Gilead Sciences (NASDAQ: GILD) stands as a titan in the biopharmaceutical industry, with a proven track record of innovation and market leadership in areas like HIV, liver disease, and oncology. For investors seeking a blend of stability, growth potential, and value, Gilead offers a compelling case for a long position. This analysis dives into the key reasons to consider investing in Gilead, focusing on its recent European approval for Livdelzi, robust Q4 financial performance, significant advancements in HIV treatments, and the continued relevance of Veklury in its portfolio. By examining these factors, alongside Gilead’s strategic positioning and financial health, we can uncover why the company remains a strong contender for long-term investors.
Livdelzi’s European Approval Bolsters Liver Disease Portfolio
Gilead’s liver disease portfolio has been a steady contributor to its revenue, and the recent European marketing authorization for Livdelzi (seladelpar) marks a pivotal milestone. Livdelzi, approved for primary biliary cholangitis (PBC), a chronic liver condition, addresses a significant unmet medical need. PBC affects a niche but critical patient population, and Livdelzi’s ability to significantly reduce alkaline phosphatase (ALP) levels and alleviate pruritus (severe itching)—a debilitating symptom for up to 80% of PBC patients—sets it apart as a differentiated therapy. Data from the Phase 3 RESPONSE trial and the ongoing ASSURE study demonstrate that 60-78% of patients, regardless of prior treatment history, achieved a composite biochemical response, underscoring the drug’s efficacy and tolerability.
The European approval follows a successful U.S. launch, where Livdelzi generated approximately $30 million in sales in its first full quarter post-approval. This early traction suggests strong market acceptance, and the European expansion—coupled with ongoing regulatory reviews in Canada and Australia—positions Livdelzi to tap into a broader global market. The liver disease segment, already a $3 billion business for Gilead, is poised for further growth as Livdelzi evolves from a niche treatment to a cornerstone of the company’s portfolio. The ongoing Phase 3b/4 AFFIRM trial, designed to secure full FDA approval, could further expand Livdelzi’s eligible patient population, enhancing its long-term revenue potential.
For investors, Livdelzi’s success validates Gilead’s $4.3 billion acquisition of CymaBay Therapeutics, which brought seladelpar into its pipeline. This strategic move not only strengthens Gilead’s liver disease offerings but also diversifies its revenue streams beyond its HIV dominance, reducing reliance on any single therapeutic area. The European approval signals Gilead’s ability to navigate complex regulatory landscapes and capitalize on global opportunities, making it a key driver for sustained growth.
Strong Q4 Results Reflect Operational Excellence
Gilead’s financial performance in the fourth quarter underscores its operational strength and ability to deliver consistent growth. Total product sales, excluding Veklury, surged 13% year-over-year to $7.2 billion, with full-year sales (excluding Veklury) reaching $26.8 billion, an 8% increase. This growth was propelled by robust demand across HIV, oncology, and liver disease segments, reflecting Gilead’s ability to execute across diverse therapeutic areas.
The company reported a diluted earnings per share (EPS) of $1.42 in Q4, up from $1.14 the prior year, driven by higher product sales, lower costs of goods sold, and reduced acquired in-process research and development expenses. Non-GAAP diluted EPS rose to $1.90 from $1.72, further highlighting Gilead’s ability to improve profitability despite increased operating expenses tied to litigation accruals and marketing investments for Livdelzi and lenacapavir. Full-year revenue climbed 6% to $28.8 billion, showcasing resilience even as Veklury sales faced headwinds due to declining COVID-19 hospitalizations.
Gilead’s financial stability is further bolstered by its cash position of $10 billion, providing ample liquidity for strategic investments, acquisitions, and shareholder returns. The company issued $3.5 billion in senior unsecured notes, paid $973 million in dividends, and repurchased $350 million in common stock in Q4, signaling confidence in its long-term outlook. With a forward P/E ratio of 13.11 and a Zacks Value Style Score of B, Gilead appears undervalued relative to its growth prospects, making it attractive for value-oriented investors. The company’s 3.23% dividend yield, covered by a reasonable 64.8% payout ratio, adds another layer of appeal for those seeking income alongside capital appreciation.
HIV Franchise: A Bedrock of Growth with Lenacapavir on the Horizon
Gilead’s HIV franchise remains the cornerstone of its business, generating $19.6 billion in full-year sales, an 8% increase year-over-year. Biktarvy, the standard of care for HIV treatment, led the charge with $13.4 billion in sales, up 13%, driven by strong demand and favorable pricing dynamics. With a market share exceeding 49% in the U.S., Biktarvy’s dominance is unchallenged, and its patent protection extends to 2033, providing a decade of exclusivity to fuel growth.
