Q1 2026 Earnings Call Transcript

Good afternoon, everyone, and welcome to Gilead Sciences, Inc.'s First Quarter 2026 Earnings Conference Call. My name is Rebecca, and I will be today's host. In a moment, we will begin our prepared remarks followed by our Q&A session. Please note that the process for queuing questions has changed this quarter.

To ask a question, press 1. To withdraw your question, press 1 again. I will now hand the call over to 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 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 will open the call to Q&A, where the team will be joined by Cindy, 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 will turn the call over to Dan.

Thank you, Jackie, and good afternoon, everyone. I am pleased to share highlights from Gilead Sciences, Inc.'s first quarter, which has extended our consistent track record of commercial, clinical, and financial execution. Our strong financial performance and increase in sales guidance reflects the depth and quality of our portfolio, the numerous launches underway, and our continued focus on financial discipline. As we execute on the strongest pipeline in our history, Gilead Sciences, Inc. is also taking steps to further strengthen the company's position for the future.

We are looking forward to sharing much more on our select oral, and tubulose in the coming quarters. Our HIV business grew 10% year-over-year, reflecting 7% growth for Biktarvy and an impressive 87% growth for our U.S. PrEP business. The ongoing success of the Esthugo launch is a key driver of this growth in HIV prevention, with first quarter sales growing 72% sequentially.

Looking forward, with no major LOEs until 2036, Gilead Sciences, Inc.'s HIV business is poised for strong, durable growth supported by up to seven potential new HIV product launches by 2033. The first of these potential launches is bictegravir plus lenacapavir, an investigational once-daily oral regimen for virally suppressed people with HIV. This is now under priority review, and we expect an FDA decision in August. Other upcoming HIV milestones include Phase 3 updates later this quarter from the ILLAND-1 and -2 studies evaluating a potential first once-weekly oral for virally suppressed people with HIV.

We shared encouraging Phase 1 data at CROI in February for a long-acting integrase inhibitor GS-3242. Later this year, we plan to share additional data that support the combination of GS-3242 with lenacapavir as a potential twice-yearly injectable treatment regimen. The time frame for potential launch is between 2031 and 2033. In oncology, first quarter Trodelvy sales were up 37% year-over-year, reflecting growing demand for Trodelvy. We anticipate regulatory decisions on extending into first-line metastatic triple-negative breast cancer in the second half of this year. Ahead of these decisions, Trodelvy has already received NCCN category 1 recommendations across the first line and is the leading ABC and second-line metastatic TNBC treatment.

We are also expecting Phase 3 updates from the EVOQUE-3 trial in first-line metastatic non-small cell lung cancer and the ASCENT GYN trial in second line-plus metastatic endometrial cancer in the second half of this year. The pending acquisition of Tubulus is another significant milestone in building Gilead Sciences, Inc.'s oncology franchise. The company brings a clinical-stage candidate, TUV-40, which we believe has the potential to be a leading ADC in ovarian cancer and a next-generation ADC platform with a promising early pipeline. At the upcoming ASCO meeting, we look forward to additional Phase 1 data on TUV-40 in platinum-resistant ovarian cancer.

Additionally, we are expecting a regulatory decision on anitocel, our potential best-in-disease BCMA CAR T, in December. Our acquisition of Arcellx, which closed on April 28, reflects our conviction in the potential of anitocel as a differentiated option for patients with multiple myeloma. Given the significant opportunity in fourth line as well as earlier lines of therapy, we believe anitocel could become a foundational therapy for multiple myeloma, driving growth in our cell therapy business in 2027 and beyond. The Arcellx platform will leverage Kite's industry-leading capabilities and could further strengthen our future in oncology and inflammation.

In liver disease, Libdelzi revenue for second-line primary biliary cholangitis more than tripled year-over-year. We are expecting an update from our Phase 3 IDEAL study for Libdelzi in the second half of this year. If positive, the IDEAL study could support a label update and expand the second-line PBC addressable population. Additionally, we expect a regulatory decision and potential U.S. launch of Hepcludex for chronic hepatitis delta virus infection later this quarter.

In inflammation, the potential acquisition of Oral Medicines will add to our portfolio with gamgurtamig, a BCMA-CD3 T cell engager in multiple B cell-driven autoimmune diseases. We will also share Phase 2 updates for our oral IRAK4 inhibitor and oral alpha4beta7 small molecule this year. These commercial and clinical updates demonstrate the strength of our execution today underpinned by our continued commitment to financial discipline. As we look to the remainder of 2026, we see many exciting opportunities to further expand our impact on the patients and communities we aim to serve.

With that, I will hand it over to Joanna.

Thanks, Dan, and good afternoon, everyone. It has been a remarkable start to the year from a commercial perspective, reflecting the innovative nature of our portfolio and our strong execution. Beginning on slide seven, first quarter total product sales excluding Veklury were $6.8 billion, up 8% year-over-year, driven by continued growth across our key products in HIV, breast cancer, and PBC, partially offset by HCV and cell therapy. Including Veklury, first quarter total product sales were $6.9 billion, up 5% year-over-year.

Sequentially, sales were down 12%, in line with normal first quarter seasonality. Moving to slide eight, our HIV commercial team delivered first quarter sales of $5.0 billion, up an impressive 10% year-over-year. This growth was driven by strong demand across Biktarvy, Yes2Go, and Descovy, as well as pricing favorability. Sequentially, HIV sales were down 13%, primarily driven by Q1 seasonality, in line with our expectations.

