It hasn't been a great year for biotech giant Gilead Sciences (GILD 0.64%). The company's shares are down by 15% since the year started, which is more or less in line with the bad performance of the broader market.

It would be easy to pin the biotech's recent struggles on the volatile geopolitical environment and the various economic issues we're facing. Unfortunately, there are company-specific headwinds investors should worry about too.

Let's consider two of these red flags and whether it's worth purchasing shares of Gilead Sciences anyway.

GILD Chart

GILD data by YCharts.

1. Reliance on Veklury

Gilead Sciences' antiviral drug Veklury was one of the first COVID-19 treatments approved in the U.S. Although it has been around since the early days of the pandemic, it continues to earn new approvals. On April 25, Gilead announced that Veklury had become the first coronavirus treatment approved for patients under 12.

Further, the therapy continues to generate strong revenue. In the first quarter, sales of Veklury came in at $1.5 billion, 5% higher than the year-ago period. However, the company's total revenue increased by a meager 3% year over year to $6.6 billion. Without Veklury, Gilead Sciences' total net sales would have been roughly $5 billion, a 2% increase compared to the year-ago period.

The COVID-19 therapy has been instrumental in keeping Gilead Sciences' top line afloat in the past couple of years. In 2021, the company's total revenue increased by 11% year over year to $27.3 billion. Without Veklury, Gilead Sciences' total revenue would have dropped by 0.5%.

Patient taking a pill.

Image source: Getty Images.

But how much longer can it keep going? Although the pandemic isn't over, we have made tremendous progress. It's not clear what the coronavirus treatment market will look like post-pandemic. Perhaps Veklury will continue to generate growing sales, but it seems at least somewhat plausible that the medicine will lose some ground. Gilead Sciences will need new approvals to keep things going.

2. Regulatory headwinds

The past couple of years would have been very different for Gilead Sciences if it had received approval from the U.S. Food and Drug Administration (FDA) for filgotinib, which was being investigated as a potential treatment for rheumatoid arthritis, along with other autoimmune disorders. Gilead Sciences had high hopes for filgotinib, and some analysts thought it would become a blockbuster therapy.

But in August 2020, the FDA declined to approve the medicine, citing male fertility concerns as the reason. Gilead Sciences eventually abandoned this project in the U.S.

The biotech recently ran into another regulatory roadblock in the U.S. In March, Gilead announced that the FDA had declined to approve lenacapavir, a potential six-month, long-acting HIV regimen. The agency mentioned issues with the proposed vial that would store the therapy and its compatibility with the lenacapavir solution.

Gilead Sciences is still looking to earn approval for lenacapavir and will try to address the issues raised by regulators. But at the very least, this curveball is delaying the launch of lenacapavir and costing Gilead Sciences money.

Lenacapavir is a promising product. If approved, it would become "the first available 6-month, long-acting subcutaneous injection for the treatment of HIV," according to management. But given that there's now more uncertainty regarding this treatment's future, investors should take that into consideration. 

Patience required 

Gilead Sciences remains a leader in the HIV drug space. The company holds a nearly 75% share of that market. Also, thanks in part to relatively recent acquisitions, the drugmaker has a deep pipeline. It's currently running more than four-dozen clinical trials. While those factors bode well for its long-term prospects, there's no denying that the company hasn't been at its best for the past couple of years.

Still, Gilead Sciences has what it takes to turn things around eventually. But doing so might take some time. On the plus side, the company looks reasonably valued at the moment with a forward price-to-earnings (P/E) ratio of 9.4 vs. an average forward P/E of 12 for the biotech industry.

For patient investors focused on the long game, it's worth considering purchasing shares of Gilead Sciences.