Gilead Sciences, Inc.
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ITEM 1. BUSINESS
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 Business
Products
We have transformed care for people around the world by discovering, developing and delivering innovative medicines to address unmet medical needs in virology, oncology and other therapeutic areas. Our innovative medicines represent advancements by offering first-in-class therapies, greater efficacy, enhanced modes of delivery, more convenient treatment and prevention regimens, improved resistance profiles and reduced side effects.
In 2025, our commercial portfolio included more than 25 therapies, including the following products and collaboration products with approved indications in the U.S.:
HIV
•Biktarvy® is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Biktarvy is a single-tablet regimen of a fixed-dose combination of our antiretroviral medications, bictegravir, emtricitabine (“FTC”) and tenofovir alafenamide (“TAF”).
•Descovy® is an oral formulation indicated in combination with other antiretroviral agents for the treatment of HIV-1 infection in certain patients. Descovy is a fixed-dose combination of our antiretroviral medications, FTC and TAF. Descovy is also approved by U.S. Food and Drug Administration (“FDA”) for a pre-exposure prophylaxis (“PrEP”) indication to reduce the risk of sexually acquired HIV-1 infection in certain at-risk patients.
•Genvoya® is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Genvoya is a single-tablet regimen of a fixed-dose combination of our antiretroviral medications, elvitegravir, cobicistat, FTC and TAF.
•Odefsey® is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Odefsey is a single-tablet regimen of a fixed-dose combination of our antiretroviral medications, FTC and TAF, and rilpivirine marketed by Janssen Products, LP of Johnson & Johnson Innovative Medicine (“Janssen”).
•Sunlenca® is an HIV-1 capsid inhibitor in tablet form for oral use and as an injection for subcutaneous use. Sunlenca, in combination with other antiretroviral(s), is indicated as a twice-yearly treatment of HIV-1 infection in heavily treatment-experienced adults with multidrug resistant HIV-1 infection failing their current antiretroviral regimen due to resistance, intolerance or safety considerations.
•Symtuza® is an oral formulation dosed once a day for the treatment of HIV-1 infection in certain patients. Symtuza is a single-tablet regimen of a fixed-dose combination of our antiretroviral medications, cobicistat, FTC and TAF, and Janssen’s darunavir. Symtuza is commercialized by Janssen, and we receive a share in revenue for the components that we contribute. See Note 7. Collaborations and Other Arrangements of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
•Yeztugo® is an HIV-1 capsid inhibitor in tablet form for oral use and as an injection for subcutaneous use. Yeztugo is indicated for PrEP to reduce the risk of sexually acquired HIV-1 in certain adults and adolescents who are at risk for HIV-1 acquisition.
Liver Disease
•Epclusa® is an oral formulation of a once-daily single-tablet regimen of sofosbuvir and velpatasvir for the treatment of chronic hepatitis C virus (“HCV”) infection in adults and pediatric patients 3 years of age and older with genotype 1, 2, 3, 4, 5 or 6: (i) without cirrhosis or with compensated cirrhosis or (ii) with decompensated cirrhosis for use in combination with ribavirin. In addition, we have an authorized generic version of Epclusa distributed by our separate subsidiary, Asegua Therapeutics LLC.
•Livdelzi® (seladelpar) is an oral formulation of a peroxisome proliferator-activated receptor delta agonist indicated for the treatment of primary biliary cholangitis (“PBC”) in combination with ursodeoxycholic acid (“UDCA”) in adults who have an inadequate response to UDCA, or as monotherapy in patients unable to tolerate UDCA.(1)
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•Vemlidy® is an oral formulation of TAF dosed once a day for the treatment of chronic hepatitis B virus (“HBV”) infection in adults and pediatric patients 12 years of age and older with compensated liver disease.
Oncology
•Tecartus® (brexucabtagene autoleucel), a suspension for intravenous infusion, is a chimeric antigen receptor (“CAR”) T-cell therapy for the treatment of adult patients with (i) relapsed or refractory mantle cell lymphoma (“MCL”)(1) and (ii) relapsed or refractory B-cell precursor acute lymphoblastic leukemia (“ALL”).
•Trodelvy® (sacituzumab govitecan-hziy), an injection for intravenous use, is a Trop-2 directed antibody and topoisomerase inhibitor conjugate indicated for the treatment of adult patients with (i) unresectable locally advanced or metastatic triple-negative breast cancer (“TNBC”) who have received two or more prior systemic therapies, at least one of them for metastatic disease, and (ii) unresectable locally advanced or metastatic hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.
