lung cancer and gastric cancer, with cautious optimism for TIGIT.

Q: Terence Flynn from Morgan Stanley inquired about expectations for the PURPOSE 2 trial and steps to alleviate payer roadblocks for branded PrEP use. A: Merdad Parsey noted that PURPOSE 2 is designed to evaluate lenacapavir's superiority against background HIV rates, similar to PURPOSE 1. Johanna Mercier, Chief Commercial Officer, highlighted the growth in the PrEP market and strategies to expand access, including addressing payer challenges and leveraging lenacapavir's twice-yearly dosing.

Q: Daina Graybosch from Leerink Partners asked about the enrollment status of the iMMagine 1 trial and the approach to bridging therapy in iMMagine 3. A: Cindy Perettie, Executive Vice President of Kite, confirmed that the enrollment target for iMMagine 1 has been met and discussed the option for bridging therapy in iMMagine 3, with learnings applied from existing products to manage turnaround time effectively.

Q: Umer Raffat from Evercore ISI asked about the potential for the lenacapavir plus bictegravir regimen to replace BIKTARVY. A: Johanna Mercier explained that the len-bic combination is a single-treatment regimen aimed at optimizing and simplifying complex regimens, providing optionality in the virologically suppressed switch segment, while BIKTARVY remains the standard of care for daily oral treatment.

Q: Carter Gould from Barclays inquired about the impact of nodules observed in the PURPOSE 1 trial on lenacapavir's demand and patient retreatment. A: Johanna Mercier noted that nodules are due to the drug depot and generally decrease over time, with minimal discontinuation observed. The flexibility in injection sites is expected to mitigate concerns, and similar data is anticipated from PURPOSE 2.

Q: Mike Yee from Jefferies asked about the potential of long-acting HIV treatments, specifically six-month options. A: Merdad Parsey emphasized the importance of cautious transition from preclinical to clinical stages, with multiple agents in Phase 1 to maintain leadership in long-acting HIV treatment, and highlighted the ongoing bNAb program with lenacapavir.

Q: Brian Abrahams from RBC Capital Markets asked about the development of an oral GLP-1 agonist and Gilead's interest in the obesity landscape. A: Merdad Parsey confirmed plans for a Phase 1 study of the oral GLP-1 agonist GS-4751 for weight management and metabolic diseases, with decisions on further development to be data-driven.

Q: Chris Schott from JPMorgan asked about the growth outlook for the US CAR-T franchise and community physician engagement. A: Cindy Perettie discussed the strong cell therapy growth driven by a US refresh strategy, focusing on referrals within authorized treatment centers and educating community practices about CAR-T's curative potential, while acknowledging competitive headwinds.

Q: Steven Seedhouse from Raymond James asked about the long-term revenue mix target for oncology. A: Daniel O'Day, CEO, reiterated the target of one-third of sales from oncology by 2030, achievable without additional business development, and highlighted current progress with oncology sales already at 12% of total product sales.

Q: Tim Anderson from Wolfe Research inquired about the potential comparison between TRODELVY and AstraZeneca's TROPION-Breast02 trial results. A: Merdad Parsey expressed confidence in TRODELVY's established efficacy and safety profile in triple-negative breast cancer, emphasizing its predictable and manageable adverse event profile compared to competitors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.