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Gilead hints at 5-point comeback strategy

May 4, 2017

Gilead Sciences released its first-quarter results on May 2, and to no one’s surprise, total revenues were down. The company reported $6.5 billion for the first quarter 2017, compared to $7.79 billion the first quarter of 2016.

The real questions, the ones investors and analysts want answered are: What are you going to do about it?, and on a related note, When are you going to buy something?

Keith Speights, writing for The Motley Fool, notes that the company, if not exactly laying out a formal plan, did at least present what appears to be a five-point outline. Let’s take a look.

1. Hepatitis C

Hepatitis C (HCV) is what the company is built on, but it’s also where the company is losing market share the most. The problem here is two-fold (at least): the company’s drugs are so effective, they’re diminishing the patient pool to draw on; and there’s increasing competition from generics and other products.

Speights notes that the company isn’t giving up on HCV, but they aren’t expecting a rebound, either. He writes, “The company has one final HCV product to launch—its SOF/VEL/VOX combo, now awaiting regulatory approval. All signs point to Gilead squeezing as much cash flow out of the HCV business as possible, and pouring all of the money into other areas.”

2. HIV

Gilead is dominant in HIV and the future looks bright in that area. The company’s Genvoya was, according to Jim Meyers, the company’s executive vice president of commercial operations, “the most successful launch in U.S. HIV history.” It’s also receiving “great enthusiasm” for its bictegravir/F/TAF combination therapy.


Nonalcoholic steatohepatitis (NASH) is an area of huge unmet need. NASH, sometimes called the “silent liver disease,” resembles alcoholic liver disease, but appears in people who drink little or no alcohol. However, it can be quite severe and lead to cirrhosis. According to the National Institute of Diabetes and Digestive and Kidney Diseases, NASH affects 2 to 5 percent of people in the U.S. There are currently no specific treatments aside from weight loss, increased physical activity, and avoiding alcohol and unnecessary medications.

Gilead has three products in its pipeline for NASH—selonsertib, GS-9674, and GS-0976. Selonsertib is in a late-stage trial, while the other two are in Phase II trials. Each has a different mode of action, which presents the possibility of them being offered alone or as combination therapies.

Speights writes, “Don’t be surprised if Gilead acquires another NASH program. John Milligan made an offhanded remark, after mentioning the NASH drugs the company has acquired, that ‘we may do more there.’ In addition, Milligan hinted that an earlier-than-expected regulatory submission for selonsertib could be a possibility.”

4. Autoimmune Diseases

Gilead seems excited about its filgotinib, currently in a late-stage clinical trial for rheumatoid arthritis, Crohn’s disease, and ulcerative colitis. Milligan also discussed the possibility of a combo treatment with filgotinib and entospletinib, which is in a Phase II trial for graft-versus-host disease.

5. Oncology Acquisition?

Acquisitions have been on everybody’s mind for some time as at least a short-term solution for Gilead’s financial sag. The company’s chief financial officer, Robin Washington, said that the company was “prioritizing the use of capital for investing in the long-term growth of our business, including partnerships and acquisitions.”

Milligan added, “And clearly, we’ve been focusing on oncology.” By that he meant bringing on Alessandro Riva, formerly head of global oncology for Novartis (NVS). Riva came aboard as senior vice president, Hematology and Oncology Therapeutic Area Head. Many investors and analysts saw this as an indication Gilead was going to accelerate its merger-and-acquisition activity, although to be fair, investors and analysts speculate on Gilead mergers and acquisitions whenever the wind blows.

During the conference call, Milligan noted that, “We focused our efforts. I’ll return to what you asked last, which is we really focus our efforts in broadening our team, adding some depth, both scientifically and with business development experience so that we, in fact, have much, much greater capacity to assess things and, in fact, fully engage with our teams assessing a number of different opportunities, which we think could play out over the coming year as we start to make progress in getting partnerships and potential acquisitions together.”

Which feels like a rambling way of saying, Don’t push us, we’ll get to it. Adam Feuerstein, writing for TheStreet, says, “Milligan has made similar statements in the past, so it’s best not to get overly hopeful that any deal is imminent. Still, Milligan’s comment hints at some urgency to get the Gilead M&A machine cranking up again.”


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