The potential launch of lenacapavir, a twice-yearly injectable for HIV prevention, could redefine the HIV market. Lenacapavir demonstrated 100% efficacy in preventing HIV in cisgender women, earning Breakthrough Therapy designation from the FDA. Its potential approval in mid-2025 could offer a game-changing alternative to daily oral regimens, appealing to patients seeking convenience and adherence. Gilead is also advancing lenacapavir in combination therapies, with Phase 2 and 3 trials (WONDERS-1 and ARTISTRY-1) exploring once-weekly oral and single-tablet regimens for treatment-experienced patients with complex needs. These innovations could capture a significant portion of the 6-8% of HIV patients who require alternatives to existing single-tablet regimens.
While competition from companies like GSK poses a challenge, Gilead’s collaboration with Merck to evaluate lenacapavir with islatravir—a once-weekly oral combination that maintained viral suppression at 48 weeks—demonstrates its proactive approach to staying ahead. The HIV franchise’s consistent growth (5% in 2022, 6% in 2023, and 8% in 2024) reflects Gilead’s clinical and commercial prowess, positioning it to maintain leadership in a market projected to grow steadily due to rising global demand for HIV therapies.
Veklury’s Role in a Post-Pandemic World
Veklury (remdesivir), Gilead’s antiviral for COVID-19, has faced declining sales, dropping 18% to $1.8 billion for the full year, reflecting lower hospitalization rates. However, Veklury remains a critical component of Gilead’s portfolio, with real-world data supporting its efficacy in immunocompromised patients and those at risk of long-COVID. The drug’s sales, while variable, continue to contribute meaningful revenue, and Gilead’s guidance accounts for this volatility by providing quarterly updates.
The decline in Veklury sales is offset by the strength of Gilead’s base business, particularly in HIV and oncology. This resilience underscores Gilead’s ability to navigate market shifts while maintaining overall revenue growth. For investors, Veklury’s contribution, though diminished, highlights Gilead’s diversified portfolio, which mitigates risks associated with reliance on any single product.
Oncology and Strategic Diversification
Gilead’s oncology segment is another bright spot, with full-year sales of $3.3 billion, up 12% year-over-year. Trodelvy, a therapy for metastatic breast and bladder cancer, saw sales rise 24% to $1.3 billion, driven by strong demand and expanded indications. The company’s cell therapy portfolio, led by Yescarta and Tecartus, generated $2 billion, treating over 7,000 patients. Strategic acquisitions like Kite and Immunomedics have solidified Gilead’s oncology presence, and ongoing Phase 3 trials could further expand indications for these therapies.
Gilead’s collaborations with Arcus Biosciences, Merck, and Genesis Therapeutics signal a commitment to diversifying its pipeline beyond virology. These partnerships leverage cutting-edge platforms like AI-driven drug discovery and novel antibody-drug conjugates, positioning Gilead to capture emerging opportunities in oncology and inflammation. While competitive pressures in cell therapy and potential litigation costs pose risks, Gilead’s diversified approach and robust pipeline mitigate these challenges.
Risks and Considerations
No investment is without risks, and Gilead faces several. The anticipated $1.1 billion impact of Medicare Part D reform in 2025, with $900 million affecting HIV revenue, could pressure margins. Competitive dynamics in oncology and cell therapy markets, coupled with foreign exchange headwinds, may also temper growth. Additionally, a $4.2 billion impairment charge related to Immunomedics assets highlights the risks of acquisitions. However, Gilead’s strong cash flow, disciplined expense management, and diversified portfolio provide a buffer against these headwinds.
Final Thoughts: A Balanced Case for Long-Term Investment
Gilead Sciences presents a compelling case for a long position, driven by its leadership in HIV, expanding liver disease portfolio with Livdelzi, robust oncology growth, and financial stability. The European approval of Livdelzi and the potential launch of lenacapavir underscore Gilead’s innovation and global reach. Strong Q4 results, a diversified pipeline, and an attractive valuation make it a standout for value and growth investors. While risks like regulatory changes and competition exist, Gilead’s track record of execution and strategic vision positions it to deliver sustained shareholder value. For those seeking a biopharmaceutical stock with both stability and upside potential, Gilead is a name to watch.
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