Gilead Sciences Inc 2026 Q2 Earnings Call

Thank you, Rebecca. Just after market close today, we issued a press release with earnings results for the second quarter of 2026. The press release, slides, and supplementary data are available on the investors section of our website at gilead.com. The speakers on today's call will be our Chairman and Chief Executive Officer, Daniel O'Day, our Chief Commercial and Corporate Affairs Officer, Johanna Mercier, our Chief Medical Officer, Dietmar Berger, and our Chief Financial Officer, Andrew Dickinson. After that, we'll open the call to Q&A, where the team will be joined by Cindy Perettie, the Executive Vice President of Kite. Let me remind you that we will be making forward-looking statements. Please refer to slide two regarding the risks and uncertainties relating to forward-looking statements that could cause actual results to differ materially. With that, I'll turn the call over to Dan.

Thank you, Jackie, thanks everyone for joining us on today's call. As you'll see from today's results, Gilead has delivered another quarter of commercial excellence with base business sales up 10% year-over-year. Our strongest second quarter growth in three years, driven by our HIV portfolio, Trodelvy and Livdelzi. This was also an exciting quarter of clinical execution with positive updates across our core therapeutic areas. Turning to HIV performance this quarter, sales grew 12% year-over-year, driven by impressive Biktarvy and PrEP business growth. Yeztugo has quickly become the leading long-acting PrEP option for new patient starts. Quarterly PrEP sales doubled year-over-year, exceeding $1 billion for the first time. With a $4 billion annual run rate for our PrEP business and Biktarvy's continued strength, we are raising our full-year HIV growth expectations to 9%-10% year-over-year from prior guidance of 8% growth.

We continue to advance our extensive HIV pipeline with potential new daily, weekly, monthly, twice yearly, and yearly options. Later this month, we expect an FDA decision on our once daily oral treatment combining bictegravir and lenacapavir. BicLen has the potential to become the first dedicated switch regimen within our treatment portfolio, expanding the options we offer for virally suppressed people with HIV and further strengthening our leadership in the switch market. We shared detailed data from our positive phase III ISLEND-1 and ISLEND-2 studies at the 2026 International AIDS Society meeting. These data are expected to support the filing and potential launch of the first once-weekly oral HIV treatment regimen, islatravir plus lenacapavir, in 2027. In oncology, Trodelvy sales were up 26% year-over-year, reflecting strong demand across both triple-negative and pre-treated HR-positive, HER2-negative metastatic breast cancer.

We also secured additional approvals for Trodelvy this quarter in first-line metastatic triple-negative breast cancer across PD-L1 status. The acquisition of Tubulis has now closed, providing Gilead with an industry-leading ADC platform and promising clinical-stage ADCs. At ASCO, we have shared encouraging phase I efficacy and safety data for GS-8824, formerly known as TUB-040, in platinum-resistant ovarian cancer. In cell therapy, launch preparations are fully underway for anito-cel, with just five months to go until the PDUFA date. The completed acquisition of Arcellx has given us full ownership of anito-cel, enabling faster, more focused execution in multiple myeloma, as well as the D-domain binder platform for future opportunities in both autologous and in vivo CAR T. This was a strong quarter for our liver disease business, with Livdelzi sales more than doubling year-over-year. Livdelzi continues to gain momentum as the leading second-line treatment for primary biliary cholangitis or PBC.

The recent positive phase III IDEAL data further strengthened the opportunity for Livdelzi to reach more patients with PBC. We also launched Hepcludex in the U.S. this quarter as the first and only FDA-approved treatment for chronic hepatitis delta virus or HDV. In summary, it's been a very strong first half and second quarter with impressive revenue growth across therapeutic areas, two commercial launches, and three positive phase III readouts. In the second half, we expect another two commercial launches in HIV and oncology while continuing to deliver clinical and commercial excellence across the portfolio. With that, I'll hand it over to Johanna.

Thanks, Dan, and good afternoon, everyone. This was another exceptional quarter of commercial execution across our core therapeutic areas. Starting on slide seven, total product sales, excluding Veklury, of $7.6 billion increased 10% year-over-year, driven by strong growth in Biktarvy, Descovy, and Yeztugo in HIV, Trodelvy in oncology, and Livdelzi in liver disease. Sequentially, base business sales were up 12%, driven by strength across each of our therapeutic areas. Including Veklury, second quarter total product sales were $7.6 billion, up 8% year-over-year and 10% sequentially. Moving to HIV on slide eight, second quarter HIV sales of $5.7 billion were up 12% year-over-year with strong performances for Biktarvy in treatment as well as Descovy and Yeztugo in PrEP, driven by higher average realized price and higher demand.