These typical first quarter factors included inventory drawdown following a year-end build in the prior quarter, and lower average realized price due to channel mix. Looking at HIV treatment in more detail on slide nine, Biktarvy sales of $3.4 billion were up 7% year-over-year driven by higher demand and average realized price, partially offset by inventory drawdown. Sequentially, sales were down 15%, reflecting the first quarter seasonality that I just discussed. Biktarvy continues to lead as the regimen of choice for both naive and switch patients across major markets.

In the U.S., Biktarvy's share was once again more than 52%, continuing its record of year-over-year gains in every quarter since launch. This market leadership is a testament to Biktarvy's differentiation and continued physician confidence. We also continue to innovate with bictegravir plus lenacapavir, or Biclen, our once-daily single-tablet regimen. We are targeting a potential launch in late August for people with virally suppressed HIV, including those on complex regimens.

Building on our longstanding track record of delivering highly effective, differentiated therapies for people with HIV, we believe that Biclen is an exciting addition to our HIV treatment portfolio and has the potential to further expand Gilead Sciences, Inc.'s leadership in the switch market. Moving to slide 10, our U.S. HIV prevention, or PrEP, business grew 87% year-over-year, comprised of the market-leading branded daily oral Descovy and the first and only twice-yearly injectable Yes2Go. This performance was driven primarily by commercial execution and the strong product profiles of Descovy and Yes2Go.

We believe we have the most compelling portfolio of PrEP products on the market and expect to retain and grow our leadership in the rapidly expanding PrEP market in both the near and long term. In the first quarter, the U.S. PrEP market grew approximately 14% year-over-year, and we look forward to further growth as we expand the reach of HIV prevention over time. Descovy first quarter sales of $807 million were up 38% year-over-year, driven by higher average realized price and demand growth.

Sequentially, Descovy sales were down 1%, due to typical first quarter seasonality and partially offset by favorable channel mix. Specifically within PrEP, which accounts for about 80% of Descovy's business, first quarter U.S. sales were up approximately 50% year-over-year. Yes2Go continues to show an unprecedented launch trajectory for a new long-acting PrEP product. First quarter sales of $166 million were up 72% sequentially, exceeding our expectations.

I am pleased to share we continue to see strong performance across our key Yes2Go launch metrics. This includes access, where now approximately 95% of individuals are covered in the U.S., of which 95% can access Yes2Go with $0 copay; market share, where we are now the leading long-acting injectable in switch, and we continue to see a higher-than-expected number of naive PrEP users initiating on Yes2Go with early signs of growing momentum in this segment; persistency, where our initial experience of return users is encouraging. Although it is still early, we expect Yes2Go persistency to be the highest in the HIV prevention category; and the impact of our direct-to-consumer campaign, where we are creating strong brand awareness and interest in Yes2Go through our omnichannel approach focusing on communities and geographies with the highest needs.

Given the outperformance of Yes2Go in the first quarter and our growing confidence in the trends we are seeing, we are increasing our 2026 Yes2Go guidance to $1 billion, potentially achieving blockbuster status in its first full year. Beyond 2026, we continue to expect a steady and durable build in sales over many years as we work to eliminate stigma associated with HIV PrEP and broaden adoption to all communities and individuals who can benefit. Both Yes2Go and Descovy for PrEP sales are expected to meaningfully grow in 2026. Reflecting this increase to our Yes2Go guidance, in addition to first quarter strength across HIV, we are now expecting 2026 total HIV sales including both treatment and prevention to grow approximately 8% year-over-year compared to the 6% previously shared in our February guidance.

This is inclusive of headwinds of approximately 2% associated with the drug pricing agreement with the U.S. government to lower Medicaid pricing for some of our products and proposed changes to the Affordable Care Act. Turning to slide 11, Libdelzi sales of $133 million were more than tripled year-over-year as the launch continues to generate strong and growing demand in the U.S. as well as across Europe. Demand growth continues to be driven by expansion in prescriber adoption, confidence in Libdelzi’s clinical profile, and broader utilization among appropriate second-line PBC patients. Sequentially, sales declined 11%, largely driven by inventory drawdown.

As we previously highlighted, fourth quarter sales included a bolus of switches associated with the discontinuation of a competing product, which has normalized in the first quarter. As we enter the second quarter, Libdelzi’s rapid market capture continues to impress, maintaining its position as market leader with more than 50% share of the U.S. second-line PBC market. More broadly in liver disease, first quarter sales of $767 million were up 1% year-over-year, primarily reflecting the continued launch of Libdelzi, partially offset by inventory drawdown across the portfolio and lower HCV patient starts.

Sequentially, sales were down 9%, reflecting seasonality, partially offset by higher average realized price for HCV products. Moving to Trodelvy on slide 12, sales of $402 million were up 37% year-over-year and 5% sequentially, with growing demand across breast cancer indications in all regions. Trodelvy is already approved in over 60 countries and has been firmly established as the leading regimen in second-line metastatic TNBC across major markets. Turning to the first-line metastatic setting, in the Phase 3 ASCENT-03 and -04 trials, Trodelvy demonstrated highly statistically significant and clinically meaningful improvements in progression-free survival over the standard of care, both as a monotherapy in PD-L1–negative patients and in combination with pembrolizumab in PD-L1–positive patients.