•Yescarta® (axicabtagene ciloleucel), a suspension for intravenous infusion, is a CAR T-cell therapy for the treatment of adult patients with (i) large B-cell lymphoma (“LBCL”) that is refractory to first-line chemoimmunotherapy or that relapses within 12 months of first-line chemoimmunotherapy, (ii) relapsed or refractory LBCL after two or more lines of systemic therapy, including diffuse LBCL (“DLBCL”) not otherwise specified, primary mediastinal LBCL, high-grade B-cell lymphoma and DLBCL arising from follicular lymphoma (“FL”) and (iii) relapsed or refractory FL after two or more lines of systemic therapy(1).
Other
•AmBisome® (amphotericin B liposome for injection) is a proprietary liposomal formulation of amphotericin B, an antifungal agent, for the treatment of serious invasive fungal infections caused by various fungal species in adults.
•Veklury® (remdesivir), an injection for intravenous use, is a nucleotide analog RNA polymerase inhibitor indicated for the treatment of COVID-19 in certain adults and pediatric patients (28 days of age and older and weighing at least 3 kg) who are (i) hospitalized or (ii) not hospitalized and have mild-to-moderate COVID-19, and are at high risk for progression to severe COVID-19, including hospitalization or death.
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(1) This indication is approved under accelerated approval by FDA, and continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.
For the disaggregated revenue amounts contributed by the products listed above as well as the total product sales that include our other approved products, see Note 2. Revenues of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Royalty, Contract and Other Revenues
We also generate revenues from other activities, including royalties for outbound licenses of our intellectual property, sales of certain intellectual property and other payments received from our collaborations with third-party partners.
Commercialization and Distribution
We have U.S. and international commercial sales operations, with marketing subsidiaries in more than 35 countries. Our products are marketed through our commercial teams and/or in conjunction with third-party wholesalers, distributors and corporate partners. Our commercial teams promote our products through direct field contact with physicians, hospitals, clinics and other healthcare providers. We generally grant our third-party distributors the exclusive right to promote our product in a territory for a specified period of time. Most of our agreements with these distributors provide for collaborative efforts between the distributor and Gilead in obtaining and maintaining regulatory approval for the product in the specified territory.
We sell and distribute most of our products in the U.S. exclusively through the wholesale channel. Historically, approximately 90% of our gross product sales in the U.S. have been to three large wholesalers—Cardinal Health, Inc., Cencora, Inc. and McKesson Corporation—and their specialty distributor affiliates. We sell and distribute our products in Europe and countries outside the U.S. where the product is approved, either through our commercial teams, third-party distributors or corporate partners.
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Competition
We operate in a highly competitive environment. Our products compete with other commercially available products based primarily on efficacy, safety, tolerability, acceptance by doctors, ease of patient compliance, ease of use, price, insurance and other reimbursement coverage, distribution and marketing. We also face significant competition from: (i) large pharmaceutical and biotechnology companies and specialized pharmaceutical firms acting either independently or together with other such companies to pursue the development of products and technologies that may be competitive with our existing products or research programs; (ii) academic institutions, government agencies and other public and private organizations conducting research who may seek patent protection or may establish collaborative arrangements for competitive products or programs; (iii) pricing pressures from private insurers and government payers as our products mature, which often result in a reduction of our net product prices; and (iv) new branded or generic products introduced into major markets, which may impact our ability to maintain pricing and market share.
Research and Development
Our research and development (“R&D”) mission is to discover and develop transformational therapies in areas of high unmet medical need. Our product development efforts are focused primarily on virology, oncology and inflammation. Our team of research scientists is engaged in the discovery and development of new molecules and technologies that we hope will lead to the approval of innovative medicines and therapies that will transform care for people around the world. We have committed significant resources to internal R&D opportunities and external business development activity to drive innovation and growth of our business. We extensively outsource our clinical trial activities and usually perform only a small portion of start-up activities in-house. We rely on third-party contract research organizations to perform most of our clinical studies, including document preparation, site identification, screening and preparation, pre-study visits, training, program management, patient enrollment, ongoing monitoring, site management and bioanalysis.
The development of product candidates and investigational therapies in our pipeline is subject to various risks and uncertainties that could result in delays or prevent completion of the development and approval of our product candidates. For more information about these risks and uncertainties, see Item 1A. Risk Factors “We face risks in our clinical trials, including the potential for unfavorable results, delays in anticipated timelines and disruption.” Drug development is inherently risky, and many product candidates and investigational therapies fail during the development process.
