Gilead Sciences (NASDAQ:GILD) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Gilead Sciences reported a strong third quarter with base business sales increasing 16% year-over-year, driven by significant growth in HIV products, Trodelvy, and Livdelzi.
HIV sales grew 18% year-over-year, with Biktarvy achieving an all-time high U.S. market share. HIV prevention also saw robust growth with Yes2go and Descovy capturing a 50% market share.
Trodelvy sales increased by 42% year-over-year, with European approval extending its use in breast cancer treatment.
The company is advancing a diverse pipeline across HIV, oncology, and inflammation, with multiple anticipated product launches, including a new HIV treatment regimen.
Full-year revenue guidance was raised by $1.6 billion, reflecting strong performance, while long-term growth is expected despite future pricing impacts from the IRA on Biktarvy.
Management highlighted strategic diversification and robust pipeline development as key drivers for sustainable growth amid policy headwinds.
Full Transcript
Rebecca (Operator)
Good afternoon everyone and welcome to Gilead Sciences earnings conference call. My name is Rebecca and I’ll be today’s host. In a moment we’ll begin our prepared remarks followed by our Q&A session. To ask a question, please press star one and to withdraw your question, press star one again. Now I’ll hand the call over to Jackie Ross, Senior Vice President, Treasurer and Head of Investor Relations.
Jackie Ross (Senior Vice President, Treasurer and Head of Investor Relations)
Thank you, Rebecca. Just after market close today, we issued a press release with earnings results for the third 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 Joanna 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 2 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.
Daniel O’Day (Chairman and Chief Executive Officer)
Thank you, Jackie, and thanks everyone for joining us on today’s call. Gilead delivered an exceptional third quarter that highlights the strength, breadth, and durability of the business. Third quarter base business sales were up 16% year over year, Gilead’s strongest growth in more than a decade, driven by Biktarvy, Descovy, and Yes2go in HIV, Trodelvy in metastatic breast cancer, and Livdelzi in PBC. At the same time, we continue to advance our diverse pipeline as we prepare for the next phase of launches. In HIV, we continue to lead across treatment and prevention. In the third quarter, HIV sales grew 18% year over year. Biktarvy achieved an all-time high U.S. market share and we had a modest initial contribution from Bixlenvo, which launched in August. HIV prevention sales nearly doubled year over year. As expected, Yes2go has rapidly established itself as the leading long-acting injectable option for HIV prevention.
Yes2go and Descovy for PrEP combined have 50% market share today and a $4 billion annual run rate. As Dietmar will cover later, we believe we have the most comprehensive and diverse HIV pipeline in the industry as well as in Gilead’s history. Across daily and long-acting dosing, we are advancing a portfolio that will deliver new options for many years to come. The most near-term example is islatravir plus lenacapavir. We expect to file this year and, if approved, this will be the first once-weekly oral treatment regimen for virally suppressed people with HIV.
In oncology, Trodelvy delivered another very strong quarter. Sales were up 42% year over year, with growing demand across triple-negative and HR-positive, HER2-negative metastatic breast cancer. Trodelvy reached an approximately $2 billion annual run rate. In the third quarter, we received European approval of Trodelvy in combination with pembrolizumab for first-line PD-L1–positive metastatic triple-negative breast cancer, extending Trodelvy’s benefits to patients earlier in treatment.
Beyond Trodelvy and metastatic breast cancer, we now have seven clinical-stage antibody–drug conjugate programs in oncology. In cell therapy, we are approaching an important catalyst with the potential approval of a needle cell toward the end of the year. This would bring our total number of approvals to four in 2026 alone. In inflammation, our third strategic area of focus, we are advancing and expanding our broad and differentiated pipeline that we believe will be a durable new growth area for the company. We recently shared promising 12-week data for Envistagrass in inflammatory bowel disease, and we expect to advance the program into phase 3 studies in ulcerative colitis in 2027. Envistagrass has the potential to be a backbone therapy for inflammatory bowel diseases as a monotherapy or in combination with other mechanisms, including the oral IL-23 receptor inhibitor we recently agreed to acquire.
Beyond IBD, we have our IRAK4 inhibitor, for which we plan to share data at the upcoming ACR meeting, as well as Gamgirdamig, which represents a promising approach to B cell–driven autoimmune diseases, with additional data expected later this year. Overall, our inflammation pipeline now includes 13 clinical programs, giving us multiple opportunities to deliver meaningful advances for patients. In summary, the third quarter continues what is proving to be a stellar year of execution and performance. This has enabled us to raise our 2026 base business revenue guidance by $1.6 billion over the course of the year while advancing a robust pipeline and preparing for the next wave of potential launches. This fundamental strength in our business means we are well placed to adapt to potential policy headwinds. As you know, Biktarvy was selected for the maximum fair price determination process.
That process is now complete, and CMS have informed us of the price they have set. As we have previously shared, this will have an impact on Biktarvy revenues in 2028. Andy will share details in his section of the call and, as this third quarter has reinforced again, our strategy of diversification has reshaped our business and is expected to continue to drive sustainable growth. Looking forward, the multiple opportunities to drive growth across all three of our therapeutic areas, the strength and diversity of our pipeline within and beyond HIV, and a disciplined operating model all give us confidence in the trajectory of the company. With that, I’ll hand it over to Joanna.
Joanna Mercier (Chief Commercial Officer)
Thanks, Dan, and good afternoon, everyone. Starting on slide 7, total product sales excluding Veklury of $8.2 billion were up 16% year over year, driven by strong HIV performance, Trodelvy, and Livdelzi. This is the highest year-over-year growth for our base business since 2015. Sequentially, sales were up 8%, driven by growth in HIV, Trodelvy, and Livdelzi. Including Veklury, third quarter total product sales were $8.3 billion, up 13% year over year and 9% sequentially.
Moving to HIV on slide 8, third quarter HIV sales of $6.2 billion were up nearly $1 billion, or 18% year over year, and represented the highest year-over-year growth since the fourth quarter of 2018. This strong performance was driven by higher average realized price, higher demand, and favorable inventory dynamics. Sequentially, HIV sales were up 10%, primarily driven by higher inventory, demand, and average realized price. We expect these inventory dynamics to normalize by year end.
