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, 2024 and our unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2025 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, coronavirus disease 2019 (“COVID-19”), cancer and inflammation. 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, 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 Quarterly Report on Form 10-Q.

Virology

• Announced U.S. Food and Drug Administration (“FDA”) accepted New Drug Applications submissions for twice-yearly lenacapavir for HIV prevention under priority review, with a Prescription Drug User Fee Act date of June 19, 2025.

• Announced the European Medicines Agency validated the Marketing Authorization Application and EU-Medicines for All application for twice-yearly lenacapavir for HIV prevention, which will undergo parallel reviews under an Accelerated Assessment timeline.

Oncology

• Announced Trodelvy plus Keytruda® (pembrolizumab) demonstrated a statistically significant and clinically meaningful improvement in progression free survival in patients with previously untreated PD-L1+ unresectable locally advanced or metastatic triple-negative breast cancer in the Phase 3 ASCENT-04 trial. The use of Trodelvy plus Keytruda is investigational in this setting.

Inflammation

• Received conditional marketing authorization from the European Commission for seladelpar for the treatment of primary biliary cholangitis (“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.

Key Financial Results

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

						Three Months Ended
						March 31,
(in millions, except percentages and per share amounts)						2025						2024						Change
Total revenues						$	6,667					$	6,686					—		%
Net income (loss) attributable to Gilead						$	1,315					$	(4,170)					NM
Diluted earnings (loss) per share attributable to Gilead						$	1.04					$	(3.34)					NM

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NM - Not Meaningful

Total revenues of $6.7 billion remained relatively flat for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to lower Veklury and Oncology sales being mostly offset by higher HIV and Liver Disease sales. Product sales were also impacted by the redesign of the U.S. Medicare Part D program.

Net income attributable to Gilead was $1.3 billion and diluted earnings per share attributable to Gilead was $1.04 for the three months ended March 31, 2025, compared to net loss attributable to Gilead of $4.2 billion and diluted loss per share attributable to Gilead of $3.34 for the same period in 2024. The increase was primarily due to:

• A $3.9 billion acquired in-process research and development (“IPR&D”) expense related to the acquisition of CymaBay Therapeutics, Inc. (“CymaBay”) during the three months ended March 31, 2024, which did not repeat; and

• A pre-tax IPR&D partial impairment charge of $2.4 billion during the three months ended March 31, 2024 related to Trodelvy IPR&D assets acquired by Gilead from Immunomedics, Inc., which did not repeat; partially offset by

• Higher income tax expense; and

• Higher net unrealized losses on equity investments.

Please refer to “Results of Operations” below for further information on results for the three months ended March 31, 2025.

Results of Operations

Revenues

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

						Three Months Ended March 31, 2025																								Three Months Ended March 31, 2024
(in millions, except percentages)						U.S.						Europe						Rest of World						Total						U.S.						Europe						Rest of World						Total						Change
Product sales:
HIV
Biktarvy						$	2,474					$	375					$	301					$	3,150					$	2,315					$	365					$	265					$	2,946					7		%
Descovy						538						21						27						586						371						26						29						426						38		%
Genvoya						305						40						19						364						332						49						21						403						(9)		%
Odefsey						215						57						10						281						223						76						11						310						(9)		%
Symtuza - Revenue share(1)						82						29						3						114						104						33						3						141						(19)		%
Other HIV(2)						50						31						10						91						60						45						12						117						(22)		%
Total HIV						3,664						553						370						4,587						3,405						596						342						4,342						6		%
Liver Disease
Sofosbuvir/Velpatasvir(3)						166						80						99						346						248						79						78						405						(15)		%
Vemlidy						100						12						140						252						95						11						119						225						12		%
Other Liver Disease(4)						68						76						17						161						42						47						19						107						50		%
Total Liver Disease						335						168						256						758						385						137						215						737						3		%
Veklury						199						22						82						302						315						70						169						555						(45)		%
Oncology
Cell Therapy
Tecartus						40						31						8						78						55						36						8						100						(22)		%
Yescarta						160						149						77						386						170						158						52						380						2		%
Total Cell Therapy						200						180						84						464						225						195						60						480						(3)		%
Trodelvy						181						75						37						293						206						68						36						309						(5)		%
Total Oncology						381						255						121						757						431						262						96						789						(4)		%
Other
AmBisome						5						67						66						139						14						70						60						144						(4)		%
Other(5)						47						9						14						70						59						9						12						80						(12)		%
Total Other						52						76						81						209						73						79						71						224						(7)		%
Total product sales						4,631						1,073						909						6,613						4,609						1,144						894						6,647						(1)		%
Royalty, contract and other revenues						37						11						6						54						23						15						1						39						37		%
Total revenues						$	4,668					$	1,084					$	915					$	6,667					$	4,633					$	1,159					$	894					$	6,686					—		%

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(1) Represents our revenue from cobicistat (“C”), emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”) in Symtuza (darunavir/C/FTC/TAF), a fixed dose combination product commercialized by Janssen Sciences Ireland Unlimited Company.

