Gilead (GILD) Q1 2025: HIV Base Grows 6% as Lenacapavir Launch Nears, Offsetting Oncology and Cell Therapy Drag

April 24, 2025 | By EarningsIQ Research

Gilead’s Q1 showed resilient base growth and margin discipline, with HIV sales up 6% and the anticipated Lenacapavir launch set to reshape the PrEP landscape. Oncology and cell therapy faced headwinds, but pipeline execution and U.S.-anchored manufacturing bolster long-term confidence. Investors should watch for near-term launch execution and evolving policy risks as the year unfolds.

Summary

• HIV Franchise Delivers: Core HIV business outperformed, while Medicare Part D headwinds remain a key 2025 drag.
• Pipeline Catalysts Build: Lenacapavir and oncology launches set up for multi-year top-line growth inflection.
• Cost Control and U.S. Focus: Margin strength and U.S.-centric R&D/manufacturing limit tariff and tax risk.

Performance Analysis

Gilead’s Q1 2025 results underscored the company’s ability to generate steady base business growth even as legacy COVID-related revenue faded. Excluding Veklury, sales grew 4% year over year, driven by a 6% increase in HIV sales and continued momentum in liver disease. Biktarvy, flagship HIV therapy, led with 7% growth, and Discovy, HIV prevention, surged 38% on both price and demand. However, total product sales declined 1% as COVID-related sales dropped sharply, and oncology and cell therapy segments each faced pressure from inventory dynamics and competitive headwinds.

Margin performance was a highlight, with gross margin holding at 85% and operating margin reaching 43%, reflecting disciplined expense management and a focus on high-value franchises. SG&A expenses declined, and R&D spend was flat, supporting robust EPS and cash flow generation. While oncology (notably Trodelvy) and cell therapy (Yescarta, Tecartus) lagged, management emphasized pipeline progress and near-term launches as key levers for future growth.

• HIV Market Share Gains: Biktarvy reached 51% U.S. market share, Discovy maintained 40%+ PrEP share, and overall HIV demand remains robust.
• Oncology Volatility: Trodelvy sales fell 5% year over year, with inventory and price mix masking underlying demand growth.
• Cell Therapy Competition: Yescarta and Tecartus faced both in-class and bispecific competition, particularly outside the U.S.

First quarter seasonality, Medicare Part D redesign, and COVID normalization all weighed on reported results, but underlying demand signals in HIV and early liver disease launches suggest a resilient core. Investors should note the company’s reiteration of full-year guidance despite these crosscurrents.

Executive Commentary

Strategic Positioning

1. HIV Franchise and Lenacapavir Launch

HIV remains Gilead’s foundational growth engine, with Biktarvy and Discovy driving volume and price gains. The imminent U.S. launch of Lenacapavir, a twice-yearly injectable for PrEP (pre-exposure prophylaxis), is poised to expand the prevention market and accelerate patient switching from daily orals. Management expects coverage to ramp to 75% within six months and 90% by one year, leveraging established commercial and access infrastructure. While the Medicare Part D redesign creates a 2025 revenue headwind, Gilead expects a return to HIV growth in 2026 as Lenacapavir adoption builds.

2. Oncology and Cell Therapy: Execution vs. Competition

Trodelvy, antibody-drug conjugate for breast cancer, remains the leading regimen in second-line metastatic triple-negative breast cancer, but sales were pressured by inventory and price mix. Positive Phase III data (ASCENT-04) in first-line setting could double the addressable population, and additional readouts are expected near-term. In cell therapy, Yescarta and Tecartus are facing competitive pressure from both new CAR-T entrants and bispecifics, especially ex-U.S. Gilead is betting on next-generation assets, including anetocel for multiple myeloma (potential 2026 launch), to reignite growth.

3. Liver Disease and Inflammation: Early Momentum

Liver disease sales rose 3% year over year, with Livdelsi showing early launch traction in primary biliary cholangitis (PBC) and rapid share uptake. European expansion is underway, with coverage already above 80% and expected to surpass 90% soon. Gilead is targeting broader PBC populations through ongoing trials, supporting a multi-year growth runway.

4. U.S.-Centric R&D and Manufacturing Footprint

Gilead’s decision to anchor nearly all R&D and intellectual property in the U.S. provides structural advantages amid tariff and tax uncertainty. Over 80% of profits are recognized domestically, and ongoing investment in U.S. manufacturing reduces exposure to global supply chain and regulatory risk. This positioning is differentiated among large pharma peers and supports resilience in the face of policy volatility.

