Daniel O’Day, a veteran executive from Swiss pharma giant Roche, has been tapped for one of the top jobs in biotech. He’s been named the CEO of Gilead Sciences (NASDAQ: [[ticker:GILD]]), which is searching for a new direction after the quick rise and fall of a once-lucrative business for hepatitis C medicines.
The Foster City, CA, firm has named O’Day its new chief executive officer and chairman. O’Day, the CEO of Roche’s pharmaceuticals subsidiary since 2012 and the head of its diagnostics division before that, will take over Gilead on March 1.
O’Day will succeed Gilead’s longtime top executive duo, outgoing CEO John Milligan and chairman John Martin. Both have been at Gilead since 1990; Martin ran Gilead from 1996 to 2016 before handing the reins to Milligan, long Gilead’s chief operating officer. They helped steer Gilead’s ascent to biotech prominence as a developer of HIV medicines, and pulled the trigger on the $11 billion buyout of Pharmasset in November 2011.
Gilead was criticized for paying too much for Pharmasset at the time, but the deal ended up a huge success. The Pharmasset buyout gave Gilead the hepatitis C medicines sofosbuvir (Sovaldi) and later ledipasvir-sofosbuvir (Harvoni), which can cure most forms of hepatitis C with a short course of treatment. Those two medicines produced the most successful drug launches ever.
But the market dried up quickly for Gilead’s hepatitis C business. Competition emerged, the available patient pool shrank, and Gilead’s share price and hep C sales began to plunge. “Put simply, [hep C] is turning out to be a ‘flash in the pan’ market,” Leerink Partners financial analyst Geoffrey Porges wrote in a 2016 note to investors. Porges more recently predicted that Gilead’s hep C sales would plummet more than 60 percent in 2018 and continue to fall “due to competitive market dynamics.”
Gilead’s other efforts to diversify beyond its core HIV franchise have yet to pay off. It has used deals to amass a pipeline of drug candidates for the fatty liver disease nonalcoholic steatohepatitis (NASH), but faces competition there from several players. And its oncology business, which it has spent years trying to build, has yet to take off.
The company has bet big on the future of CAR-T cellular immunotherapy, a cutting-edge form of genetic medicine. It paid $12 billion for CAR-T developer Kite Pharma in 2017, which yielded the company axicabtagene ciloleucel (Yescarta), one of two FDA-approved CAR-T products, and has rounded out that transaction with other investments in the field. Upon a recent deal with startup Tango Therapeutics, for instance, the company said it wants to build an “industry-leading cell therapy franchise.”
But CAR-T faces logistical and commercial hurdles and has yet to prove it’ll be more than a last-ditch treatment for patients who have run out of options. Yescarta generated $75 million in revenue in Gilead’s last quarter.
In the meantime, there has been an executive exodus at Gilead. Milligan, Martin, chief medical officer Andrew Cheng, chief scientific officer Norbert Bischofberger, chief operating officer Kevin Young, and others have all either announced plans to leave or left altogether in the past year. O’Day has been tapped to take the company forward.
“Following a comprehensive search, the board became convinced that Dan is the right leader to bring Gilead into the future,” Martin said in a prepared statement. “He is uniquely qualified to take on this role given his track record of success in highly scientific and competitive therapeutic areas, deep understanding of the evolving healthcare environment around the world, and unwavering commitment to driving innovation across all aspects of a business, which will serve Gilead and our stakeholders well.”
Current chief patient officer Gregg Alton will serve as interim CEO between January and March, when Milligan formally steps down. Gilead shares ticked up 1.5 percent in pre-market trading Monday.