(2) Includes Atripla, Complera/Eviplera, Emtriva, Stribild, Sunlenca, Truvada and Tybost.

(3) Includes Epclusa and the authorized generic version of Epclusa sold by Gilead’s separate subsidiary, Asegua Therapeutics LLC (“Asegua”).

(4) Includes ledipasvir/sofosbuvir (Harvoni and the authorized generic version of Harvoni sold by Asegua), Hepcludex, Hepsera, Livdelzi/Lyvdelzi, Sovaldi, Viread and Vosevi.

(5) Includes Cayston, Jyseleca, Letairis and Zydelig.

HIV

HIV product sales increased 6% to $4.6 billion for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to higher demand and higher average realized price, inclusive of the impact of the redesign of the U.S. Medicare Part D program. In particular:

• Biktarvy sales increased primarily due to higher demand, including patients switching from Genvoya and other Gilead HIV products.

• Descovy sales increased primarily due to higher average realized price and higher demand.

Liver Disease

Liver Disease product sales increased 3% to $758 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to sales of Livdelzi, which was launched in August 2024 for treatment of PBC, and higher demand in products for chronic hepatitis B virus and chronic hepatitis delta virus in Europe, partially offset by lower average realized price for chronic hepatitis C virus products.

Veklury

Veklury product sales decreased 45% to $302 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to decreased rates of COVID-19-related hospitalizations across all regions.

Oncology

Cell Therapy

Cell Therapy product sales decreased 3% to $464 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to lower demand in the U.S., partially offset by increased rest of world demand and higher average realized price.

Trodelvy

Trodelvy product sales decreased 5% to $293 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to inventory dynamics and lower average realized price, partially offset by higher demand.

Foreign Currency Exchange Impact

We generally face exposure to movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures.

Approximately 28% of our product sales were denominated in foreign currencies during the three months ended March 31, 2025 and 2024. Foreign currency exchange, net of hedges, had an unfavorable impact on our total product sales of $80 million for the three months ended March 31, 2025, based on a comparison using foreign currency exchange rates from the three months ended March 31, 2024.

Costs and Expenses

The following table summarizes our costs and expenses and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2025						2024						Change
Cost of goods sold						$	1,540					$	1,552					(1)		%
Product gross margin						76.7		%				76.6		%				7 bps
Research and development expenses						$	1,379					$	1,520					(9)		%
Acquired in-process research and development expenses						$	253					$	4,131					(94)		%
In-process research and development impairments						$	—					$	2,430					(100)		%
Selling, general and administrative expenses						$	1,258					$	1,375					(8)		%

Product Gross Margin

Product gross margin remained relatively flat for the three months ended March 31, 2025, compared to the same period in 2024.

Research and Development Expenses

Research and development (“R&D”) expenses consist primarily of personnel costs including salaries, benefits and stock-based compensation expense, infrastructure, materials and supplies and other support costs, research and clinical studies performed by contract research organizations and our collaboration partners and other outside services.

We manage our R&D expenses by identifying the R&D activities we expect to be performed during a given period and then prioritizing efforts based on scientific data, probability of successful technical development and regulatory approval, market potential, available human and capital resources and other considerations. We regularly review our R&D activities based on unmet medical need and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities that we believe will best support the long-term growth of our business. We do not track total R&D expenses by product candidate, therapeutic area or development phase.

The following table provides a breakout of expenses by major cost type:

						Three Months Ended
						March 31,
(in millions, except percentages)						2025						2024						Change
Personnel, infrastructure and other support costs						$	854					$	963					(11)		%
Clinical studies and other costs						524						557						(6)		%
Research and development expenses						$	1,379					$	1,520					(9)		%

Research and development expenses decreased 9% to $1.4 billion for the three months ended March 31, 2025, compared to the same period in 2024.

