GILEAD SCIENCES, INC. (GILD)

Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide material information around events and uncertainties known to management that are relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the related notes thereto and other disclosures included as part of our Annual Report on Form 10-K for the year ended December 31, 2025 and our unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2026 and the related notes thereto and other disclosures (including the disclosures under Part II, Item 1A. Risk Factors) included in this Quarterly Report on Form 10-Q.

Management Overview

Gilead Sciences, Inc. (including its consolidated subsidiaries, referred to as “Gilead,” the “company,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, COVID-19 and cancer. We operate in more than 35 countries worldwide, with headquarters in Foster City, California.

Key Business Updates

The following represents a summary of notable business updates and events since the filing of our Annual Report on Form 10-K for the year ended December 31, 2025, including certain items from our press releases, which readers are encouraged to review in full as available on our website at www.gilead.com. The content on the referenced website does not constitute a part of and is not incorporated by reference into this Quarterly Report on Form 10-Q.

Virology

•Announced U.S. Food and Drug Administration (“FDA”) accepted a supplemental New Drug Application (“NDA”) submission for Yeztugo 300-mg tablet as a potential once-weekly oral formulation for HIV pre-exposure prophylaxis, with a Prescription Drug User Fee Act (“PDUFA”) target action date of February 2, 2027.

•Received FDA accelerated approval for Hepcludex for the treatment chronic hepatitis delta virus (“HDV”) infection in adults without cirrhosis or with compensated cirrhosis, which is now the first and only FDA-approved treatment for HDV in the U.S.

•Announced FDA accepted an NDA for bictegravir and lenacapavir for virologically suppressed people with HIV under priority review, with a PDUFA target action date of August 27, 2026.

Oncology

•Received a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use for Trodelvy in combination with Keytruda® (pembrolizumab) for the treatment of adult patients with unresectable locally advanced or metastatic triple-negative breast cancer (“mTNBC”) who have not received prior systemic therapy for metastatic disease and whose tumors express PD-L1 (CPS≥10).

•Received FDA approval of Trodelvy for the first-line treatment of adult patients with locally advanced or mTNBC as either a single agent for patients who are not candidates for PD-(L)1 inhibitor-based therapy or in combination with Keytruda® (pembrolizumab) or Keytruda Qlex™ (pembrolizumab and berahyaluronidase alfa-mph) for patients whose tumors express PD-L1 (CPS ≥10).

•Announced European Commission marketing authorization for Trodelvy as a monotherapy for the treatment of adult patients with unresectable locally advanced or mTNBC who have not received prior systemic therapy for metastatic disease and are not candidates for PD-(L)1 inhibitor therapy.

•Announced the discontinuation of the Phase 3 EVOKE-03 study, in partnership with Merck & Co., Inc., evaluating Trodelvy in combination with Keytruda® for the investigational treatment of first-line metastatic non-small cell lung cancer (“NSCLC”) with high PD-L1 expression (TPS ≥50%). The decision was based on the recommendation of the external Data Monitoring Committee, following review of data from a pre-specified final analysis of progression-free survival and interim analysis of overall survival.

•Completed the acquisition of Tubulis GmbH (“Tubulis”), which brings Gilead next-generation antibody-drug conjugate (“ADC”) assets, including TUB-040, a NaPi2b-directed topoisomerase-I inhibitor ADC, and a platform to develop novel ADCs.

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•Completed the acquisition of Arcellx, Inc. (“Arcellx”), which builds on an existing collaboration agreement with Arcellx for the development of anitocabtagene autoleucel (“anito-cel”) in relapsed or refractory (“R/R”) multiple myeloma (“MM”), and also adds Arcellx’s D-Domain BCMA binder that has the potential to strengthen Gilead’s portfolio in oncology and inflammation.

•Announced that the Biologics License Application for anito-cel in 4L+ R/R MM has been accepted by FDA, with a PDUFA target action date of December 23, 2026.

