Gilead CEO Milligan, Chairman Martin to step down

(Reuters) - Gilead Sciences Inc GILD.O said on Wednesday that Chief Executive Officer John Milligan and Chairman John Martin will step down as soon as the end of the year, ending a nearly 30-year run at the U.S. biotech company for both men.

A Gilead Sciences, Inc. office is shown in Foster City, California, U.S. May 1, 2018. REUTERS/Stephen Lam

Shares of Gilead, which also announced higher-than-expected second quarter profit, fell more than 1.6 percent in extended trading.

The company did not announce a successor either executive. It said the board is launching a search for a CEO to replace Milligan, who plans to leave at year-end.

Milligan said in a statement that he and the board agreed that it was a good time for him to leave because Gilead is on “solid footing for the future.”

On a conference call with analysts, Milligan said he had seen Gilead from “a private startup to the $100 billion market cap company we are today,” and that his departure would not change the mission or strategic direction of the company.

Gilead will likely look for a new leader with expertise in two of the company’s future growth areas, the liver disease NASH and cancer, Milligan said.

NASH, or nonalcoholic steatohepatitis, is a progressive fatty liver disease tied to obesity that has no approved treatments. It afflicts about five percent of the population and is poised to become the leading cause of liver transplants.

Jefferies analyst Michael Yee said the leadership change is an opportunity to take the company in a new direction.

New management “will hopefully lead to more pipeline, more bold steps, more aggressive business development, and a chance for price-to-earnings expansion and stock appreciation,” Yee said.

Martin, who preceded Milligan as Gilead CEO and held the position from 1996 to 2016, plans to leave the board when a new CEO joins the company, he said.

Both men have been with Gilead since 1990. They oversaw enormous growth at the company, and pulled off one of the biotech industry’s most lucrative deals with the purchase of Pharmasset, gaining access to what proved to be hugely successful hepatitis C cures.

The company’s hepatitis C treatments took in more than $19 billion in 2015 alone, more than paying for the acquisition. But high demand for Sovaldi, at a cost of $1,000 a pill, helped touch off the current furor over U.S. drug pricing.

The company also reported a lower second quarter profit on Wednesday as sales of its hepatitis C drugs continued to slide due to price competition and a drop in the number of patients in need of a cure for the liver disease.

Net income in the quarter fell to $1.82 billion, or $1.39 per share, from $3.07 billion, or $2.33 per share, a year earlier.

Revenue fell 21 percent to $5.54 billion.

But the company’s earning still came in ahead of analyst estimates on strong demand for its HIV drugs.

Excluding items and a 15 cent per share tax benefit, Gilead earned $1.76 per share in the second quarter. Analysts on average expected $1.56 per share, according to Thomson Reuters I/B/E/S.

Reporting By Michael Erman and Robin Respaut; Additional reporting by Caroline Humer and Deena Beasley; editing by Bill Berkrot