Sequentially, HIV sales increased 13%, primarily driven by inventory build and higher average realized price, both typical in the second quarter following first quarter seasonal dynamics. Given the strong performance in the first half of the year, we now expect full year 2026 HIV sales to grow between 9% and 10% compared to 2025, up from our prior expectation of 8% and driven by continued strong growth in Biktarvy, Yeztugo, and Descovy. Looking at HIV treatment in more detail on slide nine, Biktarvy sales of $3.8 billion were up 7% year-over-year, driven by higher average realized price due to channel mix, in addition to inventory build and higher demand. Sequentially, Biktarvy sales increased 12%, driven by typical seasonality, partially offset by lower demand due to market dynamics, including a greater-than-expected impact associated with changes in the Affordable Care Act.

As people with HIV navigate these changes, we did see a slowing in HIV treatment market growth in the second quarter, although we expect to see this trend back to the typical 2% to 3% rate of annual growth. BIKTARVY continues to lead as the regimen of choice for both naive and switch patients across major markets and once again, increased share year-over-year in the second quarter. We're excited to bring new, potentially highly effective and differentiated therapies to further expand Gilead's leadership in the switch market. U.S. launch preparations are currently underway for bictegravir plus lenacapavir, our once-daily single-tablet regimen, where we expect an FDA priority review decision later this month. We're also anticipating islatravir plus lenacapavir, the potential first once-weekly single-tablet regimen to launch next year, continuing to build on Gilead's HIV leadership.

Moving to slide 10, our HIV prevention or PrEP business doubled year-over-year in the second quarter, and for the first time exceeded $1 billion in quarterly sales. With our expanding portfolio of PrEP options, Gilead continues to gain market share in a rapidly growing market. The U.S. PrEP market grew approximately 14% year-over-year, marking another quarter of double-digit percentage growth on an increasingly larger base of users. Gilead PrEP sales growth of over 100% has once again significantly outpaced the market, driven by strong commercial execution. Yeztugo has already established itself as the leading long-acting injectable for PrEP-naive individuals. In the PrEP switch market, Yeztugo is now the overall leader across oral and injectable options, an impressive achievement after only four full quarters of launch. Now, with 12 months of data, we are pleased to share Yeztugo's persistency rate.

More than 70% of users so far have returned for reinjection at six months and extended their protection against HIV to a full year. We're very excited to see such a high level of persistency at a rate that we believe is well above available PrEP options. Overall, we continue to be very pleased with the progress of the launch and with second quarter sales of $232 million, up 40% sequentially, and continue to target full year 2026 sales of approximately $1 billion. Moving to Descovy, PrEP sales of approximately $801 million, which accounts for around 80% of total Descovy sales, were up 60% year-over-year, driven by higher average realized price due to channel mix and demand growth. Sequentially, Descovy for PrEP sales were up 23%, driven by second quarter seasonality and higher demand.

We continue to expect robust full year growth for Descovy, driven by pricing favorability as well as demand growth and an expanding U.S. PrEP market. Our total PrEP business is already operating at an annual run rate of $4 billion. With our diverse pipeline of new prevention options in development and a growing PrEP market, Gilead is well-positioned for significant long-term growth. Moving to Livdelzi on slide 11, sales of $167 million more than doubled year-over-year, primarily driven by increased U.S. demand as well as continued uptake in Europe. Sequentially, Livdelzi sales grew 26%, driven by increased demand, partially offset by lower average realized price. Livdelzi continues to be the leading second-line PBC regimen, driving encouraging second quarter market growth as we move beyond first quarter seasonality.

We also announced new positive results from the phase III IDEAL study evaluating Livdelzi in patients with inadequately controlled disease and ALP between one and 1.67 times the upper limit of normal. We look forward to potentially expanding Livdelzi's leadership in the second-line PBC population as early as next year. More broadly, in liver disease, sales of $877 million were up 10% year-over-year, reflecting increased demand across PBC, HBV, and HDV, partially offset by lower HCV starts. Sequentially, sales were up 14%, reflecting increased demand and inventory build, partially offset by lower average realized price. In the U.S., Hepcludex was granted FDA accelerated approval in May, becoming the first and only treatment for chronic HDV. We look forward to bringing Hepcludex into the small but deeply underserved patient population, and it is expected to be a modest growth contributor in our liver disease business.

Moving to slide 12, Trodelvy delivered an exceptional quarter of growth, with sales of $457 million, up 26% year-over-year and 13% sequentially, driven by strong demand across both triple-negative and pretreated HR-positive, HER2-negative metastatic breast cancer. Building on Trodelvy's success in second-line plus metastatic TNBC, we were thrilled to receive back-to-back FDA approvals of Trodelvy in first-line metastatic TNBC across PD-L1 status. With an addressable population almost double that of the second-line setting and a longer median duration of treatment, this represents an opportunity to further extend Trodelvy's reach and benefit for patients. Following NCCN guideline updates earlier this year and our recent approvals in first-line metastatic TNBC, we have seen increasing breadth and depth in the adoption of Trodelvy.