Ahead of potential FDA decisions, the NCCN updated their guidelines with category 1 recommendations across first-line metastatic TNBC, which reinforces the strength of the data in first line and a potential launch in the U.S. in 2026. Moving to cell therapy on slide 13, and on behalf of Cindy and the Kite team, first quarter cell therapy sales were $407 million, down 12% year-over-year and down 11% sequentially, reflecting the expected ongoing in-and-out-of-class competition across regions. We continue to pursue expanding access and global reach of our cell therapies. For example, in April, Tecartus received full FDA approval in adult relapsed or refractory mantle cell lymphoma, adding data on patients who are BTK inhibitor–naive.

This important work of increasing awareness and physician comfort with CAR T helps set the stage for the potential launch of our next-generation products. Turning to anitocel, and with the close of the Arcellx acquisition last week, we are ramping up our detailed launch preparations for what we believe could be a best-in-disease multiple myeloma therapy. Adding Kite's end-to-end expertise in cell therapy to anitocel’s demonstrated deep, durable efficacy and differentiated safety profile positions anitocel to maximize its potential in the $3.5 billion fourth-line-plus CAR T market. With a late December PDUFA date and factoring in the time needed for site activation, we expect revenue from anitocel to begin in early 2027. As we wrap up the first quarter and look forward to up to four additional launches this year, shown on slide 14, I want to recognize our commercialization teams for their exceptional execution in driving another strong quarter in Q1, and thank them for their commitment to growing patient impact in the second quarter and beyond.

And with that, I will hand the call over to Dietmar.

Thank you, Joanna, and good afternoon, everyone. I am pleased to share that the strong momentum across our research and clinical programs has accelerated since our full-year earnings in February. This is supported by disciplined portfolio prioritization and strong execution. With the close of the Arcellx acquisition, our pipeline now consists of 47 clinical programs spanning our portfolio of first-in-class or best-in-class assets.

The completed acquisition of Arcellx and pending acquisition of Oral Medicines and Tubulis add potential best-in-class CAR Ts, T cell engagers, and antibody-drug conjugates as well as capability-expanding technologies through the novel D-domain binder and next-generation ADC conjugation platforms. Starting with HIV on slide 16, we shared 60 abstracts at CROI in February, continuing our track record of showcasing our comprehensive and innovative HIV pipeline at this conference. This year, we highlighted new data across our suite of lenacapavir-based regimens for treatment and prevention, as well as our other investigational programs for HIV treatment.

Updates across our HIV portfolio include our once-daily oral bictegravir plus lenacapavir, or Biclen, for treatment of virally suppressed people with HIV, which has been filed with FDA, and we expect a regulatory decision based on priority review in August. At CROI, we highlighted that Biclen demonstrated viral suppression in people switching from a multi-tablet regimen in ARTISTRY-1 or from Biktarvy in ARTISTRY-2 with no clinically meaningful emergent resistance. Moving to our once-weekly oral programs, we continue to target updates from the Phase 3 ILLAND-1 and -2 trials, in collaboration with Merck, later this quarter.

These trials are evaluating islatravir plus lenacapavir for virally suppressed people with HIV, and if successful, this could result in the first ever long-interval oral treatment regimen. We also continue to develop a wholly owned weekly oral treatment regimen combining a capsid inhibitor with an integrase inhibitor for treatment of people with HIV. With multiple alternative molecules in our portfolio, we are finalizing the selection of the capsid inhibitor and integrase inhibitor for the new combination and look forward to updating you in due course. Moving to even longer-acting options, we are excited to be initiating a Phase 2 trial combining our investigational integrase inhibitor, GS-3242, with lenacapavir in the second half of this year.

This follows Phase 1 data shared at CROI that showed potential for injectable dosing every four months. The higher-dose Phase 1 cohorts with potential for twice-yearly dosing are ongoing. In HIV prevention, we continue to drive innovation building on the exceptional clinical profile of Yes2Go, and I am pleased to share that enrollment in our Phase 3 PURPOSE-365 study evaluating once-yearly intramuscular lenacapavir is complete. This registrational study is testing PK, safety, and tolerability across a diverse set of participants indicated for PrEP.

We expect these data, along with the unprecedented efficacy and safety results from PURPOSE-1 and -2, to form the basis of regulatory submission, with target U.S. approval in 2028. Transitioning to oncology and starting on slide 17, we have announced several strategic investments over the last few months that we believe further strengthen our ADC and cell therapy capabilities and portfolios. ADCs are one of the most promising modalities in cancer today, as highlighted by the incredible impact Trodelvy has demonstrated for patients with second-line metastatic triple-negative breast cancer and pretreated hormone receptor–positive HER2–negative metastatic breast cancer.

We continue to expect regulatory decisions from FDA in first-line metastatic TNBC in 2026, and we now also anticipate European Commission decisions later this year. Further, we continue to expect Phase 3 updates from EVOQUE-3 in first-line PD-L1–high non-small cell lung cancer, and ASCENT GYN in second line-plus metastatic endometrial cancer, in the second half of this year. Given our foundational ADC experience with Trodelvy, we are excited to expand our portfolio and capabilities with the acquisition of Tubulis. The lead asset, TUB-40, is a potential first-in-class NaPi2b-directed ADC that we believe has transformative potential in platinum-resistant ovarian cancer, a challenging and aggressive condition with a poor prognosis for many women.

