Gilead's top executives Milligan and Martin stepping down

In a clean sweep, the two top executives at Gilead Sciences will step down, setting the struggling company up for an entirely new direction.

The company, which has struggled to right itself since it exhausted its moneymaking franchise in hepatitis C, said both Chairman and former CEO John C. Martin, Ph.D., and current CEO John Milligan, Ph.D., will give up their positions, Milligan at year end and Martin when a new CEO is named. The announcement comes less than two years after Milligan took on the CEO role.

"It has been an honor to work at Gilead for my entire professional career and, now that the company is on solid footing for the future, the board and I have agreed it is a good time to turn the reins over to a new leader," Milligan said in a statement. "I’m looking forward to a well-deserved break and will then move on to new and different opportunities."

As for Martin, he said "Gilead has the right strategy in place to successfully execute on its mission of improving the lives of people with some of the world’s most serious diseases, led by a robust HIV franchise, an industry-leading cell therapy platform and a late-stage pipeline in NASH and inflammation." 

Jefferies analyst Michael Yee said in a note to investors that the change will create some short-term uncertainty but the good news is that a "new future will hopefully lead to more pipeline, more bold steps, more aggressive BD, and a chance for PE expansion and stock appreciation. In theory - anything could be on the table for the new CEO."

The announcement came as the company released second-quarter financials, which included product sales of $5.55 billion, down 21% from $7 billion in the same quarter a year ago. Earnings per share were $1.39, off about 40% from the $2.33 reported in the same quarter a year ago.

Sales from its hepatitis drug portfolio continued to rapidly deteriorate, falling to $1 billion for the quarter, compared to $2.9 billion in the second quarter of 2017. That compares to the $4.9 billion in total reported revenue for just two of its hep C drugs, Harvoni and Sovaldi, during the second quarter of 2015.

Sales from its HIV portfolio were $3.7 billion, up from $3.2 billion in the second quarter of 2017. 

Martin handed off the CEO role to MIlligan in 2016 at about the same time as the hep C wonder drugs were starting to lose momentum to competition and payer pushback on their prices. Milligan promised to return to growth by taking the war chest from the franchise to make acquisitions, but investors complained he wasn't doing enough fast enough.

Last year, the company did spend $12 billion for Kite Pharma, a biotech which two months later won approval for the second CAR-T treatment after one from Novartis. It was approved to treat adults with relapsed or refractory large B-cell lymphoma, including aggressive non-Hodgkin lymphoma, for whom two or more traditional treatments have failed.

But investors wanted more. After Gilead reported that its revenues plummeted 21% in the first quarter to $5.1 billion, its executives promised 2018 would be a "trough year" and that future growth would be driven by new potential blockbusters like CAR-T cancer treatment Yescarta and HIV drug Biktarvy.

To that end, it moved its corporate development chief, Andrew Dickinson, to its senior leadership team, naming him EVP of corporate development and strategy. Dickinson, who joined Gilead in 2016, has spearheaded the company's biggest deals of late: its $11.9 billion acquisition of Yescarta inventor Kite Pharma and the $567 million purchase of Cell Design Labs.