Gilead stock tumbled Wednesday on reports the Health and Human Services Department could slash federal funding for HIV prevention, a staple in Gilead Sciences' topline.
The plans could be announced within a day, the Wall Street Journal reported citing unnamed sources. But the Trump administration could pull back on the plans or adjust them. The discussions come ahead of potential personnel cuts at the Centers for Disease Control and Prevention.
Last year, Gilead generated north of $19.61 billion in sales of its HIV treatments. Sales grew 8% and accounted for 68% of total revenue.
Gilead doesn't separate out which sales came from pre-exposure prophylaxis, or PrEP — drugs that people at risk of contracting HIV take to prevent contracting the virus. Truvada and Descovy are both used as treatments and PrEP drugs. In 2024, they brought in a combined $2.23 billion in sales.
Gilead stock fell 2.5%, closing at 107.51. Shares broke out of a flat base with a buy point at 98.90 in early February. After running up close to a profit-taking zone through March 10, Gilead stock has pulled back. Shares are now narrowly above the 5% buy zone.
Commercial Sales Are Key For Gilead
The CDC has a department dedicated to preventing HIV and other infectious diseases. In 2023, the agency spent $1.3 billion on HIV prevention, viral hepatitis, sexually transmitted infections and tuberculosis, according to WSJ. The agency also funds a PrEP initiative, which provides free HIV prevention drugs.
But J.P. Morgan analyst Chris Schott says the news "while clearly not a positive for GILD" wouldn't be a devastating blow for the drugmaker.
"Any cuts to CDC funding would not impact access to PrEP," he said in a report. "CDC is not responsible for providing/reimbursing PrEP drugs, but rather works on PrEP research and education."
He also noted 70% to 80% of Gilead's PrEP sales come from the commercial market, rather than federally reimbursed programs.
The news comes as Gilead plans to launch its drug, lenacapavir, for pre-exposure prophylaxis. Gilead is planning lenacapavir's launch this summer with a Food and Drug Administration review date of June 19. If approved, it would be the first twice yearly injection to prevent HIV.
Lenacapavir Could Be A Huge Moneymaker
Representatives of Gilead and HHS didn't immediately respond to a request for comment from Investor's Business Daily.
Lenacapavir could be a huge-ticket item for Gilead's sales, Schott said.
"We see lenacapavir in PrEP as a meaningful growth driver for GILD as coverage ramps (2026+) with an even larger role for versions of lenacapavir in long-acting treatment combination (with treatment account for the vast majority of GILD's HIV business)," he said. "Along these lines, we do not see today's headlines as meaningfully impacting the GILD story."
Schott kept his overweight rating on Gilead stock.
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