In 2025, we continued to invest in and advance our R&D pipeline across our therapeutic areas. Below is a summary of our product candidates that are in Phase 3 clinical trials or pending marketing authorization review by FDA or European Medicines Agency (“EMA”).
Product Candidates in Virology
| Product Candidates | Description | ||||||
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Financial statements
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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 months ended March 31, 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 New Drug Application for bictegravir and lenacapavir (“BIC/LEN”) for virologically suppressed people with HIV under priority review, with a Prescription Drug User Fee Act (“PDUFA”) date of August 27, 2026.
•Presented late-breaking Phase 3 results from the ARTISTRY-1 and ARTISTRY-2 trials at the 2026 Conference on Retroviruses and Opportunistic Infections (CROI), evaluating the investigational daily oral single-tablet regimen of BIC/LEN for virologically suppressed people with HIV. BIC/LEN maintained high levels of virologic suppression, demonstrating comparable efficacy to complex regimens and to Biktarvy at Week 48 in people with HIV who switched antiretroviral therapy. These data support global regulatory filings.
Oncology
•Completed the acquisition of Arcellx, Inc. (“Arcellx”) for $115 per share, or an implied equity value of $7.8 billion, and one contingent value right of $5 per share. This acquisition 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.
•Announced a definitive agreement to acquire Tubulis GmbH (“Tubulis”) a private clinical-stage biotechnology company developing next-generation antibody-drug conjugates (“ADC”), including lead asset TUB-040, a NaPi2b-directed topoisomerase-I inhibitor ADC currently in Phase 1b/2 development for platinum-resistant ovarian cancer and non-small cell lung cancer. Closing of the transaction is subject to expiration or termination of certain regulatory filings and other customary conditions.
•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. 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.
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Inflammation
•Announced a definitive agreement to acquire Ouro Medicines, LLC (“Ouro”), a private clinical-stage biotechnology company developing T cell engager (“TCE”) therapies for autoimmune diseases. This acquisition adds Ouro’s lead asset, OM336 (gamgertamig), a BCMAxCD3 TCE, to Gilead’s portfolio. Closing of the transaction is subject to expiration or termination of certain regulatory filings and other customary conditions. Gilead has entered into a framework agreement with Galapagos NV in relation to this acquisition, which includes equally splitting the $1.675 billion upfront payment and up to $500 million in milestone payments, among other terms.
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) | 2026 | 2025 | Change | |||||||||||||||||||||||||||
| Total revenues | $ | 6,960 | $ | 6,667 | 4 | % | ||||||||||||||||||||||||
| Net income | $ | 2,021 | $ | 1,315 | 54 | % | ||||||||||||||||||||||||
| Diluted earnings per share | $ | 1.61 | $ | 1.04 | 54 | % | ||||||||||||||||||||||||
Total revenues increased 4% to $7.0 billion for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher sales of HIV products, Trodelvy and Livdelzi, partially offset by lower sales of Veklury, as well as chronic hepatitis C virus (“HCV”) and Cell Therapy products.
Net income was $2.0 billion and diluted earnings per share was $1.61 for the three months ended March 31, 2026, compared to net income of $1.3 billion and diluted earnings per share of $1.04 for the same period in 2025. The increase was primarily due to:
•Net unrealized gains from equity securities compared to net unrealized losses in 2025;
•Higher product sales; and
•Lower acquired in-process research and development (“IPR&D”) expenses; partially offset by
•Higher income tax expense; and
•Higher selling, general and administrative expenses.
Please refer to “Results of Operations” below for further information on results for the three months ended March 31, 2026.
Outlook Update
As a result of the recent acquisitions completed or announced above, we expect to record related charges of approximately $11.5 billion to Acquired in-process research and development expenses in the second quarter of 2026, which we expect to result in a net loss for the second quarter and full year 2026.