•Received FDA full approval for Tecartus in adult patients with R/R mantle cell lymphoma, following an accelerated approval in this setting in July 2020. The Tecartus label now includes efficacy, safety and pharmacokinetic data from Cohort 3 of the ZUMA-2 study in patients who are R/R after one or more lines of therapy and who are Bruton tyrosine kinase inhibitor-naïve.

Inflammation

•Completed the acquisition of Ouro Medicines, LLC (“Ouro Medicines”), which adds gamgertamig, a clinical stage BCMAxCD3 T cell engager for autoimmune diseases, to Gilead’s inflammation portfolio. The acquisition was completed in collaboration with Lakefront Biotherapeutics NV (“Lakefront”) (formerly known as Galapagos NV), which equally shared the upfront payment and will equally share contingent milestone payments, subject to customary adjustments.

Key Financial Results

The following table summarizes our key financial results for the period and period-over-period changes:

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Total revenues increased 10% and 7% to $7.8 billion and $14.8 billion for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to higher sales of HIV products, Trodelvy and Livdelzi, as well as higher royalty, contract and other revenues, partially offset by lower sales of Veklury as well as Cell Therapy and chronic hepatitis C virus (“HCV”) products.

Net loss was $10.5 billion and diluted loss per share was $8.45 for the three months ended June 30, 2026, compared to net income of $2.0 billion and diluted earnings per share of $1.56 for the same period in 2025. The decrease was primarily due to:

•Higher acquired in-process research and development (“IPR&D”) expenses related to our acquisitions of Arcellx, Tubulis and Ouro Medicines;

•A pre-tax IPR&D impairment charge of $1.75 billion related to assets previously acquired from Immunomedics, Inc. (“Immunomedics”); and

•Higher operating expenses; partially offset by

•Higher revenues;

•Lower income tax expense; and

•Higher net gains from equity securities.

Net loss was $8.5 billion and diluted loss per share was $6.82 for the six months ended June 30, 2026, compared to net income of $3.3 billion and diluted earnings per share of $2.61 for the same period in 2025. The decrease was primarily due to:

•Higher acquired IPR&D expenses related to our acquisitions of Arcellx, Tubulis and Ouro Medicines;

•A pre-tax IPR&D impairment charge of $1.75 billion related to assets previously acquired from Immunomedics; and

•Higher operating expenses; partially offset by

•Higher revenues; and

•Net gains from equity securities compared to net losses in 2025.

Please refer to “Results of Operations” below for further information on results for the three and six months ended June 30, 2026.

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Results of Operations

Revenues

The following table summarizes our Total revenues and period-over-period changes:

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ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide material information around events and uncertainties known to management that are relevant to an assessment of the financial condition and results of operations of Gilead and should therefore be read in conjunction with our audited Consolidated Financial Statements and the related notes thereto and other disclosures included as part of this Annual Report on Form 10-K (including the disclosures under Part I, Item 1A. Risk Factors). Additional information related to the comparison of our results of operations and liquidity and capital resources between the years 2024 and 2023 is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2024 Form 10-K filed with U.S. Securities and Exchange Commission.

Management Overview

Gilead Sciences, Inc. (including its consolidated subsidiaries, referred to as “Gilead,” the “company,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, COVID-19 and cancer. We operate in more than 35 countries worldwide, with headquarters in Foster City, California.

Our strategic ambitions are to (i) bring 10+ transformative therapies to patients by 2030 (tracking since 2020); (ii) be a biotech employer and partner of choice; and (iii) deliver shareholder value in a sustainable and responsible manner. Our strategic priorities, as refreshed in late 2025, to deliver on these ambitions include: (i) maximize impact of long-acting HIV therapies; (ii) accelerate our pipeline build in oncology and inflammation; (iii) adopt and scale artificial intelligence to transform how we work; (iv) prioritize investments for highest impact; and (v) strengthen collaboration to accelerate innovation.