At the ESMO conference last year, TUB-40 Phase 1 data showed early treatment responses that deepened over time in a broad ovarian cancer population without any biomarker selection. This is potentially meaningful differentiation from other approved ADCs. Also, in the shared data, TUB-40 was generally well tolerated across a wide therapeutic index with no clinically relevant bleeding, pneumonitis, ocular toxicities, stomatitis, or neuropathy observed. In the immediate future, we look forward to more mature Phase 1 data on TUB-40 in ovarian cancer at this year's ASCO meeting in June, and expect to enter registrational Phase 3 studies for platinum-resistant ovarian cancer in 2027. Looking longer term, TUB-30, a potential first-in-class ADC targeting 5T4, is being evaluated in a Phase 1 basket trial in multiple solid tumors, including head and neck cancer and non-small cell lung cancer.

Further, Tubulis has multiple preclinical assets that utilize its next-generation ADC platform. We are excited by the potential to develop ADCs incorporating novel payloads, including ones developed by Gilead Sciences, Inc.'s industry-leading medicinal chemistry group. Moving to cell therapy on slide 18, and on behalf of Cindy and the Kite team, we are pleased to have closed our acquisition of Arcellx in April, which formally brings anitocel’s entire program and the broader D-domain binder portfolio into our R&D organization. We have long believed anitocel has the potential best-in-disease profile in multiple myeloma, and this is supported by clinically meaningful, deep, and durable efficacy as well as a differentiated safety profile.

This includes no delayed or non-ICANS neurotoxicities and enterocolitis in our clinical program. Given our confidence in anitocel’s clinical profile, we are evaluating anitocel in earlier treatment lines, including second- to fourth-line relapsed or refractory multiple myeloma in the Phase 3 IMagine-3 trial. This trial is recruiting ahead of expectations, with enrollment completion expected in the second quarter. We are also planning to develop anitocel in newly diagnosed multiple myeloma.

Beyond anitocel, the Arcellx acquisition brings an array of promising research assets, and we are particularly excited to explore the broader applications of the unique D-domain binder platform across a variety of targets in oncology and autoimmune diseases, notably for in vivo cell therapies. With our increasingly differentiated cell therapy pipeline, we look forward to bringing CAR T to even more patients in the years ahead. Moving to slide 19, our inflammation pipeline has nearly doubled since 2019, and now consists of 10 clinical-stage assets spanning small molecules, antibodies including bispecifics, and cell therapies that enable a diverse array of approaches to address challenging autoimmune diseases.

We are excited about the pending acquisition of Oral Medicines and its lead asset gembritomig, a clinical-stage subcutaneously administered BCMA-CD3 bispecific T cell engager we expect to develop in collaboration with Galapagos. Together with Kite's portfolio of anitocel and next-generation bias-tuned CAR Ts, we believe we could achieve durable immune reset, shifting some autoimmune diseases from chronic symptom control to a transformative long-term treatment effect. Each asset offers unique potential advantages that could allow us to target different patient populations. Specifically, gembritomig has shown rapid, deep, and sustained plasma and B cell depletion while maintaining low rates and low-grade CRS with no ICANS to date in over 60 patients with immune-mediated diseases.

We are focusing first on orphan autoimmune indications with established proof of concept and high unmet need, including autoimmune cytopenias, pemphigus, and idiopathic inflammatory myopathies. We are targeting Phase 3 registrational trials in select autoimmune diseases as early as 2027. Longer term, we believe gembritomig has potential in more than 20 autoimmune diseases that are driven by pathogenic B and plasma cells. Additionally, this year we plan to share updates from our broader inflammation portfolio, including the Phase 3 IDEAL study evaluating Libdelzi in PBC patients with incomplete response to UDCA, the Phase 2 SWIFT study evaluating GS-1427 or envistigraf, our investigational oral alpha4beta7 inhibitor for inflammatory bowel diseases, and the Phase 2a COSMIC study evaluating usertib, our investigational IRAK4 kinase inhibitor, in cutaneous lupus erythematosus.

Finally, reviewing our 2026 pipeline milestones on slide 20, we remain on track across all our key deliverables. We expect an FDA regulatory decision for bulevirtide as a treatment for chronic HDV infection later this quarter. Bulevirtide has been approved as Hepcludex in the EU since 2020, and we look forward to making this available to patients in the U.S. Additionally, we expect FDA regulatory decisions for Biclen in August and anitocel in December, as well as Phase 3 updates for ILLAND-1 and -2 in the first half of this year, and for EVOQUE-3, ASCENT GYN, and IDEAL in the second half.

With that, I would like to thank our research and development teams and our partners, whose continued strong clinical execution are driving the progress we have seen across our pipeline. Now I will turn over the call to Andy.

Thank you, Dietmar. Good afternoon, everyone. As you have heard, Gilead Sciences, Inc. delivered strong first quarter results with continued commercial outperformance and disciplined operating execution. As shown on slide 22, our base business grew 8% year-over-year, to $6.8 billion, driven by continued growth in sales for HIV products, Trodelvy, and Libdelzi, partially offset by lower sales of HCV and cell therapy products.

Sequentially, sales were down 12%, reflecting typical seasonal inventory dynamics in line with our expectations. Total product sales of $6.9 billion were up 5% year-over-year, reflecting lower Veklury sales due to fewer COVID-19–related hospitalizations. Moving to our non-GAAP first quarter results on slide 23, product gross margin was 87%, in line with our full-year guidance and up two percentage points year-over-year, due to the expiration of a longstanding TAF-related royalty obligation in addition to product mix. R&D expenses were $1.4 billion, relatively flat year-over-year, reflecting higher investments in virology clinical manufacturing, offset by lower oncology clinical study activity.

