Gilead's R&D spending spiked 25% in Q1, shortening investment gap with peers

Gilead is ratcheting up its R&D engine, spending more than $1.4 billion in development efforts in the first quarter, a 25% jump compared to the same period last year. 

Executives on the company’s first-quarter earnings call Monday were wary of suggesting immediate operating margin increases as a result of the investment jump, but they said it's the byproduct of a concerted effort to speed up ongoing studies. Chief Financial Officer Andrew Dickinson aims for the share of revenue being allocated toward R&D to be somewhere in the low-20% range. 

“But we do expect to see our operating margin strengthened again over time as we get through this bolus of phase 3 trials that we have underway,” said Dickinson. 

In 2022, Gilead spent just under $5 billion on R&D, or roughly 18% of its revenue. The top 10 highest pharma R&D budgets in 2022 all eclipsed $6.5 billion. If Gilead's spending keeps pace, the company could land closer to its peers with $5.8 billion for 2023. 



Much of that cash is flowing into Gilead’s two existing powerhouse franchises—cell therapy and HIV. But the company has also made investments in TIGIT, the immuno-oncology target that’s so far spurred more disappointment than jubilance for the pharma industry. Gilead expects more data in the first half of the year from an ongoing phase 2 trial testing its Arcus-partnered, anti-TIGIT antibody domvanalimab as part of a combination regimen.

The class has so far been a pain point, particularly for Roche whose readouts have served as a harbinger for other companies that have invested. Earlier this week, the Swiss pharma said it would wait for the final analysis of a phase 3 readout, fueling concerns that an interim readout would’ve disappointed once again. 

Gilead has shown a bit more promise, reporting in December 2022 that a combination of domvanalimab and Arcus’ anti-PD1 zimberelimab reduced the risk of disease progression by 45% compared to zimberelimab alone. Gilead Chief Medical Officer Merdad Parsey, M.D., Ph.D., said the company expects to present more mature data from a larger patient population later this quarter. 

“Certainly in our dataset, we've seen those [progression-free survival] benefits and our expectation is that the Roche data will continue to demonstrate the benefit of adding TIGITs to PD1 inhibitors,” said Parsey. “We will be looking forward to seeing those [overall survival] data and I think that should help to provide additional confidence to all the TIGIT antibodies out there.” 

Editor's note: This story was updated to correct the name of Gilead's CFO Andrew Dickinson.