Gilead Sciences, Inc. (GILD) Earnings

Management highlights

### Commercial Execution & Launches - Base business sales grew 10% YoY in Q2 2026, the strongest second quarter growth in three years, driven by HIV, Tredelvi, and Livdelzi. Total product sales (including Veclury) were $7.6 billion, up 8% YoY. - Two new commercial launches completed in H1 2026: Tredelvi for first-line metastatic triple-negative breast cancer (TNBC) and Hepcludex for chronic HDV. Two additional launches are expected before end-2026: BicLen (HIV treatment) and NitroCell (multiple myeloma cell therapy). - Yes2Go (long-acting injectable PrEP) became the leading long-acting PrEP option for new patient starts and the overall leader in the PrEP switch market after just four full quarters of launch, with a 70% 12-month persistency rate that outperforms competitors. ### Clinical & Pipeline Progress - Closed three strategic acquisitions in H1 2026: Tubulus (adding an industry-leading ADC platform and clinical-stage programs including GS8824), Arcelex (gaining full ownership of NitroCell and the D-domain binder platform for cell therapy), and Oromedicins (adding a bispecific T-cell engager asset). - Positive Phase 3 data for Islatravir + Lenacapavir (ISLEN), the potential first once-weekly oral HIV treatment, with regulatory filings ongoing and a 2027 launch targeted. The FDA accepted a filing for once-weekly oral Lenacapavir for PrEP, with a decision expected February 2027. - Positive Phase 3 IDEAL study data for Livdelzi in underrepresented PBC patient groups, supporting potential label expansion in 2027. GS8824 (ADC for platinum-resistant ovarian cancer) showed a 61% confirmed objective response rate and 11-month median progression-free survival in Phase 1, with registrational development expected as early as 2027. - Full launch preparation is complete for NitroCell (fourth-line+ relapsed/refractory multiple myeloma) ahead of its December 23, 2026 PDUFA date, with enrollment completed for the Phase 3 IMAGINE 3 trial in second-line multiple myeloma and a potential 2027 filing. ### Financial Performance - Non-GAAP product gross margin was 87% (flat YoY), in line with full-year guidance. Excluding acquired IPR&D from recent acquisitions, operating margin was ~49%, placing it in the top quartile of peer group. - Returned ~$1.4 billion to shareholders in Q2 2026, with 49% of first half 2026 free cash flow returned via dividends and share repurchases.

Guidance

- **Full year 2026 base business sales guidance**: Raised to 6-7% YoY growth, in the range of $29.8 billion to $30.1 billion, a $350 million increase at the midpoint compared to prior May guidance. - **HIV full year sales growth guidance**: Raised to 9-10% YoY, up from the prior 8% guidance, driven by stronger than expected performance of Biktarvy, Yes2Go, and Descovy. Full year Yes2Go sales guidance maintained at ~$1 billion. - **Total product sales guidance**: Adjusted to a range of $30.1 billion to $30.4 billion. Veclury sales are now expected to be ~$300 million (down from the prior $600 million expectation) due to lower than expected COVID-19 related hospitalizations. - **Cell therapy full year guidance**: Maintained expectation of a mid-teens percentage YoY sales decline. - **Non-GAAP EPS guidance**: Full year 2026 non-GAAP diluted EPS (adjusted for acquired IPR&D, financing costs, and non-recurring items) is raised to $8.50 to $8.85, an increase of $0.05 at the lower bound from prior guidance. - **M&A guidance**: Management does not anticipate pursuing additional large M&A transactions in 2026 as it focuses on integrating recently closed acquisitions, but will remain opportunistic for smaller strategic transactions.