Looking at HIV in more detail on slide 9, Biktarvy sales of $4.1 billion were up 10% year over year, driven by higher demand and average realized price, in addition to favorable inventory dynamics. Sequentially, Biktarvy’s sales increased 8%, driven by favorable inventory dynamics and higher demand, partially offset by lower average realized price due to channel mix. Biktarvy reached an all-time-high treatment market share of 53% in the US, supported by continued gains among new patients, strong retention, and improving access following adjustments to the Florida ADAP program earlier in the year.
While we have not yet seen the HIV treatment market return to its typical 2% to 3% growth, we have seen signs of stabilization. Biktarvy has also demonstrated continued resilience amid changes related to the Affordable Care Act, reflecting the strength of the product profile and of our commercial teams to help people living with HIV maintain access to treatment. Bixlenvo, our new daily oral combination of bictegravir and lenacapavir for virally suppressed adults with HIV, was launched late into the third quarter following US approval in August. While it’s still early days for the launch, we’re pleased with the uptake we are seeing in virally suppressed people on complex regimens, which has been in line with our expectations. Overall, we remain focused on expanding coverage and bringing this new option for people who want to switch or simplify their HIV treatment.
Moving to HIV prevention, or PrEP, on slide 10, sales nearly doubled year over year in the third quarter, once again outpacing overall US PrEP market growth of 14% year over year. This is a clear testament to Gilead Sciences’ strong commercial execution. Building on our leadership, now with 50% PrEP market share, our innovative portfolio has accounted for the vast majority of market growth since 2025. Additionally, demand in the long-acting injectable market doubled year over year, and we’re pleased to share Yes2Go, the leading injectable prevention regimen, with sales of $305 million, up 31% sequentially and on track to deliver full-year sales of approximately $1 billion. Importantly, we continue to see that more than 70% of users have returned for their second injection, resulting in combined protection of up to a full year. This continues to reinforce Yes2Go’s best-in-PrEP persistency profile, as defined by patients returning for their reinjections after six months.
We are particularly encouraged by the mix of new starts, the majority continuing to come from individuals switching from other PrEP regimens, while the share of PrEP-naive individuals increased during the quarter. Looking ahead, we believe the potential launch of once-weekly oral Yes2Go could further expand choice and support continued growth by reaching additional individuals who benefit from PrEP. Looking at Descovy, total sales of $1 billion were up 49% year over year, driven by higher average realized price and favorable inventory dynamics. PrEP sales continue to account for approximately 80% of total Descovy sales. Sequentially, total Descovy sales were up 8%, driven by higher-than-usual inventory build and higher demand. In just three quarters, Descovy sales have already exceeded that of full year 2025, driven primarily by strong demand and pricing favorability.
Moving to Livdelzi on slide 11, sales of $203 million were up 93% year over year and 21% sequentially, driven by increased demand in both the US and Europe. Livdelzi is the market leader in the US and is helping to drive expansion of the second-line PBC market. Looking ahead, we’re excited to share the detailed results from Livdelzi’s Phase 3 IDEAL study at the upcoming AASLD Liver Meeting. The study evaluated Livdelzi in PBC patients with ALP between 1 and 1.67 times the upper limit of normal, which account for approximately half of the second-line-eligible population and remain associated with an increased risk of disease progression.
We are working towards global filings to update Livdelzi’s label to include data from the IDEAL study and expect a US label update in 2027. Together with sales in our viral hepatitis portfolio, liver disease sales were $927 million, up 13% year over year, reflecting increased demand for Livdelzi in PBC as well as favorable pricing dynamics for HCV and HBV, partially offset by lower HCV starts. Sequentially, sales were up 6%, reflecting higher average realized price and inventory dynamics, partially offset by lower demand for HCV products.
Moving to slide 12, Trodelvy sales of $506 million for the quarter, now a $2 billion annual run rate, were up 42% year over year and 11% sequentially, driven by strong demand growth in both metastatic triple-negative and HR-positive, HER2-negative breast cancer across the US and Europe. Following the first-line approvals in the US and Europe earlier this year, Trodelvy is establishing itself as the backbone of treatment in metastatic triple-negative breast cancer, and we’re working to expand Trodelvy’s first-line opportunity further into new markets.
Triple-negative breast cancer remains one of the most aggressive and challenging forms of breast cancer to treat. Bringing Trodelvy into the first-line setting represents an important opportunity to reach significantly more patients earlier in their treatment journey, when the potential impact of treatment may be the greatest. We are incredibly pleased with the first-line metastatic TNBC uptake thus far. Moving to slide 13, and on behalf of Cindy and the Kite team, third quarter cell therapy sales of $355 million were down 18% year over year, reflecting ongoing competitive headwinds. Looking ahead, we’re also focused on the next potential chapter of growth for our cell therapy business. Our launch preparations are in full force as we approach InidoCell’s December 23rd PDUFA date in fourth-line-plus relapsed or refractory multiple myeloma. This includes conducting pre-activation efforts within our authorized treatment centers network, with a target activation of 80% of our ATCs within the first six months of launch; detailed launch planning across sales, medical, and access teams; as well as engaging with a range of payers, with a target of 90% payer coverage within the first 12 months of launch. Coupling our steadfast preparations with the level of healthcare provider and patient enthusiasm we have seen for InidoCell’s profile ahead of launch, we are targeting brand leadership in the fourth-line-plus setting within 18 months of approval.
As we head into the final months of the year, we remain focused on delivering strong performance across our portfolio and preparing for the upcoming launch of InidoCell. In HIV, we are building on our leadership in treatment and prevention through the early launch of Bixlenvo and the continued performance of Biktarvy, Yes2Go, and Descovy. Beyond HIV, Livdelzi continues to gain share as the PBC market expands, while Trodelvy is delivering strong growth across triple-negative and HR-positive, HER2-negative metastatic breast cancer.
Our outstanding performance this quarter once again reflects the incredible work of our teams across the organization, and I want to thank them for their unwavering commitment to patients, and with that, I’ll hand the call over to Andy.
