Gilead Sciences (GILD 0.74%) stock has been a standout among biotech companies over the past year, with its shares up more than 36%. Over the past decade, its shares delivered a total return of a little more than 131%, which means if you had invested $461,000 in the stock in 2013, you would be a millionaire now.
There's plenty of opportunity for continued growth, and here are five reasons the stock could help you become a millionaire.
NASDAQ: GILD
Key Data Points
1. Gilead has strong EPS potential, even with declining Veklury sales
Fourth-quarter sales rose 2% year over year to $7.4 billion, led by increased sales of oncology, HIV, and hepatitis C virus therapies. Earnings per share (EPS) for the quarter was $1.30 compared to $0.30 in the same period a year ago. Full-year revenue was $27.3 billion, flat compared to 2021. Full-year EPS was $3.64, down from $4.93, thanks to reduced sales of its COVID-19 therapy Veklury.
This year, Gilead expects revenue to slide to between $26 billion and $26.5 billion, with Veklury sales hard to gauge. However, the company sees increased profitability with EPS between $5.30 and $5.70.
2. Gilead dominates HIV therapies
In 2004, Gilead got FDA approval for Truvada, which was then the first therapy for uninfected adults at risk of getting HIV. Since that time, Gilead has grown its HIV franchise to become an industry leader in fighting the disease.
Last year, its HIV drugs brought in $17.2 billion in revenue, up 5%. Its lead HIV drug, Biktarvy, enjoyed 45% market share, delivering $10.4 billion in 2022 revenue, up 20.4%. The company had three other HIV therapies with annual sales of $1 billion or more: Descovy, a leader in the HIV PrEP (prevention) market, with $1.7 billion; Genvoya, with $2.88 billion; and Odefsey, with $1.47 billion.
Gilead also has big plans for Sunlenca (lenacapavir), a twice-yearly HIV therapy that was approved by the Food and Drug Administration (FDA) on Dec. 22 as an add-on therapy with other antiretrovirals to treat HIV-1 patients with a multi-drug resistant HIV-1 infection. At least one analyst thinks the drug has the potential for $4 billion in annual sales as it adds indications.
3. Gilead is expanding its oncology therapies
Gilead reported oncology therapy sales of $2.1 billion in 2022, up 71%. Its lead oncology drug, personalized cell therapy Yescarta, is used to treat large B-cell lymphoma and follicular lymphoma. It brought in $1.16 billion last year, up 67%.
The next potential oncology blockbuster is Trodelvy, used to fight various types of breast cancer as well as metastatic urothelial cancer, a type of bladder cancer. In 2022, the antibody drug conjugate was responsible for $680 million in revenue, up 78.9%. The drug is in 10 clinical trials with another three expected to begin dosing patients this year.
Initially approved to treat only triple-negative breast cancer, the drug scored an FDA approval on Feb. 3 to treat previously treated HR-positive, HER2-negative breast cancer. It's seen as giving hope to patients who are likely to have poor outcomes from chemotherapy. The new indication is also a much larger patient class, and that could really spur the drug's revenue in the coming years.
The company has 59 ongoing programs in its pipeline, including 38 in oncology.
Beyond oncology, Gilead isn't done with COVID-19 therapies. On April 4, it said that experimental antiviral obeldesivir recently began two phase 2 trials. The drug works in a similar manner to Veklury by targeting virus replication through inhibition of the viral RNA polymerase.
GILD Free Cash Flow data by YCharts
4. Gilead is profitable
For a company with an enviable 87% gross margin in the fourth quarter, Gilead had a slow start. Founded in 1987, it didn't turn a profit until 2001. Now, its free cash flow is an outlier among biotech stocks, with $8.344 billion last year. That helps finance its research and development, which it increased by 8% last year to $4.977 billion.
Gilead has grown its yearly EPS by 101% over the past 10 years, and its free cash flow by 214.2% in that same period.
5. Gilead generates a solid dividend
Gilead raised its dividend by 2.7% this year to $0.75 per quarterly share, the eighth consecutive year it has increased its dividend since it began offering one in 2015. In that time, it has boosted its dividend by 74%. The yield is around 3.6%, about double the S&P 500 average dividend. The dividend's payout ratio is only 44.25%, so the dividend has room to grow.