Acquired IPR&D expenses were $107 million, primarily driven by an upfront payment related to our Genhouse licensing deal. Additionally, we have now closed the acquisition of Arcellx, and the acquisitions of Oral Medicines and Tubulis are expected to close later this quarter. The upfront payments related to these transactions are expected to be recorded in our second quarter acquired IPR&D and have been reflected in our full-year EPS guidance, which I will discuss shortly. Back to our first quarter results, SG&A expenses were up 12% year-over-year, primarily reflecting higher selling and marketing expenses related to the Yes2Go launch.

First quarter operating margin was 47%, reflecting our continued focus on operating expense discipline and delivering top-quartile margins. The non-GAAP effective tax rate was 18.3% in the first quarter. And finally, non-GAAP diluted EPS was $2.03, up 12% year-over-year. This reflected higher product sales and lower IPR&D expenses incurred this quarter, partially offset by higher tax and SG&A expenses.

Moving to our full-year guidance, we are pleased to share our updated expectations for 2026, reflecting revenue outperformance in the first quarter and expected momentum through the rest of the year. As a result, we are increasing our revenue ranges by $400 million. With regards to operating expenses in 2026, and as discussed on our transaction call a few weeks ago, we continue the careful prioritization of operational spend, consistent with our track record over the last several years. For R&D, we expect a transaction-related modest and manageable dollar increase compared to our start-of-the-year guidance.

And in SG&A, we are effectively absorbing incremental expenses associated with the acquisitions in our prior guidance. Upfront IPR&D of approximately $11.5 billion, together with transaction financing expenses collectively amounting to about $9.50 per share, are reflected in our updated EPS guidance. We are pleased to note that, excluding these transaction-related costs, we are effectively maintaining our start-of-the-year non-GAAP EPS guidance, highlighting the flexibility in our operating model and our agility as we flex to accommodate the needs of the business. Looking at the details starting on slide 24, reflecting strength across our HIV businesses, we now expect 2026 HIV sales to grow 8% year-over-year, ahead of our prior guidance of 6% growth.

Within HIV, we now expect Yes2Go sales of approximately $1 billion, up from $800 million at the start of the year. As a result, we are increasing our 2026 base business guidance and now expect a range between $29.4 billion and $29.8 billion. This increase of $400 million results in 5% to 6% year-over-year growth, up from the 4% to 5% growth expectation we shared in February. As we highlighted last quarter, our guidance includes a roughly 2% growth headwind from policy-related changes this year, primarily related to the drug pricing agreement announced in December 2025 and the Affordable Care Act.

Absent this headwind, base business growth would be expected to be 7% to 8%. Our full-year Veklury guidance remains unchanged at approximately $600 million, contributing to expected 2026 total product sales between $30.0 billion and $30.4 billion, an increase of $400 million. Moving to the non-GAAP P&L for the full year 2026, we are adjusting our guidance to reflect the Arcellx, Oral Medicines, and Tubulis acquisitions. Specifically, we expect R&D expenses to increase a mid-single-digit percentage from 2025, slightly higher than the low-single-digit percentage increase shared in our February guidance.

This is primarily driven by our investment in clinical programs related to the announced acquisitions of Tubulis and Arcellx. Overall, we expect R&D expense as a percentage of total product sales to be less than 20% in 2026. We expect acquired IPR&D investments of approximately $11.8 billion for the year, which includes the upfront payments associated with our recently announced acquisitions. We expect SG&A expenses to remain in line with our February guidance of a mid-single-digit percentage increase compared to 2025. And we expect full-year 2026 operating income of $2.4 billion to $2.9 billion.

Full-year 2026 effective tax rate is expected to be between 140% and 190% reflecting the nondeductible expenses from the Arcellx, Oral Medicines, and Tubulis transactions. Excluding the $11.5 billion in upfront payments related to these recent transactions, operating income would be between $14.0 billion and $14.5 billion, or $200 million higher than our February guidance. On slide 25, you can see that we now expect full-year 2026 non-GAAP loss per share in the range of $1.05 to $0.65 per share. This includes an expense of approximately $9.50 per share relating to the upfront payments and financing costs associated with the Arcellx, Oral Medicines, and Tubulis transactions.

Excluding this impact, our non-GAAP diluted EPS would be $8.45 to $8.85, or in line with the non-GAAP EPS guidance we shared back in February. We are pleased to note that the strength in our commercial business, reflected in the $400 million increase in product sales, is effectively offsetting the impact, primarily R&D, of the three deals on an EPS basis. On slide 26, we returned greater than $1.4 billion to shareholders in 2026, including over $400 million of share repurchases. Combined with our dividend, we returned approximately 60% of our free cash flow to shareholders in 2026. Looking ahead, given the pace of our activity in 2026, our business development focus in the near term will be closing and successfully integrating these programs, and maintaining strong clinical momentum.

At the same time, we will continue to pursue ordinary course business development transactions. It is less likely that we will pursue more sizable M&A this year, although we will always leave the door open to consider strategic acquisitions if a compelling opportunity emerges. Overall, we are pleased with Gilead Sciences, Inc.'s consistent strong performance highlighted by solid clinical and commercial execution, and supported by our disciplined operating model. We continue to be very well positioned for both near-term and long-term growth and fully focused on executing our strategic commitments.

With that, I will invite Rebecca to begin the Q&A.

Thank you, Andy. At this time, we will invite your questions. Please 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 a question, press 1. And to withdraw your question, press 1 again. Our first question comes from Akash Tewari at Jefferies. Go ahead. Your line is open.