Personnel, infrastructure and other support costs decreased mainly due to the impact of stock-based compensation expenses related to the acquisition of CymaBay during the three months ended March 31, 2024, which did not repeat, as well as lower restructuring costs.

Clinical studies and other costs decreased mainly due to lower spend on clinical manufacturing.

Acquired In-Process Research and Development Expenses

Acquired in-process research and development expenses are recorded when incurred and reflect costs of externally-developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront and pre-commercialization milestone payments related to various collaborations and the costs of rights to IPR&D projects.

Acquired in-process research and development expenses were $253 million for the three months ended March 31, 2025, primarily related to the LEO Pharma A/S collaboration in January 2025.

Acquired in-process research and development expenses were $4.1 billion for the three months ended March 31, 2024, primarily related to the following transactions:

• $3.9 billion CymaBay acquisition in March 2024; and

• $100 million Arcus Biosciences, Inc. collaboration amendment in January 2024.

See Note 6. Acquisitions, Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

In-Process Research and Development Impairment

No IPR&D impairment charges were recorded during the three months ended March 31, 2025.

In January 2024, we received data from our Phase 3 EVOKE-01 study of Trodelvy evaluating sacituzumab govitecan-hziy (“SG”) indicating that the study did not meet its primary endpoint of overall survival in previously treated metastatic non-small cell lung cancer (“NSCLC”), thus triggering a review for potential impairment of the NSCLC IPR&D intangible asset. Based on our evaluation of the study results and all other data currently available, and in connection with the preparation of the financial statements for the first quarter, we performed an interim impairment test and determined that the revised estimated fair value of the NSCLC IPR&D intangible asset was below its carrying value. As a result, we recognized a partial impairment charge of $2.4 billion in In-process research and development impairments on our Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

To arrive at the revised estimated fair value as of March 31, 2024, we used a probability-weighted income approach that discounts expected future cash flows to present value, which requires the use of Level 3 fair value measurements and inputs, including critical estimated inputs, such as: revenues and operating profits related to the planned utilization of SG in NSCLC, which includes inputs such as addressable patient population, projected market share, treatment duration, and the life of the potential commercialized product; the probability of technical and regulatory success; the time and resources needed to complete the development and approval of SG in NSCLC; an appropriate discount rate based on the estimated weighted-average cost of capital for companies with profiles similar to our profile; and risks related to the viability of and potential alternative treatments in any future target markets. Our revised discounted cash flows for the March 31, 2024 fair value estimation primarily reflected the smaller addressable market that Trodelvy could serve among metastatic NSCLC patients and a delay in expected launch timing for second-line plus patients.

If future events result in adverse changes in the key assumptions used in determining fair value, including the timing of product launches, information on the competitive landscape of treatments in this indication, changes to the probability of technical or regulatory success, failure to obtain anticipated regulatory approval or discount rate, among others, additional impairments may be recorded and could be material to our financial statements.

Selling, General and Administrative Expenses

Selling, general and administrative expenses are recorded when incurred and consist primarily of personnel costs, facilities and overhead costs, and selling, marketing and advertising expenses, as well as other general and administrative costs related to finance, human resources, legal and other administrative activities.

The following table summarizes our Selling, general and administrative expenses and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2025						2024						Change
Selling and marketing expenses						$	753					$	743					1		%
General and administrative expenses						505						632						(20)		%
Selling, general and administrative expenses						$	1,258					$	1,375					(8)		%

Selling, general and administrative expenses decreased 8% to $1.3 billion for the three months ended March 31, 2025, compared to the same period in 2024.

Selling and marketing expenses remained relatively flat.

General and administrative expenses decreased mainly due to:

• Lower legal and other corporate expenses; and

• Stock-based compensation expenses related to the acquisition of CymaBay during the three months ended March 31, 2024, which did not repeat; partially offset by

• Higher restructuring costs.

Interest Expense and Other (Income) Expense, Net

The following table summarizes our Interest expense and Other (income) expense, net and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2025						2024						Change
Interest expense						$	260					$	254					2		%
Other (income) expense, net						$	328					$	(91)					NM
Loss from equity securities, net						$	426					$	14					NM
Interest income						$	(94)					$	(108)					(13)		%
Other, net						$	(4)					$	4					NM

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NM - Not Meaningful

Interest expense remained relatively flat for the three months ended March 31, 2025, compared to the same period in 2024.

Unfavorable movements in Other (income) expense, net for the three months ended March 31, 2025, compared to the same period in 2024, primarily related to higher net losses from equity securities.