Segment performance

1. **HIV**: Q2 2026 sales of $5.7 billion, up 12% year-over-year, contributing 75% of total product sales. Biktarvy sales were $3.8 billion, up 7% YoY. PrEP business hit $1 billion in quarterly sales (doubled YoY), with Yes2Go Q2 sales of $232 million (up 40% sequentially) and Descovy PrEP sales of $801 million (up 60% YoY, 80% of total Descovy sales). 2. **Liver Disease**: Total Q2 sales of $877 million, up 10% YoY. Livdelzi sales were $167 million, more than doubling YoY and growing 26% sequentially. Hepcludex launched in the U.S. in Q2 2026 as the first FDA-approved HDV treatment, expected to be a modest growth contributor. 3. **Oncology**: Tredelvi Q2 sales were $457 million, up 26% YoY and 13% sequentially, with strong demand across approved breast cancer indications. This puts Tredelvi on an ~$1.8 billion annual run rate. 4. **Cell Therapy (KITE)**: Q2 sales of $417 million, down 14% YoY (down 14% full-year 2026 expected) and up 2% sequentially. Yaskarta demand increased, offset by higher competitive pressure on Tecartus.

Risks & headwinds

- Changes to the Affordable Care Act subsidy program led to greater than expected insurance coverage losses for HIV patients in the U.S., slowing HIV treatment market growth in Q2 2026, though management expects this to rebound to the historical 2-3% annual growth rate. - Ongoing competitive pressures in the cell therapy market have driven year-over-year sales declines for KITE's portfolio, a trend expected to continue through full year 2026. - Forward-looking statements related to pipeline milestones, launch timelines, and regulatory approvals are subject to inherent uncertainties that could cause actual results to differ materially from expectations.

Analyst Q&A

• Q: There is a reported gap between IQVIA prescription trend data for Yes2Go and Gilead's reported sales. What are the key remaining growth drivers for Yes2Go through end of 2026?

  A: Gilead does not comment on third-party data collection methodology, and stands by its own reported sales results that show strong launch momentum. Management expects continued growth driven by strong uptake in both treatment-naive and switch patient populations, growing provider confidence, a 14% YoY growing overall U.S. PrEP market, and a high 70% 12-month persistency rate, and maintains full year guidance of ~$1 billion in Yes2Go sales. (219 words)

• Q: Gilead already has a long-acting injectable PrEP option (Yes2Go). Why is it investing in a once-weekly oral PrEP option, and has market demand for longer-acting injectables changed?

  A: Nothing has changed regarding enthusiasm for long-acting injectable PrEP, and Gilead still views longer dosing intervals as preferable for most patients. 80-85% of the current PrEP market still uses daily oral therapies, including a large share of patients who prefer orals over injectables and a large generic market segment. A once-weekly oral option expands patient choice, captures additional market share, and does not cannibalize Yes2Go, supporting overall market expansion for Gilead's PrEP portfolio. (171 words)

• Q: Is reducing HIV sales concentration in Gilead's portfolio still a long-term priority, or is that goal less important given HIV's strong current growth?

  A: Gilead still has an intentional long-term diversification goal, split into two focus areas: diversifying within virology (including expanding Gilead's HIV portfolio across multiple dosing formats and patient segments to strengthen long-term leadership), and diversifying outside of virology into oncology and immunology/inflammation. Tredelvi is already approaching a $2 billion annual run rate with 26% YoY growth, and new acquisitions and pipeline programs are building out oncology and inflammation, so Gilead can both grow its strong HIV franchise and diversify the broader business over time. (169 words)

• Q: What drove Biktarvy's outperformance in Q2 2026 despite ACA-related coverage losses in the U.S.?

  A: ACA subsidy elimination did create a temporary softening in the overall U.S. HIV treatment market in Q2, as patients navigated coverage changes, which did negatively impact Biktarvy volume. The YoY growth was driven by higher average realized prices from favorable channel mix and a larger than expected inventory build, offsetting temporary volume headwinds. Management expects the overall HIV treatment market growth to rebound to its historical 2-3% annual rate in coming quarters, and the stronger than expected performance supported the raise in full year HIV guidance. (145 words)