Hey, thanks so much. Can you talk a bit more about the Tubulis deal? How much of that NPV was driven by ovarian and the signal you are seeing there for 040 versus the potential to take this into lung given the amount of NaPi2b expression there? And, additionally, we are kind of seeing two steps forward, one step back with the PD-1/VEGF.

You guys have not been in that class so far. What additional validation would you need to see from the class at ASCO to look forward towards combination approaches with your ADC platform? Thank you.

Yeah. Thanks for the question, Akash. I will invite some of my colleagues to comment as well. Let me just frame this, and the other transactions.

As I have said before, we have one of the strongest portfolios ever in Gilead Sciences, Inc.'s history—in fact, the strongest—before these acquisitions, and each of these contributes to different aspects of strengthening our business. Tubulis in particular, and we will get to that, is not only TUB-40, as you have heard in the prepared remarks, and TUB-30, but also the strength of the platform overall. I will invite Dietmar to comment a little bit further on how he sees the uniqueness of this platform. And then, Andy, if you have any additional comments, please, I welcome them as well.

Dietmar, over to you.

Thanks, Akash, for the question. The Tubulis platform, to just expand a bit on what Dan has said, we see the value of the front-runner molecule, which has what we think is unprecedented data in ovarian cancer. When you look at the data they presented at ESMO in platinum-resistant ovarian cancer, the durability of the response and also the tolerability in the patients treated really stand out and, on top of that, this is not in a biomarker-selected population. So we really see a lot of value there, obviously also with the objective to take this into earlier lines of therapy, especially into platinum-sensitive ovarian cancer.

Then there is a second clinical program with the 5T4-targeted TUB-30 program with broader potential in different tumor types, currently in dose escalation, but already with encouraging findings when you look at expression of 5T4 and some of the early data. And then, talking about the platform, there are really two technologies we are especially excited about. One is the P5 technology that is a linker technology that, from a chemical perspective, is entirely new, allows for very stable linkage, and allows for delivery of the payload directly at the tumor site with limited general toxicity. The toxicity profile that we see with the molecule—with at this point in time no lung toxicity, no ocular toxicity, etc.—really underpins that biological story.

And then the second part of the platform being the ALCO-5 platform, which allows linking different types of payloads, and this is also where the synergy between Tubulis and Gilead Sciences, Inc. comes in, developing novel payloads, both from a Tubulis but also from a Gilead Sciences, Inc. perspective using our medicinal chemistry capabilities. We have been scouring the world for really attractive ADC technologies. We have good experience obviously with Trodelvy, and we wanted to add to that and expand beyond that. And the Tubulis technology is really the first that convinced us to add that to our portfolio because it is so transformational and has so much opportunity.

Regarding your second question with the VEGF/PD-1, obviously it is an interesting mechanism that we follow closely. The combinations need to be, in my mind, very targeted to the individual tumor type, so you need to really evaluate does the PD-1 mechanism play a role, does the VEGF mechanism play a role? And we are also obviously looking at the data that are coming out with these different molecules currently in development across different tumor types.

And Akash, it is Andy. Maybe I would just add, following what you heard from Dietmar and Dan, there are clearly numerous sources of value in the acquisition that we are excited about. I think I said on our call a couple weeks ago, the ovarian opportunity alone is very large. The data are really encouraging.

The financial return for our company and the shareholders on ovarian cancer alone can justify the transaction price. You are absolutely right, there is upside in lung cancer potentially. We will see as the data develop. And all of these products have the potential to be a pipeline in a product, but just the ovarian cancer opportunity alone is very exciting.

So we will leave it at that for now.

As a reminder, we ask that you please limit yourself to one question so we can get to as many analysts as possible on today's call. Our next question comes from Terence Flynn at Morgan Stanley. Terence, go ahead. Your line is open.

Great, thanks so much and congrats on all the progress. This is a question for Joanna and it is one question, I promise. Just on the Yes2Go launch, can you provide the latest mix of switch versus naive, buy-and-bill? And then anything new on the adherence assumption that is embedded in the $1 billion guidance? Thank you.

Thanks for the question. We are really excited about what we are seeing with the strong performance in the first quarter, and that is really across all of the launch metrics that you were referring to. I would start with growing confidence with health care professionals as the access pathways are getting a lot easier, the logistics and the experience are growing, and we are really seeing that pickup, as well as new prescribers of Yes2Go being added every single week. From an access standpoint, we are now at about 95% coverage, with 95% of those having $0 copay, so we are in a really good situation, which I think is what you are seeing—that growth post the January 1 play—because of the updates in the prescriber fee schedule for J-code and everything else coming into play.

On the market share front that you were referring to, we are obviously tracking both the naive and switch share. Switch share is greater than the naive, but naive is coming along really quite nicely, and we are seeing strong momentum there as well. Within the switch share, we see a bit of a split—basically a third/third/third—across long-acting other LAI injectables, Truvada generics, as well as Descovy. We are seeing a little bit of a play there.

And then we are seeing really strong market growth at about 14%. That is driving not just Yes2Go; that is obviously helping Descovy as well. On persistency, it is early days, as you think about the volume only really starting in Q4, but what we are seeing we are really pleased with—very encouraging. Health care professionals are finding the second injection easier; access is easier; the experience and confidence in the injection and the experience for the people getting the injection are better as well, based on what we are hearing anecdotally.