Dietmar Berger (Chief Medical Officer)
Thank you, Joanna, and good afternoon, everyone. The third quarter was another productive period across all three of our therapeutic areas. We received FDA approval of Bix Lenvo, advanced our twice-yearly HIV treatment programs, and shared promising early data from our Emerging Inflammation portfolio, including our investigational oral alpha-4 beta-7. We’re making strong progress across our diverse portfolio of 49 clinical programs, beginning with HIV treatment on Slide 16.
We’re advancing the most comprehensive HIV portfolio in both the industry and in Gilead Sciences’ history. While Biktarvy sets the standard for daily single-tablet regimens in people with HIV, we continue to innovate across daily and long-acting treatment options to address the diverse needs of the greater than 40 million people living with HIV globally. Building on Bix Lenvo’s approval, we are making progress in six long-acting treatment programs encompassing both orals and injectables. We expect to file islatrevir plus lenacaprevir with FDA this year with a regulatory decision in 2027. If approved, ISLEN would be the first once-weekly oral treatment regimen for virally suppressed people with HIV. Beyond ISLEN, we remain on track to initiate our Phase 2 trials for our wholly owned weekly oral regimens, combining lenacapavir with our investigational long-acting integr.
Earlier this month we started the Phase 2 trial for the lenacapivir combination with GS3242 and the Phase 2 trial for the combination with GS1720 is expected to start in early ’27. We will select the most promising candidate for Phase 3 development in treatment-naive and virally suppressed people with HIV. The selected program will have the potential to be the first INSTI-containing weekly regiment. We are also advancing two distinct long-acting injectable treatment options. First, we initiated the newly named Phase 3 Daybreak 1 and 2 trials for lenacapavir plus our investigation of broadly neutralizing antibodies teropavimab and sinilurumab during the third quarter. This has the potential to be our first complete twice-yearly HIV treatment regimen for the virally suppressed population with susceptibility to both bNAbs. In parallel, we initiated the also newly named Phase 2 Pulsr 1 and 2 trials evaluating injectable GS3242 plus lenacapavir, our first INSTI-based long-acting injectable treatment program.
These studies have already begun dosing our every-four-month cohort. We expect to initiate the twice-yearly dosing cohort following additional Phase 1 data. Overall, we continue to believe that portfolio cross both long-acting oral and injectable treatments positions us well to expand choice, support Gilead Sciences’ continued leadership, and reach more of the 44% of people with HIV who are not virally suppressed. Turning to HIV prevention, we continue to build upon the unprecedented clinical profile demonstrated by Lena keper in the PURPOSE studies with twice-yearly DS2GO establishing a new benchmark for HIV prevention efficacy. Building on the successful commercial launch of twice-yearly Years two goals, our application of once-weekly oral lenacapavir for is under review with FDA with a regulatory decision expected in early February 2027. If approved, once-weekly lenacapivir could become the first long-acting oral PrEP regimen complementing twice-yearly yes tugo for people who prefer an oral option.
Looking further ahead, we continue to expect an update from the Phase 3 PURPOSE365 study evaluating one’s yearly intramuscular Lena Capivir for PrEP in 2027. Aligning with annual preventative care visits, this option could be even more transformative in reaching more people who could benefit from PrEP. We are targeting potential launch in 2028. Turning to oncology on Slide 17, we remain focused on advancing differentiated therapies for cancers with large unmet needs. Our acquisition of tuber list earlier this year adds four promising clinical-stage programs as well as next-generation ADC technology that further strengthen our existing ADC expertise. Among our ADC programs, we look forward to providing an update from our Phase 3 ASCENT GYN study around the end of the year. The study is evaluating Trodelvy in advanced or recurrent endometrial cancer, where patients whose disease progresses following prior treatment continue to have limited effective options.
Beyond Trodelvy, we continue to advance GS8824, our investigational NAPI2B-directed ADC in platinum-resistant ovarian cancer. The encouraging Phase 1 activity observed in heavily pretreated patients without biomarker selection reinforces our belief in its potential to offer a differentiated treatment option in this challenging disease. At the same time, we are exploring Gad824’s potential more broadly in our Phase 1 program for platinum-sensitive ovarian cancer.
We have also initiated a new trial in advanced or recurrent endometrial cancer. Our commitment to oncology extends further into our earlier-stage pipeline, where we are advancing several programs designed to address high unmet needs in solid tumors. This includes a focused effort in MTAP-deleted cancers, which represent approximately 10 to 15% of tumors, with GS5319, our investigational MTA-cooperative PRMT5 inhibitor, and GS2426, our investigational MET2A inhibitor which targets a complementary pathway, both currently in Phase 1 clinical trials.
Moving to inflammation on Slide 18, we’re excited to be at the stage where we’re starting to share clinical data. As our third strategic area of focus, we have been building and leveraging deep expertise across immunological pathways and mechanisms to develop a pipeline of potential first-in-class or best-in-class approaches to target various severe immune-mediated inflammatory conditions. With high unmet need in inflammatory bowel disease, we shared promising 12-week data for Envistigrast, our investigational once-daily oral small-molecule inhibitor of alpha-4 beta-7, at the United European Gastroenterology meeting earlier this month.
The data demonstrate the potential for best-in-class oral efficacy with a generally well-tolerated safety profile. We believe that invistigrasst could provide a much-needed oral treatment option for IBD patients who currently cycle through burdensome injectable therapies. Following these results, we expect to advance invistigrasst monotherapy into Phase 3 studies in ulcerative colitis in 2027. In addition, we are exploring its potential as an oral backbone for combination regimens designed to break through the efficacy ceiling seen with approved monotherapies.
We are also planning a Phase 2b/3 study to evaluate invistigrass in Crohn’s disease. These programs will be conducted in both advanced-therapy-naive as well as advanced-therapy-experience populations in line with FDA guidance. In addition to these programs, we agreed to acquire an oral peptide IL-23 receptor inhibitor, which we believe adds a potentially differentiated oral approach for inflammatory bowel disease to our growing inflammation and immunology portfolio. The program, known as HCXT 2001, may potentially be used alone or in combination with envistigrast as a daily oral treatment for people living with IBD. This reinforces our approach to build depth and optionality in selected immune-mediated diseases through multiple complementary mechanisms and modalities.
