A new shot prevents HIV—and breathes new life into a stagnant biotech

Mint

05-06-2025

Later this month, the Food and Drug Administration is widely expected to approve a groundbreaking twice-yearly injection to prevent HIV—a milestone in the decadeslong fight against a once-devastating disease.
For Gilead Sciences, the dominant player in HIV treatment, the breakthrough is doing what years of splashy but underwhelming acquisitions failed to achieve: It has Wall Street paying attention again. Since reporting last June that just two annual shots of lenacapavir prevented all HIV infections in a study of women and girls, shares have surged 73%.
Gilead still isn't very expensive: It trades at 13.3 times forward earnings—below the industry average of 14, as measured by the NYSE Arca Pharmaceutical Index, and hardly a stretch for a company on the cusp of a new product cycle.
Investors might fear they have seen this movie before. A decade ago, Gilead stock soared on excitement over its hepatitis C cure, only to stall once most patients had been treated and the market dried up. The company then fell into value-trap territory, weighed down by sluggish growth and a string of underwhelming cancer deals.
This time could be different—but only if Gilead can execute. Over 400,000 people in the U.S. are currently on pre-exposure prophylaxis, or PrEP—a medication that protects against HIV infection. To hit the $4 billion in annual sales that some analysts are forecasting by the end of the decade, the company will need to not only convert a big chunk of existing patients but also expand the overall market both at home and abroad. Gilead expects the number of users in the U.S. to grow to over one million in the next decade.
The early signs are promising. For starters, the market is growing fast. Sales of Gilead's daily pill Descovy rose 38% last quarter from a year ago, while GSK's Apretude—a long-acting injection given every two months—jumped 63%. Secondly, many current and potential users say they would prefer a longer-acting injection. A Jefferies survey of more than 500 PrEP users found that 95% would switch to a twice-yearly injection.
In an interview, Gilead's Chief Commercial Officer Johanna Mercier said the key advantage of the company's upcoming HIV prevention shot isn't just efficacy but adherence. 'We know it's challenging to take a daily pill for prevention, and we see an incredible opportunity here," she said, citing data showing that many patients struggle to stay consistent with oral PrEP.
Still, hurdles remain. Stigma continues to hinder PrEP uptake, particularly outside the core demographic of white men who have sex with men. Black Americans account for 39% of new HIV diagnoses but just 14% of PrEP users. Expanding access to underserved populations will require continued insurance coverage. While most current users are covered by commercial insurance, Medicaid will be key to reaching lower-income groups—making recent GOP proposals to cut the program a potential threat to Gilead's growth strategy.
Another risk, according to RBC Capital Markets analyst Brian Abrahams, is cannibalization. Gilead's daily pill Descovy currently accounts for 40% to 45% of the PrEP market, so some of the lenacapavir growth could come at the expense of its existing business.
But Mercier is confident the new product will expand the market both in the U.S. and globally. Gilead is working with governments in countries such as the U.K., where PrEP awareness is low, and planning broader rollout in low-income countries through partnerships with global health organizations. 'We're thinking globally about the public health impact we can have," she said.
Gilead's growth outlook means it is, for now, steering clear of the patent cliff that is about to hit much of the industry as multibillion-dollar blockbuster drugs face generic competition. Gilead's HIV blockbuster, Biktarvy—which is prescribed after infection—retains exclusivity until 2033, with several potential successors already in the pipeline.
Beyond HIV, Gilead is beginning to show signs of turning the corner in cancer, a space where past acquisitions have frustrated investors. There is growing excitement around Trodelvy—an antibody-drug conjugate acquired via its $21 billion Immunomedics deal—after data showed it delayed progression in an aggressive form of breast cancer when combined with Merck's Keytruda. Meanwhile, Gilead's cell therapy program is gaining traction, with the company aiming to challenge Johnson & Johnson in the multibillion-dollar multiple myeloma market, explains Traver Davis, a healthcare strategist at Citi.
'They have been hammered for their acquisitions and execution on the oncology side of the business in the last few years," said Davis. 'The narrative on that is definitely turning."
Gilead spent years trying to move beyond HIV. In the end, it might be HIV prevention that finally delivers the breakthrough investors have been waiting for.
Write to David Wainer at [e-mail]