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Results of Operations
Revenues
The following table summarizes our Total revenues and period-over-period changes:
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | U.S. | Europe | Rest of World | Total | U.S. | Europe | Rest of World | Total | Change | ||||||||||||||||||||||||||||||||||||||||||||
| Product sales: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| HIV | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Biktarvy | $ | 2,573 | $ | 437 | $ | 352 | $ | 3,361 | $ | 2,474 | $ | 375 | $ | 301 | $ | 3,150 | 7 | % | |||||||||||||||||||||||||||||||||||
| Descovy | 761 | 23 | 23 | 807 | 538 | 21 | 27 | 586 | 38 | % | |||||||||||||||||||||||||||||||||||||||||||
| Genvoya | 215 | 33 | 16 | 264 | 305 | 40 | 19 | 364 | (28) | % | |||||||||||||||||||||||||||||||||||||||||||
| Odefsey | 153 | 59 | 9 | 221 | 215 | 57 | 10 | 281 | (21) | % | |||||||||||||||||||||||||||||||||||||||||||
Symtuza - Revenue share(1) | 107 | 28 | 3 | 138 | 82 | 29 | 3 | 114 | 21 | % | |||||||||||||||||||||||||||||||||||||||||||
| Yeztugo | 158 | — | 7 | 166 | — | — | — | — | NM | ||||||||||||||||||||||||||||||||||||||||||||
Other HIV(2) | 36 | 27 | 9 | 73 | 50 | 31 | 10 | 91 | (20) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total HIV | 4,004 | 607 | 419 | 5,030 | 3,664 | 553 | 370 | 4,587 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||
| Liver Disease | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Livdelzi | 115 | 18 | — | 133 | 40 | — | — | 40 | NM | ||||||||||||||||||||||||||||||||||||||||||||
Sofosbuvir/Velpatasvir(3) | 141 | 60 | 82 | 283 | 166 | 80 | 99 | 346 | (18) | % | |||||||||||||||||||||||||||||||||||||||||||
| Vemlidy | 91 | 13 | 132 | 237 | 100 | 12 | 140 | 252 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||
Other Liver Disease(4) | 15 | 78 | 21 | 114 | 28 | 76 | 17 | 121 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Liver Disease | 362 | 170 | 235 | 767 | 335 | 168 | 256 | 758 | 1 | % | |||||||||||||||||||||||||||||||||||||||||||
| Veklury | 112 | 14 | 18 | 144 | 199 | 22 | 82 | 302 | (52) | % | |||||||||||||||||||||||||||||||||||||||||||
| Oncology | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cell Therapy | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tecartus | 30 | 37 | 8 | 75 | 40 | 31 | 8 | 78 | (4) | % | |||||||||||||||||||||||||||||||||||||||||||
| Yescarta | 120 | 146 | 67 | 332 | 160 | 149 | 77 | 386 | (14) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Cell Therapy | 150 | 183 | 74 | 407 | 200 | 180 | 84 | 464 | (12) | % | |||||||||||||||||||||||||||||||||||||||||||
| Trodelvy | 253 | 95 | 54 | 402 | 181 | 75 | 37 | 293 | 37 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Oncology | 403 | 278 | 129 | 810 | 381 | 255 | 121 | 757 | 7 | % | |||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AmBisome | 7 | 59 | 72 | 138 | 5 | 67 | 66 | 139 | (1) | % | |||||||||||||||||||||||||||||||||||||||||||
Other(5) | 39 | 8 | 11 | 58 | 47 | 9 | 14 | 70 | (17) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Other | 46 | 67 | 83 | 196 | 52 | 76 | 81 | 209 | (6) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total product sales | 4,926 | 1,137 | 883 | 6,946 | 4,631 | 1,073 | 909 | 6,613 | 5 | % | |||||||||||||||||||||||||||||||||||||||||||
| Royalty, contract and other revenues | — | 8 | 6 | 14 | 37 | 11 | 6 | 54 | (75) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 4,926 | $ | 1,144 | $ | 889 | $ | 6,960 | $ | 4,668 | $ | 1,084 | $ | 915 | $ | 6,667 | 4 | % | |||||||||||||||||||||||||||||||||||
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NM - Not Meaningful
(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, Sovaldi, Viread and Vosevi.
(5) Includes Cayston, Jyseleca, Letairis and Zydelig.
HIV
HIV product sales increased 10% to $5.0 billion for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher demand and average realized price, partially offset by unfavorable inventory dynamics. In particular:
•Biktarvy sales increased 7% primarily due to higher demand, including patients switching from Genvoya and other Gilead HIV products, and average realized price, partially offset by unfavorable inventory dynamics; and
•Descovy sales increased 38% primarily due to higher average realized price and demand.
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Liver Disease
Liver Disease product sales increased 1% to $767 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher demand for Livdelzi, partially offset by unfavorable inventory dynamics and lower sales for HCV products.
Veklury
Veklury product sales decreased 52% to $144 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower rates of COVID-19-related hospitalizations.
Oncology
Cell Therapy
Cell Therapy product sales decreased 12% to $407 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to lower demand reflecting ongoing competitive headwinds.
Trodelvy
Trodelvy product sales increased 37% to $402 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher demand, favorable inventory dynamics and higher average realized price.