Income Taxes

The following table summarizes our Income tax expense (benefit) and period-over-period changes:

						Three Months Ended
						March 31,
(in millions, except percentages)						2025						2024						Change
Income (loss) before income taxes						$	1,649					$	(4,486)					NM
Income tax expense (benefit)						$	334					$	(315)					NM
Effective tax rate						20.2		%				7.0		%				NM

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NM - Not Meaningful

Our effective tax rate increased for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to:

• The non-deductible acquired IPR&D expense recorded in connection with our first quarter 2024 acquisition of CymaBay; partially offset by

• Tax benefits from stock-based compensation.

Liquidity and Capital Resources

We regularly analyze our ability to generate and obtain adequate amounts of cash to meet our short-term and long-term requirements and plans. Our capital priorities include: (i) investing in our business and R&D pipeline, (ii) continuing select partnerships and business development transactions, (iii) growing our dividend over time, and (iv) repurchasing shares to offset dilution and opportunistically reduce share count. Based on our evaluation of our current position of liquidity, available capital resources and our material cash requirements, we believe that we can satisfy our capital needs for the next 12 months and the foreseeable future.

Liquidity

Cash and cash equivalents were $7.9 billion as of March 31, 2025. The table below summarizes our cash flow activities, followed by our analysis of changes and trends:

						Three Months Ended
						March 31,
(in millions, except percentages)						2025						2024						Change
Net cash provided by (used in):
Operating activities						$	1,757					$	2,219					(21)		%
Investing activities						(415)						(2,207)						(81)		%
Financing activities						(3,426)						(1,361)						NM
Effect of exchange rate changes on cash and cash equivalents						19						(18)						NM
Net change in cash and cash equivalents						$	(2,065)					$	(1,367)					51		%

Operating Activities

Net cash provided by operating activities is our primary source of funds, driven mainly by collections on product sales, partially offset by operating spend. Changes in working capital balances, generally associated with the timing of collections and payments, as well as unanticipated payments related to litigation, taxes or other matters, may create some variation in any given year. Net cash provided by operating activities decreased for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to higher income tax payments and inventory purchases.

In April 2025, we made our final $1.3 billion federal income tax payment for transition tax on the mandatory deemed repatriation of foreign earnings related to the Tax Cuts and Jobs Act.

Investing Activities

Net cash used in investing activities decreased for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to the $3.9 billion net cash payment for the CymaBay acquisition during the three months ended March 31, 2024, partially offset by proceeds from the liquidation of marketable debt securities to fund that acquisition, with no such activity during the three months ended March 31, 2025. The decrease was also due to fewer equity security purchases during the three months ended March 31, 2025. Net cash used in investing activities may vary in any given year depending on the favorability of strategic opportunities for the business.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2025 was primarily the result of $1.76 billion for debt repayments, $1.0 billion for dividend payments and $730 million for common stock repurchases. During the three months ended March 31, 2024, we utilized cash of $990 million for dividend payments and $400 million for common stock repurchases. The year-over-year changes were due mostly to higher cash used by debt repayments and share repurchases. Net cash used in financing activities may vary in any given year depending primarily on the timing of debt repayments and proceeds from debt offerings and the amount of common stock repurchases.

On April 24, 2025, we announced that our Board of Directors declared a quarterly dividend of $0.79 per share of our common stock, with a payment date of June 27, 2025 to all stockholders of record as of the close of business on June 13, 2025. Future dividends are subject to declaration by our Board of Directors.

Capital Resources

A summary of our capital resources and material cash requirements is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. Other than as disclosed in the Liquidity section above and in Notes 4. Equity Securities, 6. Acquisitions, Collaborations and Other Arrangements, 9. Debt and Credit Facilities, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our capital resources and material cash requirements during the three months ended March 31, 2025.

Critical Accounting Estimates

A summary of our critical accounting estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. Other than as disclosed in Notes 2. Revenues, 7. Intangible Assets, 10. Commitments and Contingencies and 12. Income Taxes of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting estimates during the three months ended March 31, 2025.

Information Available on Our Website

Our company website is www.gilead.com. We routinely post important information for investors in the “Investors” section of our website, https://investors.gilead.com. Among other things, an estimate of Acquired IPR&D expenses is expected to be made available on the Quarterly Results page within the first ten days after the end of each quarter. The content on the referenced websites does not constitute a part of and is not incorporated by reference into this Quarterly Report on Form 10-Q.