Year in Review

During 2025, we delivered growth in our HIV product sales, introduced Yeztugo, the first and only twice-yearly HIV pre-exposure prophylaxis (“PrEP”) option available in the U.S., and expanded Livdelzi’s market share in the treatment of primary biliary cholangitis (“PBC”). As evidenced by various late-stage clinical trial updates in HIV and oncology, we continued to invest in our business and research and development (“R&D”) pipeline through advancement of our portfolio and broadening of available therapies, including through acquisitions and collaborations. Meanwhile, we maintained our financial position by lowering operating expenses, repaying senior notes coming due and providing shareholder returns through dividends and share repurchases. The following represents a summary of notable business updates and events since the filing of our Annual Report on Form 10-K for the year ended December 31, 2024, including certain items from our press releases, which readers are encouraged to review in full as available on our website at www.gilead.com. The content on the referenced website does not constitute a part of and is not incorporated by reference into this Annual Report on Form 10-K.

Virology

•Announced positive topline Phase 3 results from the ARTISTRY-1 and ARTISTRY-2 trial, evaluating our investigational daily oral single-tablet regimen of bictegravir 75mg and lenacapavir 50mg (“BIC/LEN”) for virologically suppressed adults with HIV. BIC/LEN met its primary endpoint, demonstrating non-inferiority to baseline multi-tablet antiviral regimens (ARTISTRY-1) and Biktarvy (ARTISTRY-2).

•Announced settlement agreements to resolve Biktarvy patent litigation with generic manufacturers Lupin Ltd., Cipla Ltd. and Laurus Labs Ltd. Under the agreements, the earliest date the three generic manufacturers can market a generic version of full dose Biktarvy in the U.S. is April 1, 2036, subject to standard acceleration provisions. This is more than two years later than our previous loss of exclusivity projection for Biktarvy (December 2033).

•Received a strong recommendation for the use of twice-yearly injectable Yeztugo (lenacapavir) for HIV PrEP in the new U.S. Centers for Disease Control and Prevention guidelines.

•Announced a partnership with the U.S. State Department and the U.S. President’s Emergency Plan for AIDS Relief (“PEPFAR”) to deliver lenacapavir for HIV PrEP for up to two million people over three years in countries supported by both PEPFAR and the Global Fund.

•Received European Commission (“EC”) marketing authorization for Yeytuo (lenacapavir) for PrEP to reduce the risk of sexually acquired HIV-1 in adults and adolescents with increased HIV-1 acquisition risk.

•Received U.S. Food and Drug Administration (“FDA”) approval for Yeztugo (lenacapavir) for PrEP to reduce the risk of sexually acquired HIV in adults and adolescents weighing at least 35kg.

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•Announced that FDA had placed a clinical hold on the HIV treatment trials of GS-1720 and/or GS-4182, including the WONDERS-1 and WONDERS-2 trials. These drug candidates are investigational and not approved anywhere globally.

Oncology

•Announced that we entered into a definitive agreement to acquire all of the outstanding common stock of Arcellx, Inc. (“Arcellx”), providing us with full control of its leading pipeline candidate, anitocabtagene autoleucel, an investigational BCMA-directed CAR-T cell therapy for patients with relapsed and/or refractory multiple myeloma. This transaction is anticipated to close during the second quarter of 2026, subject to the satisfaction or waiver of customary closing conditions.

•Announced the discontinuation of the Phase 3 STAR-221 study, in partnership with Arcus Biosciences, Inc. (“Arcus”), evaluating the anti-TIGIT antibody domvanalimab (“dom”) plus zimberelimab (“zim”) and chemotherapy in first-line HER2- advanced gastric and esophageal cancers. The decision was based on the recommendation of the Independent Data Monitoring Committee, following review of data from a pre-specified interim analysis. Additionally, Gilead and Arcus will discontinue the Phase 2 EDGE-Gastric study evaluating dom and zim regimens in upper gastrointestinal cancers. Dom and zim are investigational products and are not approved anywhere globally.

•Announced that our Phase 3 ASCENT-07 study of Trodelvy evaluating sacituzumab govitecan-hziy (“SG”) as a first-line treatment post-endocrine therapy in hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) metastatic breast cancer patients did not meet the primary endpoint of progression-free survival. Overall survival is a key secondary endpoint and was not mature at the time of the primary analysis; however, an early trend was observed favoring patients treated with Trodelvy compared to chemotherapy.