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 27% and 28% of our product sales were denominated in foreign currencies during the three months ended March 31, 2026 and 2025, respectively. Foreign currency exchange, net of hedges, had a favorable impact on our total product sales of $112 million for the three months ended March 31, 2026, based on a comparison using foreign currency exchange rates from the three months ended March 31, 2025.
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) | 2026 | 2025 | Change | |||||||||||||||||||||||||||
| Cost of goods sold | $ | 1,445 | $ | 1,540 | (6) | % | ||||||||||||||||||||||||
| Product gross margin | 79.2 | % | 76.7 | % | 249 bps | |||||||||||||||||||||||||
| Research and development expenses | $ | 1,372 | $ | 1,379 | (1) | % | ||||||||||||||||||||||||
| Acquired in-process research and development expenses | $ | 107 | $ | 253 | (58) | % | ||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 1,451 | $ | 1,258 | 15 | % | ||||||||||||||||||||||||
Product Gross Margin
Product gross margin increased to 79.2% for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by the expiration of a royalty-related obligation and product mix.
Research and Development Expenses
Research and development 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 these expenses by identifying the research and development (“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.
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The following table summarizes our Research and development expenses and period-over-period changes:
| Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, | ||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2026 | 2025 | Change | |||||||||||||||||||||||||||
| Personnel, infrastructure and other support costs | $ | 861 | $ | 854 | 1 | % | ||||||||||||||||||||||||
| Clinical studies and other costs | 510 | 524 | (3) | % | ||||||||||||||||||||||||||
| Research and development expenses | $ | 1,372 | $ | 1,379 | (1) | % | ||||||||||||||||||||||||
Research and development expenses remained relatively flat at $1.4 billion for the three months ended March 31, 2026, compared to the same period in 2025. Personnel, infrastructure and other support costs remained relatively flat with higher compensation largely offset by lower restructuring costs. Clinical studies and other costs decreased slightly primarily due to lower oncology clinical study activity, partially offset by higher investment in virology 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 $107 million for the three months ended March 31, 2026, primarily related to $80 million associated with the Suzhou Genhouse Bio Co., Ltd. collaboration upfront payment.
Acquired in-process research and development expenses were $253 million for the three months ended March 31, 2025, primarily related to $250 million associated with the LEO Pharma A/S collaboration upfront payment.
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. Also, refer to the “Outlook Update” section above regarding significant Acquired in-process research and development expenses expected for the second quarter of 2026.
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) | 2026 | 2025 | Change | |||||||||||||||||||||||||||
| Selling and marketing expenses | $ | 898 | ||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-01 | O'Day Daniel Patrick | Chairman & CEO | Sell | -15,000 ×3 | $131.46 | -$1,971,847 |
| 2026-05-15 | Dickinson Andrew D | Chief Financial Officer | Sell | -3,000 | $132.27 | -$396,810 |
| 2026-05-15 | Mercier Johanna | Chief Comm & Corp Aff Officer | Sell | -28,000 ×4 | $131.29 | -$3,676,199 |
| 2026-04-28 | O'Day Daniel Patrick | Chairman & CEO | Sell | -10,000 ×2 | $129.16 | -$1,291,608 |
| 2026-04-15 | Mercier Johanna | Chief Comm & Corp Aff Officer | Sell | -3,000 | $140.96 | -$422,880 |
| 2026-04-15 | Dickinson Andrew D | Chief Financial Officer | Sell | -3,000 | $140.96 | -$422,880 |
| 2026-03-27 | O'Day Daniel Patrick | Chairman & CEO | Sell | -10,000 | $136.82 | -$1,368,162 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-07 10-Q expected by 2026-08-09 (in 53 days)
- ~2026-11-07 10-Q expected by 2026-11-09 (in 145 days)
- ~2027-02-23 10-K expected by 2027-03-01 (in 253 days)
- ~2027-05-07 10-Q expected by 2027-05-09 (in 326 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-20 8-K Material Agreement Entered; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2026-05-18 424B5 Prospectus Supplement
- 2026-05-07 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-07 10-Q Quarterly Report
- 2026-05-07 S-8 Employee Benefit Plan Registration
- 2026-04-28 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
- 2026-02-24 10-K Annual Report
- 2026-02-23 8-K Material Agreement Entered; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-10 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-19 8-K Officer/Director Change
- 2025-11-07 10-Q Quarterly Report
- 2025-10-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-14 8-K Officer/Director Change
- 2025-08-07 10-Q Quarterly Report
- 2025-08-07 8-K Earnings Release; Financial Statements and Exhibits