Gilead’s Financial Performance in 2024: Navigating Challenges and Opportunities

Gilead Sciences, a leading biopharmaceutical company, has released its financial results for the year 2024. The report provides insights into the company’s performance, strategic priorities, and outlook for the future.

Overview of Financial Performance

In 2024, Gilead reported total revenues of $28.8 billion, a 6% increase from the previous year. This growth was primarily driven by higher sales in the company’s HIV, Oncology, and Liver Disease product segments, partially offset by lower sales of Veklury (remdesivir), Gilead’s COVID-19 treatment.

Despite the revenue growth, Gilead’s net income attributable to the company decreased significantly to $480 million, or $0.38 per diluted share, compared to $5.7 billion, or $4.50 per diluted share, in 2023. This substantial decline was mainly due to:

1. A pre-tax impairment charge of $4.2 billion related to Gilead’s Trodelvy in-process research and development (IPR&D) assets for metastatic non-small cell lung cancer (NSCLC).
2. Higher acquired IPR&D expenses, primarily $3.8 billion related to Gilead’s acquisition of CymaBay Therapeutics.

Segment Performance

HIV Gilead’s HIV product sales increased by 8% to $19.6 billion in 2024, driven by higher demand and higher average realized prices for key products like Biktarvy and Descovy.

Liver Disease Liver Disease product sales grew by 9% to $3.0 billion, primarily due to increased demand for chronic hepatitis C, hepatitis B, and hepatitis delta virus treatments, as well as the launch of Livdelzi for the treatment of primary biliary cholangitis (PBC).

Veklury Veklury (remdesivir) product sales decreased by 18% to $1.8 billion, reflecting the lower rates of COVID-19-related hospitalizations.

Oncology Gilead’s Oncology segment saw strong performance, with Cell Therapy product sales (Tecartus and Yescarta) increasing by 6% to $2.0 billion and Trodelvy product sales growing by 24% to $1.3 billion.

Gross-to-Net Deductions A significant portion of Gilead’s product sales is subject to various discounts, rebates, and other deductions, collectively referred to as gross-to-net deductions. In 2024, these deductions totaled $17.8 billion, or 38% of gross product sales, compared to $16.4 billion, or 38%, in 2023.

Foreign Currency Exchange Impact Approximately 27% of Gilead’s product sales were denominated in foreign currencies during 2024. The strengthening of the U.S. dollar had an unfavorable impact of $163 million on the company’s total product sales.

Costs and Expenses

Product Gross Margin Gilead’s product gross margin improved to 78.2% in 2024, compared to 75.9% in 2023, primarily due to the absence of restructuring expenses related to changes in the company’s manufacturing strategy in the prior year.

Research and Development (R&D) Expenses R&D expenses increased by 3% to $5.9 billion, driven by higher personnel, infrastructure, and other support costs, partially offset by lower clinical study and other costs.

Acquired IPR&D Expenses Gilead incurred $4.7 billion in acquired IPR&D expenses in 2024, primarily related to the CymaBay acquisition, the extinguishment of future royalty obligations for seladelpar, and milestone payments for collaborations with Arcus Biosciences, Arcellx, and Tmunity Therapeutics.

IPR&D Impairments Gilead recognized a total of $4.2 billion in IPR&D impairment charges related to Trodelvy’s metastatic NSCLC program. This was due to the failure of the Phase 3 EVOKE-01 study to meet its primary endpoint and Gilead’s subsequent decision to discontinue the clinical development program for the second-line NSCLC indication.

Selling, General and Administrative (SG&A) Expenses SG&A expenses remained relatively flat at $6.1 billion in 2024, with an increase in selling and marketing expenses offset by a decrease in general and administrative expenses.

Income Taxes Gilead’s effective tax rate increased to 30.5% in 2024, compared to 18.2% in 2023, primarily due to the non-deductible acquired IPR&D expenses and a decrease in unrecognized tax benefits, partially offset by a non-recurring tax benefit and a decrease in state deferred tax liabilities related to the Trodelvy IPR&D impairment.

Liquidity and Capital Resources

Gilead’s primary source of funds is net cash provided by operating activities, which increased to $10.8 billion in 2024, compared to $8.0 billion in 2023, mainly due to higher collections on product sales and lower tax and operating payments.

Net cash used in investing activities was $3.4 billion in 2024, primarily related to the $3.9 billion net cash payment for the CymaBay acquisition.

Net cash used in financing activities was $3.4 billion in 2024, primarily due to debt repayments, dividend payments, and common stock repurchases, partially offset by proceeds from the issuance of senior unsecured notes.

As of December 31, 2024, Gilead had $10.0 billion in cash and cash equivalents. The company believes it can satisfy its capital needs for the next 12 months and the foreseeable future through its current liquidity, future cash flows from operations, and access to external capital, if needed.

Outlook and Strategic Priorities

Looking ahead to 2025, Gilead expects to see continued increases in demand for its products, particularly in the HIV business. The company anticipates that strong volume growth will be offset by the effects of the Inflation Reduction Act, which is expected to increase Gilead’s payment obligations under the Medicare Part D discount program, a decrease in Veklury sales, and the impact of a stronger U.S. dollar.

Gilead’s strategic priorities include:

1. Maximizing near-term revenue growth
2. Maximizing the impact of long-acting HIV therapies
3. Expanding and delivering on oncology programs

The company plans to continue investing in its business and R&D pipeline, both internally and through partnerships and select business development transactions, while maintaining disciplined operating expense management.

Risks and Uncertainties

Gilead’s ability to deliver on its strategy and 2025 objectives is subject to a number of uncertainties, including:

• Competitive landscape and market dynamics
• Regulatory approvals and clinical trial outcomes
• Successful integration of acquired assets and collaborations
• Potential legal and regulatory actions
• Macroeconomic and geopolitical factors

Investors are encouraged to review the risk factors detailed in Gilead’s Annual Report on Form 10-K for a comprehensive understanding of the potential risks and uncertainties facing the company.

Conclusion

Gilead’s financial performance in 2024 was marked by growth in key product segments, offset by significant impairment charges and higher acquired IPR&D expenses. The company remains focused on maximizing its near-term revenue, advancing its long-acting HIV therapies, and expanding its oncology portfolio, while navigating various risks and uncertainties. Gilead’s ability to execute on its strategic priorities and deliver value to shareholders will be crucial in the years ahead.