Beyond our inflammatory bowel disease programs, we are also excited by the early-stage portfolio of T-cell engager therapies acquired in our oral medicine acquisition in partnership with Lakefront. As a reminder, Gamgerdamig is a potential best-in-class BCMA CD3 bispecific T-cell engager that demonstrated robust clinical activity in early Phase 1 studies across autoimmune conditions. We will be presenting additional Phase 1 data for gamgodamig in immune thrombocytopenia at a medical congress later this year.
Additionally, we are looking forward to sharing a detailed update from our Phase 2a COSMIC study the upcoming American College of Rheumatology meeting on November 8. While still early, the study provides the first clinical proof-of-concept signal for EDI’s, aertib, our investigational IRAK4 inhibitors in cutaneous lupus erythematosus. Further, at the upcoming AASLD meeting, we’re excited to present detailed results from our Phase 3 IDEAL study of LIFDELZI.
This study evaluated patients with alkaline phosphatase between 1 and 1.67 times the upper limit of normal or intolerant to ursodeoxycholic acid, following positive topline results shared earlier this year. This presentation will provide a fuller view of the findings and their potential benefit for patients with PBC and an opportunity to deepen our understanding of where Liftel C can potentially address remaining treatment needs. Overall, our information pipeline now includes 13 clinical programs led by our inflammatory bowel disease and B-cell depleting programs.
We believe our portfolio gives us multiple opportunities to deliver meaningful advances for patients and establish inflammation as a potentially significant new growth area for Gilead Sciences. Moving to cell therapy on Slide 19, and on behalf of Cindy and the Kite team, we are now less than two months away from AnnidoCell’s December 23rd PDUFA date and potential launch in 4th line or later relapsed or refractory multiple myeloma. The filing was supported by data from our Phase 2 Imagine 1 study, for which we expect to share additional follow-up data inclusive of the Kaplan-Meier curve for PFS and at an upcoming medical congress this year.
We’re excited to deliver what we believe could be an important new treatment option for patients, reinforced by InidoCell’s deep durable efficacy, differentiated safety profile, and targeted manufacturing turnaround time of less than three weeks. In addition to the fourth-line-plus setting, the broad AdidoCell program adds the potential to establish a new standard of care across the multiple myeloma landscape, reaching more patients earlier in treatment.
We look forward to Imagine 3 data in second to fourth line with a potential BLA file as early as 2027. We’re pleased to share that we expect to initiate our Imagine 6 and Imagine 4 studies in transplant-eligible and non-eligible newly diagnosed patients in early 2027 and plan to share data from the GEM Anito First safety lead-in study for newly diagnosed multiple myeloma at an upcoming medical congress later this year. Beyond AdidoCell, Kite 512, our GPC3-targeted dual-armored CAR T-cell therapy, has been cleared for clinical studies by FDA, and we look forward to enrolling the Phase 1 trial in patients with advanced GPC3-positive hepatocellular carcinoma soon. This marks an important milestone for extending the reach of the transformative potential of Kite cell therapies into solid tumors.
Turning to our next-gen cell therapies, Palisades 1 and 2 evaluating Kite 753 in patients with second-line and third-line-plus relapsed or refractory diffuse large B-cell lymphoma have been placed on a partial clinical hold while we investigate safety differences we’ve noted between Phase 1 and Phase 2. Lastly, we are pleased to share that in collaboration with Pregene, we have begun dosing patients with our in vivo BCMA CAR T therapy in an investigator-initiated trial in China.
Leveraging Kite’s extensive cell therapy expertise and manufacturing capabilities, our inventory program aims to address existing glass challenges and unlock broader applications across oncology and autoimmune diseases. Our advancement in the clinic is an encouraging milestone, and we look forward to providing additional updates in due course. Moving now to our milestones on Slide 20, I’d like to thank our research and development teams at Gilead Sciences and Kite for their dedication and execution across our clinical portfolio. We are on track for our remaining 2026 milestones, including the Phase 3 update for Ascent GYN evaluating Trodelvy in advanced or recurrent endometrial cancer and the FDA decision on a needle cell in fourth line or later relapsed or refractory multiple myeloma.
Along with our planned acquisition of an oral IL-23 receptor inhibitor program, we entered two new collaborations that further strengthen our solid tumor portfolio. With BioNTech, we will evaluate Trodelvy in combination with pomitomig, an investigational PD-L1/VEG-A bispecific, in first-line metastatic triple-negative breast cancer, and with Vera Biotechnology we will develop three novel dual-masked T-cell engagers for solid tumors. Taken together, these updates reflect the strength of the portfolio we have built and the opportunities that lie ahead.
Now turn over the call to Andy
Andrew Dickinson (Chief Financial Officer)
Thank you, Dietmar, and good afternoon, everyone. Gilead’s third quarter results demonstrate outstanding commercial and clinical execution, reinforced by continued operating expense discipline. As shown on Slide 22, our base business grew 16% year over year to $8.2 billion, driven by continued growth across Biktarvy, Descovy and Yes2go in HIV, Trodelvy in metastatic breast cancer, and Livdelzi in PBC, partially offset by lower sales of cell therapy products.
Sequentially, sales were up 8%, driven by higher HIV, liver disease and Trodelvy sales, partially offset by lower sales of cell therapy products. Total product sales of $8.3 billion were up 13% year over year, reflecting lower Veklury sales due to fewer COVID-19-related hospitalizations. Moving to our non-GAAP third quarter results on Slide 23, product gross margin was 88% in the third quarter of 2026, up from 86% in the third quarter of 2025, primarily driven by the expiration of a TAF-related royalty obligation in November of 2025. R&D expenses were $1.6 billion, up 19% year over year and 11% sequentially, reflecting higher compensation accruals related to our financial outperformance year to date as well as higher clinical costs.
SG&A expenses were $1.5 billion, up 14% year over year, primarily reflecting HIV promotional activities that supported our strong commercial performance in addition to legal expenses and higher compensation accruals related to financial outperformance year to date. The operating margin was 50% in the third quarter and 49% year to date excluding acquired IPR&D associated with the Arcellx, Tubulis and ORO Medicines acquisitions, firmly in the top quartile of our group and underscoring the leverage in our business model resulting from our expense discipline.