We do expect Yes2Go’s persistency to keep growing over time and to be the highest in the overall HIV prevention market. That sums up our first quarter for Yes2Go—an incredibly strong performance—and explains why we have updated our guidance to the $1 billion opportunity for 2026. Our next question comes from Salveen Richter at Goldman Sachs. Go ahead.

My question is with regard to users who have not yet returned for the second dose. Do you have a sense of what is driving this? How it breaks down between users who are stopping PrEP versus switching to another option or just delayed in coming back for the second dose? And maybe just speak to the DTC efforts as well. Thank you.

Sure, thanks, Salveen. We are tracking the claims data pretty closely. It is not perfect data, to be honest, so I do not have the level of detail you are referring to. What we are seeing, however, is really good comeback on the second dose and within a reasonable timeframe.

So as long as you give it a couple of weeks, plus or minus, what we are seeing is positive and encouraging, and we are hearing the same from our research with health care professionals. The DTC only adds to that. We have a lot of efforts going on with persistency. We leverage our specialty pharmacies to make sure they call and remind people to make their appointments well ahead of time.

The DTC helps that as well. Our DTC started in late February, and we have seen a huge increase in brand awareness and visibility for Yes2Go, and it also helps remind people to come back for their injection. It is still really early—we just launched in late February. We are seeing social media awareness ramp up because of those efforts, but it takes six to twelve months before we really see the outputs of the DTC.

Hi, thank you very much for taking my question. Hope your BD team got some rest from the crazy first quarter. My question is regarding the attractiveness of Biclen in treatment here as you are about to launch. So 5% to 6% of the HIV market could still be a sizable opportunity.

Could you please help us understand the opportunity here and how big this product could be even in the switch market? Thank you.

Thanks, Mohit. We are really excited about Biclen with the PDUFA date around the corner in late August. We see two opportunities. One is what you referred to: with ARTISTRY-1 showing—among virologically suppressed people on complex regimens—there are still about 5% to 6% of people living with HIV who are on multiple pills—five, six, seven, eight pills—daily, and this is an opportunity to simplify their regimen and move to one pill once a day.

We will be very focused on that at launch. In addition, in the switch market—which is dynamic at about 20% switching annually as people move to the next innovation—we see opportunity for Biclen. Biktarvy will continue to remain the standard of care for many years to come with an LOE out to 2036. Some people do switch off Biktarvy and right now they are switching to competitor products. We believe Biclen gives us an opportunity to play in that switch market and capture those patients if they are going to switch anyway.

Bictegravir as the integrase inhibitor standard of care and lenacapavir as a really innovative capsid inhibitor—two orthogonal mechanisms with high resistance barriers and no cross resistance—make for a very appealing option. Given a late August approval, access will need to ramp, so revenues in 2026 will be modest, with a nice ramp in 2027 and beyond.

Great, good afternoon. Thanks for taking the question. Another one on Yes2Go adherence. Joanna, I appreciate your framing of adherence as highest in the category.

Is it fair to assume those comments are anchoring on aperture adherence around 50% still, and are there any reasons, based on the early days, that the greater than 80% adherence you outlined at HIV Day eighteen months ago is not still in play with the once-yearly offering?

Thanks, Carter. You are referring to adherence, not persistency, at 80%, and we still believe adherence is much greater because you are at 100% for six months. On persistency, we believe with a Q6-month regimen—and what we are seeing in early days—it is definitely stronger than what current competition is seeing. That is what is encouraging: seeing people come back for their second injection and potentially third later this year.

We are tracking logistics and scheduling closely and working with clinics and specialty pharmacies to keep everything on time. There is strong potential for Yes2Go to be very persistent over time, while recognizing it is a prevention market, so it will never be 100%.

Hey, everyone. Congrats on the quarter, and thanks for the question. One on anitocel. As you approach the launch and look to development in earlier lines, what is your perspective on the safety advantage among CAR Ts? Would we expect it to narrow or widen as you treat patients upstream that are perhaps less heavily pretreated? Thank you.

Thanks, Jeff. We actually agree with the statement you just made. We are really excited about the potential for anitocel going into earlier lines, whether it is newly diagnosed multiple myeloma or even smoldering where patients are not technically diagnosed with the disease—safety really matters at that point. It is a combination: the efficacy profile we have seen to date coupled with the safety profile.

We think it will be a really important option for patients in earlier lines. We are working now on the trial designs in newly diagnosed myeloma and will share more information as available. We think there is an opportunity based on both exceptional efficacy and a differentiated safety profile.

Obviously this year you have had three new acquisition integrations running simultaneously alongside multiple commercial launches. How should we think about margins in the near term and the long term? Is there room for continued margin expansion, particularly in the 2027 to 2028 time frame? Thank you.

Hey, Alex. Thanks for the question. In the first quarter, we delivered a 47% operating margin—significant strengthening from last year. The business continues to perform really well; you see that in our updated guidance, including the increase in revenue guidance.

You also see the ability to absorb all three of these deals—essentially offsetting with revenue outperformance the incremental expenses we expect this year. Of the roughly $400 million in incremental expenses, a little over $200 million are R&D this year and the remainder are financing expenses. With revenue outperformance and disciplined expense management, we can offset those when you exclude IPR&D and look at EPS on an apples-to-apples basis. We expect in 2027 to find room in our portfolio and P&L as well.

