Gilead names Roche veteran O'Day as CEO
- Gilead Sciences has named Daniel O'Day as its next chief executive, tapping the longtime Roche veteran to lead a push into new therapeutic markets like oncology and rejuvenate a business slowed by falling sales of its mainstay hepatitis C drugs.
- O'Day, head of Roche's expansive pharmaceuticals division for the past six years, will start as CEO on March 1, Gilead said Monday, ending several months of speculation after the company unexpectedly announced in July its current chief John Milligan would step down at year's end.
- In selecting O'Day, Gilead has turned to an executive known for a steady hand and commercial execution while CEO of Roche Pharmaceuticals. Those skills will be needed at Gilead, which faces the challenging task of growing cancer cell therapy into the company's therapeutic franchise of the future.
O'Day will join Gilead at a critical moment for the three-decade-old biotech.
Product sales, which soared between 2014 and 2016 on the back of a slate of highly effective medicines for hepatitis C, have fallen rapidly as that market has matured and become more competitive. While Gilead can still count on a sizable HIV business, future growth hinges on how well the company can turn bets in oncology and inflammation into commercial successes.
Chief among those bets is Gilead's $12 billion acquisition of Kite Pharma and its pipeline of cancer cell therapies last year. The deal gave Gilead control of Yescarta (axicabtagene ciloleucel), the second CAR-T treatment approved in the U.S. behind Novartis' Kymriah (tisagenleucel).
Expectations are high for the CAR-T field, but the complex, individualized medicines present unique commercial challenges that will test companies seeking blockbuster sales. Initial performance from both Yescarta and Kymriah has disappointed some on Wall Street, and there's no guarantee that Gilead can stay at the front of the fast-moving field.
Gilead's newfound focus on oncology is reflected in the company's choice of O'Day as its next CEO.
"Oncology historically has not been [Gilead]'s strong suit, so the hiring of an exec from a major oncology company reflects in part [Gilead]'s future direction," wrote Jefferies analyst Michael Yee in a Dec. 10 note to investors.
O'Day joined Roche in 1987 and steadily rose through the ranks to become head of the Swiss pharma's drug division in 2012. As CEO of Roche Pharmaceuticals, O'Day oversaw the launch of a number of major products, including half a dozen cancer drugs and the multiple sclerosis medicine Ocrevus (ocrelizumab).
Gilead's selection of O'Day marks the first time in two decades the biotech has looked outside its walls for a leader, following CEOs John Martin and John Milligan. O'Day will also be the first CEO in that span to not hold an advanced science degree, a fact that Mizuho analyst Salim Syed notes could be a sign of a growing emphasis on commercial operations.
While Yescarta and CAR-T cancer therapy represent Gilead's future, O'Day's near-term priority will be ensuring growth continues for the company's HIV medicine Biktarvy (bictegravir/emtricitabine/tenafovir alafenamide).
O'Day will also likely face investor pressure to deploy the company's roughly $30 billion in cash, equivalents and short-term securities for fresh M&A. Skepticism remains on Wall Street that Gilead will be successful in executing on its planned transformation into an oncology powerhouse so expectations could rise for new deals in the space.
Gregg Alton, currently Gilead's chief patient officer, will serve as interim CEO for January and February, filling in after Milligan departs at the end of 2018. O'Day will also serve as chairman of Gilead's board of directors, also beginning March 1.
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