The non-GAAP effective tax rate was 19% in the third quarter, in line with our full-year expectation for an effective tax rate of approximately 20% excluding acquired IPR&D expenses related to our 2026 acquisitions. And finally, our non-GAAP diluted EPS was $2.55, primarily driven by higher product sales and lower acquired IPR&D expenses, partially offset by higher operating expenses, compared to $2.47 in the same period in 2025. Recall, as shown on Slide 24, our third quarter 2025 benefited from an approximately $400 million, or $0.25 per share, contribution reported in royalty, contract and other revenue related to an IP asset sale from 2018.
Excluding this, non-GAAP EPS increased 15% year over year and compares to 13% total product sales growth. Moving to our full-year guidance on Slide 25, we are updating our full-year sales and EPS guidance to reflect our outstanding third quarter results. We now expect base business sales to range between $30.7 and $31 billion. This represents an increase of $900 million at the midpoint compared to our August guidance and an increase of $1.65 billion at the midpoint compared to our initial 2026 guidance. In HIV and reflecting our strong performance year to date, we now expect full-year sales to grow approximately 12% year over year, driven by Biktarvy for HIV treatment as well as Yes2go and Descovy for PrEP.
Given larger inventory build than is typical for the third quarter, we expect the Q4 inventory build to be smaller than we have historically seen in the fourth quarter. We continue to expect Yes2go sales of approximately $1 billion for the full year, allowing for more modest sequential growth reflecting holiday seasonality, and we continue to expect cell therapy sales to decline mid-teens percentage year over year. Moving to total product sales, we now expect sales in the range of $31 to $31.3 billion.
Included in total product sales, we continue to expect Veklury sales of approximately $300 million for the full year, reflecting lower COVID-19-related hospitalizations. With regards to our non-GAAP P&L, we now expect acquired IPR&D of approximately $12.9 billion, reflecting the $1.4 billion in upfront payments expected in the fourth quarter associated with the acquisition of an oral IL-23R inhibitor program from Pepstar Therapeutics and the recently announced VEER Research collaboration.
Moving to operating expenses, we now expect full-year 2026 R&D expenses to increase a mid- to high-single-digit percentage on a dollar basis compared to 2025 and SG&A expenses to increase by a high-single-digit percentage on a dollar basis compared to 2025, both reflecting higher costs related to the significant increase in our expected full-year financial performance. Moving to tax, we now expect full-year 2026 effective tax rate to be between 16.5% and 22.0%, reflecting the non-deductible acquired IPR&D expenses associated with the Arcellx, Tubulis and ORO Medicines transactions, as well as the expected acquired IPR&D expense associated with the Pepstar Therapeutics transaction. Excluding these transactions, our effective tax rate would be 20%, no change from our February guidance. Overall, we expect full-year non-GAAP loss per share between $1.50 and $0.85.
Turning to Slide 26, excluding approximately $9.95 per share related to the acquired IPR&D expense and full-year financing costs associated with the acquisitions this year and nonrecurring other revenue, our full-year non-GAAP diluted EPS would be $8.75 to $9.10, raised $0.25 on both ends from our illustrative August guidance due to higher base sales partially offset by higher operating expenses. Looking beyond 2026, I wanted to share an update on our discussions with CMS starting Biktarvy pricing. As a reminder, Biktarvy was selected for the maximum fair price determination process that will impact Biktarvy revenue starting in 2028. CMS has informed us that it has set pricing for Biktarvy at $2,600 per 30-day supply, which represents an approximate 38% discount from the list price and in the Medicare channel. Based on our preliminary analysis, we currently expect full-year 2028 Biktarvy revenue to decline from 2027.
More specifically, we expect a total net impact to Biktarvy revenue of approximately $1.5 billion in 2028, reflecting the lower price in Medicare in addition to related impacts across other U.S. channels, including Medicaid, 340B and other payer segments. Reflecting growth from other innovations across our HIV portfolio, we continue to expect total HIV revenue to grow in 2028 compared to 2027. Further, our growing HIV business is expected to be complemented by additional growth across our innovative oncology and inflammation portfolios.
As a result, we expect both total product sales and earnings per share to grow in 2028 compared to 2027. Note that these statements are based on our current assumptions that may change and could be updated at any time, including when we share formal guidance in early 2028. Taking a step back, Gilead Sciences has demonstrated its ability to address policy impacts over the last few years, including the $1.1 billion headwind associated with Medicare Part D redesign in 2025 and the greater than $500 million headwind associated with the Affordable Care Act and other government policies in 2026. With more than a year before the new Biktarvy pricing takes effect, we will continue to work diligently to potentially mitigate some of the impact back to 2026.
And on Slide 27, you can see we returned approximately $1.4 billion to shareholders in the third quarter, including $370 million of share repurchases. Combined with our dividend, we have returned approximately 40% of our free cash flow to shareholders in the first three quarters of 2026. In closing, and building on our track record of execution so far, we remain focused on a strong finish to a remarkable year for Gilead Sciences and believe we are better positioned than ever with robust clinical and commercial pipelines and a strong business model that sets us up well in 2027, 2028 and beyond.
And with that, I’ll invite Rebecca to start our Q&A session.
Rebecca (Operator)
Thank you, Andy. At this time, we’ll invite your questions. We ask that you be courteous and limit yourself to one question so we can get to as many analysts as possible during today’s call. Again, to ask your question, press 1, and to withdraw your question, press Star 1. Our first question comes from Umer Rafat at Evercore. Umer, go ahead. Your line is open.
Umer Rafat (Analyst)
Thanks for taking my question, guys. I wanted to spend a quick second on your recently acquired oral IL-23 and the potential for combo with some of the recent data sets for the alpha-4 beta-7. And my question is if the alpha-4 beta-7 requires dosing as fasted and the IL-23, which is presumably a cyclic peptide, requires overnight fasting and perhaps waiting another 30 minutes post the dose practically for a patient, how would the co-administration or the combo actually work?
Is there a way to be able to give them simultaneously or close enough while still being practically feasible? Thank you.