5. Margin Discipline and Capital Allocation

Operating margin strength reflects tight cost control and focus on high-value launches. SG&A and R&D discipline, combined with $1.7 billion returned to shareholders in Q1, underscore a balanced approach to investing in pipeline growth while rewarding shareholders. S&P’s recent upgrade to A- with a stable outlook further validates Gilead’s financial strategy.

Key Considerations

Gilead’s Q1 sets a foundation for a pivotal 2025, with HIV franchise stability, pipeline launches, and disciplined cost management at the forefront. Investors should weigh:

Key Considerations:

• Lenacapavir Launch Execution: Timely FDA approval and rapid coverage uptake are critical for PrEP market expansion and offsetting Discovy cannibalization.
• Medicare Part D Redesign Impact: Flat HIV sales for 2025 mask underlying demand; full-year effect and volume offsets will be a focus for Q2/Q3.
• Oncology Growth Path: Trodelvy’s first-line breast cancer data could be transformative, but inventory and pricing volatility remain near-term risks.
• Cell Therapy Competitive Dynamics: Market share erosion from new entrants and bispecifics will test Kite’s manufacturing and data-driven differentiation.
• Policy and Tariff Exposure: U.S.-anchored operations mitigate some risks, but evolving U.S. healthcare policy and global trade actions require ongoing vigilance.

Risks

Policy uncertainty, particularly around Medicare, Medicaid, and PrEP funding, could disrupt access and pricing in Gilead’s core markets. Oncology and cell therapy segments are exposed to competitive threats from new modalities and shifting treatment paradigms. Near-term, the success of Lenacapavir’s launch and the ability to offset Discovy cannibalization will be crucial, while macro-related supply chain and tariff risks remain manageable but not immaterial.

Forward Outlook

For Q2 2025, Gilead guided to:

• Continued base business growth, with HIV demand-led volume offset by ongoing Part D headwinds.
• Steady margin performance, with gross margin expected at 85-86% and disciplined operating expense management.

For full-year 2025, management maintained guidance:

• Total product sales of $28.2–$28.6 billion; base sales (ex-Veklury) $26.8–$27.2 billion.
• Flat HIV sales, with return to growth in 2026 as Lenacapavir scales.
• Operating income $12.7–$13.2 billion; EPS $7.70–$8.10; tax rate ~19%.

Management highlighted several factors that support guidance:

• Robust HIV demand and new product launches to drive second-half momentum.
• Tariff and FX headwinds absorbed in current outlook; no major LOEs until 2033.

Takeaways

Gilead’s Q1 demonstrates business model resilience, with HIV franchise momentum and pipeline catalysts offsetting near-term headwinds in oncology and cell therapy. Margin discipline and a U.S.-centric footprint provide insulation from policy and trade risk, while the upcoming Lenacapavir launch will be a critical test of commercial execution.

• HIV Franchise Drives Stability: Underlying demand and market share gains provide a solid base, with Lenacapavir set to expand the PrEP market and enable a return to growth in 2026.
• Pipeline Execution Key for Upside: Trodelvy and anetocel launches are central to reigniting oncology and cell therapy growth; near-term data readouts will guide sentiment.
• Monitor Policy and Launch Dynamics: Medicare/Medicaid, PrEP funding, and tariff developments could create volatility; watch for Lenacapavir’s launch trajectory and Discovy cannibalization through year-end.

Conclusion

Gilead’s Q1 2025 results highlight a company at an inflection point, balancing strong HIV fundamentals and pipeline promise against sector headwinds and policy complexity. The next 12 months will be defined by launch execution and the ability to translate pipeline progress into durable growth.

Industry Read-Through

Gilead’s U.S.-anchored IP and manufacturing strategy sets a template for pharma peers facing rising tariff and tax uncertainty. The Lenacapavir PrEP launch will be a major test for injectable prevention’s ability to expand the market and disrupt daily oral incumbents, with implications for HIV players and specialty pharma. Oncology and cell therapy competitive dynamics highlight the urgency of data-driven differentiation and manufacturing scale, as new modalities and bispecifics pressure legacy CAR-T franchises. Sector-wide, policy volatility remains a key watchpoint for access, pricing, and growth visibility.

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