Gilead: Trodelvy Lung Cancer Data Disappoints, but No Changes to Our Fair Value Estimate

One of Gilead’s key cancer drugs failed to extend survival in a study that could have expanded its approval into the large lung cancer market, but we’re maintaining our $97 fair value estimate for the firm. We still include potential lung cancer sales for Trodelvy in our valuation model, but we’ve pushed back the start of this potential revenue from 2025 to 2027, given this setback. We continue to see Trodelvy generating $3.5 billion in annual sales by 2032, with roughly 20% of this revenue coming from lung cancer indications. The drug is already seeing strong growth in triple-negative breast cancer as well as hormone receptor-positive and HER2-negative breast cancer, and we expect these indications to dominate the drug’s long-term sales. Overall, we see Trodelvy as one piece of Gilead’s expanding oncology portfolio, which together with the established and dominant HIV portfolio forms the basis of its wide economic moat.