Dietmar Berger (Chief Medical Officer)
Yeah, Umer, thank you for the question. This is Dietmar. I mean, first of all, let me say we’re really excited about the portfolio that we’re building in inflammatory bowel disease. And there’s obviously really the opportunity for various types of combinations, both internal and external. The IL-23 is very early, so we’re still working on different types of formulations. So please stay tuned, and we’ll inform you more about those details as we move along.
Rebecca (Operator)
Our next question comes from Akash Tiwari, Jefferies. Go ahead. Your line is open.
Akash Tiwari (Analyst)
Hey, thanks so much. Can you go over the moving pieces on the $1.5 billion IRA impact for Biktarvy pricing? How much of that is a net pricing impact for Medicare specifically versus the downstream impact on your kind of Medicaid best price and then the 340B impact? I want to make sure we just get those moving pieces right, thank you.
Daniel O’Day (Chairman and Chief Executive Officer)
Yeah, thanks, Akash. This is Dan. And then I’ll turn it over to my colleagues for some more detailed framing of your question. But before we do, I just wanted to elaborate a little bit on what was in my script and share my perspectives on the CMS price setting. First, I’d just like to say that the price set by CMS does not reflect the value of Biktarvy, the medicine that has transformed HIV treatment and is widely recognized as a standard of care.
I think this is an example of how the price setting approach under the IRA, especially for highly differentiated medicines like Biktarvy in the middle of their lifecycle, can put investment in new medicines at risk. We firmly believe there are ways to improve affordability for patients in America without damaging policies that undermine the U.S. patent system and the innovation it supports. I’d just go on to say that there are certain diseases that can only be addressed by small-molecule medicines like HIV and others. Many of these diseases disproportionately impact underserved patients, for which Gilead is firmly committed to supporting. In so many ways, this pill penalty, which has now been applied to Biktarvy, discourages investment in these medicines. So I just want to end with these two concepts. Both can be true. As I said earlier, our business is strong.
The quarter has been exceptional. The portfolio that you just saw that Dietmar outlined really has never been stronger at Gilead. And we’ve built a business for the patients and communities we serve that can respond to these policy headwinds. And I just want to say we firmly oppose policies like this that undermine innovation. Relative to the $1.5 billion, we wanted to give you some color on our preliminary analysis and what we think the impact will be in 2028 to guide you. I’m going to turn it over to Joanna to give a little bit more detail on how that $1.5 billion breaks out and what we anticipated including in it. So over to you, Joanna.
Andrew Dickinson (Chief Financial Officer)
Thanks, Dan. Yeah, so again, obviously this is a preliminary analysis and subject to change as we get closer to 2028, but we expect the $1.5 billion that Andy mentioned earlier. Really that’s a net impact on Biktarvy revenues in 2028. So that is inclusive of the Medicare piece and all other spillovers to other channels in the U.S., and so to your question around the split on that, we’re not going to give all the details at this point in time. It’s still very early.
But having said that, it’s primarily Medicare and then you have this spillover effect. It really is a net impact and that’s why we’re giving you the total number. And this is also net of the Part D redesign impact that we saw for Biktarvy in 2025. That goes away in 2028. So the $1.5 billion is all-encompassing.
Rebecca (Operator)
Our next question comes from Mohit Bansal at Wells Fargo. Mohit, go ahead. Your line is open.
Mohit Bansal (Analyst)
Great. Thank you very much for taking my question. And I want to turn the attention to the Planet Cell trial for newly diagnosed multiple myeloma, the Imagine Spik trial. I couldn’t help but notice that it does have a co-primary endpoint of MRD negativity at 12 months. So we’d love to understand your thought process behind this and what discussion you had with the FDA. And is there a possibility of early filing on the basis of 12-month negativity here?
Thank you.
Cindy Perettie (Executive Vice President of Kite)
Thanks, Mohit. This is Cindy. If you look at both our Imagine 3 trial as well as our newly diagnosed trials, they are co-primary endpoints looking at MRD followed by PFS for the Geminito first. And then I think you were referring to the Imagine 4 and Imagine 6 trial. Those are MRD-negative CR rates and those are discussions that we had with global regulatory agencies as we were designing the trial. I think the thing I would point out uniquely about the trials for Imagine 4 and Imagine 6 is they’re in transplant-ineligible (Imagine 4) and transplant-eligible (Imagine 6), where we’re looking at quad therapy up front followed by anecel and maintenance. In the Imagine 4 trial, we’re also looking at MRD-guided maintenance so that patients could have treatment-free intervals.
Rebecca (Operator)
Our next question comes from Brian Abrams at RBC. Brian, go ahead. Your line is open.
Brian Abrams (Analyst)
Hey, good afternoon, guys. Thanks for taking my question, and congrats on the strong quarter. Really appreciate the details on the potential IRA impact in 2028. That’s really helpful. Can you clarify, does your expectation to be able to grow the HIV franchise through that, does that include—is that inclusive of PrEP? And then I guess I’m curious what would need to happen in terms of overall market growth, new products, and switches in order to be able to offset that $1.5 billion IRA impact?
To Victoria, thanks.
Daniel O’Day (Chairman and Chief Executive Officer)
Yeah. Joanna, why don’t you start?
Joanna Mercier (Chief Commercial Officer)
Yeah, thanks, Brian, for the question. Yeah. So your question about our HIV—of course we look at HIV holistically. We look at our portfolio across both treatment and prevention, and so that is inclusive of all of our portfolio today. Of course, the portfolio to come as we think about the very strong pipeline that’s going to support the next 10 to 15 years of growth and leadership in HIV. The other piece of your question around, sorry, the offset for the $1.5 billion, and what we’ve said is obviously we will look to—we have about a year or so—we will look at different opportunities to mitigate as much as possible the $1.5 billion, but that’s in addition to the overall portfolio and of course other strategies that we can look at. So more to come on that one.
Rebecca (Operator)
Our next question comes from Chris Schott at JPMorgan. Chris, go ahead. Your line is open.
