Roche Executive Named Gilead CEO -- 2nd Update
December 10 2018 - 3:07AM
Dow Jones News
By Jonathan D. Rockoff and Joseph Walker
Gilead Sciences Inc. has named industry veteran Daniel O'Day to
take the helm and help the drug company revive sales and recover
from a disappointing deal, according to people familiar with the
matter.
Mr. O'Day, whose hiring was announced early Monday, will become
Gilead CEO after a long career at Switzerland's Roche Holding AG,
most recently running its pharmaceuticals group. In the role, Mr.
O'Day oversaw successful launches of several new cancer and other
drugs and turned the business into a top industry performer.
It is the kind of experience that Gilead has been seeking since
CEO John Milligan unexpectedly said in July he will leave by year's
end.
The Foster City, Calif., company is at a pivotal juncture as it
looks to jump-start revenue growth and its stock price amid
declining sales of its lucrative hepatitis C drugs, including
Sovaldi and Harvoni. Those drugs helped Gilead's sales to nearly
triple from $11.2 billion in 2013 to $32.6 billion in 2015.
But sales have fallen quickly since then because of competitive
pricing pressures and declining patient demand, and the company's
total revenue this year is projected to be $21.7 billion, according
to S&P Capital IQ.
Mr. O'Day will be tasked with using Gilead's roughly $28 billion
in cash and short-term investments to hunt for new acquisitions and
research and development deals.
But among Mr. O'Day's first orders of business will be making
good on the company's recent foray into a new kind of cancer
treatment. The treatment, known as CAR-T, takes a patient's own
immune cells, weaponizes them to fight cancer and then returns them
to the patient to attack the disease.
Gilead paid about $11 billion last year to buy one of the CAR-T
technology's pioneering companies and its lead drug Yescarta. The
move was aimed to help fill the hole left by slowing sales of
Gilead's hepatitis C drugs. But Yescarta sales have been meager so
far, just $183 million for the first nine months of this year.
Mr. O'Day has a record turning drugs into big sellers, in cancer
and other diseases. Sales of new multiple sclerosis, hemophilia and
cancer drugs have been propelling Roche's pharmaceuticals business
in recent quarters.
Roche's multiple-sclerosis drug, named Ocrevus, has had among
the industry's most rapid launches since it was approved in the
U.S. last year. It has rung up 1.7 billion Swiss francs ($1.7
billion) in sales during the first nine months of this year. Roche
took the unusual step of pricing Ocrevus below many of its
rivals.
Sales at Roche's pharmaceuticals business rose 7% to 32.7
billion Swiss francs during the first nine months of this year from
the same period a year earlier. The business is Roche's biggest
segment.
Yet turning around Yescarta looks especially challenging. The
drug is more complicated and expensive to make than other cancer
treatments and only a select number of highly trained cancer
centers can deliver them.
Gaining reimbursement is also proving tricky. Yescarta lists for
$373,000. But the cost for such cellular therapies involves not
just the drug but also a range of hospital services that can bring
the total tab to $1 million.
Another accomplished cancer-drug seller, Novartis AG, has also
struggled to sell its CAR-T.
Dr. Milligan, and his mentor John Martin, had transformed Gilead
from a fledgling biotech into one of the industry's fastest risers
by treating infectious diseases HIV/AIDS and then hepatitis C.
Its drugs provided lifelines to patients facing potential death
sentences, while ringing up tens of billions of dollars in sales
for the company.
Yet Gilead has found it difficult to maintain its growth.
High prices drew criticism -- notably for the initial
$1,000-a-pill price tag for Sovaldi. Eventually competition drove
down prices for the hepatitis C drugs that had been powering its
recent growth, hurting sales. The HIV-drug franchise couldn't pick
up all the slack.
Gilead's revenue of $16.3 billion during the first nine months
of this year was almost a fifth less than the same period a year
earlier.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Joseph Walker at joseph.walker@wsj.com
(END) Dow Jones Newswires
December 10, 2018 02:52 ET (07:52 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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