We spent a lot of time planning for this as we looked at the transactions, so we feel very comfortable navigating the incremental expenses. Beyond 2027, our expectation was that we would have more room in our portfolio in any event, as we have been wrapping up a number of Phase 3 trials across the portfolio. So 2026 and 2027 are modest, manageable increases. 2028 and beyond, we needed to add to the portfolio in any event, and these are high-quality assets to add. You should still expect very strong financial performance—top line and bottom line.

There is room to strengthen the margin over time. Of course, it can vary quarter to quarter, but we feel like we are in a great spot today and really excited about what lies ahead.

Thank you, guys. I was really looking forward to a possible update on your Phase 2 ulcerative colitis trial of the oral alpha4beta7. I think ClinTrial says it wrapped up in March. How should I interpret the lack of any update there? Thank you.

Umer, thank you for the question. We are really excited about the oral alpha4beta7, and we are very much looking forward to updating you in due course. Do not read anything into the timeline. We are looking at the data, and we will update you very soon.

Hey, guys. Thanks very much. For Yes2Go, can you discuss what regions in the U.S. you are seeing the greatest uptake so far in the launch and how you expect that to evolve in the coming months and years?

Sure, Tyler. Where we are seeing the greatest uptake is where we had already penetrated the HIV market—cities such as San Francisco, Los Angeles, New York, and areas of Florida. Those are areas where prescribers were more comfortable with PrEP, so it is more of a switch market there. In parallel, we are very focused on the naive market—creating awareness in areas of high unmet need with high HIV incidence, for example the rural South of the United States.

That will build over time, but we are already seeing more naive prescriptions coming through there as well.

Great, thank you. On GS-3242, you had some great data at CROI recently. Your competitor seems to think that they are ahead, publicly stating a 2030 type time to market, and you are saying 2031 to 2033. Can you talk a little bit about your timing and what drives the difference between 2031–2033 and how you are thinking about that program? Thanks.

Thanks for the question. As you saw at CROI, we are currently in the dose-escalation phase, looking at pharmacokinetics for different doses. We are very comfortable with the every-four-month dosing. Our ambition, and we are encouraged by the data we have seen, is to bring this to once-every-six-months dosing.

So I am confident moving forward there. The 2031 to 2033 window is really a conservative reflection of the different trial designs and clinical plans we are working on. We will try to bring this forward to patients as quickly as possible. We feel once-every-six-months injectable treatment on the basis of 3242 will really make a difference for patients.

Okay, great. Thanks for taking my question. I wanted to ask your thoughts on how you are thinking about the impact to Trodelvy sales in triple negative, in particular, in the case that Astra and Daiichi’s datopotamab is approved—I think they have a PDUFA in June—and they are claiming a superior overall survival benefit relative to chemotherapy in patients that are not eligible for immunotherapy. Does that change what you think the market opportunity is in this indication for Trodelvy?

Thanks.

Thanks, Tazeen, for the question. We are really excited about Trodelvy’s performance. In Q1, we delivered 37% year-over-year growth, driven by growing physician confidence. We have established Trodelvy as the standard of care in second-line metastatic TNBC.

Since publication and the NCCN guideline updates to category 1 for both first-line PD-L1–negative as well as PD-L1–positive patients, we have seen nice uptake in earlier lines, including first line, with spontaneous use. We feel very confident in Trodelvy’s overall profile—the data are practice-changing, as recognized at ASCO and ESMO when both studies were presented—and we are excited about the potential approvals of both first line and second line toward the later Q3 of this year. More to come.

Great, sorry—was muted before. I just wanted to come back to anitocel and launch dynamics as we look out to 2027. Specifically, do you think you are going to need the second-line IMagine-3 data before you can broadly convert over practices, or do you think there is an ability to ramp this product just based on the initial later-line approvals? Thank you.

Thanks a lot for the question, Chris. We feel really confident about the anitocel launch. It offers a one-and-done treatment that cell therapy provides, with stellar efficacy without compromising on safety—and that matters in every line. We are excited to bring it forward in fourth line.

We are hearing strong enthusiasm from our KOLs and many of our authorized treatment centers. That shows up in two ways: first, enrollment for IMagine-3 went faster than we expected, and second, we expect to have a majority of our authorized treatment centers activated within 2027 based on their enthusiasm. There is a substantial opportunity at a patient level. The market in fourth line plus is $3.5 billion, so there is substantial opportunity there.

We also think anitocel offers the differentiated efficacy and safety profile that patients and physicians are looking for.

That completes the time that we have for questions. I will now invite Dan to share any closing remarks.

Thanks, everybody, for joining. I just want to wrap up a very strong quarter and thank the Gilead Sciences, Inc. teams for another impressive performance. The performance you are seeing at Gilead Sciences, Inc. today is clearly driven by the quality of our portfolio—enhanced by acquisitions since the beginning of the year—the numerous launches underway, and our continued focus on disciplined financial management, which you heard today, and our ability to add to the portfolio while maintaining disciplined financial management. Underpinning all this is the dedication of our teams and the people and communities we serve.

We will continue to stay very focused on commercial and clinical execution, as you have seen us do in past quarters. As we look to the remainder of 2026, in addition to the two really strong launches underway right now with Yes2Go and Libdelzi, we have up to four potential upcoming launches before the end of the year and up to five Phase 3 updates this year. There are many opportunities on the horizon to increase our impact, and we look forward to keeping you informed on the progress throughout the year. As usual, if you have any additional questions that you were not able to get answered today, please reach out to our investor relations group.

We are happy to help you and support you in any way possible. Thank you for your attention and focus on Gilead Sciences, Inc. today.