Chris Schott (Analyst)
Great. Thanks so much for the question. I just wanted to dig into the weekly oral PrEP launch as we head into next year. I guess can you just help frame out what portion of the market you think this could appeal to and maybe just compare and contrast a little bit how you’re thinking about that launch relative to what we’ve seen with the S2Go over the last year or so? Thanks so much.
Joanna Mercier (Chief Commercial Officer)
Sure, Chris. Joanna again. I’ll take that one. We’re really excited about the QWeekly. This will be the first long-acting oral in the prevention market, potentially, and so we’re excited about the opportunity. As we think about that launch, we are thinking that that’s going to really appeal to a population that might want the longer acting but might not like injectables, for example. And if you think about the current market today, despite very strong growth of Yes2Go—because I think people are really moving towards that longer acting as much as possible because it’s truly prevention at the Q6-monthly and that is a preference—there are some people that don’t like the injection, and there’s still a very strong oral market, both with Descovy as well as generic Truvada. And so we do think there’s going to be a strong appeal for folks that are already on a daily oral to move to a QWeekly oral, and we’re excited about that opportunity.
And I would just add one more concept that’s maybe a little bit different than a new launch because this is an extension based on Yes2Go in the weekly. We’re going to be building off the access we already have on Yes2Go, specifically around the access we have in the pharmacy benefits space, which is about 70% or so. And so we do think that as of launch it’ll really help support kind of a fast potential ramp-up as we go forward. And of course we’ll continue to expand our access over the months to follow our launch.
So more to come on that, but we’re excited about that mix. And of course to your question about Yes2Go and how that plays out, we still believe longer acting is going to be preferred in the HIV prevention space, not only with our Q6-monthly, but even with the potential of an annual injection with our Q12 potentially in 2028. So excited about what’s to come in our HIV market.
Rebecca (Operator)
Our next question comes from Michael Yee at UBS. Michael, go ahead. Your line is open.
Michael Yee (Analyst)
Great, thanks. On the HIV treatment pipeline, you had a disclosure around 3107 monthly oral with a clinical hold. Maybe you could just give us an update on that program and what was going on there.
Dietmar Berger (Chief Medical Officer)
Thank you for the question for 3107. This is one of our prodrug compounds, and with some of the prodrug compounds, as you know, we saw metabolites that have an unexpected impact, and that is really the reason for the clinical hold at this point. We’re working through that clinical hold. At the same time, we have a broader portfolio—really in the background, research molecules coming out of research into the early development—that are also aiming at the monthly space.
So monthly oral treatment is still a key objective for us. We’re following that, working through 3107, and we’re also in parallel working on backup molecules.
Rebecca (Operator)
Our next question comes from Terrence Flynn at Morgan Stanley. Terrence, go ahead. Your line is open.
Terrence Flynn (Analyst)
Hi. Thanks for taking the question. I was just wondering, Andy, if you can help us think about margin progression here into 2027. Obviously you have done some business development deals. There’s going to be some R&D spend behind those programs. And then also as we think about the Biktarvy impact in ’28, maybe just help us think high level about impact to margins there, knowing it’s not guidance, but just maybe directionally. Thank you so much.
Andrew Dickinson (Chief Financial Officer)
Hey, Terrence, thanks for the question. Look, at a high level, we continue to expect to have very strong margins, you know, not only in ’27 but for the foreseeable future. And of course we’ll provide more guidance on ’27 and ’28 as we get into those calendar years. You’ve seen here our ability to do three acquisitions earlier this year and to absorb most of that spend. So, you know, when you look at our updated guidance this year, we were right on track when you parse out both our R&D spend as well as our SG&A spend—right on track for the expenses that we were targeting at the beginning of the year in our initial guidance.
And then we added in the additional compensation accruals, expenses tied to our significant outperformance this year as our expected bonus payments have gone up. So we’re really pleased with our ability to bring in these additional assets and fold them into the portfolio and absorb those expenses this year, and that’s certainly our goal in future years as well. We are really focused, as you heard in my comments, on continued disciplined operating expense management and a very strong margin profile both in terms of our gross margin as well as our operating margin.
So we’ll give you more specifics as we go forward. But we think the business is really set up nicely to continue to have a very strong margin.
Rebecca (Operator)
Our next question comes from Dana Graybosch at Leerink Partners. Dana, go ahead. Your line is open.
Dana Graybosch (Analyst)
Hi, thank you for the question. I wonder if you could talk more about the Palisades partial clinical hold, and whether, taking that amongst some of the other competitive clinical holds—particularly with the fast manufacturing—how you’re thinking about fast manufacturing, if there’s any risk you see for KITE-363 in autoimmune disease as well, and the timing for when we might better understand the risk for both of these programs.
Cindy Perettie (Executive Vice President of Kite)
Thanks a lot, Dana. So maybe I’ll start with KITE-363 in autoimmune because we’re not using rapid manufacturing with that, and that program does continue. We expect both the rheumatology and the neurology phase ones to continue, and remain excited. About the second question that you had around Palisades 1 and 2, that does have a rapid manufacturing. It’s a three-day manufacturing process that we shared with you, that is different than what I think you were referring to—two of the other manufacturers in this space who have rapid manufacturing as a one-day manufacturing. Ours is a three-day manufacturing. When you look at the partial hold, we have made a decision to take a look at differences that we’re seeing specifically with grade 3 and grade 4 ICANS in a small number of patients, and we have decided to take some time, pause, and investigate that before we move forward.
There is no patient death; there’s no grade 5. So as soon as we have more information we will, you know, we’ll continue to keep you informed.
Rebecca (Operator)
Our next question comes from Louise Chen at Scotiabank. Louise, go ahead. Your line is open.
Louise Chen (Analyst at Scotiabank)
Hi, thank you for taking my question. I wanted to ask you about sort of a more long-term view on things. Currently around 70% of franchises with HIV, and just curious if you think out in the next couple of years how do you expect this to change as you develop these new verticals? Thank you.
Daniel O’Day (Chairman and Chief Executive Officer)
Maybe I’ll start and I’ll invite others to add. Louisa, this is Dan. You know, our strategy has always been, you know, over the past eight years or so to diversify our portfolio from a variety of different angles. I mean first of all, within HIV—and both HIV treatment and PrEP—and my colleagues have spoken about that. I think you’ll continue to hear how our longer-acting treatment program continues to evolve over time. But we really are incredibly enthusiastic about how that is progressing.