•Presented Phase 3 ASCENT-03 data for Trodelvy in 1L metastatic triple-negative breast cancer (“mTNBC”) patients who are not candidates for PD-1/PD-L1 checkpoint inhibitors at the 2025 European Society for Medical Oncology Congress. Trodelvy is not approved in this setting.

•Entered into a collaboration with Shenzhen Pregene Biopharma Co., Ltd. (“Pregene”) to develop next-generation in vivo therapies.

•Announced the acquisition of Interius BioTherapeutics, Inc. (“Interius”), a privately held biotechnology company developing in vivo chimeric antigen receptor therapeutics, for approximately $350 million.

•Presented results from the Phase 3 ASCENT-04 trial evaluating Trodelvy plus Keytruda in 1L PD-L1+ mTNBC at the American Society of Clinical Oncology meeting. Trodelvy is not approved in this setting.

•Entered into an exclusive option and license agreement with Kymera Therapeutics, Inc. to develop novel oral molecular glue CDK2 degraders with broad oncology treatment potential.

Inflammation

•Received conditional marketing authorization from the EC for seladelpar for the treatment of PBC in combination with ursodeoxycholic acid (“UDCA”) in adults who have an inadequate response to UDCA alone, or as monotherapy in those unable to tolerate UDCA.

•Entered into a strategic partnership with LEO Pharma A/S (“LEO Pharma”) to develop and commercialize their pre-clinical oral signal transducer and activator of transcription 6 programs for the potential treatment of inflammatory diseases.

Corporate

•Announced an agreement with the U.S. government to lower the cost of medicines for Americans, reinforcing a commitment to U.S.-based innovation, affordability and global health leadership.

•Announced ground-breaking on a new Pharmaceutical Development and Manufacturing Technical Development Center in Foster City, California as part of a planned $32 billion investment in the U.S. through 2030.

The following table summarizes our key financial results for the year and period-over-period changes:

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Total revenues increased 2% to $29.4 billion in 2025, compared to 2024, primarily due to:

•Higher product sales primarily driven by HIV and Liver Disease products, partially offset by lower sales of Veklury; and

•Higher royalty, contract and other revenues.

Net income attributable to Gilead was $8.5 billion and diluted earnings per share attributable to Gilead was $6.78 in 2025, compared to net income attributable to Gilead of $480 million and $0.38 diluted earnings per share attributable to Gilead in 2024. The increase was primarily due to:

•A $3.8 billion acquired in-process research and development (“IPR&D”) expense related to the acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) in 2024, which did not repeat in 2025;

•Lower pre-tax IPR&D partial impairment charges, with $590 million in 2025 related to assets acquired from MYR GmbH (“MYR”) compared to $4.2 billion in 2024 related to assets acquired from Immunomedics, Inc.;

•Higher net unrealized gains on equity securities;

•Higher revenues; and

•Lower selling, general and administrative expenses; partially offset by

•Higher income tax expense.

Please refer to “Results of Operations” below for further information on 2025 results.

Outlook

As we look to 2026, we expect to see continued growth for our product sales overall, bolstered by increased demand in our HIV business. We anticipate that such growth will be partially offset by the impact of various policy-related developments in the U.S., as well as an expected decrease in our Veklury product sales due to lower rates of COVID-19-related hospitalizations and an expected decrease in our Cell Therapy product sales reflecting ongoing competitive headwinds.

Our R&D portfolio includes over 50 clinical-stage programs across our core therapeutic areas. We expect updates in 2026 on various clinical trials and certain regulatory filing submissions and decisions, including FDA decisions related to two first-line breast cancer therapies and an additional HIV treatment option. We plan to continue investing in our business and R&D pipeline both internally and externally through partnerships and select business development transactions. As part of our overall investment approach to fund the advancement of our pipeline and commercialization of our products, we will continue to focus on disciplined operating expense management.

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Results of Operations

Revenues

The following table summarizes our Total revenues and period-over-period changes:

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