Nov 13, 2024 3 min read GILEAD SCIENCES INC

GILEAD SCIENCES INC (GILD) Earnings Summary for Q3 FY2024

Key Metrics

Total Product Sales: $7.5 billion (up 7% yoy)
HIV Products Total Sales: $5.1 billion (up 9% yoy, up 7% qoq)
- Biktarvy: $3.5 billion (up 13% yoy, up 7% qoq)
- Descovy: $586 million (up 15% yoy, up 21% qoq)
Oncology Total Sales: $860 million (up 6% yoy, down 3% qoq)
- Trodelvy: $332 million (up 17% yoy, up 4% qoq)
Liver Disease Total Sales: $733 million (up 4% yoy, down 12% qoq)
Veklury: $692 million (up 9% yoy)
Royalty: $505 million
R&D Expenses: Down 5% yoy
SG&A Expenses: Up 8% yoy
Operating Margin: 43%
Product Gross Margin: 87% (up 84 basis points yoy)
Non-GAAP Diluted EPS: $2.02 (compared to $2.29 in the same period last year)

2024 Revenue Guidance: Total product sales (excluding Veklury) expected to be $26 billion to $26.3 billion, up $150 million from prior guidance. Total product sales (including Veklury) projected at $27.8 billion to $28.1 billion, an increase of $650 million at the midpoint.
HIV Sales Growth: Full-year HIV sales expected to grow approximately 5%, up from prior expectations of 4%. Fourth-quarter HIV sales anticipated to be roughly flat quarter-over-quarter.
Veklury Revenue: Full-year revenue for Veklury expected to be approximately $1.8 billion, raised from initial guidance of $1.3 billion.
Operating Income: Expected operating income range increased to $8 billion to $8.3 billion, up from $7.2 billion to $7.6 billion.
Gross Margin: Product gross margin expected to be approximately 86%, narrowed from prior guidance of 85% to 86%.
R&D Expense: R&D expenses expected to decline by a low single-digit percentage, revised from prior outlook of low-to-mid single-digit growth.
EPS Guidance: Non-GAAP diluted EPS guidance raised to a range of $4.25 to $4.45, up from $3.60 to $3.90.

Positives:

Daniel O'Day highlighted a "very strong quarter of commercial and operational execution" with a 9% growth in HIV revenue, indicating robust demand and effective management strategies.
The FDA granted breakthrough therapy designation to lenacapavir for HIV prevention, which could significantly impact public health and expand Gilead's market share in the prevention sector.
Johanna Mercier noted that the launch of Livdelzi for primary biliary cholangitis exceeded internal expectations, suggesting strong demand and potential for future growth in this segment.
Gilead's oncology portfolio, particularly Trodelvy, showed promising growth, with a 17% year-over-year increase, indicating strong market positioning despite competitive pressures.
Andrew Dickinson reported an increase in full-year guidance for product sales, reflecting strong year-to-date performance and disciplined expense management.

Negatives:

The company faced competitive pressures in the CAR-T space, with Cindy Perettie acknowledging challenges from both in-class and out-of-class competitors, which could impact Yescarta's market share.
The impairment charge of $1.8 billion related to the IPR&D assets from Immunomedics indicates potential setbacks in the oncology pipeline, particularly for Trodelvy's second-line indication.
The HIV market's growth is tempered by expected flat sales in the fourth quarter, as noted by Johanna Mercier, due to pricing dynamics and inventory adjustments.
Andrew Dickinson mentioned that the operating margin would have been 47% without the impact of the royalty buyout charge, suggesting underlying cost pressures that could affect profitability.
The ongoing challenges in expanding CAR-T therapy access, as highlighted by Cindy Perettie, indicate potential barriers to growth in the cell therapy segment.

Oncology Market Dynamics: Pfizer reported a 31% year-over-year growth in Oncology, driven by strong demand for XTANDI and TALZENNA, indicating a competitive landscape where Gilead's oncology products may face intensified competition.
HIV Market Pressures: Gilead noted flat sales expectations in Q4 for HIV, while AbbVie highlighted 18% growth in its ex-Humira platform, suggesting potential competitive threats in the HIV segment.
Cost Management Trends: Pfizer's projected $4 billion in net cost savings and Merck's anticipated 81% gross margin reflect a sector-wide focus on operational efficiency, which could pressure Gilead's margins.
Regulatory and Competitive Challenges: Johnson & Johnson acknowledged regulatory challenges and biosimilar competition impacting STELARA, indicating broader industry pressures that could affect Gilead's product lines.
Market Access Concerns: Bristol Myers Squibb's mention of regulatory uncertainties and payer negotiations for new products suggests potential barriers to market access that could also impact Gilead's growth strategies.