Of course the PrEP options that allow for even longer dosing intervals are in our pipeline, in our portfolio. And then we’ve always said that, as you know, that provides great robustness of our HIV beds, that we’re very interested in diversifying, of course, outside of HIV and into oncology and inflammation. And I think the call here has really, I think, emphasized how much progress we’ve made both in oncology cell therapy and our non–cell therapies in that growing portfolio. But also I think this has really been a quarter where the inflammation and autoimmune pipeline has started to reveal itself.
And you can see that we’re going after highly differentiated mechanisms and a chance to really kind of break through efficacy barriers and bring different options for people with autoimmune diseases across all of our therapeutic platforms. I’d invite others to add as well.
Dietmar Berger (Chief Medical Officer)
This is Dietmar. Dan, you said a lot of it, right. But I’m really about both the diversification in the HIV portfolio. You look at it, we’ve got six long-acting programs currently ongoing. We’re looking at up to five launches before 2033 in HIV therapy, which will help us to really address the needs of people with HIV and the different options that they appreciate. On the prevention side, I’m also really excited about the weekly oral option that we have, but then also about once every year, which so well aligns with other preventative visits that there’s really, I think, a broader opportunity there.
In oncology we now have these seven ongoing ADC programs. We look at the broader Tubulis technology that has broad applicability also together with chemistry capabilities. And I think with the PRMT5 and MAT2A programs, we have another interesting program really focusing on synthetic lethality, which is very broadly present in different types of tumors. And then finally the inflammation program, currently with 13 different projects, is really starting to reveal itself. I think we have very differentiated mechanisms and really drugs that have the potential to address large unmet medical needs, whether it’s in inflammatory bowel disease, whether it’s in B cell depletion, which is a broad set of different types of diseases, or even in type 2 inflammation. So stay tuned. But I think that trajectory is starting to reveal itself.
Rebecca (Operator)
Our next question comes from Carter Gould at Cantor Fitzgerald. Go ahead. Your line is open.
Carter Gould (Analyst)
Great. Good afternoon. Thanks for taking the question on Gambirmic and the update. Where are we going to get on that front? Dietmar, can you kind of help set the stage there? The number of dosing cohorts we might see, the number of patients with over 6 months follow-up, and clarify that things are still on track to enter registrational studies next year.
Dietmar Berger (Chief Medical Officer)
So you’re going to have to wait for the exact data release that is coming at a conference later this year. But we’re really looking forward to present more data, especially in the autoimmune cytopenia setting. Also very much on the immune cytopenia. I think that data is exciting, so stay tuned for that. Obviously there’s a broader opportunity with B cell depletion, as you know, and we’re staying firm in our commitment to bring Gambirmic into a phase three study next year in autoimmune cytopenias.
Rebecca (Operator)
Our last question comes from Jeff Meacham at Citi. Jeff, please go ahead.
Jeff Meacham (Analyst)
Hey guys. Afternoon. Thanks so much. I get IRA impact longer term to HIV, but maybe can you talk about the trends you’re seeing in 3Q? I wasn’t sure the reason why you guys are now recognizing a stronger realized price, and then related, can you talk a little bit about if there’s any discernible growth in just the number of new patients entering the HIV treatment market.
Rebecca (Operator)
Thank you.
Joanna Mercier (Chief Commercial Officer)
Yeah, sure. Jeff, it’s Joanna. Yeah, so what we’re seeing—and I’ll just take Biktarvy, right—10% year-on-year growth. Overall HIV is 18% year-on-year and that’s obviously inclusive of Biktarvy, but also Truvada and Descovy. But if you think about the treatment and what’s going on there, a lot of that has to do with, obviously, demand but also inventory. And we saw a little bit of a higher Q3 inventory than we usually see across all of our HIV portfolio, which is obviously something that we’re conscious of and understand that that might mean that the seasonal, the typical Q4 inventory that plays out in Q4 usually might be a little softer than usual, but you’ll still see a ramp up, a buildup, and that’s part of our guidance, of course.
So there was an inventory play. There was also favorable pricing, and the favorable pricing has to do with the channels I think I’ve shared before. But 1% of one channel—if the channel moves, if there’s less of a discount in that channel versus a heavier discounted channel—can play a big fluctuation in your pricing on a quarter-over-quarter kind of basis. That’s what’s playing out there. And of course the demand piece, you see that the share for Biktarvy continues to grow.
It’s at an all-time high at 53%. So incredibly proud. We are number one across naïve, switch, restarts, and I think the team has just done an incredible job and this is obviously not only in the US but really worldwide, and very proud of that work. Let alone the Bic Flenville launch that we haven’t really touched on—and I’ll close the call on that. The Big Flo launch is absolutely on track versus expectations. It’s very early; we launched late August, but really pleased to see incredible awareness of this molecule and really, if you compare at similar time points post launch, we are well ahead of recent competitor launches. So we feel very strongly that this is on the right track and we just need to continue to build access and awareness in the field both for complex regimen as well as virally suppressed switch patients.
Jeff Meacham (Analyst)
Thank you.
Rebecca (Operator)
That completes the time we have for questions. I’ll invite Dan to share any closing remarks.
Daniel O’Day (Chairman and Chief Executive Officer)
Well, first of all, I mean I can’t let a quarter go by like this without thanking the extraordinary Gilead team for delivering on this really exceptional third quarter. It’s the strongest base business growth we’ve seen in more than 10 years and at the same time just the incredible advancement in our pipeline which is getting diverse as you can see and we’re preparing for even more launches into the future. So I’m incredibly proud of the progress that we made as a team and the impact that we’re creating for the communities and the patients we serve as we look ahead.
The multiple opportunities to drive growth across all of our therapeutic areas, the strength of our commercial and clinical execution, and the disciplined operating model that we are following all give us tremendous confidence in the trajectory of the company and really the fact that we can do even more for the patients and communities and shareholders that we serve. So thank you so much for joining today. As usual, we’re here for your questions and comments and we look forward to keeping you informed on our progress.
Thank you again.
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